Detroit Edison Co. v. Michigan Mut. Ins. Co.

• Decision Date: 02 December 1980
• Docket Number: Docket No. 78-3481
• Citation: 301 N.W.2d 832,102 Mich.App. 136
• Parties: The DETROIT EDISON COMPANY, a Michigan Corporation, Plaintiff-Appellant, v. MICHIGAN MUTUAL INSURANCE COMPANY, a Michigan Corporation, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 832

301 N.W.2d 832

102 Mich.App. 136

The DETROIT EDISON COMPANY, a Michigan Corporation, Plaintiff-Appellant, v. MICHIGAN MUTUAL INSURANCE COMPANY, a Michigan Corporation,

Defendant-Appellee.

Docket No. 78-3481.

Court of Appeals of Michigan.

Dec. 2, 1980.

Released for Publication Feb. 20, 1981.

Mich.App., 1980.

Jon Fiekens, Detroit, for plaintiff-appellant.

Lawrence S. Charfoos, Detroit, for defendant-appellee; Hayim I. Gross, Birmingham, of counsel.

Before T. M. BURNS, P. J., and MAHER and CLEMENTS, ^* JJ.

CLEMENTS, Judge.

Plaintiff Detroit Edison Company (Edison) appeals as of right from a circuit court order granting summary judgment in favor of defendant Michigan Mutual Insurance Company (Mutual) and from a denial of a motion for reconsideration of that summary judgment order. Edison had sought a declaratory judgment and a declaration of duty to defend to compel Mutual to defend Edison in a personal injury suit that was then pending.

On March 23, 1976, Salvatore Tocco severely injured his left hand and arm in an accident at the Edison Monroe plant. Tocco was an employee of Michigan Boiler Company, which was doing work at the Edison plant.

At the time of the accident, Edison was insured by a comprehensive general liability policy issued by Mutual. The policy provides:

"The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of Coverage A. personal injury or Coverage B. property damage to which this policy applies, caused by an occurrence or event arising out of (1) the work described in Item 4 of the declarations, (2) supervisory acts or omissions, including instructions and inspections, by the named insured in connection with such work and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such personal injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements."

Item 4, the description of work insured, contains the following language:

"All work let to any person or organization by The Detroit Edison Company and including all work performed by or for such person or organization on behalf of the named insured."

Another provision of the policy excludes liability coverage for:

"personal injury or property damage arising out of any act or omission of the named insured or any of his employees, other than supervisory acts or omissions including instructions and inspections, of work performed for the named insured."

Tocco filed suit against Edison seeking a total of $850,000 in damages. Paragraph 5 of the complaint alleged:

"That the negligence of the Defendant, DETROIT EDISON COMPANY, consisted of improperly maintaining the machinery and equipment; failing to properly control the hydraulic devices and cylinders Plaintiff was required to work upon; that although the said Defendant knew or should have known that Plaintiff was working in the vicinity upon said hydraulic cylinders, Defendant recklessly and negligently left the cylinders in an operating condition and/or turned them on at the time he was working upon said cylinders, thereby causing the injuries and damages."

When Mutual declined to defend this case, Edison filed a complaint on September 9, 1977, to compel Mutual to defend the suit. After several hearings were held, the lower court judge granted Mutual's motion for summary judgment finding that Tocco's complaint alleged negligence on the part of Edison's employees rather than supervisory acts or omissions.

Subsequently, Edison filed a motion for reconsideration of the summary judgment order based on the fact that Tocco had amended his complaint so that it specifically alleged that Edison's negligence included its failure to properly supervise the project Tocco was working on. This complaint alleged that Edison failed to properly inspect the machinery and failed to warn Tocco of the condition of the hydraulic cylinders.

Mutual's attorney filed an affidavit in response to Edison's motion for reconsideration in which he stated that he had spoken with Tocco's attorney who indicated that the amended complaint had been filed at Edison's request, that the additional language had been supplied by Edison, and that the facts alleged in the original complaint were the ones being primarily relied on in the suit against Edison. The lower court judge, in denying the motion for reconsideration emphasized the facts stated in Mutual's affidavit.

Shortly before oral arguments on this appeal were heard, Tocco settled his claim against Edison for $50,000.

Because we find that the allegations in either Tocco's original complaint or in his amended complaint established a duty to defend on the part of Mutual, we reverse the lower court's summary judgment order in favor of Mutual.

The duty of the insurer to defend the insured depends upon the allegations in the complaint of the third party in his or her action against the insured. This duty is not limited to meritorious suits and may even extend to actions which are groundless, false, or fraudulent, so long as the allegations against the insured even arguably come within the policy coverage. An insurer has a duty to defend, despite theories of liability asserted against any insured which are not covered under the policy, if there are any theories of recovery that fall within the policy. Dochod v. Central Mutual Insurance Co., 81 Mich.App. 63, 264 N.W.2d 122 (1978). The duty to defend cannot be limited by the precise language of the pleadings. The insurer has the duty to look behind the third party's allegations to analyze whether coverage is possible. Shepard Marine Construction Co. v. Maryland Casualty Co., 73 Mich.App. 62, 250 N.W.2d 541 (1976). In a case of doubt as to whether or not the complaint against the insured alleges a liability of the insurer under the policy, the doubt must be resolved in the insured's favor. 14 Couch on Insurance 2d, § 51:45, p. 538.

Applying these rules to the facts of this case, we find that Tocco's original complaint created a duty to defend on the part of Mutual because it can reasonably be inferred from that complaint that Tocco was alleging that Edison failed to properly supervise his work to insure his safety. Several decisions from other jurisdictions have found that a duty to defend arose under circumstances similar to those involved in this case. Chesapeake & Potomac Telephone Co. of Maryland v. Allegheny Construction Co., 340 F.Supp. 734, 742-743 (Md.1972); Continental Casualty Co. v. Florida Power & Light Co., 222 So.2d 58 (Fla.App.1969); Western Casualty & Surety Co. v. Southwestern Bell Telephone Co., 396 F.2d 351 (CA 8, 1968).

Mutual cites Citizens Mutual Ins. Co. v. Employers Mutual Liability Ins. Co. of Wisconsin, 49 Mich.App. 694, 212 N.W.2d 724 (1973), which was relied on by the lower court judge. In that case the defendant was insuring a sewer construction project to protect the City of Alma from claims arising out of the project. The policy excluded coverage for:

"any act or omission of the named insured or any of his employees, other than general supervision of work performed for the named insured by independent contractors." 49 Mich.App. 698, 212 N.W.2d 724.

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