Michigan Coverage Decisions, Issue 38

Allstate Insurance Company v Robert Daniel McCarn, et al

Decided June 11, 2002 State of Michigan Supreme Court docket No. 118266.

Plaintiff insurer filed a declaratory judgment action under a homeowner’s policy for a wrongful death suit arising from a shooting death of a third party. The sixteen year old insured pointed a shotgun, thought to be unloaded, at the face of a friend, pulled the trigger, the gun fired, killing his friend.

The trial court granted defendants’ motion for summary disposition rejecting the plaintiff’s argument that the events did not constitute an “occurrence” in the policy. The trial court also found no intentional or criminal conduct with the meaning provided in the policy. The Court of Appeals reversed the trial court’s decision in an unpublished opinion basing their decision that the acts were intentional by creating a direct risk of harm that precluded coverage.

The Supreme Court determined that if both the act and harmful consequences were intended by the insured, the act does not constitute an accident. The Supreme Court determined the question was not one to be analyzed from the perspective of a reasonable person, but the subjective standard of the perspective of the insured. Using this subjective standard, he Supreme Court reversed the Court of Appeals and determined that the death was an accident, thus an occurrence under the policy and coverage applied.

[su_box title=”Kallas & Henk Note”] Notwithstanding a vigorous dissent asserting the contrary, this decision does not appear to depart from prior Michigan case law holding that an event is not an occurrence if the insured acts to cause harm but the harm exceeds or is different from that intended. In this case, the determinative factor was that the insured affirmatively believed that the gun was not loaded. This is different from a situation where a person shoots a loaded gun at someone without the intent to kill but that is the result. This is also different from a situation where a person picks up and shoots a gun without knowledge of whether it is loaded.  [/su_box]

 

The City of Flint v Lexington Insurance Company

Decided June 17, 2002 United States Court of Appeals for the 6th Cir. No. 00-3267/3297.

The insured city filed an action for declaratory judgment against their Public Officials and Employees Liability insurer seeking defense and indemnification for damages awarded against the city in a civil rights action. Several white police officers successfully argued that the affirmative action plan implemented by the city was illegal on the basis that the affirmative action plan was not narrowly tailored. The city submitted the claim to their insurer for payment of the judgment and other costs and the insurer denied coverage citing policy definitions and exclusions.

In the declaratory judgment action, the court granted summary judgment in favor of the city on the basis that the affirmative action plan originated from the city, not the police department. The court determined that the police department only followed the plan at the behest of the municipality. The court stated that the municipality was clearly an insured and the law enforcement exclusions were not applicable due to the origination of the plan by the city.

[su_box title=”Kallas & Henk Note”] The Court essentially held that the exclusion for “law enforcement” would not be read broadly to include anything involving the Police Department. In this case, the Court found that the hiring and/or promotion policies mandated by the city were not law enforcement even if they applied to the police. [/su_box]

 

Safeco Insurance Company of America v Dale G. Kennedy & Sons Warehouse, et al

Published. Decided June 21, 2002, State of Michigan Court of Appeals docket No. 23179.

Parties filed a declaratory judgment action to determine obligations of the various parties pursuant to a commercial auto insurance policy issued to a third party. The action arose from the death of an employee of the third party. Insured employees loaded a trailer in anticipation of a pick-up by the third party company for delivery. The trailer was moved to the third party facility to be prepared for shipment. During this preparation, the load fell on the employee. An action was brought against the insured and settled. The insurers of the third party brought the declaratory action to determine that they had no duty to defend or indemnify the action filed by the employee.

The company that loaded the trailer claimed it was an additional insured under the commercial auto policy issued to the employer. The policy defined an insured as “anyone else while using with permission a covered auto…” The loading company argued that coverage should be afforded because it should be considered as an omnibus insured because it was “using”, a covered auto. The trial court determined that the company was not “using” the trailer at the time of the accident and the employer’s auto policy provided no coverage for the company who loaded the trailer.

The Court of Appeals affirmed the trial court holding that the term “while using” temporally restricted the definition of an insured. The court noted the temporal restriction created by the word “while” as opposed to arising out of and determined that the loading company was not using the trailer at the time of the accident.

[su_box title=”Kallas & Henk Note”] This case is significant for limiting the permissive user language of policies to persons using at the time of the incident. While the Court acknowledged that loading can constitute a use, this terminates when the loading or unloading is complete. [/su_box]

 

Carl Dale and Dawn Martinie v Farmers Insurance Exchange

Unpublished. Decided June 21, 2002 State of Michigan Court of Appeals docket No. 230419.

Plaintiff was a passenger in a vehicle accident. The other vehicle involved was owned jointly by the driver and his father. The defendant insurer issued two policies to the driver’s father, each for separate vehicles with different liability limits. Plaintiff received the entire policy limit for the vehicle involved in the accident but sought additional coverage under the policy in the insured household.

The trial court granted the insurer’s motion for summary disposition under the second policy on the basis that coverage was limited to the policy covering the vehicle involved in the accident. The Court of Appeals affirmed based on analysis of the second policy covering the vehicle which was not involved in the accident. The court determined that an exclusion for any other owned vehicle applied. Plaintiffs argued that an anti-stacking provision created ambiguity and therefore an ambiguity should be construed in their favor. The Court of Appeals determined that the exclusion applied, therefore, the anti-stacking provision was not reached.

[su_box title=”Kallas & Henk Note”] The Court of Appeals properly applied long-standing Michigan precedent that exclusions are to be applied independently of any other provision and that if any exclusion applies, coverage is eliminated. [/su_box]

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