Opinion ID: 2982672
Heading Depth: 3
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Heading: is charged with a crime;

Text: b. is convicted of a crime whether by a court, jury or plea of nolo contendere; or c. enters a plea of guilty whether or not accepted by the court . . . . We must first determine whether the exclusion was ambiguous. In making this inquiry, this court must apply Kentucky law in accordance with the controlling decisions of the Supreme Court of Kentucky. OneBeacon Am. Ins. Co. v. Am. Motorists Ins. Co., 679 F.3d 456, 460 (6th Cir. 2012) (citing Allstate Ins. Co. v. Thrifty Rent-A-Car Sys., Inc., 249 F.3d 450, 454 (6th Cir. 2001). This court’s own prior published decisions interpreting Kentucky law are also controlling, unless Kentucky law “has measurably changed in the meantime.” Rutherford v. -5- No. 14-5195 Auto Club Property-Casualty Columbia Gas, 575 F.3d 616, 619 (6th Cir. 2009) (quoting Big Lots Stores, Inc. v. Luv N’ Care, Ltd., 302 F. App’x 423, 427 (6th Cir. 2008)). Controlling precedent establishes that the Criminal-Act Exclusion in the Cambrons’ policy does not exclude coverage for the events of July 5, 2010. First, the language of the exclusion is ambiguous. In Healthwise of Kentucky, Ltd. v. Anglin, 956 S.W.2d 213 (Ky. 1997), the Supreme Court of Kentucky held that an exclusion for “losses suffered . . . while committing . . . a crime” was ambiguous. Id. at 216. Even though the court hypothesized that the average person would likely view the relevant conduct—drag racing—as criminal, the exclusion was still ambiguous because it was susceptible to more than one reasonable interpretation. Id. at 216. Similarly, in American Family Life Assurance Co. v. Bilyeu, 921 F.2d 87 (6th Cir. 1990), this court found ambiguity in an exclusion for injuries that occurred “during the commission of a crime” when seeking to determine whether the policy covered injuries sustained while drunk driving. Id. at 89–90. In both of these controlling cases, the exclusion for “crimes” or “criminal acts” was ambiguous when applied to particular acts that were not quintessentially criminal. The Cambrons’ policy contains exclusions for “a criminal act or omission” and “an act or omission, criminal in nature.” If this language is ambiguous when applied to drag racing and drunk driving, it is also ambiguous when applied to possessing and igniting fireworks without a license. There are at least two reasonable interpretations of the exclusion in this situation, one covering injuries and one excluding coverage for injuries. Just like in Anglin and Bilyeu, the Cambrons’ exclusion is ambiguous. Next, we must determine whether, under Kentucky’s reasonable expectations doctrine, the Cambrons may reasonably expect coverage for the events of July 5. Again, precedent dictates the outcome. In Bilyeu, the insured was driving while intoxicated when he crashed and -6- No. 14-5195 Auto Club Property-Casualty died. Id. at 88. The company that issued his life insurance policy refused to pay benefits on the ground that the accident occurred “during the commission of a crime.” Id. This court held that the insured would not have reasonably expected an accident to be excluded from coverage simply because it occurred while drunk driving. Id. at 89. This court agreed with the district court that an insured, reading the term “crime” in a policy exclusion, “is more likely to understand it to mean[,] for example[,] burglary, armed robbery, or murder than for it to mean drunk driving.” Id. at 89 (alterations in original). As a result, the exclusion could not serve as a basis for the denial of coverage. Id. at 90. Similarly, here, the Cambrons would have reasonably expected to be covered for injuries resulting from their possession of the bottle rockets, despite the Criminal-Act Exclusion. The Cambrons allegedly committed the offense of possessing fireworks without a license, and J.J. the offense of using or exploding a firework without a license, in violation of the then-existing versions of Kentucky Revised Statutes (“KRS”) sections 227.702, 227.708, and 227.710. These are types of conduct that an insured person, reading the policy, would reasonably believe were covered. They are far from the core criminal offenses—burglary, armed robbery, and murder— that an insured, according to the Bilyeu court, would believe to be within the exclusion. Bilyeu, 921 F.2d at 89. This does not mean that the Criminal-Act Exclusion only excludes burglary, armed robbery, and murder. But Kentucky favors interpreting ambiguous terms in a way that provides maximum coverage, see Flowers, 513 F.3d at 564, and requires exclusions from coverage to be “unequivocally conspicuous, plain and clear.” Wolford, 662 S.W.2d at 838–39. It is unclear that the unlicensed possessing or exploding of fireworks falls within the exclusion in the Cambrons’ policy. -7- No. 14-5195 Auto Club Property-Casualty The district court declined to follow Anglin and Bilyeu, finding neither “applicable to the facts of the case at bar.” However, each of the four bases on which the district court distinguished those cases is unavailing. First, the court stated that “[t]hose cases involved [employee health] and accidental death policies [respectively], as opposed to homeowner’s insurance policies.” The method of interpreting the exclusion in the Cambrons’ policy is not reserved for homeowners’ policies. While the type of policy may be relevant in analyzing ambiguity and reasonable expectations in a particular case, Bilyeu and Anglin both focused on the ambiguity of excluding coverage for damage sustained during the commission of a “crime” in a policy issued to an individual consumer. Bilyeu, 921 F.2d at 89–90; Anglin, 956 S.W.2d at 216. Bilyeu also ruled that such a consumer would reasonably expect coverage when engaging in conduct that does not fall within the scope of crimes such as burglary, robbery, or murder. Bilyeu, 921 F.2d at 89. Nothing about these analyses suggests that the Cambrons’ Criminal-Act Exclusion is any less ambiguous because it is in a homeowners’ policy rather than a medical or life insurance policy. Nor do these prior opinions indicate that the insureds’ reasonable expectations regarding an exclusion for crimes would be any different in the contexts of medical or life insurance than in the context of homeowners’ insurance. The district court did not offer, and we cannot find, any reasoned bases to analyze these exclusions differently. Second, the district court noted that the exclusions in the prior cases excluded coverage “if the insured ‘committed’ a crime.” There is no material difference in the language of the exclusions. The Anglin and Bilyeu decisions focused on the ambiguity of the word “crime” within those policies, and the reasonable expectations that the word creates. Bilyeu, 921 F.2d at 89–90; Anglin, 956 S.W.2d at 216–17. The Cambrons’ policy excludes coverage for “a criminal act or omission” or “an act or omission, criminal in nature.” The same ambiguity exists and the -8- No. 14-5195 Auto Club Property-Casualty Cambrons’ reasonable expectations will be no different from the insured parties in Anglin and Bilyeu. Third, the district court explained that “in both cases the insured was alleged to have violated traffic regulations by driving under the influence of alcohol and drag racing, respectively,” and “such violations are specifically excluded from the . . . Penal Code’s definition of ‘crime.’” This improperly characterizes the Bilyeu opinion, which concedes that “drunk driving appears to be a crime in Kentucky.” Bilyeu, 921 F.2d at 87. This is consistent with other authority, which recognizes drunk driving as a crime rather than a mere traffic infraction. See KRS § 189A.010(5) (providing, consistently with the version in force on July 5, 2010, for fines and imprisonment for the first three drunk-driving offenses, and designating the fourth offense as a felony); see also Heath v. Commonwealth, 761 S.W.2d 630, 630–31 (Ky. 1988) (referring to “the crime of drunk driving”); Keller v. Commonwealth, 719 S.W.2d 5, 6 (Ky. Ct. App. 1986) (same). Although the Bilyeu court treated drunk driving as a crime, the court still found the word “crime” ambiguous and decided that the insured would have reasonably expected to have been covered for injuries suffered while driving drunk. Bilyeu, 921 F.2d at 89. The ambiguity and reasonable-expectation inquiries do not focus solely on the definition of “crime” in the Penal Code. If there is more than one reasonable interpretation, the reasonableexpectations doctrine applies and, if in doubt, “the interpretation favorable to the insured is adopted.” Anglin, 956 S.W.2d 213 (citing St. Paul Fire & Marine Insurance Co. v. Powell– Walton–Millward, Inc., 870 S.W.2d 223, 226 (Ky. 1994)). Whether or not the Cambrons and J.J. committed “crimes,” this does not detract from the ambiguity of the exclusion or the Cambrons’ reasonable expectation of being covered for injuries caused by the fireworks. -9- No. 14-5195 Auto Club Property-Casualty Finally, the district court explained that Anglin and Bilyeu do not control because “when confronted with language identical to that used in the Cambrons’ Policy, courts in other jurisdictions found such language to be unambiguous.” Kentucky law governs in this case and thus these decisions are inapposite. Anglin and Bilyeu are controlling, no matter how they compare to decisions from other jurisdictions. Controlling precedent leads to the conclusion that the Criminal-Act Exclusion does not provide a basis for denying coverage for the injuries that B.T. suffered on July 5, 2010.