Opinion ID: 2130437
Heading Depth: 1
Heading Rank: 2

Heading: extrinsic analysis

Text: As this Court has long held, insurers in drafting policies must use language which is clear and understandable to laymen. See, e.g., Wadsworth v New York Life Ins Co, 349 Mich 240, 259; 84 NW2d 513 (1957); Century Indemnity Co v Schmick, 351 Mich 622, 627; 88 NW2d 622 (1958). This is simply correlative of the rule that technical constructions of policies are not favored and exceptions to the general liability provided for in a policy are to be strictly construed against the insurer. Francis v Scheper, 326 Mich 441, 448; 40 NW2d 214 (1949). See, generally, 2 Couch, Insurance, 2d (rev ed), § 15:74, pp 334-357. Both rules stem from the presumption that the parties to a contract of insurance fully understand the provisions. Id., § 15:12, pp 155-156. Since an insured is charged with knowledge of the provisions of the policy, Cleaver v Traders' Ins Co, 71 Mich 414, 417; 39 NW 571 (1888), 2 Couch, supra, § 15:14, pp 157-159, it reasonably follows that insurers must draft policies in language which is clear and understandable to laymen. I have concluded that Metropolitan failed to draft its exclusion so as to clearly preclude a duty to defend DiCicco. Indeed, I have concluded that the policy clearly and unambiguously requires the insurer to provide a defense on these facts. Thus, there is no need to resort to extrinsic evidence to ascertain the meaning of the exclusion. Id., § 15:57, pp 298-302. (Since all prior negotiations are assumed to be merged in the written contract, the policy itself constitutes the contract between the parties, and, if the meaning is clear, it alone must be looked to in construction.) [10] However, assuming arguendo that an ambiguity exists and therefore that extrinsic evidence is admissible, I would nevertheless hold that Metropolitan has a duty to defend under this policy. Perhaps the most common of extrinsic aids to the construction of an insurance policy or other contract are usage and custom. See id., § 15:60, pp 307-308; 3 Corbin, supra, § 555, pp 228-239. It is in this light that I have reviewed the large number of cases from foreign jurisdictions cited by the parties. It is, of course, possible that the reasoning of other courts would also add insight into relevant methods of intrinsic analysis. Moreover, it is possible that the weight of authority may be of use in resolving an ambiguity. [11] However, the sheer weight of authority cannot create an ambiguity in the plain and ordinary meaning of the policy language where none would otherwise exist. Again, we charge the insured with knowledge of the policy provisions. We do not charge the insured with the accumulated knowledge of a law library. As explained by Professor Corbin: When a member of a trade or profession makes a contract with one who is not a member, a usage or custom is not operative against the latter unless he in fact knows it or has such reason to know it that the member reasonably believes that he knows it. This is true even though the transaction is one that regularly occurs within the trade or profession. [3 Corbin, supra, § 557, p 248.] Here, there is no evidence that the insured in fact knew or had reason to know of a usage apart from the plain or ordinary meaning of the words of the exclusion. Thus, in reviewing the case law as to usage, I am only assuming arguendo both that the policy language requires extrinsic analysis and that it is relevant to the interpretation of the policy language in this case. As explained in the opinion of Justice ARCHER, standard policy language prior to 1966 included coverage for bodily injury or property which was accidental. See opinion of Justice ARCHER, post, pp 723-725. This was interpreted to exclude coverage for expected or intended injury, but two problems arose. The first problem with the expected or intended interpretation was whether it should be viewed from the standpoint of the injured party or from that of the insured. As one commentator has explained: A split of authority existed prior to the 1966 revisions as to whether the happening of an accident must be determined from the standpoint of the insured or from the standpoint of the victim. Where the question of accident is viewed from the standpoint of the victim, it seems obvious that almost all instances of personal injury or property damage would appear to be accidents. The victim of an assault or other personal injury or property damage generally does not intend or expect it to happen. [Rynearson, supra, Exclusion of expected or intended personal injury or property damage under the occurrence definition of the standard comprehensive general liability policy. 19 Forum 513, 521-522 (1984). See also anno: Liability insurance: Assault as an accident, or injuries, therefrom as accidentally sustained, within coverage clause, 72 ALR3d 1090, § 4, p 1100.] Obviously, interpretation of the policy language to require only that the injury be expected or intended from the standpoint of the injured party greatly expanded the liability of the insurer. A second, and relatively minor problem, arose in interpretations of the pre-1966 language regarding whether accidental, expected or intended injuries must be measured by the act or the result. As explained by Rynearson: The primary split in authority involved a question of whether or not an insured would be barred by the foreseeable or expected consequences of his act or conduct. A distinction was made between intentional acts and intentional results, with the emphasis being on the result, and not the act which brought about the result. Thus, one had to have either foreseen or intended the results of his act in order to bar coverage. The term expected was not necessarily equated with the term foreseeable and could denote a different degree of anticipation of damage from a particular course of action. [Rynearson, supra, 19 Forum 518. Emphasis added.] As can be seen from Rynearson's discussion, although foreseen and intended acts may denote different degrees of anticipation, either may be viewed from the standpoint of the insured. A split of authority had nevertheless developed over the use of a subjective or an objective test. The 1966 revisions were clearly designed to remedy the split of authority as to whether the accidental nature of the injury was to be measured from the standpoint of the insured or from that of the injured party: Prior to 1966, the language employed to achieve a similar exclusion objective had been, generally, bodily injury or property damage caused intentionally by or at the direction of the insured. The courts had experienced difficulties with this latter language insofar as it was being used to clarify the concepts of accident or accidental means, as those concepts appeared in policies prior to 1966. The view that caused intentionally, as an amplification of the circumstances that constituted an accident or accidental means, signified that the prospective [sic] was to be from the standpoint of the victim, had been rejected, for the reason that it is the state of the will of the person by whose agency the injury was caused rather than that of the injured person which determines whether an injury was accidental. However, this approach was characterized as a form of punishment to the wrongdoer, and it ignored the fact that insurance also is for the benefit of injured victims of accident. For this reason, others considered the resulting injury from the point of view of the victim, and if it was accidental from that point of view, the loss would be covered by the liability insurance issued to the actor. It appeared that the change of language now under scrutiny, which emerged from the 1966 revision undertaking, had reference to this agreement as to perspective, and that one of its purposes was to make more specific the concept of accident contained in the definition of occurrence. It was stressed that the phrasing from the standpoint of the Insured seemed designed to make plain that the accident component of an occurrence is to be evaluated from the perspective of the insured rather than of the injured victim. [Anno: Construction and application of provision of liability insurance policy expressly excluding injuries intended or expected by insured, 31 ALR4th 957, 972. See also 34 ALR4th 761 (acts of self-defense as within the same exclusion), and 35 ALR4th 1063 (criminal conviction as falling within the same exclusion).] While the 1966 revision, adopting the language of dispute in this proceeding, resolved the split of authority as to the viewpoint of the injured or insured, it did nothing to resolve the insurer's problem as to whether a subjective or objective standard should be employed. Indeed, it made the insurer's position as to the latter less tenable. As I have discussed in part II, intrinsic analysis of the phrase from the standpoint of the insured imparts a subjective meaning to the words expected or intended. Parenthetically, it might be argued that the prepositional phrase, from the standpoint of the insured, should be read to modify the antecedent intended. See 2 Couch, Insurance, 2d (rev ed), § 15:13, pp 156-157. Thus, the word expected might be given an objective meaning in contrast to intended, i.e., reasonably expected. However, under such a reading, the word expected might yet be viewed from the standpoint of the injured party. Indeed, had the insured insisted that the qualifying phrase be applied only to intended, viewing expected from the standpoint of the injured party would appear to be the most reasonable reading of the modified exclusion in an intrinsic analysis. Needless to say, it is not a reading that the insurer has suggested nor does it appear to be one that the insurer would prefer. Therefore, even in light of the extrinsic evidence, I would adopt a reading of the exclusion under which the phrase from the standpoint of the insured qualifies both expected and intended. Clearly, extrinsic analysis establishes that the phrase from the standpoint of the insured was not principally intended by the insurer to convey a subjective standard. However, it must be conceded that the insurer was aware of the split of authority regarding a subjective or objective standard. Subsequently, language was adopted by the insurer which solved one coverage issue while weakening the insurer's position as to another. That is, the insurer accepted a clause imparting a subjective standard in order to clarify that the accidental nature of the injury must be viewed from the standpoint of the insured. In this light, the continuing argument as to an intent to employ an objective standard is commensurately weakened. The insurer's argument is weakened further when it is considered that alternative language might have placed them in a better position as to both coverage questions, as illustrated by the language employed by Allstate in the companion case. There are presently two distinguishable classes of cases under the standard exclusion used by Metropolitan. First, there is the class of cases involving an intended act, but unintended injury: The courts in a number of jurisdictions have adopted the view that the injury or damage is caused intentionally within the meaning of an intentional injury exclusion clause so as to preclude coverage if the insured intended the act and to cause some kind of bodily injury or damage ..., with the result that the insurer will not be relieved of its obligations under a liability policy containing the exclusion unless the insurer acted with such specific intent.... [T]here is authority explicitly supporting the view that once it is found that harm was intended, it is immaterial that the actual harm caused was of a different character or magnitude from that intended by the insured.... [31 ALR4th at 973.][ [12] ] Utilizing a subjective standard for expected or intended, courts have found that there was coverage when the intentional burning of property, but without the intent to injure or cause damage, in fact caused injury or damages. See, e.g., Aetna Ins Co v Janson, 60 Ill App 3d 957; 18 Ill Dec 143; 377 NE2d 296 (1978). Similarly, coverage has been found in cases in which guns were intentionally pointed, but the discharge or the striking of the injured party was unintentional. See, e.g., Vanguard Ins Co v Cantrell, 18 Ariz App 486; 503 P2d 962 (1972); Jackson v Lajaunie, 253 So 2d 540 (La App, 1971), aff'd in part and rev'd in part on other grounds, 264 La 181; 270 So 2d 859 (1972). Another class of cases involves an intentional act, the result of which injury can only occur. [13] In these cases, some courts have quite reasonably presumed that the injury was intentional. Thus, in Fireman's Ins Co v Smith, 13 Ark App 250, 253-254; 683 SW2d 234 (1985), cited by the Chief Justice, a wrongful death action was brought against the insured in alleging that the shooting of the victim was willful, malicious and intentional. Since the language of the complaint in the underlying claim was controlling, it could only be presumed that the injury was intended and coverage was excluded. Similarly, in Cavanagh v Ohio Farmer Ins Co, 20 Ariz App 38; 509 P2d 1075 (1973), an intent to injure was presumed from the fact that the insured placed a loaded gun to the victim's head and pulled the trigger. Presumed intent can also be found in CNA Ins Co v McGinnis, 282 Ark 90; 666 SW2d 689 (1984), also cited by the Chief Justice. In McGinnis the insured caused injury to his minor stepdaughter through sexual abuse. The court rejected McGinnis' claim that although the sexual intercourse was intended, no harm was intended. The McGinnis court analogized to Clark v Allstate Ins Co, 22 Ariz App 601; 529 P2d 1195 (1975), in which no coverage was found as a matter of law, although the insured denied an intent to injure when striking the victim in the face with a closed fist. As explained in McGinnis, to claim that the insured did not expect or intend to cause injury flies in the face of all reason, common sense and experience. Id. at 93. The same cannot be said in this case. While DiCicco did intentionally brandish the knife and further poked Gravenmier in the chest with his other hand, it was apparently Gravenmier's own act of bravado which immediately preceded the injury. While it is true that facts may yet emerge in the underlying claim which would establish that DiCicco actually expected or intended to stab Gravenmier (as opposed to Gravenmier accidentally being cut), I cannot say on the present facts that the denial of an intent to injure flies in the face of all reason, common sense and experience so that intent to injure may be presumed. I cannot say that brandishing a knife always results in injury  that DiCicco's actions preclude coverage as a matter of law. [14] Therefore, assuming arguendo that extrinsic analysis is necessary, it is my conclusion that the trial court improperly granted judgment for the insurer in this action, and I would reverse its judgment. However, I would again emphasize that I necessarily take no position as to whether Metropolitan must eventually indemnify DiCicco for injuries caused to Gravenmier.