Iacobelli Const. Co., Inc. v. Western Cas. & Sur. Co., Docket No. 63857

• Decision Date: 20 January 1984
• Docket Number: Docket No. 63857
• Parties: IACOBELLI CONSTRUCTION COMPANY, INC., Plaintiff-Appellee, v. The WESTERN CASUALTY & SURETY COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 517

343 N.W.2d 517

130 Mich.App. 255

IACOBELLI CONSTRUCTION COMPANY, INC., Plaintiff-Appellee, v. The WESTERN CASUALTY & SURETY COMPANY, Defendant-Appellant.

Docket No. 63857.

Court of Appeals of Michigan.

Submitted March 14, 1983.

Decided Nov. 7, 1983.

Released for Publication Jan. 20, 1984.

Martin, Bacon & Martin, P.C. by Stuart A. Fraser, Mount Clemens, for plaintiff-appellee.

Seavitt, Westcott, Stowe & Magnuson by Donald R. Dillon, Jr., Detroit, for defendant-appellant.

Before T.M. BURNS, P.J., and CYNAR and MARUTIAK, ^* JJ.

CYNAR, Judge.

This appeal is from a summary judgment in an action for declaratory relief wherein plaintiff sought payment of a judgment rendered against it and attorney fees incurred in plaintiff's appeal of the unfavorable judgment from the district court to the circuit court. The district court suit was a trespass action instituted against plaintiff by Wayne and Alta Stoddard. Defendant had issued plaintiff a general comprehensive liability insurance policy, which was in effect at the time of the trespass. Summary judgment was granted in favor of plaintiff in the declaratory judgment action by order of March 31, 1982, from which defendant appeals as of right. Defendant further appeals as of right from that part of the court's order which awarded attorney fees for prosecuting the instant declaratory judgment action and for defending an interlocutory appeal in connection therewith.

On April 16, 1979, the Stoddards (Stoddard) filed suit against plaintiff in district court, alleging that on January 11, 1979, plaintiff entered upon Stoddard's property with knowledge that it was Stoddard's property and that Stoddard had not consented to the entry. Plaintiff proceeded to dig up Stoddard's yard with earthmoving equipment in order to install sanitary sewer lines. Damage was done to Stoddard's land and grass and to a cherry tree. Stoddard sought treble damages pursuant to M.C.L. § 600.2919; M.S.A. § 27A.2919. Stoddard further alleged that, subsequent to a request that plaintiff leave the premises, the parties initited negotiations for an easement from Stoddard to plaintiff to allow a temporary roadway on Stoddard's property, enabling traffic on the street abutting the property to pass. Plaintiff's construction had impeded traffic on the street.

During these negotiations, plaintiff stated its intent to use and pay for the proposed easement and, in reliance thereon, Stoddard retained the services of an attorney and a surveyor. The benefits expected from the retention of these services never came to fruition due to plaintiff's refusal to negotiate further regarding the easement. The district court jury found that plaintiff trespassed on Stoddard's land and that the trespass was not "casual and involuntary, but deliberate and intentional". Mr. and Mrs. Stoddard were awarded $2,000 in damages, which amount was trebled according to statute. Interest was also assessed.

At the time of these events, plaintiff had a contract of general comprehensive liability insurance with defendant. Defendant took up plaintiff's defense in the Stoddard action but with an express reservation. ¹

Upon rendition of the district court jury verdict that plaintiff's trespass was intentional, defendant insurance company advised plaintiff on December 12, 1979, that it was not responsible for any part of the judgment and would not participate in an appeal. On December 18, 1979, plaintiff appealed the jury verdict in the trespass suit to the circuit court, apparently claiming as error that the jury instructions were inadequate. The district court jury had been asked whether the trespass was casual and involuntary or intentional and deliberate. Negligent trespass was not one of the choices. On December 9, 1980, the circuit court affirmed the judgment of the district court. In the meantime, on February 12, 1980, plaintiff filed this action for declaratory relief, seeking a determination that defendant had a duty to represent plaintiff on appeal and seeking attorney fees for plaintiff's appeal to the circuit court, as well as a declaration that the underlying judgment came within the coverage of the insurance policy between the parties.

Ultimately, a hearing was held on both plaintiff's and defendant's motions for summary judgment. The court granted plaintiff's motion on all points which are now appealed by defendant and denied defendant's motion. The court's order required defendant to pay $6,743.01, the amount of the judgment against plaintiff in the trespass action plus 12 percent interest thereon, and $4,589 for attorney fees incurred in pursuing the instant action, including plaintiff's defense of defendant's prior application for leave to appeal to this Court and for plaintiff's appeal of the trespass judgment to the circuit court.

I

The first issue is whether the trespass and the resulting damage established in the trespass suit were covered by the insurance policy between plaintiff and defendant.

Initially, it is noted that an insurer's duty to defend is broader than its duty to pay or the limits of its policy coverage. These obligations are not synonymous. Palmer v. Pacific Indemnity Co., 74 Mich.App. 259, 263-264, 254 N.W.2d 52 (1977), lv. den. 401 Mich. 808 (1977). See also, Stockdale v. Jamison, 416 Mich. 217, 330 N.W.2d 389 (1982); City Poultry & Egg Co. v. Hawkeye Casualty Co., 297 Mich. 509, 298 N.W. 114 (1941). Thus, defendant's liability on the trespass judgment does not affect the disposition of the remaining issues.

The relevant language of the disputed insurance policy is:

"Coverage B--Property Damage Liability

"The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

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"B. property damage

"to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily 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.

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"DEFINITIONS

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" '[O]ccurrence' means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.

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" '[P]roperty damage' means (1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period." (Emphasis added.)

Defendant properly asserts that the special verdict in the underlying trespass action precludes any claim that the trespass was not intentional. Plaintiff maintains that the trespass was at most negligent and that the verdict is not conclusive because the jury was not given the choice of negligent trespass. Treble damages under M.C.L. § 600.2919; M.S.A. § 27A.2919 may not, however, be awarded where the trespass was merely negligent. See Connor v. McRae, 193 Mich. 682, 160 N.W. 479 (1916); Michigan Land & Iron Co. v. Deer Lake Co., 60 Mich. 143, 146, 27 N.W. 10 (1886), each construing a predecessor statute. Not only does the special verdict indicate that the trespass was intentional and deliberate, precluding plaintiff's assertion that it was only negligent, but the final judgment awarding treble damages necessarily included the finding that the trespass was not merely negligent. The award of treble damages being a final judgment and binding upon plaintiff, plaintiff is precluded from now asserting that the trespass was not intentional.

Although the finding of intentional and deliberate trespass and the award of treble damages preclude a claim that the trespass was negligent, such a finding does not by itself indicate that the plaintiff acted with malice or an intent to do injury, because the treble-damage statute may be invoked without such a showing. Kelly v. Fine, 354 Mich. 384, 387, 92 N.W.2d 511 (1958), construing a predecessor statute. The crucial inquiry becomes whether a distinction should be drawn between the intent to do the act and the intent to do injury.

In Morrill v. Gallagher, 370 Mich. 578, 122 N.W.2d 687 (1963), the Supreme Court held that, where the insurance policy excludes intentional injury, it must be demonstrated that the injury was intentional; an intentional act alone is insufficient. See also, Vermont Mutual Ins. Co. v. Dalzell, 52 Mich.App. 686, 692-693, 218 N.W.2d 52 (1974), lv. den. 392 Mich. 803 (1974). In both Morrill and Dalzell, there was no finding that the injury was intended. Based on the language of the insurance policy, the injury was deemed to come within the insurance coverage.

Defendant argues that the distinction between intentional act and intentional injury is immaterial, citing Group Ins. Co. of Michigan v. Morelli, 111 Mich.App. 510, 314 N.W.2d 672 (1981), and Kermans v. Pendleton, 62 Mich.App. 576, 233 N.W.2d 658 (1975), wherein coverage was denied in the face of arguments that the injury was unintentional. Morelli and Kermans, however, did not hold that such distinction was immaterial but, rather, that there had actually been a finding in each case that the injury was intentional.

"Under the facts and circumstances of the underlying trial, we are persuaded that the factual finding that defendant committed the intentional tort of assault and battery also encompasses the corollary finding that the defendant must have intended the injury." (...