MICHIGAN BASIC PROPERTY INSURANCE ASSOCIATION v. WASAROVICH
Docket No. 166039
Court of Appeals of Michigan
Submitted December 13, 1994. Decided November 17, 1995.
214 Mich. App. 319
The Court of Appeals held:
1. The trial court, in granting summary disposition for the defendants, erred in ruling that Feldt‘s murder by Joseph Wasarovich was an occurrence for which Patricia Wasarovich can claim insurance coverage. The plaintiff‘s policy covers liability for damages resulting from bodily injury caused by an occurrence. The policy defines “occurrence” as an accident that results in bodily injury. The policy does not define “accident,” a term commonly used to mean an undesigned contingency, a casualty, a happening by chance, something out of the usual course of things, unusual, fortuitous, not anticipated, and not naturally to be expected. Where, as here, there are multiple insureds, the intent of the insured who caused the injury determines whether the injury-causing incident is an occurrence within the meaning of the policy. Because Joseph Wasarovich had intended to kill August Feldt, the shooting incident was not an occurrence under the terms of the plaintiff‘s policy.
2. The trial court erred in denying the plaintiff‘s motion for summary disposition based on the policy exclusion for injury
Reversed.
L.C. ROOT, J., dissenting, stated that the plaintiff‘s policy is ambiguous with respect to whether an injury-causing incident is to be examined from the standpoint of the insured who caused the injury or from the standpoint of an innocent coinsured in determining whether the incident is accidental with respect to the coinsured, that such ambiguity should be resolved in favor of coverage for Patricia Wasarovich, and that the case should be remanded for findings with respect to the applicability of the exclusion for expected or intended injury.
INSURANCE — LIABILITY — PERSONAL INJURY — MULTIPLE INSUREDS.
Whether personal injury to a third party is accidental and therefore covered by a liability insurance policy that has more than one insured is determined by examining the intent of the insured who caused the injury; no insured is covered by such a policy where the insured who caused the injury intended the injury.
Garan, Lucow, Miller, Seward, Cooper & Becker, P.C. (by Lloyd G. Johnson and Robert D. Goldstein), for Michigan Basic Property Insurance Association.
Merlotti Legal Services, P.C. (by Vincenzina R. Merlotti), for Patricia Wasarovich.
Musilli, Baumgardner, Wagner & Parnell, P.C. (by Ralph Musilli), for Michael Feldt.
Before: CORRIGAN, P.J., and CAVANAGH and L. C. ROOT,* JJ.
CORRIGAN, P.J. In this action for declaratory judgment concerning insurance, plaintiff Michigan
I. UNDERLYING FACTS AND PROCEDURAL HISTORY
Michigan Basic‘s action for declaratory judgment arises from the August 26, 1990, shooting death of August Feldt. On August 24, 1990, Patricia and Joseph Wasarovich were divorced. Two days later, they argued on the telephone about custody of their son. That night, Joseph Wasarovich, armed with a handgun, arrived at 11356 Brammel Street in Detroit where Patricia Wasarovich and August Feldt, her roommate, resided. Joseph told his ex-wife to lock the door and close the drapes. He then ordered August to lie on the floor. When August refused, Joseph shot him in the head, killing him instantly. Joseph next sexually assaulted, shot, and wounded his ex-wife. He then shot and killed himself.
Michael Feldt, as personal representative of August Feldt‘s estate, subsequently sued Ms. Wasarovich, the owner of the home where Feldt was murdered, for her negligence in failing to protect Feldt from Joseph Wasarovich‘s crime. The Wasaroviches had purchased an occurrence-based homeowner‘s policy for the Brammel Street house. Michigan Basic undertook Ms. Wasarovich‘s defense pursuant to that homeowner‘s insurance policy but also then initiated the present declaratory judgment action to determine whether it had a duty to defend or indemnify Ms. Wasarovich in the underlying litigation. It moved for summary
Finding that Ms. Wasarovich was an innocent coinsured, the court ruled that the killing of Feldt was an “accident” within the policy definition of an “occurrence” and concluded that the policy exclusion for intentional acts did not apply. The court ruled as a matter of law that Michigan Basic owed a duty to defend Ms. Wasarovich in the underlying negligence action and granted summary disposition in favor of defendants.1
II. INTERPRETATION OF THE OCCURRENCE-BASED INSURANCE POLICY
Michigan Basic contends that the trial court erred in its interpretation of the occurrence-based homeowner‘s insurance policy. This Court interprets an insurance policy by first reviewing the policy language in an effort to effect the intent of the parties. Auto Club Group Ins. Co. v. Marzonie, 447 Mich. 624, 630; 527 N.W.2d 760 (1994). If the language is clear and unambiguous, we apply the terms as written. Auto-Owners Ins. Co. v. Churchman, 440 Mich. 560, 567; 489 N.W.2d 431 (1992). If an ambiguity exists, it is resolved in favor of the insured. Group Ins. Co. of Michigan v. Czopek, 440 Mich. 590, 595; 489 N.W.2d 444 (1992). However, a policy is not rendered ambiguous simply because it omits the definition of a term. Absent a policy
Similarly, in applying exclusionary provisions, this Court strictly construes the policy language against the insurer. Czopek, supra at 597. If the policy language is clear and unambiguous, it must be applied as written. Marzonie, supra at 631. “Indeed, this Court will not countenance holding ‘an insurance company liable for a risk it did not assume.‘” Marzonie, supra, quoting Churchman, supra at 567.
A. LIABILITY COVERAGE: OCCURRENCE
Michigan Basic first contends that the trial court erroneously ruled that August Feldt‘s death was an occurrence and therefore is covered under the homeowner‘s policy. We agree. The clear and unambiguous language of the “Liability Coverages” section of the Wasaroviches’ homeowner‘s policy provides that Michigan Basic will cover liability “for damages resulting from bodily injury or property damage caused by an occurrence.” The policy defines an “occurrence” as
an accident, including exposure to conditions, which results, during the policy period, in:
a. bodily injury; or
b. property damage.
The policy, however, does not define the term “accident.” As a result, applying the directive of our Supreme Court, we must assign the term its commonly used meaning:
[A]n accident is an undesigned contingency, a casualty, a happening by chance, something out of the usual course of things, unusual, fortuitous, not
anticipated, and not naturally to be expected. [Marzonie, supra at 631.]
We cannot say that Joseph Wasarovich‘s act of murdering August Feldt was an “undesigned contingency” or “chance happening.” Our analysis should focus on the injury-causing act. The trial court found, and neither party disputes, that Joseph Wasarovich intended to murder Feldt. That Patricia Wasarovich did not anticipate her ex-husband‘s act of murdering Feldt does not render the murder an undesigned contingency or chance happening.
The trial court found that Joseph Wasarovich‘s act was intentional. In determining whether the shooting death of August Feldt was an accident, however, the trial court erroneously viewed the murder from the standpoint of Ms. Wasarovich. Because the court found that she was an innocent coinsured, it concluded that Feldt‘s death was an “accident” and thus an “occurrence” for purposes of liability coverage. In so doing, we believe that the trial court erred as a matter of law (as we faithfully attempt to interpret and apply our Supreme Court‘s rulings).
First, the court erred in applying the innocent coinsured doctrine to determine whether the occurrence-based policy covered liability arising from Feldt‘s murder. That doctrine applies in cases where an innocent spouse or coinsured makes a claim for insurance proceeds for a loss of property that was jointly owned with the insured responsible for the loss. Morgan v. Cincinnati Ins. Co., 411 Mich. 267; 307 N.W.2d 53 (1981); see also Borman v. State Farm Fire & Casualty Co., 446 Mich. 482; 521 N.W.2d 266 (1994); Ramon v. Farm Bureau Ins. Co., 184 Mich. App. 54; 457 N.W.2d 90 (1990). In Morgan, our Supreme Court interpreted a statutory fire
the provision voiding the policy in the event of fraud by “the insured” is to be read as having application only to the insured who committed the fraud and makes claim under the policy. The provision has no application to any other person described in the policy as an insured. [Morgan, supra at 276.]
In other words, the innocent coinsured doctrine prevents an insurer from voiding a policy that would otherwise cover the particular loss on the basis of fraud by the insured as long as the coinsured is innocent of any wrongdoing.2 The doctrine is not a mechanism to define an occurrence and thus establish coverage under the policy. Rather, the doctrine prevents an insurer from excluding a party from coverage on the basis of fraud.
Unlike Morgan, supra, this case does not involve an attempt to void a policy because of an insured‘s fraudulent claim. Rather, Michigan Basic contends that the terms of the policy do not cover Feldt‘s murder. By considering Ms. Wasarovich‘s role in the murder, the trial court confused the threshold issue whether a policy provides coverage with the provision excluding liability from injury as a result of an intentional act. Accordingly, the trial court erred in applying the innocent coinsured doctrine to determine that Michigan Basic owed a duty to defend and indemnify Ms. Wasarovich.
Although the matter is not entirely free from doubt, we believe that the trial court also erred in
In Arco Industries Corp. v. American Motorists Ins. Co., 448 Mich. 395; 531 N.W.2d 168 (1995), our Supreme Court finally resolved the viewpoint debate (i.e., whether an incident must be analyzed from the standpoint of the insured or the injured party).3 Arco held that courts must view the incident that caused the personal injury from the standpoint of the insured, and not the injured party, to determine whether it is an accident. Arco, supra at 405; Marzonie, supra (concurring opinion of GRIFFIN, J., and dissenting opinion of LEVIN, J.); see also Czopek, supra at 598. The homeowner‘s insurance policy in Arco defined an occurrence as:
[An] accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured. [Arco, supra at 404. Emphasis added by the Supreme Court.]
In determining whether coverage existed, the Court considered whether an accident had occurred independent of the Court‘s consideration of whether the injury was expected or intended from the standpoint of the insured. Id. Czopek, supra,
In both Arco and Czopek, the insured who committed the act that caused the injury was the same insured who was being sued in the underlying litigation. However, this case involves two insureds, Joseph Wasarovich, the criminal actor who murdered Feldt, and Ms. Wasarovich, the defendant in the underlying negligence action. Michigan Basic argues for an objective view, because the policy does not define an occurrence “from the standpoint of the insured.” Defendants assert that the incident must be viewed from Ms. Wasarovich‘s standpoint because she is the defendant insured in the underlying action.
Applying the principles established in Arco, we conclude that neither party has presented the correct test to determine whether the incident falls within the policy definition of an occurrence. In determining whether an accident occurred, we must view the incident itself from the standpoint of the insured actor who caused the injury in question. Arco considered the “accident” aspect of the insurer‘s definition of occurrence separately from its analysis of the “from the standpoint of the insured” language, supra at 404-410. In considering the question whether the incident constituted an accident, the Court analyzed the incident itself from the standpoint of the insured who committed the act that caused the injury. The Court then considered the language contained in the policy itself referring to the expectations or
The trial court found that Joseph Wasarovich intentionally killed August Feldt. Mr. Wasarovich went to 11356 Brammel Street armed with a pistol. When Feldt refused to do as instructed, Joseph Wasarovich shot him in the head, killing him instantly. Analyzing the shooting from the standpoint of the insured, Joseph Wasarovich, there is no question that the incident was not an “accident” within the policy definition of “occurrence.” Accordingly, the trial court erred in finding an occurrence and in ruling that Michigan Basic had a duty to defend Ms. Wasarovich in the underlying negligence action.
B. POLICY EXCLUSION: INJURY EXPECTED OR INTENDED FROM THE STANDPOINT OF THE INSURED.
Michigan Basic also contends that the trial court erred in ruling as a matter of law that Ms. Wasarovich neither expected nor intended the injury to August Feldt. In light of our resolution of the coverage issue, this issue is moot. However, we note that the trial court stated during oral argument:
I‘m satisfied that there‘s a question of fact about whether or not Patricia Wasarovich should have—could have expected the actions of her ex-husband. It is clear to the Court based on the indication that there was some violence in this relationship beforehand, that, in fact, some violence had occurred prior in time. There‘s not any evidence presented.
* * *
[W]hether or not [the murder] is an action—accident as it goes to [Patricia] . . . is a question of fact. . . . [W]hat we have before us is an instance where there‘s been some allegation that [Patricia] should reasonably have known that [Joseph‘s] violence would escalate and that he might come over here and have a gun and—and, therefore, might then injure a third party, which is a lot of going down the road with it, I think. It‘s not clear to me that whether or not that‘s a reasonable expen—expectation upon her part.
On this record, whether Ms. Wasarovich expected or intended the injury to Feldt was a question of fact that the court failed to resolve. As a result, the trial court erred in denying Michigan Basic‘s motion for summary disposition on the basis that the policy precluded coverage under the exclusion for personal injury expected or intended from the standpoint of the insured. However, given our disposition of the preceding issue, we need not remand to the trial court for findings of fact.
We direct the circuit court to enter an order that Michigan Basic owes no duty to defend or indemnify Patricia Wasarovich in the underlying action.
Reversed.
CAVANAGH, J., concurred.
L. C. ROOT, J. (dissenting). This is a case of two coinsureds with conflicting perspectives of a shoot-
I. INTERPRETATION OF THE OCCURRENCE-BASED INSURANCE POLICY
The first step in deciding if Michigan Basic must defend and indemnify Ms. Wasarovich is to determine if the shooting is covered by the insurance policy. In interpreting an insurance contract, the general rule is that the policy is enforced according to its terms. Arco, supra at 402. If the terms are unambiguous, they are enforced as written. Id. at 403. If ambiguity exists, the policy is enforced in favor of the insured. Group Ins. Co. of Michigan v. Czopek, 440 Mich. 590, 595; 489 N.W.2d 444 (1992). A term left undefined is not necessarily ambiguous, but is given its commonly used meaning, id. at 596, and
In its policy, Michigan Basic contracted to defend and indemnify a claim or suit “brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies. . . .” An occurrence is defined as “an accident . . . which results, during the policy period, in bodily injury.” “Accident” is not a defined term, leaving its definition to case law interpretation, Czopek, supra, and the reasonable expectations of the parties, Arco, supra at 403. As commonly defined, an accident for insurance purposes is “an undesigned contingency, a casualty, a happening by chance, something out of the usual course of things, unusual, fortuitous, not anticipated, and not naturally to be expected.” Id. at 404-405. Accidents are interpreted from the subjective standpoint of the insured, not the injured person. Id. at 405, 407.
Applying the definitions and principles of contract construction to the present case, the shooting death of August Feldt is covered under the policy if it is an accident from the subjective standpoint of the insured. Id. at 405. The difficulty in this case arises from the fact that the insurance policy covers two insured parties with conflicting subjective standpoints, and neither the contract terms nor interpretive case law explain which standpoint of multiple insured parties is adopted to define an accident when the standpoints of the insured parties conflict. The contract is silent in terms of the conflicting perspectives of coinsureds, leaving two
Interpreting the contract in favor of the insured as a result of the ambiguity means that the shooting incident is viewed from the subjective perspective of Patricia Wasarovich. The trial court, whose decision is overturned by this Court of Appeals majority, denied Michigan Basic summary disposition, holding that the shooting was an occurrence under the insurance policy because it should be interpreted from Patricia Wasarovich‘s standpoint as a result of the innocent coinsured doctrine from Morgan v. Cincinnati Ins. Co., 411 Mich. 267, 276; 307 N.W.2d 53 (1981). The end result of this analysis is that the trial court‘s decision should be upheld, but the rationale for it rejected. The trial court erred in applying the innocent coinsured doctrine to this case. That doctrine operates to determine whether an exclusionary clause bars one of multiple coinsureds from making a claim of insurance because of an act of fraud on the insurer. Id. at 276. Thus, it is not applicable to the interpretation of the definition for the term “occurrence” under the insurance policy. Accordingly, the trial court‘s denial of Michigan Basic‘s summary disposition motion should be upheld because contract ambiguity results in the shooting being defined as an occurrence under the insurance policy.
II. INTERPRETATION OF THE POLICE EXCLUSION
Given that the shooting death of August Feldt is
When interpreting exclusions in a policy of insurance, clear, specific exclusions are enforced, but “exclusions to the general liability . . . are to be strictly construed against the insurer.” Czopek, supra at 597. If ambiguity exists, the policy is enforced in favor of the insured. Arco, supra at 403; Czopek, supra at 595. Michigan courts have not interpreted the meaning of the phrase “the insured” in an exclusionary clause of a homeowner‘s policy covering multiple coinsureds. However, the Michigan Supreme Court interpreted the phrase “the insured” in the context of the exclusionary clause for fraud in the standard fire insurance policy,
Morgan‘s exclusionary clause read as follows:
“This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.”
MCL 500.2832 ; MSA 24.12832. [411 Mich 276. Emphasis added.]
Expanding this logic to the Michigan Basic clause that excludes coverage of personal liability and medical payments of others for bodily injury if the bodily injury was “expected or intended by the insured” in the case of multiple insureds, only the insured or insureds who intended or expected bodily injury and who applied for coverage would be excluded. Therefore, in the present case Patricia Wasarovich is not excluded from coverage in a summary disposition hearing because her intent or expectation with respect to August Feldt‘s bodily injury is a question of fact, as was recognized by the trial court.
Alternatively, if Morgan‘s analysis is not expanded into the realm of homeowner‘s insurance, Patricia Wasarovich is still not excluded under this clause. The word “the” is
[a] demonstrative adjective used chiefly before a noun to individualize, specialize, or generalize its meaning, having a force thus distinguished from the indefinite distributive force of a, an, and from the abstract force of the unqualified noun. Thus, the man points to a particular man. . . . Limiting a general term to the individual or class indicated by a succeeding element in the sentence. . . . [Webster‘s New International Dictionary Unabridged, Second Edition.]
Black‘s Law Dictionary, Revised Fourth Edition explains “the” as “an article which particularizes the subject spoken of.” Black‘s goes on to say,