Opinion ID: 2130437
Heading Depth: 1
Heading Rank: 3

Heading: ALLSTATE INS CO v FREEMAN

Text: The plaintiff, Allstate Insurance Company, seeks a determination of its obligation to defend and indemnify under a homeowner's insurance policy issued to Marshall and Alonda Freeman for a shooting incident in which Alonda shot the defendant-appellant, Mary Helen Kelly. The Freemans lived two houses away from Kelly. On February 25, 1984, Kelly stood outside her home, shouting at another neighbor. Alonda Freeman came out of her home and told Kelly to shut her damn mouth. This provoked an argument between Kelly and Alonda Freeman, during which Alonda Freeman went back into her home. However, rather than remaining safely inside, she retrieved a loaded .38 caliber handgun from her kitchen cabinet and reappeared almost immediately on the front porch. Alonda Freeman testified that without issuing any type of a warning, she aimed the gun in Kelly's direction and fired. Although Alonda Freeman stated that she did not intend to injure Kelly, she also admitted that she stood only three to six feet away from Kelly when she fired the gun. The shot hit Kelly in the shoulder. On August 16, 1984, Alonda Freeman was convicted of discharging a firearm intentionally, aiming without malice and with injury. MCL 750.235; MSA 28.432. [20] On July 13, 1984, a month prior to Alonda Freeman's conviction in the criminal case, Kelly filed a tort action for assault and battery against Marshall and Alonda Freeman for damages resulting from the February, 1984, shooting. On August 7, 1984, plaintiff filed the instant declaratory judgment suit seeking a determination that plaintiff did not have to pay any obligation or defend the Freemans upon the basis of the intentional-act exclusion. On September 26, 1984, Kelly amended her original complaint in an attempt to claim damages for negligence. On October 12, 1984, the court entered a default judgment against the Freemans for failure to appear or file an answer. Plaintiff stipulated to the setting aside of these default judgments on December 17, 1984, and on January 25, 1985, moved for summary disposition, seeking a determination that it had no obligation to defend or indemnify. There is no dispute that on the date of the incident the Freemans were insureds under a homeowner's policy issued by Allstate. On February 22, 1985, Wayne Circuit Court Judge Maureen P. Reilly granted plaintiff's motion with regard to Alonda Freeman. However, she reserved judgment, without prejudice, as to Marshall Freeman because of the nonspecific nature of the tort allegations alleged against him. Marshall Freeman was not at home at the time of the shooting incident. On March 15, 1985, Kelly filed a second amended complaint in the underlying tort action in which she argued that Marshall Freeman breached an independent duty of care, which essentially amounted to a claim for negligent entrustment of the firearm. On October 4, 1985, Judge Reilly granted plaintiff's motion for summary disposition and held that plaintiff did not have a duty to defend or indemnify Marshall Freeman in the underlying tort action. Defendants filed a joint claim of appeal in the Court of Appeals on November 1, 1985. The Court of Appeals affirmed the orders of summary disposition. On March 22, 1988, this Court granted the declaratory defendants' delayed application for leave to appeal in consolidation with Metropolitan Property & Liability Ins Co v DiCicco. 430 Mich 857 (1988).
The Court of Appeals held that the policy exclusion requires application of a two-part test. [21] The exclusion in the Allstate policy provided: Exclusions  Losses We Do Not Cover 1. We do not cover any bodily injury or property damage which may reasonably be expected to result from the intentional or criminal acts of an insured person or which is in fact intended by an insured person. [Emphasis added.] The Court of Appeals held that Allstate may obviate its duty to defend and indemnify under the exclusion if it can prove that (1) the insured acted either intentionally or criminally, [22] and (2) the resulting injury was reasonably expected to result from such intentional or criminal conduct. However, Alonda Freeman contends that under the second prong, the Court of Appeals erred in not requiring Allstate to prove Alonda Freeman intended to injure Kelly and, alternatively, that her subjective expectation controls. We find neither argument proffered by Alonda Freeman persuasive. We note first that neither party contends that the exclusion is ambiguous as it applies to Alonda Freeman. [23] We agree with this conclusion. The provision, under a conspicuous heading entitled, Exclusions  Losses We Do Not Cover, sets forth, in plain English, a two-part test. We do not find the terms, reasonably be expected, intentional, or criminal ambiguous. Moreover, several recent decisions interpreting the identical exclusionary clause in this case have failed to find any ambiguity. See Barton v Allstate Ins Co, 527 So 2d 524 (La App, 1988); Allstate Ins Co v Talbot, 690 F Supp 886 (ND Cal, 1988); Allstate Ins Co v Foster, 693 F Supp 886, 888 (D Nev, 1988) (citing Freeman, supra ); Allstate Ins Co v Gilbert, 852 F2d 449 (CA 9, 1988). Applying the exclusionary language that we find unambiguous to the facts in this case, we are persuaded, as was the Court of Appeals, that Alonda Freeman's conduct satisfies the first element of the exclusionary language as either an intentional or criminal act. The uncontroverted testimony showed that Alonda Freeman left the scene of the fight and reentered her home. However, rather than remaining safely inside, she reappeared with a loaded .38 caliber gun and fired it towards Kelly who was approximately three to six feet away. As the Court of Appeals stated, there is ... no dispute that [Alonda Freeman] pointed a loaded gun in the direction of Kelly and fired it at her at close range. Freeman, supra at 356. Under these circumstances, we affirm the holding of the Court of Appeals that Alonda Freeman acted intentionally. [24] In her second argument, Alonda Freeman asserts that the exclusion does not apply because she did not intend to injure Kelly. See, e.g., Morrill, supra ; Putman, supra . We rejected the same argument involving a slightly different exclusion in DiCicco, supra. In so doing, we distinguished expected from intended injuries within the context of an exclusion which excluded injuries either expected or intended, and held that expected required a lesser degree of proof than intended. Accordingly, we held that an insurer could satisfy either the expected or intended portion of the exclusion by proving that injury resulted as the natural, foreseeable, expected, and anticipated result of [the insured's] intentional act[s]. Jenkins, supra at 468; Morelli; Yother; Wright, supra . Similarly, the Allstate exclusion requires an intentional or criminal act. We find our analysis of expected injuries in DiCicco equally applicable in the context of this case. Therefore, we hold that expected, within the context of reasonably be expected, connotes the same meaning as it does in expected or intended. An insurer may obviate its duty to defend and indemnify under the exclusion in the present case if the resulting injury was the natural, foreseeable, expected, and anticipated result of the intentional or criminal conduct. Alonda Freeman further argues that we must determine expectation from her subjective viewpoint. While there is a line of authority which appears to support this view under the expected or intended exclusion in other jurisdictions, we do not choose to follow it. [25] Rather, we find that reasonably be expected is unambiguous, and therefore, requires application of an objective standard of expectation. In support of this conclusion, we find that the exclusion also excludes coverage for injuries actually intended by an insured person. In our opinion, this section of the exclusion requires application of a subjective standard. As we stated in DiCicco, we will give effect to all words in an insurance contract if they serve a reasonable purpose. We are persuaded that Allstate included both phrases in order to reinforce its intent to exclude both objectively expected injuries and subjectively intended injuries. Therefore, we agree with the Court of Appeals that, under the Allstate exclusion, reasonably be immediately preceding expected, in addition to the omission of from the standpoint of the insured, requires application of an objective test of expectation. Accordingly, we agree with the Court of Appeals that a reasonable person would expect injury to result from the shooting incident in this case. As the Court of Appeals stated, we agree with the principle that `some acts ... are so nearly certain to produce injury that intent or expectation to injure should be inferred as a matter of law.' Freeman, supra at 356; MacKinnon v Hanover Ins Co, 124 NH 456, 460; 471 A2d 1166 (1984); Barton v Allstate Ins Co, supra . For example, Barton involved a shooting incident and implicated the identical exclusionary clause involved in this case. The insured and wife were separated. At 4:00 A.M. one morning, he went to her home and found a man hiding in her bathroom. The insured took out his .357 magnum revolver and shot through the bathroom door, injuring the man. However, the insured claimed he intended to open the door and not to injure the boyfriend. The court held that the exclusion applied because it found that the insured intentionally (intentional act) fired the gun and, therefore, he should have been aware that it was substantially certain [reasonably be expected] that the person behind the door would be injured. Id. at 526. Similarly, the shooting incident in this case constitutes such an act. The uncontroverted testimony showed that after the initial fight with Kelly ended, Alonda Freeman reentered her home, retrieved a loaded .38 caliber handgun, and returned outside to confront Kelly. Then, without issuing a warning, Alonda Freeman shot towards Kelly from a close distance. A motion for summary disposition is proper under the facts of the instant case. MCR 2.116(C)(10). It would be patently disingenuous to say that injury would not be reasonably expected from the shooting incident. Freeman, supra at 356; Linebaugh, supra at 760-761; Cannon, supra at 34. Therefore, for the reasons discussed above, we affirm the Court of Appeals holding that under the intentional-act exclusion of the Freemans' policy, Allstate had no duty to defend or indemnify Alonda Freeman.
Next, we address Marshall Freeman's argument that Allstate must defend him against the Kelly suit. Marshall Freeman raises two arguments. First, that Allstate has a separate and distinct duty to cover each insured under the policy, and, therefore, its duty to defend depends solely upon his conduct. And, second, that the policy language, an insured, is ambiguous and, therefore, must be construed in favor of the insured. The Court of Appeals rejected both contentions and held that Allstate did not have a duty to defend Marshall Freeman. With respect to Marshall Freeman's first argument, we agree with the Court of Appeals analyses holding that [w]hile we agree with Kelly and the Freemans that, under the policy, Allstate has a separate and distinct duty to cover each of the insureds, we nonetheless agree with the trial court that in this case any duty to defend Marshall Freeman is solely derivative of the duty to defend Alonda Freeman under the policy. Freeman, supra at 357. Although the Court determined that the claim against Marshall Freeman was essentially one of negligent entrustment, where an insurance policy exclusion precludes coverage for the particular injury, then it also excludes coverage for negligent entrustment of the instrumentality that caused the injury. In other words, we look to the underlying cause of the injury to determine coverage and not to the specific theory of liability. Freeman, supra at 357-358. See Illinois Employers Ins of Wausau v Dragovich, supra at 507; Shepard Marine Construction Co v Maryland Casualty Co, supra at 65. For example, in Michigan Mutual Ins Co v Sunstrum, 111 Mich App 98; 315 NW2d 154 (1981), Timothy Sunstrum suffered severe injuries in an automobile accident while riding in a truck owned by Warren Priesman and driven by, his son, Michael. Although Michael was uninsured, Warren had automobile insurance for the truck through Associated General Insurance Company, a subsidiary of Michigan Mutual Insurance Company. Michigan Mutual also provided homeowner's insurance for Warren Priesman's residence. Timothy Sunstrum brought an action alleging that Warren Priesman negligently entrusted the truck to his son. The Court of Appeals, supra at 103-104 denied coverage holding: Other jurisdictions which have denied coverage have done so after concluding that negligent entrustment of a motor vehicle, as a cause of action, is derived from the more general concepts of ownership, use or operation of a motor vehicle. These decisions have reasoned that although the act of negligently entrusting a motor vehicle is an essential (if not the primary) element of the tort, liability giving rise to the tort is not actually triggered until the motor vehicle is used in a negligent manner resulting in injury. These jurisdictions have concluded that because the accident occurred off the homeowner's premises and resulted from the use or operation of a motor vehicle, the clear language of the exclusionary clause disavows coverage. [Citations omitted. [26] See also Allstate Ins Co v Goldwater, 163 Mich App 646, 649; 415 NW2d 2 (1987); State Farm Fire & Casualty Co v Huyghe, 144 Mich App 341; 375 NW2d 442 (1985).] We also find Allstate Ins Co v Goldwater, supra , a recent Court of Appeals decision, particularly instructive. In Goldwater, two minors, Ronald Goldwater and Robbie Buchte, collided while riding their dirt bikes. The Buchtes sued the Goldwaters for negligent operation of a motor bike. They also sued Ronald Goldwater's father under a negligent-entrustment theory. Plaintiff, the Goldwater's insurer (Allstate Insurance Company), filed a declaratory action, seeking a determination that it had no duty to defend and indemnify the Goldwaters. The Court of Appeals held: [The Goldwater's homeowner's insurance] excludes coverage for an accident involving a motorized land vehicle designed for recreational use off public roads, owned by an insured, that occurred away from the residence premises. Since plaintiff has no duty to defend the claim against Ronald Goldwater for negligent use of the dirt bike, it has no duty to defend his father on the claim of negligent entrustment. [ Id. at 649.] Similarly, in the instant case, the Court of Appeals concluded that the exclusion focused on bodily injury and that Alonda Freeman's conduct precluded coverage under the policy. We agree. Therefore, Allstate has no duty to defend Marshall Freeman because it has no duty to defend Alonda Freeman's conduct. However, Marshall Freeman also contends that the exclusion is ambiguous as applied to him because an insured could mean either that insured, the insured, or any insured. Whereas, plaintiff contends that an insured means any insured. The policy exclusion provides, in pertinent part: [w]e do not cover any bodily injury or property damage which may reasonably be expected to result from the intentional or criminal acts of an insured person.... Any ambiguity must be construed in favor of the insured. Thus, we agree that if an insured is ambiguous, then Allstate must defend Marshall Freeman because the insured or that insured would refer to criminal or intentional acts of that particular insured, and in this case, Alonda Freeman. American States Ins Co v Borbor, 826 F2d 888, 894 (CA 9, 1987); Western Casualty & Surety Co v Aponaug Mfg Co, 197 F2d 673, 674 (CA 5, 1952); Arenson v Nat'l Automobile & Casualty Ins Co, 45 Cal 2d 81; 286 P2d 816 (1955); Unigard Mutual Ins Co, supra . The crux of Marshall Freeman's argument adopts the reasoning asserted by the dissenting opinion in the Court of Appeals decision. Freeman, supra at 361. Although Marshall Freeman cites no case law directly on point, he argues that, in the instant case, we should adopt several rules of insurance contract construction which this Court has applied in the context of an automobile accident policy. Powers, supra at 623-631. While we agree that these principles are generally applicable in the present case, we also find extremely persuasive several decisions by other courts which addressed this issue in the context of an identical policy exclusion. [27] Allstate Ins Co v Gilbert, supra at 453-454; Allstate Ins Co v Condon, 198 Cal App 3d 148; 243 Cal Rptr 623 (1988); Allstate Ins Co v Foster, 693 F Supp 886, 889 (D Nev, 1988); Travelers Ins Co v Blanchard, 431 So 2d 913 (La App, 1983). In Allstate Ins Co v Gilbert, supra , a fourteen-year-old minor filed a tort action against Albert and Margaret Gilbert. The United States Court of Appeals for the Ninth Circuit affirmed the lower court decision which held that Allstate did not have a duty to defend Albert Gilbert for sexual molestation of a minor. However, Margaret argued that the claims against her only involved negligence, [28] and, therefore, the Allstate policy required Allstate to defend her in the underlying action. Further, she advanced an argument identical to that of Marshall Freeman, namely, that the term `an insured person' connotes the singular, not the plural, and therefore applies only to the insured committing the willful act. Gilbert, supra at 454. However, the court rejected her contention: Recently, a California appellate court was faced with a similar problem of policy interpretation. In Allstate Ins Co v Condon, [ supra ], an automobile insurance policy excluded coverage of certain automobiles available or furnished for the regular use `of a person insured.' The issue was whether a person insured should be interpreted to mean only the named insured or to include additional insureds under the policy. The court held that a person insured was functionally equivalent to the terms any insured and an insured, and logically refers to any one of all the persons insured under the policy (as distinguished from the insured which refers only to a particular insured).... We agree with Condon that an insured refers to all insureds under the policy. [ Id. ] We adopt the analysis of the Gilbert court and hold that by excluding insurance coverage for injury or damage intentionally caused by `an insured person,' Allstate unambiguously excluded coverage for damages caused by the intentional wrongful act of any insured under the policies. Gilbert, supra at 454 (citations omitted). While Justice ARCHER attempts to distinguish Gilbert, his effort misses the mark. We are persuaded that a proper analysis of Gilbert, the cases upon which it relied, and a correct usage of the English language mandates that this Court adopt the conclusion advanced by plaintiff. Justice ARCHER contends that in Gilbert the court reversed its holding in American States Ins Co v Borbor, supra . We find this conclusion untenable for several reasons. First, Justice ARCHER uses the following quote from Borbor out of context: Judge Thompson, who wrote Gilbert, stated that `[h]ad American States intended that the wrongful act of any insured would void the policy, it could have unambiguously drafted and included such language in the contract.' Post, pp 734-735. We agree with this quotation as applied in the context of the Borbor opinion. In Borbor, the United States Court of Appeals for the Ninth Circuit addressed the issue whether an insurance policy covered defendants as individuals, a partnership, or both. The court addressed the limited interpretation of the meaning of the insured, [29] and concluded that if the insurer intended any insured it could have unambiguously drafted such language. The Borbor court, and the cases which it relied upon, never distinguished, nor had reason to distinguish, the term an insured from any insured. The Gilbert court never contested the validity of this proposition. However, Justice ARCHER, in his effort to distinguish Gilbert, extrapolates from the Borbor court's opinion the conclusion that it also held that [t]he court reasoned that no uncertainty or ambiguity would have existed if the policy exclusion would have referred to `any insured' rather than `an insured.' Post, p 735. We disagree that Borbor even remotely supports this inference. In fact, the only authority cited by the Borbor court, which analyzed the relationship between an insured and any insured, distinguished the insured from a, any, or an insured and, therefore, supports the position advanced by plaintiff. Borbor, supra at 894 (emphasis added) quoting Comment, Spouse's fraud as a bar to insurance recovery, 21 Wm & Mary LR 543, 549-554 (1979). If the Borbor court intended to distinguish an insured from any insured, then it would have done so rather than citing authority which equated the two terms. Accordingly, we disagree with Justice ARCHER that the Gilbert court retreated from its position in Borbor. [30] Rather, we believe that Borbor supports the conclusion reached by Judge Thompson in Gilbert. Justice ARCHER also concludes that an insured is ambiguous because Gilbert sought guidance from Allstate Ins Co v Condon, supra which, in turn, drew support from a provision of the California Insurance Code. Post, p 734. Although we agree that Gilbert sought guidance from Condon and that Condon drew support from the insurance code, we disagree that this suggests that an insured is ambiguous. In Condon, an exclusion in the insurance policy precluded coverage for nonowned automobiles that were `available or furnished for the regular use of a person insured.' Condon, supra at 152 (emphasis added). The court rejected the Condon argument that a person insured was ambiguous and unequivocally held that a person insured means any insured and not the insured. However, Justice ARCHER finds it instructive that the Condon court drew upon a statutory provision to support its holding that an insured means any insured. We agree and rely upon the specific wording of the Condon opinion to determine the significance of the court's reference to the insurance code. As the court stated: A person insured in the Allstate policy has a plural connotation similar to any insured. A person insured logically refers to any one of all the persons insured under the policy. There is no logical method to construe the phrase as singling out any particular insured person within the coverage of the policy. Insurance Code section 11580.1, subdivision (c)(8) provides another analogous definition. [ Condon, supra at 153. Emphasis added.] Thus, the court drew support from the insurance code only after already concluding in the preceding paragraph that a person insured unambiguously meant any insured. Accordingly, we find that the Condon court referred to the insurance code for exactly the purpose which it stated, namely, that it provide[d] another analogous definition. Even assuming that we agreed with Justice ARCHER's analysis of the interrelationship between Gilbert, Condon, and the insurance code, we disagree with the conclusions drawn from that relationship. We note that the California code is part of every insurance policy written in California and is equivalent to an exclusionary clause in the policy. Borbor, supra at 894 (citations omitted). This Court has held that the omission of a definition from an insurance policy does not render that term ambiguous. In this respect, we note that insurance law in California differs from many other states, including Michigan, because the California Insurance Code codifies many seemingly obvious and well-established principles of insurance law. If we adopted the analysis of Justice ARCHER in the instant case, we would preclude ourselves from drawing upon cases involving the interpretation of insurance policy provisions merely because the California Legislature codified them. We cannot agree that an insured is ambiguous because the California Legislature defined a term in a code which it considers the equivalent of a policy exclusion, whereas, plaintiff in the instant case did not define the same, unambiguous terms. Furthermore, we agree with those decisions that reach the same conclusion as Gilbert by relying upon a correct usage of the English language. See Allstate Ins Co v Foster, supra at 889. This case does not present a situation in which the particular word in question has several meanings. See Shumake v Travelers Ins Co, 147 Mich App 600, 607-608; 383 NW2d 259 (1985). Rather, this case involves the interpretation of a word in which sources uniformly define an as an indefinite article. For example, the Foster court stated that, `[a]' or `an' is an indefinite article often used in the sense of `any' and applied to more than one individual object; whereas `the' is an article which particularizes the subject spoken of. Foster, supra at 889; Black's Law Dictionary (5th ed); The American Heritage Dictionary (2d ed, 1982). See Brooks v Zabka, 168 Colo 265, 268-270; 450 P2d 653 (1969); People v Enlow, 135 Colo 249, 261-263; 310 P2d 539 (1957); comment, supra at 551. We agree. Strong public policy supports this decision. Adherence to a correct usage of the English language in insurance contract construction promotes a uniform, reliable, and reasonable foundation upon which policyholders and insurers alike may rely when they enter into a contractual agreement. In the instant case, if we place the word a or an in front of the word insured, then we must conclude that an insured unambiguously means any insured. [31] Accordingly, we hold that under the policy exclusion in the instant case, an insured unambiguously refers to any insured. [32] As we have previously held: The expectation that a contract will be enforceable other than according to its terms surely may not be said to be reasonable. Raska v Farm Bureau Mutual Ins Co, supra at 362; Klym v Nida, 147 Mich App 709, 713; 383 NW2d 93 (1985). We base our decision today upon an interpretation of the insurance policy and not upon a factual dispute. Summary disposition is proper under these circumstances. MCR 2.116(C)(10). Therefore, we affirm the decision of the Court of Appeals in Freeman with regard to Marshall Freeman.