RILEY, C.J.
In these cases, consolidated for purposes of appeal, we are asked to decide the meaning of a coverage provision and two exclusionary clauses within a homeowner's liability insurance policy.
In Allstate Ins Co v Freeman, we hold that the exclusionary clause requires application of a two-part objective test. An insurer may relieve itself of its duty to defend and indemnify if (1) the insured acted either intentionally or criminally, and (2) the resulting injuries occurred as the natural, foreseeable, expected, and anticipated result of an insured's intentional or criminal acts. In the instant case, we agree with the Court of Appeals that the exclusion precludes coverage for Alonda Freeman. We find that Alonda Freeman acted either intentionally or criminally and Mary Kelly's injuries were the "expected" result of Alonda Freeman's acts. We also hold that "an insured" unambiguously refers to "all" or "any" insureds under the homeowner's policy. Therefore, the exclusion also excluded coverage for Marshall Freeman. Accordingly, we affirm the decision of the Court of Appeals in Freeman. 160 Mich. App. 349; 408 N.W.2d 153 (1987).
In Metropolitan Property Liability Ins Co v DiCicco, we hold that a proper analysis of whether an insurer has a duty to defend and indemnify an insured under a homeowner's policy requires a determination of whether coverage exists under the policy, and if coverage exists, then there must follow a determination of whether the exclusionary clause applies. In the present case, we find that the claimed incident constituted an "occurrence" under the coverage provision of the insured's policy. However, unlike a majority of this Court, we would hold that, in order to avoid its duty to defend and indemnify under the exclusion, the insurer must show that an objective insured "intended or expected" injury to result from those intentional acts. In this case, we find that an objective insured would expect injury to result from the stabbing incident. Even assuming we agreed with the majority and applied a subjective standard of review to the "intended or expected" exclusion, we would conclude that a subjective insured would "expect" injury to result in the instant case. Therefore, we would reverse the decision of the Court of Appeals in DiCicco and reinstate the decision of the trial court.
Apparently, Justice BOYLE believes that we inadvertently referred to the issue in the instant case as "whether Metropolitan has a duty to indemnify," and not "whether [it] has a duty to defend." Post, p 701. On the contrary, we specifically distinguished the two concepts in section I. Therefore, because we hold that Metropolitan has no duty to defend in the instant case, it necessarily follows that this finding obviates its duty to indemnify DiCicco. On the other hand, if we had held that Metropolitan had a duty to defend, then it would be incorrect to refer to Metropolitan's duty to defend or indemnify.
I. INTRODUCTION
In reviewing a grant or denial of summary disposition under MCR 2.116(C)(10), we consider the pleadings, affidavits, depositions, admissions, and any other documentary evidence in favor of the party opposing the motion. A motion for summary disposition tests the factual basis for plaintiff's allegations and may be granted only if "there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law." MCR 2.116(C)(10); Velmer v Baraga Area Schools, 430 Mich. 385, 390; 424 N.W.2d 370 (1988). An insurer may utilize this procedure in a declaratory action to determine whether it must indemnify and provide a defense for an insured in an underlying tort action. See, e.g., Wright v White Birch Park, 118 Mich. App. 639; 325 N.W.2d 524 (1982).
The duty of an insurance company to provide a defense in an underlying tort action depends upon the allegations in the complaint and extends to allegations which "even arguably come within the policy coverage." Detroit Edison Co v Michigan Mutual Ins Co, 102 Mich. App. 136, 142; 301 N.W.2d 832 (1980). The duty to defend is broader than, and not necessarily conclusive of, an insurer's duty to indemnify. The court must resolve any doubt pertaining to the duty to defend in favor of the insured. Guerdon Industries, Inc v Fidelity Casualty Co of New York, 371 Mich. 12, 18-19; 123 N.W.2d 143 (1963); Illinois Employers Ins of Wausau v Dragovich, 139 Mich. App. 502; 362 N.W.2d 767 (1984). However, it is equally clear that an insurer's duty to defend and indemnify does not depend solely upon the terminology used in a plaintiff's pleadings. Rather, "it is necessary to focus on the basis for the injury and not the nomenclature of the underlying claim in order to determine whether coverage exists. . . . [S]o must the allegations be examined to determine the substance, as opposed to the mere form, of the complaint." Illinois Employers Ins, supra at 507; Shepard Marine Construction Co v Maryland Casualty Co, 73 Mich. App. 62; 250 N.W.2d 541 (1976). It is against this backdrop that we must decide the cases before us today.
II. METROPOLITAN INS v DiCICCO A. FACTS AND PROCEEDINGS
The parties stipulated that the trial judge would decide the case upon the basis of the briefs and deposition transcripts. We adopt the facts as set forth by the trial court:
There is little dispute as to what occurred on February 25, 1984. DiCicco and Gravenmier were residents of the same college residence hall. Gravenmier was in a hallway with his girlfriend and a Graham Williamson. They had discovered glue in Gravenmier's door lock and suspected DiCicco had committed the prank. They knocked and kicked at DiCicco's door, and when DiCicco came out there was a scuffle in the hall with first Williamson and then with Gravenmier. Both DiCicco and Gravenmier landed blows, the glass of a fire extinguisher cabinet was broken. Gravenmier and DiCicco separated and the fight came to an abrupt end. DiCicco returned to his room and Gravenmier started down the hall with his girlfriend and Williamson. Within a short time DiCicco came from his room again holding a folding hunting knife with the three-inch blade exposed. DiCicco called Gravenmier and his girlfriend offensive names and Gravenmier returned to respond. Gravenmier observed the knife, put his hands up and told DiCicco in effect that if he were dumb enough or
brave enough to use it on Gravenmier's stomach. DiCicco commenced poking at Gravenmier's chest with his left hand repeating the admonition, "don't mess with me." He backed Gravenmier against the wall. Gravenmier reacted by grabbing DiCicco by the throat, turning, and pushing DiCicco against the wall. Gravenmier then felt the knife being withdrawn from his stomach.
DiCicco denies any intent to use the knife, claiming that he went to get the knife merely to scare away the other persons he considered to be a threat. No one observed him make a gesture of moving the knife as though to stab Gravenmier. The knife was held in his right hand and the poking was done with his left. DiCicco denies knowledge of in fact stabbing. Immediately following the stabbing, DiCicco looked shocked. Gravenmier obviously did not expect DiCicco would use the knife or he would not have engaged in his act of bravado.
Subsequently Gravenmier commenced a tort action. Grand Traverse File 84-2119-NO. In that action Gravenmier makes allegations against DiCicco in Count I of negligence in the course of the dispute in that DiCicco inadvertently stabbed him. In Count II he alleges DiCicco intentionally inflicted the stab wound.
There is no dispute that as of the date of the incident David DiCicco was an insured under a homeowner's insurance policy issued by Plaintiff, Metropolitan Property Liability Insurance Company, to David DiCicco's parents.
The prosecutor filed criminal assault charges against DiCicco, but eventually dismissed the charges. The plaintiff argues that the prosecutor dismissed the charges because Gravenmier withheld his cooperation, fearful that a criminal conviction would eliminate any possibility that DiCicco's insurer would pay damages awarded in a civil suit. Although plausible, there is no record support for this theory.
Defendant Gravenmier filed a civil suit against DiCicco, and plaintiff Metropolitan has provided a defense for DiCicco in the civil suit under a homeowner's insurance policy issued to DiCicco's father. That case remains pending in Grand Traverse Circuit Court.
Plaintiff filed the instant suit, seeking a declaration that the policy does not cover the stabbing incident between DiCicco and Gravenmier and, therefore, it does not have a duty to defend or indemnify DiCicco in the underlying tort action. The trial court granted summary disposition in favor of plaintiff.
Defendant appealed, and the Court of Appeals reversed, remanding the case to the trial court to determine whether DiCicco intended to stab Gravenmier. This Court granted leave to appeal in consolidation with Allstate Ins Co v Freeman.
430 Mich. 857 (1988).
B. ANALYSIS
Initially, in determining whether a policy applies, we first must determine whether the policy is clear and unambiguous on its face. We look to the language of the policy and we construe any ambiguity in favor of the insured. Powers v DAIIE, 427 Mich. 602, 624; 398 N.W.2d 411 (1986). In the instant case, the policy sets forth the essential terms and phrases in bold-faced type under conspicuously marked sections entitled "Coverages II," "Definitions," and "Exclusions applicable to section II" (section headings are also in bold-faced type). Raska v Farm Bureau Mutual Ins Co, 412 Mich. 355, 363; 314 N.W.2d 440 (1982). The terms used are either clearly defined within the policy itself or given a meaning in accordance with their common usage. Fireman's Fund Ins Co v Ex-Cell-O Corp, 702 F. Supp. 1317, 1323, n 7 (ED Mich, 1988) (the omission of a definition of a term with a common meaning does not necessarily render an insurance policy ambiguous). Therefore, we conclude that the provisions in the Metropolitan policy are clear and unambiguous. Jones v Farm Bureau Mutual Ins Co, 172 Mich. App. 24; 431 N.W.2d 242 (1988); American States Ins Co v Maryland Casualty Co, 587 F. Supp. 1549 (ED Mich, 1984). We cannot create an ambiguity where none exists. Edgar's Warehouse, Inc v United States Fidelity Guaranty Co, 375 Mich. 598; 134 N.W.2d 746 (1965); Patek v Aetna Life Ins Co, 362 Mich. 292; 106 N.W.2d 828 (1961); Dimambro-Northend Associates v United Construction, Inc, 154 Mich. App. 306, 313; 397 N.W.2d 547 (1986); Farm Bureau Mutual Ins Co v Hoag, 136 Mich. App. 326, 332; 356 N.W.2d 630 (1984). Similarly, we reject the temptation to rewrite the plain and unambiguous meaning of the policy under the guise of interpretation. Rather, we enforce the terms of the contract as written. Eghotz v Creech, 365 Mich. 527, 530; 113 N.W.2d 815 (1962); Stine v Continental Casualty Co, 419 Mich. 89, 114; 349 N.W.2d 127 (1984); Dimambro-Northend Associates, supra at 312-313; Murphy v Seed-Roberts Agency, Inc, 79 Mich. App. 1, 7-9; 261 N.W.2d 198 (1977).
Justice CAVANAGH incorrectly assumes that we cite Powers for the proposition that we should apply the broad rules of construction of an automobile liability policy under the no-fault act in the instant case. Post, p 742. On the contrary, we cite Powers simply for the proposition that ambiguity should be construed in favor of the insured.
The provision entitled "SECTION II COVERAGES," provided, in pertinent part: "Metropolitan will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury sustained by other persons or property damage, to which this insurance applies, caused by an occurrence." Likewise, the definitional section defined an "occurrence" as an "accident . . . which results . . . in bodily injury."
The Metropolitan definition of "occurrence" differs from numerous others which include the exclusionary language in the Metropolitan policy within their definition of "occurrence." The two clauses differ because the Metropolitan policy does not include the "bodily injury . . . expected or intended" language. Courts have also interpreted this clause as clear and unambiguous under Michigan law. Bigelow-Liptak Corp v Continental Ins Co, 417 F. Supp. 1276 (ED Mich, 1976). But see Patrons-Oxford Mutual Ins Co v Dodge, 426 A.2d 888 (Me, 1981); Quincy Mutual Fire Ins Co v Abernathy, 393 Mass. 81; 469 N.E.2d 797 (1984).
Plaintiff argues that the Court of Appeals should have affirmed the trial court's summary disposition in its favor because the coverage section of DiCicco's homeowner's policy does not apply to the fighting incident between DiCicco and Gravenmier. This provision requires an "occurrence." However, neither the trial court nor the Court of Appeals appears to have determined whether the fighting incident constituted an "occurrence" within the meaning of the coverage provision of the policy.
The coverage provision also requires "bodily injury sustained by other persons." However, neither party contends that Gravenmier suffered bodily injury as a result of the stabbing incident, thereby satisfying the "bodily injury" requirement of "occurrence." We agree and need not address this issue further.
Plaintiff contends that the language of the insurance contract requires the determination of whether the fighting incident constituted an "occurrence" under the policy before addressing any applicable exclusionary provisions. See Frankenmuth Mutual Ins Co v Kompus, 135 Mich. App. 667; 354 N.W.2d 303 (1984); Western Casualty Surety Group v Coloma Twp, 140 Mich. App. 516, 521; 364 N.W.2d 367 (1985); Allstate Ins Co v Cannon, 644 F. Supp. 31, 32-33 (ED Mich, 1986); Unigard Mutual Ins Co v Spokane School Dist, 20 Wn. App. 261; 579 P.2d 1015 (1978); Grange Ins Ass'n v Authier, 45 Wn. App. 383; 725 P.2d 642 (1986); Hins v Heer, 259 N.W.2d 38 (ND, 1977); American Home Assurance Co v Osbourn, 47 Md. App 73; 422 A.2d 8 (1980). Although some courts have addressed the exclusionary clause before determining whether coverage exists under a policy, we agree with plaintiff that the proper construction of a contract requires that we first determine whether coverage exists, and then whether an exclusion precludes coverage. As the Maryland Court of Appeals observed in a case implicating the identical provisions involved in this case:
Shelter Mutual Ins Co v Bailey, 160 Ill. App.3d 146, 157-160; 112 Ill Dec 76; 513 N.E.2d 490 (1987); Mid-America Fire Marine Ins Co v Smith, 109 Ill. App.3d 1121; 65 Ill Dec 634; 441 N.E.2d 949 (1982).
Osbourn here contends that "it was for the jury to determine whether the facts of this case as revealed by the evidence, fit within the exclusions of the policy. The jury declared that they did not." We disagree. It is plain that the court submitted to the jury an irrelevant issue. The exclusion was inapplicable for the reason that there was no language in Section II, Part I, the liability provision, which afforded coverage to the appellee in the first place under the facts alleged. [
American Home Assurance Co,
47 Md. App. 82.]
Accordingly, we must determine first whether the fighting incident constituted an "occurrence." Plaintiff places great reliance on Frankenmuth v Kompus, supra, for its position that the fighting incident did not constitute an "occurrence." In Kompus, several insurance companies and individuals appealed orders declaring their respective duties to defend Dr. Kompus, the insured, in his underlying tort actions, alleging assault, malpractice, and other claims. These claims arose from Dr. Kompus' alleged homosexual activity with several patients. Dr. Kompus was convicted of third-degree criminal sexual assault. The Kompus Court found that Dr. Kompus' actions were not accidental and, thus, did not satisfy the policy's definition of "occurrence." In Kompus, the policy defined an "occurrence" as an "accident," and the Court of Appeals interpreted "accident" with reference to an insurance policy involving a general liability section identical to that in the present case:
"An `accident,' within the meaning of policies of accident insurance, may be anything that begins to be, that happens, or that is a result which is not anticipated and is unforeseen and unexpected by the person injured or affected thereby — that is, takes place without the insured's foresight or expectation and without design or intentional causation on his part. In other words, an accident is 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." [
Kompus, supra at 678, quoting
Guerdon Industries, Inc, supra at 18-19;
Allstate Ins Co v Cannon, supra at 32.]
The Kompus Court found this definition to be in harmony with the word's common usage. See also American States Ins v Maryland Casualty Co, supra.
As the American States court found:
The term "occurrence" includes an "accident." Accident has often been defined by courts according to common usage. Black's Law Dictionary 14 (5th ed. 1979) defines accident as: "[A] fortuitous circumstance, event, or happening; an event happening without any human agency, or if happening wholly or partly through human agency, an event which under the circumstances is unusual and unexpected by the person to whom it happens; an unusual, fortuitous, unexpected, unforeseen or unlooked for event, happening or occurrence; an unusual or unexpected result attending the operation or performance of a usual or necessary act or event; chance or contingency; fortune; mishap; some sudden and unexpected event taking place without expectation, upon the instant, rather than something which continues, progresses or develops; something happening by chance; something unforeseen, unexpected, unusual, extraordinary or phenomenal, taking place not according to the usual course of things or events, out of the range of ordinary calculations; that which exists or occurs abnormally, or an uncommon occurrence." [
American States Ins Co,
587 F. Supp. 1552.]
However, the Court of Appeals in the present case distinguished Kompus on the ground that " Kompus merely held that a psychiatrist's homosexual acts on his patients were intentional as a matter of law." Consequently, the Court reasoned, it was unnecessary to reach the exclusion provision of the insured's policy since the psychiatrist's acts were not "occurrences" as that term was defined in the policy. According to the Court of Appeals, "[t]he same conclusion cannot be reached in the present case . . . [because] a homosexual act can never be unintentional; a stabbing can be." We disagree. If we adopted the Court of Appeals interpretation of Kompus, then we would effectively restrict the definition of "accident" to "unintentional." This we decline to do. Rather, we find that the last sentence of the Kompus definition accurately summarizes those events which constitute an "accident": "an accident is 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." Accordingly, we find that ascertaining the insured's "intent" may determine whether the insured's actions constituted an "accident," but it does not necessarily follow that an insured must act unintentionally for an act to be an "occurrence."
Similarly, we reject DiCicco's argument that we must focus solely upon the words "caused intentionally" in the Kompus definition.
See, generally, 10 Couch, Insurance, 2d (rev ed), §§ 41:7 et seq.
We also find Allstate Ins Co v Cannon, supra, particularly instructive when characterizing an event as an "occurrence" under the present policy language. In Cannon, Allstate brought an action for declaratory judgment that it did not have a duty to defend or indemnify its insured under a homeowner's policy with the same language involved in this case. Plaintiffs in the underlying action, Louise L. Jackson and Ernestine Dennis, sued Kenneth Cannon (the insured) for the shooting death of Larry James and the wounding of David Dennis by defendant Lance Rutland with a rifle which he obtained from defendant Eddie Gaines. Gaines gave the rifle to Cannon because Rutland wanted the gun for protection. A verbal street fight ensued between Rutland and James. After Cannon broke up the fight, he and Rutland went to Cannon's home. Cannon handed the loaded rifle to Rutland knowing Rutland was angry. Rutland returned to the scene of the fight and fired two warning shots and a third in self-defense. Although Rutland said he never aimed the rifle at anyone, he killed James and wounded Dennis, a bystander. Rutland pleaded guilty to second-degree murder. United States District Court Judge Avern Cohn held:
[S]ummary judgment in favor of
Allstate is appropriate in this case. The operative act is Cannon's handing a loaded rifle to Rutland. Indeed, Cannon had custody of the rifle on behalf of Rutland. Cannon also purchased ammunition for the rifle. . . . Rutland had been in a fight and was angry. He left the scene of the fight to get the rifle. Cannon knew that. Cannon also knew Rutland was returning to the scene of the fight with the rifle. It is fatuous to argue that the injuries from the shootings were "accidents" as defined by the Michigan Supreme Court. While D. Dennis's wounding may have been accidental, certainly the discharge of the rifle was not an accident. [
Allstate Ins Co v Cannon, supra at 33.]
Although we find Cannon and Kompus analogous to the case at bar, and we agree that they represent examples of situations in which there was no "occurrence" under the present policy language, the claimed incident in the instant case is not clear cut enough to allow us to make a similar determination. Under the analyses we advance today, we conclude that the present coverage provision must be broadly construed. Therefore, we hold that the claimed incident constituted an "occurrence" under the policy.
The Metropolitan policy differs from similar policies which have included the present exclusion within the definition of occurrence. Cases involving this clause have generally focused upon the "expected or intended" portion of the definition. In our opinion, these cases, by implication, also broadly defined the "accident" section of "occurrence."
However, under the authority of Kompus and Cannon, we do not preclude the possibility that an incident may not be considered an "occurrence" under the coverage section of the policy.
Thus, we turn next to the exclusionary clause in the plaintiff's policy. That provision reads: "[The policy does not cover] BODILY INJURY OR PROPERTY DAMAGE WHICH IS EITHER EXPECTED OR INTENDED FROM THE STANDPOINT OF THE INSURED." There is precedential authority in this jurisdiction which holds that under an exclusion excepting coverage for "injury . . . caused intentionally by or at the direction of the insured," an insured must subjectively intend both his act and the resulting injury in order to avoid its duty to defend and indemnify. Morrill v Gallagher, 370 Mich. 578, 583; 122 N.W.2d 687 (1963). Putman v Zeluff, 372 Mich. 553; 127 N.W.2d 374 (1964). See also Transamerica Ins Co v Anderson, 159 Mich. App. 441; 407 N.W.2d 27 (1987); Turner v Burch, 156 Mich. App. 303; 401 N.W.2d 355 (1986); Linebaugh v Berdish, 144 Mich. App. 750; 376 N.W.2d 400 (1985); Farm Bureau Mutual Ins Co v Rademacher, 135 Mich. App. 200; 351 N.W.2d 914 (1984); Kermans v Pendleton, 62 Mich. App. 576, 580; 233 N.W.2d 658 (1975); Vermont Mutual Ins Co v Dalzell, 52 Mich. App. 686; 218 N.W.2d 52 (1974); Connecticut Indemnity Co v Nestor, 4 Mich App 578; 145 N.W.2d 399 (1966). Drawing on this authority, defendants argue that the Court of Appeals erred and that we should construe the current exclusionary clause as narrowly as the "caused intentionally" exclusion. Thus, DiCicco would have us interpret the addition of the word "expected" to the exclusion as superfluous, thereby requiring plaintiff to prove DiCicco acted intentionally and intended to injure Gravenmier. Whereas, plaintiff urges that we construe the addition of "expected" according to its plain and unambiguous meaning and find, therefore, that the exclusion applies to "expected," as well as "intended," injuries.
We are convinced that the exclusion in the present case differs from the "caused intentionally" exclusion and, as the plaintiff persuasively argues, that the exclusion does not require a determination of whether DiCicco intended to stab Gravenmier. Rather, as plaintiff contends, the express language of the exclusion only requires a determination of whether "bodily injury . . . is . . . either expected or intended." We agree and we so hold.
Although other jurisdictions have not reached a uniform conclusion on this issue, we agree with plaintiff that the addition of the word "expected" expands the meaning of the "caused intentionally" language. We are persuaded that the present policy exclusion represents an attempt by insurers to avoid the harsh results of Morrill and similar cases nationwide. Aetna Casualty Surety Co v Freyer, 89 Ill. App.3d 617; 44 Ill Dec 791; 411 N.E.2d 1157 (1980). Accordingly, "`[n]o word in a contract should be rejected as surplusage if it serves some reasonable purpose.'" Ex-Cell-O Corp, supra, pp 1325-1326; Geerdes v St Paul Fire Marine Ins Co, 128 Mich. App. 730, 734; 341 N.W.2d 195 (1983); Draper v Nelson, 254 Mich. 380, 383; 236 N.W. 808 (1931). See also Associated Truck Lines v Baer, 346 Mich. 106, 110; 77 N.W.2d 384 (1956). In our opinion, under a literal reading of the exclusion, the addition of "expected" serves the purpose of excluding coverage for "expected," in addition to "intentional," injuries. In fact, the Court of Appeals has distinguished between "intended" and "expected" injuries in cases involving the "caused intentionally" and the "expected or intended" exclusions. State Farm Fire Casualty Co v Jenkins, 147 Mich. App. 462; 382 N.W.2d 796 (1985); Linebaugh v Berdish, supra; State Farm Fire Casualty Co v Groshek, 161 Mich. App. 703; 411 N.W.2d 480 (1987); Allstate v Freeman, supra; Aetna Casualty Surety Co v Sprague, 163 Mich. App. 650, 654; 415 N.W.2d 230 (1987). As the Jenkins Court stated in the context of the identical exclusion:
See, generally, State Auto Mutual Ins Co v McIntyre, 652 F. Supp. 1177 (ND Ala, 1987); 31 ALR4th 957; 7A Appleman, Insurance Law Practice, §§ 4492 et seq.; 12 Couch, Insurance, 2d (rev ed), §§ 44:285 et seq.
We believe, where a policy excludes coverage for intended or expected injuries, a distinction should be drawn between the terms "intentional" and "expected." In order to avoid liability for an expected injury, it must be shown that the injury was the natural, foreseeable,
expected, and anticipated result of an intentional act. [
Jenkins, supra at 467-468.
Emphasis added.]
In this respect, we agree with those courts which have held that "[f]or the purposes of an exclusionary clause in an insurance policy the word `expected' denotes that the actor knew or should have known that there was a substantial probability that certain consequences will result from his actions." City of Carter Lake v Aetna Casualty Surety Co, 604 F.2d 1052, 1058-1059 (CA 8, 1979). We also reject defendant's contention that the standard we adopt today will preclude coverage for negligent acts by the insured. As the City of Carter Lake court stated, supra at 1059, n 4:
We also take into account the fact that "expected" requires a lesser degree of proof than "intended." Bay State Ins Co v Wilson, 96 Ill.2d 487, 492-494; 71 Ill Dec 726; 451 N.E.2d 880 (1983).
The difference between "reasonably foreseeable" and "substantial probability" is the degree of expectability. A result is reasonably foreseeable if there are indications which would lead a reasonably prudent man to know that the particular results could follow from his acts. Substantial probability is more than this. The indications must be strong enough to alert a reasonably prudent man not only to the possibility of the results occurring but the indications also must be sufficient to forewarn him that the results are highly likely to occur.
Moreover, we note that our decision today is in accord with those Court of Appeals decisions which have held that plaintiff must show: (1) the insured acted intentionally, and (2) the insured "intended or expected" injury to result from those acts. State Farm v Jenkins, supra; Yother v McCrimmon, 147 Mich. App. 130; 383 N.W.2d 126. (1985); Wright, supra; Group Ins Co of Michigan v Morelli, 111 Mich. App. 510; 314 N.W.2d 672 (1981). We find that the above-cited cases support the proposition that if the court determines that the insured acted intentionally, then the "expected or intended" language is satisfied by a finding that injury resulted as the "natural, foreseeable, expected, and anticipated" consequence of those intentional acts. However, we disagree with defendants that these cases or the policy language requires a determination of the insured's intent to act. Accordingly, we agree with the trial court that the insurer need not prove that the insured acted intentionally under the exclusion.
Similarly, our decision today is supported by at least one other Court of Appeals decision. Michigan Millers Mutual Ins v Berry, 123 Mich. App. 634; 333 N.W.2d 70 (1983). See also Cannon, supra at 33-34. In Berry, supra at 640, after the Court held that the insured intended his actions, it also stated that "the exclusionary provision at issue in this case [the same as the present case] did not require a finding of intent. Coverage was excluded based on the undisputed evidence that Robertson expected the property damage which occurred." (Emphasis added.)
We emphasize that under our holding today, even if the trial court does not preclude coverage for "intended acts which result in natural, foreseeable, expected, and anticipated injuries," it may also preclude coverage under the exclusion for injuries which satisfy this Court's definition of "expected injuries."
Finally, defendants also contend that we must determine the insured's expectations or intentions from his subjective viewpoint because the exclusion states expectation "from the standpoint of the insured." Basically, they would have us construe the exclusionary language so as to require an insurer to prove that the insured said, "yes I expected or intended injury to result from my intentional act." Unfortunately, a majority of this Court agrees with defendants on this issue. However, in our opinion, plaintiff persuasively argues that we should adopt an objective standard. As one court recognized:
Probing one's state of mind is an elusive task at best. Supplanting an objective standard with a subjective standard for determining whether the act or conduct of an insured is "intentional" or "expected or intended" for purposes of assessing coverage would emasculate apposite policy provisions by making it impossible to preclude coverage for intentional acts or conduct absent admissions by insureds of a specific intent to harm or injure. Human nature augers against any viable expectation of such admissions. [
Truck Ins Exchange v Pickering, 642 S.W.2d 113, 116 (Mo App, 1982).]
In deciding this issue, we take into account that under the "caused intentionally" exclusion, numerous Court of Appeals panels have avoided potentially absurd results by not requiring a literal finding of an insured's "subjective intentions." For example, some Court of Appeals panels have held that, under the "intent to injure" requirement of the "caused intentionally" exclusion, "intended tortious acts and unintended tortious results [is a distinction] without a difference. . . ." Linebaugh v Berdish, supra at 756. Moreover, some panels have stated that the finding of an intentional act necessarily encompasses the corollary finding that the insured intended the injury. Turner v Burch, supra. Similarly, several recent Court of Appeals decisions have achieved a similar result under the "caused intentionally" language by inferring the insured's "intent to act" from the very nature of his actions. Kermans v Pendleton; Farm Bureau Ins Co v Rademacher, supra. Lastly, some panels have avoided such theoretical exercises and simply equated the "caused intentionally" language with the "expected or intended" exclusion. Transamerica Ins Co v Anderson; Linebaugh v Berdish, supra. We find these cases persuasive, but rather than engaging in their theoretical exercises or drawing questionable inferences to determine the insured's "subjective expectation," we hold that the "expected or intended" exclusion must be determined on the basis of an objective standard. Shelter Mutual Ins Co v Parrish, 659 S.W.2d 315 (Mo App, 1983); Pickering, supra; Fireman's Ins Co v Smith, 13 Ark. App. 250, 253-254; 683 S.W.2d 234 (1985); CNA Ins Co v McGinnis, 282 Ark. 90, 93-94; 666 S.W.2d 689 (1984).
Justice BOYLE attempts to distinguish McGinnis and Smith on the ground that they involved the interpretation of a provision which excluded coverage for "expected or intended" injuries, without reference to the "standpoint of the insured." However, a more careful review of these cases reveals that they involved precisely the same exclusionary provision as in the instant case. The dissent in Smith noted that it was interpreting the same provision as in Talley v MFA Mutual Ins Co, 273 Ark. 269, 271; 620 S.W.2d 260 (1981), which excluded coverage for "`bodily injury . . . which is either expected or intended from the standpoint of the insured.'" Thus, these cases actually reinforce the proposition that we must focus our interpretation on the "expected or intended" language of the exclusion.
Under the facts of the instant case, we would conclude that the trial court properly granted plaintiff's motion for summary disposition. Summary disposition is appropriate when there is no genuine issue of material fact. MCR 2.116(C)(10). Neither party contends that DiCicco returned to his room after the brawl with Gravenmier ended. Rather, it is unrefuted that DiCicco obtained a folding hunting knife, he opened it, and returned to confront Gravenmier with a barrage of verbal attacks and threatening motions with the knife. We find it inconceivable that, under these facts, an objective person would not "expect" injury to result from his stabbing Gravenmier with a hunting knife. Therefore, we agree with the trial court that DiCicco must have expected serious injury to result.
Even assuming that we agreed with the defendant and adopted a subjective standard of review of the exclusionary clause, nevertheless, we would conclude that the trial court properly granted plaintiff's motion for summary disposition. We have the complete record upon which the parties stipulated to the resolution of their declaratory action. Accordingly, we disagree with the dissent that we must remand the case to the trial court for a determination under a subjective analysis.
In our opinion, the facts of the instant case would present the ideal circumstances in which a trial court should infer the insured's subjective intentions as a matter of law. The mere fact that the defendants denied their intentions or expectations does not surprise us, nor should it obligate plaintiff to defend in the underlying suit. Otherwise, an insured could simply obligate an insurer to defend by denying that he intended or expected injury to result.
Rather, we would hold that defendant "subjectively expected" injury to result even though he denied any intent to injury. This Court has recognized the difficulty in determining an individual's "subjective intentions": "`Intent is a secret of the defendant's mind,' which he can disclose by his declarations or by his actions and `his actions sometimes speak louder than words.'" People v Strong, 143 Mich. App. 442, 452; 337 N.W.2d 335 (1985). (Citations omitted; emphasis added.)
We adopt this analysis because it accurately addresses the circumstances of the instant case. Although the defendant denies any intent to injure, his actions speak louder than those words. In the instant case, we note that determining the defendant's "subjective expectations" requires a lesser degree of proof than his "subjective intentions." DiCicco never contested that he grabbed a folding hunting knife from his room, opened it, and returned to confront Gravenmier with a barrage of verbal attacks and threatening motions with the knife. Contrary to Justice BOYLE's conclusion, we believe that to claim that DiCicco did not " expect or intend" injury to result from his conduct, does in fact, "`fl[y] in the face of all reason, common sense and experience.'" BOYLE, J., post, p 720 (citing McGinnis, supra at 93). Therefore, even under these circumstances, we would hold that the defendant "subjectively expected" injury to result.
Justice BOYLE contends that this characterization of fight enlarges the trial court's findings or construes the record most favorably toward the insurer. The parties submitted the instant declaratory judgment action upon the briefs, deposition and preliminary examination testimony. Granted, we took the "liberty" to review and rely upon those same documents that the trial judge based his findings of fact upon. However, in no way did our "summarization" of the record distort what actually happened between DiCicco and Gravenmier. Rather, in reviewing the preliminary examination testimony of Gravenmier, we find that the above recitation of facts is well supported:
Q. Would you take the knife here, exhibit number one, and show us exactly how he was holding it when you came back to his doorway?
A. He was holding it approximately like this, down with the blade, the sharp edge towards his body.
Q. The blade was extended then?
A. Yes. He extended it, I was not sure if it was with the left or right hand. He had it extended by the time I was close.
Q. I see. So, you actually watched him extend the blade?
A. Yes, pretty close, I can't recall that well.
Q. Okay. And, as you were approaching him is when he extended the blade?
A. Yes.
Q. Okay. Then you have indicated, for the record, that he was holding with the blade facing him and the point of the blade to his left, is that right?
A. Yes. He had held it pretty close to his belly.
Q. He was holding it close to him, himself?
A. Yes.
Q. Did he say anything about the fact that he had a knife in his hand?
A. No, he did not.
Q. Was it — was it obvious to you that he had the knife in his hand?
A. Yes.
Q. Okay. And, then you continued to approach him and did what?
A. I told him that was one of the last things that he needed to do and if he was stupid enough to and it was really stupid and if he was stupid enough here is my gut, you got the knife go ahead. And, I raised my hands and nothing happened.
Q. You were pretty close to him at that point?
A. Within two feet.
Q. What happened after you — after you said that to him?
A. He just kept saying "don't mess with me, don't fuck with me, I don't want to take anymore of your shit," kept poking his finger into my chest and pushed me a couple of times and I was up against the wall in this round, he just turned me around literally.
Q. Okay. You became — your back became up against the wall that was on . . .
A. . . . in between room doors.
Q. Okay. The wall was on the same side of the hallway as your room and his room?
A. Yes.
Q. And, he is poking you with, I take it, his left hand at that point because he has the knife in the other hand?
A. I don't know. I am pretty sure it was his right hand that he was poking with.
Q. Okay. Well, he was poking with one hand and had the knife in the other, anyways.
A. Yes, um-hum.
Q. And, with one hand he got you up against the wall?
A. Yes, with the other he was flashing the knife about.
Q. And, during this period of time you were not — what were you doing, if anything, physically to him?
A. Nothing. I was — I just kept backing up.
Q. At the time — let's go back to the point and time where you stated that you were two feet away from him and told Dave "look, you don't need to do that, that is a stupid thing to do" or words to that effect.
A. Yes.
Q. All right. He was standing in his doorway, is that correct?
A. Yes.
Q. And, you were standing, obviously, in the hallway?
A. Yes.
Q. Now, down the hall to your right is Graham and Cindy, is that right?
A. Yes.
Q. And, the way that you were going to exit the . . .
A. . . . yes.
Q. What is down to your left, is it — your room is down there, right?
A. Yes.
Q. And, is there an exit down that way to?
A. Two more doors and then there is a stairway.
Q. Okay. This is also an exit that was opened at the time this event happened?
A. Yes.
Q. What happened after he had you up against the wall then?
A. He was pushing me and he put his left arm against my chest a couple of times just pushing me back and was flashing the knife around my face and around my body and across. Most of the time I kept straight so I can't recall all of the places the knife went. [Emphasis added.]
Accordingly, we would reverse the decision of the Court of Appeals and reinstate the trial court's declaratory order in favor of Metropolitan.
III. ALLSTATE INS CO v FREEMAN
A. FACTS AND PROCEEDINGS
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.
Alonda Freeman alleged that she acted in self-defense. While we recognize that there is conflicting testimony as to who started the argument and the precise nature of what each person said, we are not persuaded by Alonda Freeman's characterization that she acted in self-defense.
Kelly claimed that Alonda came out of her home and began swearing at Kelly. Although she began walking towards the Freeman's house, Kelly alleged that she did not make any threats and never encroached upon the Freemans' property. Rather, Alonda, went into her home, got the handgun, came back out, and shot Kelly.
Whereas, Alonda claimed that Kelly began the argument. Further, she stated that Kelly threatened to kill Alonda and her children. Kelly began walking toward the Freemans' house. Alonda went into the house, retrieved the handgun, and reappeared on her front porch. Alonda testified that she fired after Kelly allegedly lunged at Alonda. Although Alonda first thought Kelly held an object in her hands, she stated that she did not see anything when she pulled the trigger.
Our review of the testimony persuades us that the Court of Appeals was correct in concluding that upon the basis of the evidence and testimony presented, the trial court properly rejected Alonda Freeman's claim of self-defense. As the Court of Appeals stated:
In reviewing a grant or denial of summary disposition under MCR 2.116(C)(10), this Court considers the pleadings, affidavits, depositions, admissions and other documentary evidence available to it and gives the benefit of any reasonable doubt and views the evidence in a light most favorable to the party opposing the motion.
Wright, [
supra at 646.] Considering the evidence under these standards, we must nonetheless reject the Freemans' self-defense argument. . . . [T]here is still no dispute that she pointed a loaded gun in the direction of Kelly and fired it at her at close range. [
Freeman, supra at 352-353.]
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).
B. SUMMARY DISPOSITION MOTION — ALONDA FREEMAN
The Court of Appeals held that the policy exclusion requires application of a two-part test. The exclusion in the Allstate policy provided:
Neither party contends that the coverage section of the policy applies in this case. That section provided in pertinent part:
Losses We Cover
We will pay all sums arising from the same loss which an insured person becomes legally obligated to pay as damages because of bodily injury or property damage covered by this part of the policy.
We may investigate or settle any claim or suit for covered damages against an insured person. If an insured person is sued for these damages, we will provide a defense with counsel of our choice, even if the allegations are not true. We are not obligated to pay any claim or judgment or defend any suit if we have already exhausted the limit of liability by paying judgments or settlements.
We do not address the applicability of the exclusion.
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, 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.
The exclusion also excludes coverage for injuries actually intended. This case does not implicate this portion of the exclusion.
We note first that neither party contends that the exclusion is ambiguous as it applies to Alonda Freeman. 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 F.2d 449 (CA 9, 1988).
However, Marshall Freeman argues that the policy is ambiguous as it applies to him. We address this issue in section III(C) of this opinion.
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.
Similarly, we also agree with the Court of Appeals that Alonda Freeman's conviction in the criminal case for discharging a firearm intentionally but without malice satisfies the "criminal conduct" aspect of the first element of the exclusion. MCL 750.235; MSA 28.432. Allstate Ins Co v Talbot, 690 F. Supp. 886 (ND Cal, 1988) (conviction of child molestation constituted criminal acts specifically excluded from coverage under the identical policy involved in this case). A criminal conviction is admissible in a declaratory action in order to determine whether an insurer has a duty to defend and indemnify. Transamerica Ins Co v Anderson, 159 Mich. App. 441, 444-445; 407 N.W.2d 27 (1987); Yother, supra at 134.
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. Rather, we find that "reasonably be expected" is unambiguous, and therefore, requires application of an objective standard of expectation.
We also rejected this argument in DiCicco, supra.
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 N.H. 456, 460; 471 A.2d 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.
C. SUMMARY DISPOSITION MOTION — MARSHALL 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 N.W.2d 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.
See also
Allstate Ins Co v Goldwater, 163 Mich. App. 646, 649;
415 N.W.2d 2 (1987);
State Farm Fire Casualty Co v Huyghe, 144 Mich. App. 341;
375 N.W.2d 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 F.2d 888, 894 (CA 9, 1987); Western Casualty Surety Co v Aponaug Mfg Co, 197 F.2d 673, 674 (CA 5, 1952); Arenson v Nat'l Automobile Casualty Ins Co, 45 Cal.2d 81; 286 P.2d 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. 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).
Conversely, we also find equally instructive cases which have distinguished "the insured" from "an insured" and "any insured." Allstate Ins Co v Green, 831 F.2d 145, 147 (CA 6, 1987); Safeco Ins Co of America, Inc v McKenna, 90 N.M. 516; 565 P.2d 1033 (1977); Pawtucket Mutual Ins Co v Lebrecht, 104 N.H. 465; 190 A.2d 420 (1963); Borbor, supra at 894; Aponaug Mfg Co, supra at 674.
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, 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:
Specifically, the complaint alleged "Margaret negligently cared for and supervised [the minor], and that Margaret was negligent in failing to take steps to prevent Albert's acts of sexual molestation upon [the minor] when she knew that he had a propensity for committing, and intended to commit such acts." Gilbert, supra at 450 (emphasis added).
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," 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 language arose out of § 533 of the California Insurance Code. California courts interpret the insurance code as if it were an exclusion in an insurance policy. Therefore, the Borbor court's analysis of "the insured" is applicable in the present case.
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. Rather, we believe that Borbor supports the conclusion reached by Judge Thompson in Gilbert.
The dissent notes that the Court of Appeals for the Ninth Circuit issued Gilbert and Borbor within one year of each other and that Judge Thompson wrote the opinion of the court in both cases. If Judge Thompson intended to restrict the Gilbert decision as argued by the dissent in the instant case, then we assume he easily could have done so.
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 N.W.2d 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 P.2d 653 (1969); People v Enlow, 135 Colo. 249, 261-263; 310 P.2d 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."
Similarly, we disagree with Justice CAVANAGH's conclusion that the exclusion in the Allstate policy "is reasonably susceptible of two different meanings" on the basis of the definition of the word "an" in Black's Law Dictionary. Post, p 744. This statement is misleading and incorrect. Justice CAVANAGH cites the definition of "a" and not "an," which suggests his recognition that the definition of "an" contradicts his position. "The English indefinite article, equivalent to `one' or `any'. . . ." Black's Law Dictionary (5th ed), p 77. By contrast, the definition of "the" states:
An article which particularizes the subject spoken of. "Grammatical niceties should not be resorted to without necessity; but it would be extending liberality to an unwarrantable length to confound the articles `a' and `the.' The most unlettered persons understand that `a' is indefinite, but `the' refers to a certain object." [
Id., p 1324.]
Accordingly, we hold that under the policy exclusion in the instant case, "an insured" unambiguously refers to "any insured." 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 N.W.2d 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.
Accordingly, we also reject the defendant's contention that "[i]f Allstate had meant `any,' it should have said `any,' not `an.'" Post, p 736. The Condon court rejected this argument as it stated, "because `any person insured' would have been a more precise term to describe an exclusion designed to cover all persons under the policy, we are required to construe the exclusionary clause in favor of the Condons. This contention is without merit." Id. at 154. We agree.
IV. SUMMARY
A
In Allstate Ins Co v Freeman, we hold that Allstate's exclusionary clause requires application of a two-part objective test. An insurer may relieve itself of its duty to defend and provide coverage if (1) the insured acted either intentionally or criminally, and (2) the resulting injuries occurred as the natural, foreseeable, expected, and anticipated result of an insured's intentional acts. We also hold that "an insured" unambiguously refers to "all" or "any" insureds under the homeowner's policy. Accordingly, we affirm the decision of the Court of Appeals in Freeman.
B
In Metropolitan Property Liability Ins Co v DiCicco, we hold that the claimed incident constituted an "occurrence" under the coverage provision of the insured's policy. We also hold that an insurer need not prove that the insured acted intentionally in order to avoid its duty to defend and indemnify under the present exclusion. However, unlike a majority of this Court, we would hold that, in order to avoid its duty to defend and indemnify under the exclusion, the insurer must show that an objective insured "intended or expected" injury to result from those acts. Therefore, we would reverse the decision of the Court of Appeals in DiCicco and reinstate the decision of the trial court.
GRIFFIN, J., concurred with RILEY, C.J.