Michigan Basic Property Insurance v. Wasarovich

542 N.W.2d 367, 214 Mich. App. 319

• Court: Michigan Court of Appeals
• Decided: November 17, 1995
• Docket: Docket 166039
• Status: Published

Opinions

Corrigan, P.J.

In this action for declaratory judgment concerning insurance, plaintiff Michigan Basic Property Insurance Association appeals as of right the denial of its motion for summary disposition pursuant to MCR 2.116(0(10) and the grant of summary disposition in favor of defendants Patricia Wasarovich and Michael Feldt, as personal representative of the estate of August Feldt, pursuant to MCR 2.116(I)(2). We reverse.

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 disposition, asserting that the occurrence-based insurance policy did not provide liability coverage because Feldt’s murder was not an "occurrence” as defined in the policy. In the alternative, Michigan Basic argued that the policy exclusion for acts intended or expected to cause bodily injury from the standpoint of the insured precluded coverage.

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 OP THE OCCURRENCE-BASED INSURANCE POLICY

Michigan Basic contends that the trial court érred 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 NW2d 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 NW2d 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 NW2d 444 (1992). However, a policy is not rendered ambiguous simply because it omits the definition of a term. Absent a policy definition, we assign a term its commonly used meaning. Marzonie, supra at 631; Czopek, supra at 596.

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 NW2d 53 (1981); see also Borman v State Farm Fire & Casualty Co, 446 Mich 482; 521 NW2d 266 (1994); Ramon v Farm Bureau Ins Co, 184 Mich App 54; 457 NW2d 90 (1990). In Morgan, our Supreme Court interpreted a statutory fire insurance policy provision that voided the policy in cases of fraud. Morgan held that

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 analyzing the shooting from the standpoint of Ms. Wasarovich. The court found that Joseph Wasarovich intended to murder Feldt. The court concluded, however, that the murder of Feldt was an "accident” under the policy because Ms. Wasarovich did not intend the act that caused the injury. We disagree.

In Arco Industries Corp v American Motorists Ins Co, 448 Mich 395; 531 NW2d 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, interpreted a policy definition of occurrence similar to that in Arco, but without the "expected or intended from the standpoint of the insured” language. Implicitly viewing the incident from the standpoint of the insured, Czopek held that the insured’s criminal assault on police officers did not constitute an accident within the meaning of the definition of occurrence. Czopek, supra at 597.

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 intentions of the insured. Id. The homeowner’s policy at issue defines an occurrence as "an accident . . . which results, during the policy period, in personal injury.” The "expected or intended from the standpoint of the insured” language is absent from this definition, as it was in the Czopek policy. Thus, we must consider only the incident itself in determining whether there was an occurrence. Accordingly, we consider whether Feldt’s murder constitutes an accident independent of whether the insured, Ms. Wasarovich, expected or intended the resulting injury. In so doing, we consider only the intent of the insured who caused the injury, Joseph Wasarovich.

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:. IN JURY 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 satisSed 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.

[WJhether 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.

1 The trial court limited its finding that Patricia Wasarovich was an innocent coinsured to the declaratory judgment action, leaving open the possibility that she could later be found negligent in the underlying action.

2 In cases where policy language voids the policy because of "any” or "an” insured’s fraudulent conduct, no other insured, including innocent coinsureds, may recover under that policy. See Borman, supra; Allstate Ins Co v Freeman and Metropolitan Property & Liability Ins Co v DiCicco, 432 Mich 656, 700; 443 NW2d 734 (1989).

3 See Frankenmuth Mutual Ins Co v Piccard, 440 Mich 539; 489 NW2d 422 (1992) (plurality opinion of Riley, J.) (an incident must be analyzed from the standpoint of the injured party) and Marzonie, supra (concurring opinion of Griffin, J. and dissenting opinion of Levin, J., incident must be viewed from the standpoint of the insured); see also Czopek, supra.