Insurer Loses Bet on Posing Only One Reason for Criminal Acts Exclusion At Summary Disposition Stage in Declaratory Judgment Action Challenging Coverage for “Accidental” Shooting

This case demonstrates the importance of having experienced coverage counsel analyze and apply all potential theories of coverage, including exclusions, at the defense stage of proceedings to determine coverage obligations in a declaratory judgment action.

The plaintiff in the underlying lawsuit was shot by the defendant insured during a hunting incident.  The shooting was clearly an accident, as the hunter (stupidly, if not criminally) fired at a flash of white he thought was a deer he flushed out while walking around a field at dusk.

The insurer insured the defendant under a homeowner’s policy.  The insurer filed a declaratory judgment action seeking to avoid coverage.  It raised the “criminal acts” exclusion, while conceding an occurrence.  The exclusionary language excluded coverage for “a criminal act or omission” or for “an act or omission, criminal in nature”.  However, the insurer only plead that the insured had violated MCL 750.235(1), which made it a misdemeanor to maim or injure “another person by discharging a firearm pointed or aimed intentionally but without malice at another person….”  This was the only basis relied on by the insurer to seek a declaration that coverage should be excluded by the policy’s criminal acts exclusion.

The trial court concluded that the elements of this specific intent statute were not satisfied because the defendant in the underlying suit testified he did not know he was shooting at a person.  Therefore, the trial court ruled the insurer owed coverage to the defendant insured for defense and potential indemnity to the plaintiff in the underlying lawsuit.

On appeal, the Court of Appeals (Fitzgerald, Meter, and M.J. Kelly) affirmed.  It points out, more than once, that the insurer failed to plead or assert any other grounds for exclusion under the policy.  The singular reliance on whether or not MCL 750.235(1) had been violated and the trial court’s disposition with respect to that singular issue was all that the Court of Appeals could assess in terms of preserved issues on appeal.

This case demonstrates the importance of having coverage counsel assess all possible avenues concerning coverage obligations, including whether or not and to what extent any of the coverage provisions, i.e., occurrence, claim, etc., and any exclusion (or any other exclusions) might be satisfied, or apply, respectively.

It also demonstrates the importance of exploring whether other potential facts implicate the broader language of the criminal acts exclusion.  Certainly, it appears that “an act or omission, criminal in nature”, which the exclusion included, casts a wider net than the simple “specific intent” statute that the insurer here attempted to prove had been violated.  Criminal negligence, reckless endangerment, recklessness, and a host of other general criminal acts come to mind when considering the exclusion’s precise language.

The opinion is here:  Auto Club v. Kondziolka, et al.

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