Michigan Coverage Decisions, Issue 29

Allstate Insurance Company v Stacy Reinhardt and Carla S. Laroche

Unpublished. Decided November 6, 2001. Michigan Court of Appeals Docket Number 224205.

The Trial Court granted Plaintiff’s summary disposition, in a declaratory judgment action filed against the policyholder. The policyholder, who was under the influence of liquor, pushed a third party which resulted in injury to the third party. The Trial Court determined that no coverage existed under the policy for an intentional act by the insured on the basis that the actions of the insured did not constitute an “occurrence” because there was no “accident”. The policyholder appealed the Trial Court’s decision.

The Court of Appeals upheld the Trial Court on the basis that the insured’s actions did not meet the definition of occurrence, which required an “accident.” No “occurrence” triggered liability under the insurance policy based on the determination that lack of intent to cause the harm does not create an accident. The court concluded that the insured’s actions were not accidental because it could not plausibly be construed as an undesigned contingency or something that happened by chance. The resulting harm should reasonably have been expected as the results of the policyholder’s forceful contact with the third party.

[su_box title=”Kallas & Henk Note”] This case is consistent with and relies on the Michigan Supreme Court decision in Nabozny vs. Burkardt, 461 Mich 471 (2000). It is also significant for finding that the intoxicated condition of the insured cannot be used to avoid a finding of intentional act. [/su_box]


Market Development Corp., Spartan Stores, and National Union Fire Insurance Company v State Mutual Insurance Company

Unpublished. Decided November 9, 2001. State of Michigan Court of Appeals Docket No. 225439.

Plaintiff insured filed a declaratory judgment action against the insurer for one of its tenants seeking reimbursement for a claim payment made to a third party for a slip and fall injury on an icy sidewalk at the tenant’s location. Plaintiff is the development company who leased store locations in a strip mall. The leases required the tenants to maintain premises liability insurance and lists the development company as an additional named insured. The tenant had its insurance through Defendant insurance company, State Mutual and plaintiff had its insurance through National Union Fire Insurance Company.

Plaintiff alleged that the additional insured endorsement entitled it to reimbursement and the Trial Court granted summary disposition in Plaintiff’s favor on that basis. Defendant insurance company argued that the terms of the lease expressly waived any subrogation claims and that there was a question of fact regarding the proportionate fault of the various parties.

The Court of Appeals determined that a declaratory judgment action seeking indemnification is not equivalent to a subrogation claim. The Court of Appeals affirmed the Trial Court’s decision on the basis that Plaintiff was named as an additional insured on Defendant’s policy.

[su_box title=”Kallas & Henk Note”] While this case presents a very typical situation, (a lease which requires a landlord to be an additional insured) the arguments made by the parties apparently confused the issue. The ultimate holding of the Court of Appeals was made on the very simple basis that Plaintiff was an additional insured on the policy issued by Defendant and is therefore entitled to indemnity under the terms of the policy. [/su_box]


Auto Club Group Insurance Company v Todd Bauswell and Kelly Miller, personal representative of the Estate of Leonard Miller, deceased

Unpublished. Decided November 9, 2001 State of Michigan Court of Appeals Docket No. 225812.

The Trial Court granted a motion for summary disposition in favor of homeowners policy insurer. Defendant Boswell sought coverage under his homeowners policy for a civil suit brought against him. His insurance carrier denied coverage on the basis that the policy excluded bodily injury resulting from a criminal act. Defendant Bauswell was convicted of careless, reckless or negligent discharge of a firearm of causing the death for which coverage is sought.

On appeal, the decedent’s estate argued in favor of coverage because the exclusion was ambiguous. The Court of Appeals affirmed the Trial Court on the basis that the policy exclusion unambiguously applied to exclude coverage for bodily injury resulting from a criminal act.

[su_box title=”Kallas & Henk Note”] Consistent with prior appellate decisions, the Court of Appeals in this case held that a criminal acts exclusion applies irrespective of whether the crime or resulting injury was intended or expected by the insured.  [/su_box]


Richard Bertrand, et al v Gregory Moga et al

Unpublished. Decided November 16, 2001 State of Michigan Court of Appeals Docket No. 219724.

Plaintiff pizza store filed a declaratory judgment action against its general liability insurer for defense and indemnity damages resulting out of an automobile-pedestrian accident involving an employee. While delivering pizzas the employee struck two people, killing one and severely injuring the other. The pizza store demanded that the Defendant general liability insurer defend and indemnify. The insurance company refused to on the basis that an automobile exclusionary clause applied, specifically that the claim arose out of the use of an automobile by an employee.

The Trial Court determined that the exclusionary clause was applicable, therefore no indemnification was required by the insurance company for any liability determined to exist in the underlying negligence actions. The Trial Court also held that the insurance company had a duty to defend in the underlying actions from the filing of the complaint to determination of coverage in the declaratory judgment action.

The store appealed arguing that the term employee was ambiguous therefore coverage should apply. The Court of Appeals disagreed and held that under the common and plain meaning of the term employee, the exclusionary provision applied to eliminate coverage. Defendant insurer appealed the Trial Court’s decision finding a duty to defend. The Court of Appeals found that the Defendant insurer had a duty to defend, but the duty did not began until the second amended complaints were filed questioning the delivery person’s “employee” status.

[su_box title=”Kallas & Henk Note”] The Court of Appeals in this case applied the long-standing rule that undefined terms in an insurance policy should be given their commonly understood meanings. This case is somewhat curious in that the court found that there was a duty to defend even though no duty to indemnify. It does not appear that this issue was properly addressed by the parties. [/su_box]

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