Nabozny v. Pioneer State Mut. Ins. Co.

• Decision Date: 22 December 1998
• Docket Number: Docket No. 203738
• Citation: 233 Mich.App. 206,591 N.W.2d 685
• Parties: John R. NABOZNY, Plaintiff-Appellee, v. Kevin Michael Burkhardt, Defendant, and PIONEER STATE MUTUAL INSURANCE COMPANY, Garnishee-Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 685

591 N.W.2d 685

233 Mich.App. 206

John R. NABOZNY, Plaintiff-Appellee, v. Kevin Michael Burkhardt, Defendant and PIONEER STATE MUTUAL INSURANCE COMPANY, Garnishee-Defendant-Appellant.

Docket No. 203738.

Court of Appeals of Michigan.

Submitted Dec. 2, 1998, at Detroit.

Decided Dec. 22, 1998, at 9:00 a.m.

Released for Publication March 12, 1998.

Edson & Hastings (by Gerald Edson), Port Huron, for plaintiff.

Richard F. Huegli, Port Huron, for Pioneer State Mut. Ins. Co.

Before DOCTOROFF, P.J., and SAWYER and FITZGERALD, JJ.

PER CURIAM.

Garnishee defendant Pioneer State Mutual Insurance Company appeals as of right from the circuit court's order denying its motion for judgment notwithstanding the verdict or a new trial and entering judgment on a jury verdict in favor of plaintiff in the amount of $86,288.71. We affirm.

On April 8, 1994, plaintiff and defendant Kevin Michael Burkhardt ¹ were involved in a street fight at Brown's Pit in St. Clair County. In response to a remark made by plaintiff, to which Burkhardt took offense, Burkhardt approached plaintiff and initiated a fight. Despite plaintiff's refusal to fight, Burkhardt pushed plaintiff a few times, threw him to the ground, and punched him in the chest before releasing him. As a result, and to both parties' surprise, plaintiff sustained a broken ankle and a hairline fracture to another bone in his leg.

Thereafter, plaintiff filed a civil action against Burkhardt, seeking damages for his injuries. Burkhardt requested that garnishee defendant Pioneer defend the action pursuant to the homeowner's insurance policy issued to his parents. Pioneer refused to do so, claiming that the policy did not cover intentional and criminal acts such as those committed by Burkhardt. No further action was taken by Burkhardt and a default judgment was subsequently entered against him in the amount of $75,000. Thereafter, plaintiff sought recovery of the judgment from Pioneer directly, but Pioneer objected to the writ of garnishment obtained by plaintiff. The matter proceeded to trial and the jury returned a verdict in favor of plaintiff, finding that Pioneer was required to defend and indemnify pursuant to the terms of the policy. In response, Pioneer filed a motion for judgment notwithstanding the verdict or a new trial, arguing that the factual findings were against the great weight of the evidence. The court denied the motion, and this appeal ensued.

On appeal, Pioneer first claims that the trial court erred in denying its motion for judgment notwithstanding the verdict or a new trial because the evidence presented at trial did not support the jury's verdict in favor of plaintiff. We disagree.

This Court reviews a trial court's grant or denial of a motion for a directed verdict de novo. Meagher v. Wayne State Univ., 222 Mich.App. 700, 708, 565 N.W.2d 401 (1997). On appeal, this Court must review all the evidence presented up to the time of the motion to determine whether a factual question existed. Kubczak v. Chemical Bank & Trust Co., 456 Mich. 653, 663, 575 N.W.2d 745 (1998); Hatfield v. St. Mary's Medical Center, 211 Mich.App. 321, 325, 535 N.W.2d 272 (1995). In so doing, this Court views the evidence in the light most favorable to the nonmoving party. Id. It should likewise grant the nonmoving party every reasonable inference and resolve any conflict in the evidence in the nonmoving party's favor. Id. Furthermore, this Court may not substitute its judgment for that of the jury; hence, it must defer to the trier of fact's ability to observe witnesses, determine credibility, and weigh testimony. Zeeland Farm Services, Inc. v. JBL Enterprises, Inc., 219 Mich.App. 190, 195, 555 N.W.2d 733 (1996). Likewise, the standard of review for judgment notwithstanding the verdict motions requires review of the evidence and all legitimate inferences in the light most favorable to the nonmoving party. Orzel v. Scott Drug Co., 449 Mich. 550, 557, 537 N.W.2d 208 (1995). Only if the evidence so viewed fails to establish a claim as a matter of law, should a motion for judgment notwithstanding the verdict be granted. Id. at 558, 537 N.W.2d 208. Finally, the interpretation of an insurance contract is a question of law that this Court likewise reviews de novo. Morley v. Automobile Club of Michigan, 458 Mich. 459, 581 N.W.2d 237 (1998).

Initially, in determining whether Pioneer must indemnify Burkhardt pursuant to the judgment entered against it, we must look to the language of the insurance policy and interpret the terms therein in accordance with Michigan's well-established principles of contract construction. Arco Industries Corp. v. American Motorists Ins. Co., 448 Mich. 395, 402, 531 N.W.2d 168 (1995); Michigan Millers Mut. Ins. Co. v. Bronson Plating Co., 445 Mich. 558, 567, 519 N.W.2d 864 (1994). First, an insurance contract must be enforced in accordance with its terms. Upjohn Co. v. New Hampshire Ins. Co., 438 Mich. 197, 207, 476 N.W.2d 392 (1991). Naturally, we will not hold an insurance company liable for a risk that it did not assume. Auto-Owners Ins. Co. v. Churchman, 440 Mich. 560, 567, 489 N.W.2d 431 (1992).

Second, a court cannot create ambiguity in an insurance policy where the terms of the contract are clear and precise. Id. Thus, where there is no ambiguity, the terms of the contract must be enforced as written. Stine v. Continental Casualty Co., 419 Mich. 89, 114, 349 N.W.2d 127 (1984). However, where an ambiguity does exist, the policy of Michigan courts is to construe the contract in favor of the insured. Auto Club Ins. Ass'n v. DeLaGarza, 433 Mich. 208, 214, 444 N.W.2d 803 (1989).

Finally, the fact that a policy does not define a relevant term does not render the policy ambiguous. Auto Club Group Ins. Co. v. Marzonie, 447 Mich. 624, 631, 527 N.W.2d 760 (1994). Rather, reviewing courts must interpret the terms of the contract in accordance with their commonly used meanings. Group Ins. Co. of Michigan v. Czopek, 440 Mich. 590, 596, 489 N.W.2d 444 (1992). Moreover, the reasonable expectations of the parties must be considered when interpreting insurance policies. Vanguard Ins. Co. v. Clarke, 438 Mich. 463, 472, 475 N.W.2d 48 (1991).

In the instant case, we are essentially presented with two questions. First, we must interpret the scope of coverage afforded to Burkhardt under the insurance policy. In other words, we must decide whether the conduct in question constituted an "accident," and, hence, an "occurrence," within the meaning of the policy. In conjunction with this analysis, we must review the nature of the event (i.e., whether it was an intentional act), as well as the nature of the injuries sustained (i.e., whether the injuries were intended or expected under the circumstances). Second, we must construe the exclusionary language in the policy to decide if the intentional acts exclusion applies to the facts of this case.

According to the plain meaning of Pioneer's homeowner's insurance policy, coverage only exists where an "occurrence" has taken place. Therefore, our first inquiry is whether there was an "occurrence" between plaintiff and Burkhardt within the meaning of the policy. The relevant language of the policy provides:

[Pioneer will provide coverage] [i]f a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies....

Moreover, the policy specifically defines the term "occurrence" as follows:

[A]n accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in:

a. bodily injury, or

b. property damage.

We find that the language in the policy is clear and unambiguous insofar as Pioneer is required to provide coverage in situations where an accident occurred involving the insured and damages resulted. However, the policy does not explicitly define the term "accident." When the meaning of a term contained in a contract is not obvious from the policy language, the commonly used meaning will control. Czopek, supra at 596, 489 N.W.2d 444. Therefore, we refer to the commonly used meaning of "accident" as defined in recent case law. 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." ' " Arco Industries, supra at 404-405, 531 N.W.2d 168 (citations omitted). See Marzonie, supra at 631-632, 527 N.W.2d 760; Allstate Ins. Co. v. Freeman, 432 Mich. 656, 670, 443 N.W.2d 734 (1989); Frankenmuth Mut. Ins. Co. v. Masters, 225 Mich.App. 51, 56, 570 N.W.2d 134 (1997).

The Supreme Court has recently debated the issue of what constitutes an "accident," and hence an "occurrence," within the meaning of insurance policies. See Freeman, supra at 670, 443 N.W.2d 734; Frankenmuth Mut. Ins. Co. v. Piccard, 440 Mich. 539, 552-553, 489 N.W.2d 422 (1992); Czopek, supra at 598, 489 N.W.2d 444; Marzonie, supra at 639-640, 527 N.W.2d 760. In Marzonie, supra at 648, 527 N.W.2d 760 (Griffin, Cavanagh, and Brickley, JJ., concurring in part), at 652, 527 N.W.2d 760, at 660, 527 N.W.2d 760 (Levin, J., dissenting), the Court finally formed a majority opinion that the issue whether there is an accident should be evaluated from the perspective of the insured, not the injured party. Therefore, in accordance with that principle, we will examine the accident in this case from the standpoint of Burkhardt.

The Supreme Court additionally pronounced that it is possible for a cause of action to exist where intentional conduct resulted in unintended and unexpected injuries constituting an accident. Indeed, the focus of the inquiry is on the result or consequence of the insured actor's behavior, not the act alone. Piccard, supra at 548-549, 489 N.W.2d 422; Arco Industries, supra at 416-417, 531 N.W.2d 168. Therefore, even if we find...