Auto-Owners Ins. Co. v. Churchman

• Decision Date: 09 September 1992
• Docket Number: No. 10,Docket No. 88923,AUTO-OWNERS,10
• Citation: Auto-Owners Ins. Co. v. Churchman, 489 N.W.2d 431, 440 Mich. 560 (Mich. 1992)
• Parties: INSURANCE COMPANY, Plaintiff-Appellant, v. Beulah Marie CHURCHMAN, Personal Representative of the Estate of Gary Wayne Churchman, Deceased; Beulah Marie Churchman, as Next Friend for Amber Rose Lynn Churchman and Brandon James Churchman; Beulah Marie Churchman, Individually; the Estate of Henry Gordon Frost, Jr., Deceased; Leslie J. Kalchik, as Next Friend for Todd Allen Ferguson; and Leslie J. Kalchik, Individually, Defendants-Appellees. Calendar
• Court: Michigan Supreme Court

Page 431

489 N.W.2d 431

440 Mich. 560

AUTO-OWNERS INSURANCE COMPANY, Plaintiff-Appellant, v. Beulah Marie CHURCHMAN, Personal Representative of the Estate of Gary Wayne Churchman, Deceased; Beulah Marie Churchman, as Next Friend for Amber Rose Lynn Churchman and Brandon James Churchman; Beulah Marie Churchman Individually; the Estate of Henry Gordon Frost, Jr. Deceased; Leslie J. Kalchik, as Next Friend for Todd Allen Ferguson; and Leslie J. Kalchik, Individually, Defendants-Appellees.

Docket No. 88923.

Calendar No. 10.

Supreme Court of Michigan.

Argued Jan. 8, 1992.

Decided Sept. 9, 1992.

[440 Mich. 562] Plunkett & Cooney, P.C. by Robert G. Kamenec, Charles H. Gano, Detroit, for plaintiff-appellant.

Burns & Spanos by George D. Spanos, Petoskey, for defendant-appellee Estate of Henry Gordon Frost, Jr., Deceased.

OPINION

MALLETT, Justice.

This is a declaratory action to determine the insurer's duty to defend or indemnify its insured for the murder of Gary Churchman.

We granted leave to consider whether insurance coverage is precluded as a matter of law because of an exclusion for bodily injury coverage when "expected or intended by an insured person" and the insured is mentally ill or insane.

We find that the Court of Appeals erred in holding that an insane or mentally ill person cannot intend or expect the consequences of his actions as required by the exclusion of plaintiff's homeowner's policy. We conclude that, while an insane or mentally ill insured may be unable to form the criminal intent necessary to be charged with murder, such an individual can still intend or expect the results of the injuries he causes.

I

On May 30, 1987, Henry Gordon Frost, Jr., and Mary Churchman had an argument. According to Mrs. Churchman, they often argued about Gary Churchman having legal custody of her children. She and Mr. Frost had had plans to marry, but on that night, Mary Churchman told him that she could not go through with the wedding while her ex-husband, Gary Churchman, had custody of the children.

Mr. Frost became furious. He told Mrs. Churchman that he had taken his revolver and was going to kill her ex-husband. Then he said that he would kill himself.

Mary Churchman was not worried by this because she had heard him make similar threats in the past. Usually, Mr. Frost went for a drive to cool off.

On that day, however, Mr. Frost did go to Gary Churchman's house. According to Leslie Kalchik, Gary Churchman's girlfriend, she and her son were lying on the floor watching television when a car pulled into the driveway and someone knocked on the door. Mr. Churchman went to answer it. A few seconds later, Ms. Kalchik heard a shot and Gary Churchman came running up the steps saying he had been shot. Leslie Kalchik saw Mr. Frost at the door and then grabbed her son. She and her son quickly left the house and ran into the woods next door.

Mr. Frost followed Mr. Churchman up into the living room area and shot him at least three more times. The final shot he fired into Gary Churchman was into the back of his head. Before Mr. Frost left the house, he threatened to kill Beulah Churchman, Gary Churchman's mother. Mr. Frost then walked from the house to the garage, put the gun in his mouth and committed suicide.

It has been said that Henry Gordon Frost was a paranoid schizophrenic for most of his life; however, because of the limited procedural development of the record below, no evidence was presented on this point. ¹ Nonetheless, at the time of his death, according to Sgt. Scott Croton of the Michigan State Police, Mr. Frost was not receiving treatment of any kind for any physical or mental illnesses immediately before his death.

This declaratory judgment action arises from two lawsuits that are the result of the tragic murder/suicide committed by Mr. Frost. The first was filed by Beulah Churchman, as personal representative of the estate of Gary Churchman, as well as next friend of the three Churchman children. The second was brought by Leslie Kalchik, Churchman's girlfriend, for herself and as next friend of Todd Ferguson, her son. Ms. Kalchik stated that at the time of Gary Churchman's murder, they were engaged to be married.

Henry Gordon Frost was the named insured of a homeowner's policy provided by plaintiff in the instant action, Auto-Owners Insurance Company.

Auto-Owners brought this declaratory action in Emmet Circuit Court in September of 1987. Trial court Judge Richard M. Pajtas held that although Michigan case law did not address the issue, a majority of jurisdictions found an exclusionary clause in an insurance policy inapplicable if the insured did not have the mental capacity to intend or expect his actions. He then denied plaintiff's motion for summary disposition and encouraged Auto-Owners to appeal. In the meantime, two decisions regarding this question were issued by the Court of Appeals. Each panel came to a different conclusion.

Plaintiff Auto-Owners applied to the Court of Appeals for leave to appeal, which was granted on January 5, 1989. The Court affirmed the decision of the trial court in an opinion per curiam, 184 Mich.App. 699, 459 N.W.2d 24 (1990), concluding that, because of the difference of opinion between the previous panels, it was impossible to conclude that the trial court's ruling was erroneous. Id. at 702, 459 N.W.2d 24. Plaintiff filed a timely application for leave to appeal in this Court.

II

We granted leave to consider whether insurance coverage is precluded as a matter of law because of an exclusion providing no coverage for bodily injuries caused by an insured that were expected or intended by the insured where the insured is insane or mentally ill. The policy in this case stated:

"Coverage E--Personal Liability

"We will pay all sums which an insured person becomes legally obligated to pay as damages because of bodily injury, personal injury (libel, slander or defamation of character, false arrest, detention or imprisonment or malicious prosecution; invasion of privacy, wrongful eviction or wrongful entry) or property damage covered by this policy.

"If a claim is made or suit is brought against the insured person for liability under this coverage, we will defend the insured person at our expense, using lawyers of our choice. We are not obligated to defend after we have paid an amount equal to the limit of our liability. We may investigate or settle any claim or suit as we think appropriate.

* * * * * *

"Exclusions

"Under Personal Liability Coverage and Medical Payments to Others Coverage we do not cover.

* * * * * *

"7. bodily injury or property damage expected or intended by an insured person." (Emphasis added.)

An insurance policy is much the same as any other contract. It is an agreement between the parties in which a court will determine what the agreement was and effectuate the intent of the parties. Eghotz v. Creech, 365 Mich. 527, 530, 113 N.W.2d 815 (1962). Accordingly, the court must look at the contract as a whole and give meaning to all terms. Fresard v. Michigan Millers Mut. Ins. Co., 414 Mich. 686, 694, 327 N.W.2d 286 (1982). Further, "[a]ny clause in an insurance policy is valid as long as it is clear, unambiguous and not in contravention of public policy." Raska v. Farm Bureau Mut. Ins. Co. of Michigan, 412 Mich. 355, 361-362, 314 N.W.2d 440 (1982). This Court cannot create ambiguity where none exists. Edgar's Warehouse, Inc. v. United States Fidelity & Guaranty Co., 375 Mich. 598, 602, 134 N.W.2d 746 (1965).

Exclusionary clauses in insurance policies are strictly construed in favor of the insured. Shelby Mut. Ins. Co. v. United States Fire Ins. Co., 12 Mich.App. 145, 149, 162 N.W.2d 676 (1968). However, coverage under a policy is lost if any exclusion within the policy applies to an insured's particular claims. Fresard, supra, 414 Mich. at 695, 327 N.W.2d 286. Clear and specific exclusions must be given effect. It is impossible to hold an insurance company liable for a risk it did not assume. Kaczmarck v. La Perriere, 337 Mich. 500, 506, 60 N.W.2d 327 (1953).

In the instant case, the insurance policy contained an exclusionary clause that excluded coverage for bodily injuries caused by an insured that were expected or intended by the insured.

III

In order to avoid its duty to defend and indemnify, plaintiff must show that the insured subjectively intended and expected injury to result from his intentional act.

This Court considered similar policy language in Metropolitan Property & Liability Ins. Co. v. DiCicco, 432 Mich. 656, 443 N.W.2d 734 (1989), and found that because the policy language included the phrase "from the standpoint of the insured," subjective intent was required. Id. at 708, 443 N.W.2d 734. The policy language in this case, "expected or intended by an insured person," is unambiguous and requires a subjective intent; thus, the exclusion must be applied in its plain and easily understood sense. Wertman v. Michigan Mut. Liability Co., 267 Mich. 508, 510, 255 N.W. 418 (1934).

Looking at the available facts of this case, we know that Mr. Frost left his home, stating his intentions. We also know that he drove to Gary Churchman's house, knocked on his door, and shot him numerous times. He then threatened Beulah Churchman, left the house, and killed himself.

It is apparent from these facts that Mr. Frost intended to injure Gary Churchman and expected at least to seriously harm him. No other interpretation is possible. Therefore, we find that Henry Gordon Frost indeed intended or expected the resulting harm he caused. We further find that the pertinent exclusion applies to the facts of this case.

IV

Therefore, the next question for us to determine is whether an insane or mentally ill person is capable of intending or expecting the consequences of his actions. We must determine if Mr. Frost knew what he was doing when he shot and killed Gary Churchman. We conclude that he did. While Mr. Frost may not have been...