Court Opinion

ID: 9592443
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:14:19.092399+00
Date Added: 2024-06-11T12:05:37.254214
License: Public Domain

Boyle, J.
(concurring). I agree with the majority *419that the Court of Appeals improperly applied an objective standard of review in determining whether plaintiffs expected or intended the property damage that resulted from Arco Industries Corporation’s use of volatile organic compounds (vocs), and therefore should be reversed. I also agree that there is an inadequate basis to question the trial court’s findings that American Motorists Insurance Company (amico) has a duty to indemnify its insureds.1
I write separately for two reasons. First, while the trial court correctly followed the direction provided by this Court in previous cases in evaluating whether the incidents at issue in this case constituted covered "occurrences” under the language of the comprehensive general liability (cgl) policy, the necessity for engaging in a two-step inquiry into whether there was an "accident” and whether damages were "intended or expected” when evaluating incidents under the standard terms of the cgl policy before us is unnecessarily duplicative. In the context of such a policy, the only analysis necessary in this regard is whether the damages were intended or expected from the standpoint of the insured. That inquiry sufficiently encompasses the threshold determination of "accident” as this Court has defined that term, and properly places the burden of proof on the question of coverage on the insured party. In addition, *420while intent is an element of the coverage analysis, primary emphasis in determination of coverage for environmental pollution damage is most often placed on the insured’s expectation of damage. Second, I wish to make clear that my agreement with the majority that we should not disturb the trial court’s finding that there was no intent to cause property damage or any expectation of such damage from 1972 to 1974, contrary to the conclusion of the dissent, is not based on a refusal to impute the collective knowledge of Arco’s employees to the corporation, as I interpret the majority to do. Instead, I find the evidence on the record insufficient to question the trial court’s holding on this issue.
i
A
The applicable "Coverage” section of the policies issued by amico states that the insurer will pay damages its insureds become legally obligated to pay for covered bodily injury or property damage "caused by an occurrence.” The "Definitions” sections of the policies define "occurrence” as follows:
"[Occurrence” means an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured ....
The majority concludes from our prior decisions that, in order to determine if there has been an occurrence, a court must evaluate whether there has been an accident, and then, if an accident has occurred, whether any resulting damage was ex*421pected or intended from the standpoint of the insured. Ante at 404-405.
1 acknowledge that in other recent cases in which insurance coverage has been afforded for occurrences, we have engaged in the two-step analysis embarked upon by the majority. Auto Club Group Ins Co v Marzonie, 447 Mich 624; 527 NW2d 760 (1994); Group Ins Co of Michigan v Czopek, 440 Mich 590; 489 NW2d 444 (1992); Metropolitan Property & Liability Ins Co v DiCicco, 432 Mich 656; 443 NW2d 734 (1989). I therefore do not fault the trial court for following this direction. Federal courts applying Michigan law have similarly found the two-pronged analysis necessary in pollution coverage cases. Fireman’s Fund Ins Cos v Ex-Cell-O Corp, 750 F Supp 1340 (ED Mich, 1990), but see Ray Industries Inc v Liberty Mutual Ins Co, 728 F Supp 1310 (ED Mich, 1989) (analyzing the issue of occurrence by focusing only on the insured’s intent or expectation of damage), aff’d in part and rev’d in part on other grounds 974 F2d 754 (CA 6, 1992).2
In all our earlier cases noted above, coverage was provided for an occurrence defined only as "an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage . . . .”3 It was then stated in the exclusionary section of the homeowners’ policies4 that the insurers did not cover "bodily injury or property damage which is *422either expected or intended from the standpoint of the insured.”5 DiCicco, supra at 672.
By articulating a definition for occurrence— which provides coverage — separate from a determination of expected or intended injury for exclusion of coverage, the policies in the cases noted dictated a two-pronged inquiry. We first had to determine whether coverage existed, applying the occurrence definition, before considering whether coverage was excluded because damage was intended or expected. "[T]he proper construction of a contract requires that we first determine whether coverage exists, and then whether an exclusion precludes coverage.” DiCicco, supra at 668 (Riley, J.).
In the present case, the definition of occurrence has been expanded to include what was exclusionary in the homeowner’s policies. The question under the contract agreed to by the parties therefore is whether the damage for which Arco has become liable is covered by the policy, because it was caused by an "occurrence,” i.e., an accident, including injurious exposure to conditions, that resulted, during the policy period, in property damage neither expected nor intended from Arco’s standpoint.
This single inquiry into coverage under a cgl policy like the one before us allows a court to collapse the two-part investigation into the existence of an accident and whether damage was expected or intended, into a single question: whether the insured subjectively expected or in-
*423tended damage.6 The two-pronged accident and intentional or expected damage test, under the current definition of accident employed by this Court, requires analysis of (1) whether there were unintended acts (wherein the results would clearly be unintended) or intentional acts with unintended or unexpected results, i.e., an accident,7 then (2) whether the damage resulting from the accident was subjectively intended or expected. The same question is therefore being asked twice. Where the sole issue is one of coverage, I do not find this circular analysis necessary. Where the standard definition of an occurrence in a cgl policy is used, as in the present case, I would only require the insured to demonstrate that damage transpired during the policy period8 and that it was neither expected nor intended by the insured in order to *424prove that coverage exists.9 "The newer definition of occurrence and accident [articulated in the post-1966 cgl policies][10] eliminates the need for an exact finding of the cause of damages so long as they are neither expected nor intended from the standpoint of the insured.” 7A Appleman, Insurance Law & Practice (rev ed), § 4493, p 49.
Justice Levin noted the circularity of the two-pronged accident and expected or intended injury analysis earlier this term in Marzonie, supra at 652-662 (Levin, J., dissenting).11 I will not repeat Justice Levin’s analysis of this point, but note that I disagree with his conclusion that the presence of the expected or intended language in the exclusionary section of homeowner’s policies like that in Marzonie, as opposed to its presence in the definition of a covered occurrence in the cgl policy in the present case, is of no significance. Id. at 659, n 24. It is the general rule of insurance contract interpretation, applied by this Court, that an insured bears the burden of proving coverage, while the insurer must prove that an exclusion to cover*425age is applicable. Williams v Detroit Fire & Marine Ins Co, 280 Mich 215, 218; 273 NW 452 (1937); Roddis Lumber & Veneer Co v American Alliance Ins Co, 330 Mich 81, 88; 47 NW2d 23 (1951); Ex-Cell-O, supra at 1348, 1350. Under the cgl policy language before us, the burden is on the insured to prove that damage was neither expected nor intended. This issue is all encompassed within the issue of coverage, with any successive questions of exclusion being the burden of the insured to prove. Under a homeowner’s policy requiring the two-pronged analysis, it would be the insured’s burden to prove that an accident occurred, and the insurer’s burden to prove that damage was expected or intended. While the question may be the same to both parties in analyzing application of the homeowner’s policy to a particular set of facts,12 the insured and insurer would have successive burdens, dictated by the policy, to prove the intent or expectation of damage.13_
*427B
As noted above, I do not fault the trial court in the present case for engaging in the two-pronged analysis of accident and intended or expected damage that this Court has previously stated is necessary. We provided that direction, however, without making a distinction between policies that separate the accident question and the intended or expected damage question between issues of coverage and exclusion, and policies with a standard occurrence definition encompassing both issues. The trial court’s analysis of the case under this two-pronged test resulted in findings that satisfy the single intended or expected damage inquiry. While the trial judge did not expressly reference the burden of proof, he made an affirmative holding that property damage was not expected or intended by the insureds, rather than finding that there was insufficient proof of intent or expectation. I interpret the trial court’s statement that it found no intent to contaminate the environment to mean that it found that Arco did not know that the leaching process it employed would contribute vocs to the ground water.14 I thus agree with the majority that the Court of Appeals incorrectly reversed the trial court’s decision.
ii
In determining whether damage was caused by *428an occurrence where the insured is a commercial entity, the focus is primarily on whether the insured expected damage. Rynearson, Exclusion of expected or intended personal injury or property damage under the occurrence deñnition of the standard comprehensive general liability policy, 19 Forum 513, 514 (1984). In the context of environmental pollution, it will be the rare case in which the proofs will include testimony that an insured actually intended to cause property damage.
A determination whether an insured subjectively expected damage to occur from its actions clearly takes the inquiry out of the realm of mere reasonable foreseeability. In determining subjective expectation, we need not rely solely on the representations of the insured with regard to his subjective state of mind. Expectation can be inferred from the nature of the act in question and the high degree of probability, i.e., a substantial probability, of resultant damage.15 It is in such *429cases that an insured’s claim that no injury was expected or intended "flies in the face of all reason, common sense and experience . . . DiCicco, supra at 720.16
In the present case, the trial court found that there was no subjective expectation of damage for two reasons. First, the court believed the insureds’ testimony that they had no such expectation, and, second, the court found that there was insufficient knowledge possessed during 1968 through 1974 by either the insureds or the general community of experts in environmental pollution of the likelihood of property damage caused by release of vocs to be able to infer that such expectation was subjectively possessed by the insureds. Therefore, even taking into account the collective knowledge of all of Arco’s employees, Upjohn Co v New Hampshire Ins Co, 438 Mich 197, 213; 476 NW2d 392 (1991), there was insufficient knowledge of the dangers of voc contamination to provide sufficient evidence of expectation of property damage. I do not find the admission by Arco’s chemist that he knew in 1972 that release of vocs into the company’s seepage lagoon could result in property damage sufficient evidence of an expectation that property damage would occur to question the conclusion of the trial court.
*430Ill
In summary, I agree that the judgment of the Court of Appeals should be reversed, the findings of the trial court reinstated, and the case remanded to the Court of Appeals for further consideration. Where a cgl policy, including within its definition of a covered occurrence the requirement that there be an accident and that damage be neither intended nor expected from the standpoint of the insured, the only issue in determining if coverage exists, other than whether damage occurred during the policy period, is whether the insured has fulfilled the burden of proving that it neither subjectively expected nor intended the damage. When the insureds are commercial parties, this analysis will normally focus on the insureds’ expectation of damage. In the present case, I find insufficient evidence to question the trial court’s finding that the insureds neither expected nor intended property damage during the entire period covered by the policies issued by amico.

 I also agree with the remand order, although I would additionally direct the Court of Appeals to consider the applicability of the pollution exclusion present in three of the policies issued by amico. The trial court found the exclusions inapplicable, defining the phrase "sudden and accidental” as used in the pollution exclusion clauses to mean "unintended and unexpected.” But see Upjohn Co v New Hampshire Ins Co, 438 Mich 197, 207; 476 NW2d 392 (1991), defining "sudden” to include "a temporal element that joins together conceptually the immediate and the unexpected” (citation omitted). The Court of Appeals did riot address this issue, finding that there was no coverage in the first place.

 In Ray Industries, the parties had stipulated that the insured did not actually intend or expect property damage. 728 F Supp 1315.

 The question whether damage occurred during the policy period was not at issue in these cases, nor has it been argued to this Court in the case at bar.

 I do not mean to suggest that the separate occurrence definition and intended or expected injury exclusion will always be present in homeowner’s policies, only that this division was present in the homeowner’s policies analyzed in prior cases.

 While neither Auto-Owners Ins Co v Churchman, 440 Mich 560; 489 NW2d 431 (1991), nor Allstate Ins v Freeman, the companion case to DiCicco, provided coverage for occurrences, instead simply stating that coverage was provided for bodily injury, personal injury, or property damage, both policies provided within their exclusion sections that expected or intended property damage or personal injury was not covered, under either an objective or subjective standard. See also Buczkowski v Allstate Ins, 447 Mich 669; 526 NW2d 589 (1994) (interpreting an objective standard exclusion).

 In Frankenmuth Mutual Ins Co v Piccard, 440 Mich 539; 489 NW2d 422 (1992), the two-pronged analysis used by the majority here was applied to the same cgl occurrence definition as in the present' case; however, no majority of this Court agreed with the substantive analysis in Piccard. It therefore is not binding precedent. "Plurality decisions in which no majority of the justices participating agree as to the reasoning are not an authoritative interpretation binding on this Court under the doctrine of stare decisis.” Negri v Slotkin, 397 Mich 105, 109; 244 NW2d 98 (1976).

 As the majority correctly notes, an accident has been defined by this Court to mean "' "an undesigned contingency, a casualty, a happening by chance, something out of the usual course of things, unusual, fortuitous, not anticipated, and not naturally to be expected.” ’ ” Ante at 404-405. This definition incorporates both unintended and unexpected results. See 10 Couch, Insurance, 2d (rev vol), §41:7, p 9.

 The question when the damage occurred is one of whether coverage was "triggered.” This normally contentious matter in pollution cases has not yet been addressed by this Court, and is not before us in the present case. See, e.g., Ray Industries Inc v Liberty Mutual Ins Co, 974 F2d 754 (CA 6, 1992) (describing the four theories of trigger, and concluding that this Court would adopt a continuous trigger theory on the facts of that case, which concerned insurance coverage for environmental pollution); Ex-Cell-O Corp, supra (adopting the exposure theory in an environmental pollution case). Application of the "injurious exposure to conditions” clause in the occurrence definition has also not been argued in this case.

 Once coverage is shown, the determination whether coverage is precluded by an exclusion in the policy would be required.

10 See Marzonie, supra at 652-662 (Levin, J., dissenting).

 A commentator analyzing the definition of "occurrence” soon after it was added to cgl policies made the following observation, applying an objective standard of expectation:
Let us assume for the purpose of argument that the expression "which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured” modifies the word "accident.” We could then make an interesting observation. An "accident” is a negligent act which is not intentional and which causes unprecedented or unforeseeable injury or damage. It is obvious that "accident” is not something wilfully or deliberately caused. If the words "neither expected nor intended” refers to some conditions or damage accidentally caused but not caused by accident, then the words are nonsense. [Even, The corporate insurance administrator — Problems with the 1966 revised liability policy, 3 Forum 95, 104-105 (1967).]

 But see Shell Oil Co v Winterthur Swiss Ins, 12 Cal App 4th 715, 748-752; 15 Cal Rptr 2d 815 (1993) (holding, inter alia, that “accident” in a cgl policy is the direct and immediate causal event of resulting property damage, and constitutes a separate inquiry from whether damages were intended or expected). I do not address the merits of the California court’s construction of the accident definition, because this Court has clearly held that an "accident,” analyzed in terms of whether there has been an occurrence, includes intentional acts resulting in unintended harm. DiCicco, supra at 670. “If the resulting damages can be viewed as unintended by a fact finder the result constitutes an 'accident’ for purposes of the liability insurance policy; it is the quality of result rather than the quality of the cause that is controlling.” 7 A Appleman, supra, § 4492.02, p 31 (citations omitted).

 In the present case, the issue of the standpoint from which the happening of an occurrence should be viewed has been clearly stated in the policy as being that of the insured. Czopek, supra at 608-609 (Boyle, J., concurring).
I agree with the majority in the present case that a majority of this Court has recently found that, where an insurance policy is silent with regard to the standpoint from which an accident should be evaluated, such as in the homeowner’s policies in DiCicco, Czopek, and Marzonie, the standpoint of the insured should be applied. Ante at 405. If an accident in such instances was viewed from the standpoint of the injured party, however, see Czopek, supra at 608-612 *426(Boyle, J., concurring), the two-pronged inquiry dictated by the homeowner’s policies would examine two distinct questions: 1) was there an accident from the injured party’s perspective, and 2) was damage intended or expected from the standpoint of the insured.
Not all courts have followed this rule [that an accident should be evaluated from the standpoint of the insured]. It has been traditional to deny insurance protection for deliberate, outrageous or irresponsible behavior as a form of punishment to the wrongdoer. One judge suggested that such a theory follows "the sporting theory of justice.” It ignores the fact that most of the actors involved in irresponsible behavior are also financially irresponsible and that it is the injured victim that is really being punished. If punishment is the objective of these rulings surely some other way of doing so can be found. To look at only the insured’s behavior ignores the fact that insurance also is for the benefit of injured victims of accidents. They are the third party beneficiaries of the insurance contracts and their situation should not be ignored. The interpretation of an insured’s conduct is not only a dispute between the insured and his insurance company. Some courts have recognized this and consider the resulting injury from the point of view of the victim. If it was accidental from that point of view, the loss will be covered by the liability insurance issued to the actor. From the standpoint of the aggressor an injury willfully inflicted upon another is not an accident but from that of the victim of an uninvited and unprovoked aggression, the injury is accidental. [7A Appleman, supra, § 4492.02, pp 27-28.]
This perspective should not require the insurer to indemnify an insured for liability it did not contract to cover. For example, where damage is the result of inherently dangerous behavior engaged in with criminal intent, exclusion of coverage due to expectation, if not intentional infliction of injury may be apparent, even if the policy does not include an express criminal acts exclusion. See, e.g., Continental Western Ins Co v Toal, 244 NW2d 121 (Minn, 1976). In Toal, the Minnesota Supreme Court found error in a jury instruction that an occurrence definition identical to that in the present case barred recovery for injuries that were the natural and probable consequences of the insured’s intentional act, or that merely foreseeable injuries were excluded. Nonetheless, the court held that intent to inflict injury, precluding insurance coverage, could be inferred as a matter of law, where the insureds participated in the armed robbery of a bowling alley that resulted in the death of an employee. Id. at 125-126. "[T]he insured need not intend the actual bodily injury inflicted in order to fall within the instant exclusionary clause. It is sufficient that the factfinder conclude the insured subjectively expected some type of harm reasonably foreseeable from the insured’s standpoint.” DiCicco at 731, n 11 (Archer, J., concurring in part and dissenting in part). Assertions by an insured in such a case that damage was not intended or expected appears to be a denial of expected harm that "flies in the face of all reason, common sense and experience . . . .” *427Id. at 720 (Boyle, J., concurring in part and dissenting in part) (citation omitted). But see Marzonie, supra at 666, n 36 (Levin, J., dissenting) (citing cases in which insurance coverage for injuries inflicted by insureds committing criminal acts was a question of fact).

 If the trial court had found only that Arco did not intend or expect the precise contamination that actually resulted from its process, but did expect some property damage, then the policies would not have provided coverage for Arco’s liability. A literal "intent to contaminate the environment” was not necessary to find a subjective intent or expectation of property damage under the contract.

 Even those courts that advocate an objective inquiry into intent and expectation reject the suggestion that a mere reasonable foreseeability of damage is sufficient to bar coverage. City of Carter Lake v Aetna Casualty & Surety Co, 604 F2d 1052, 1058-1059 (CA 8, 1979). In City of Carter Lake, the court held that coverage should be excluded because of the objective expectation of damage only where "the actor knew or should have known that there was a substantial probability” of damage, defining substantial probability as indications of damage strong enough to warn the reasonably prudent actor that damage was "highly likely” to occur. The amici curiae in the present case who advocate that this Court adopt the objective standard of inquiry acknowledge that the policy dictates that the reasonable person be one who stands in the shoes of the insured, i.e., views the likelihood of damage "from the standpoint of the insured.” Such observations lead me often to conclude that the objective versus subjective expectation debate, where subjective expectation can be proven by circumstantial evidence, generates more heat than light. Neither standard relies solely on the admissions of the insured in order to find an expectation of damage. In City of Carter Lake, the court held that when sewage backed up once and no action was taken by the insured to head off future incidents, there was a substantial likelihood of the occurrence of the second through sixth backup so as to preclude coverage for the subsequent incidents, because of an objective expectation of damage. It seems to me the court could have just as easily found that the *429evidence was sufficient (one backup, and nothing done to correct the problem) to find a subjective expectation of damage, despite representations by the insured to the contrary. See also Bituminous Casualty Corp v Tonka Corp, 9 F3d 51 (CA 8, 1993) (the insured was found to have objectively expected property damage where the insured routinely dumped contaminant containing sludge on site, the insured admitted knowledge of contaminants in the sludge, and the insured and its employees had knowledge of the harmful character of the contaminants).

 The question of "intended or expected” damage from the standpoint of the insured thus essentially mirrors the definition of "intent” in tort law. 1 Restatement Torts, 2d, § 8A, p 15 (defining "intent” to mean "that the actor desires to cause consequences of his act, or that he believes that the consequences are substantially certain to result from it”).