AMERICAN BUMPER & MFG CO V AMERICAN INTERNATIONAL GROUP
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STATE OF MICHIGAN
COURT OF APPEALS
AMERICAN BUMPER & MANUFACTURING
COMPANY and JACK C. SKOOG,
FOR PUBLICATION
March 23, 2004
9:15 a.m.
Plaintiffs-Appellants,
v
No. 245342
Ionia Circuit Court
LC No. 97-018096-CK
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA
Defendant-Appellee,
and
AMERICAN INTERNATIONAL GROUP, INC.,
LANSING INSURANCE AGENCY, and
L. JOHN WENGLARSKI,
Defendants.
AMERICAN BUMPER & MANUFACTURING
COMPANY and JACK C. SKOOG,
Plaintiffs-Appellees,
No. 245367
Ionia Circuit Court
LC No. 97-018096-CK
v
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA
Defendant-Appellant,
and
AMERICAN INTERNATIONAL GROUP, INC.,
LANSING INSURANCE AGENCY, and
L. JOHN WENGLARSKI,
Defendants.
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Updated Copy
June 18, 2004
Before: Fitzgerald, P.J., and Cavanagh and Hoekstra, JJ.
CAVANAGH, J. (dissenting).
The issue is whether defendant insurer had a duty to defend against the underlying
intentional tort claims in this declaratory judgment action. I respectfully disagree with the
majority's determination that there was no such duty.
The insurance policy at issue provides that it does not give rise to a duty to defend or
provide coverage for injuries unless they were the result of an "occurrence," which is defined as
an event neither expected nor intended from the insured's standpoint.
With regard to the "duty to defend" obligation, the law provides:
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. 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. 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. [American Bumper & Mfg Co v Hartford Fire Ins Co, 452 Mich 440, 451452; 550 NW2d 475 (1996) (citations and quotations omitted).]
Therefore, we must consider whether the intentional tort claims filed in the underlying cases
could conceivably be covered by the policy; could the injuries have resulted from an
"occurrence"—an event neither expected nor intended by the insured?
The underlying claims were brought under the intentional tort exception, which provides:
An intentional tort shall exist only when an employee is injured as a result
of a deliberate act of the employer and the employer specifically intended an
injury. An employer shall be deemed to have intended to injure if the employer
had actual knowledge that an injury was certain to occur and willfully disregarded
that knowledge. The issue of whether an act was an intentional tort shall be a
question of law for the court. [MCL 418.131(1).]
In Travis v Dreis & Krump Mfg Co, 453 Mich 149; 551 NW2d 132 (1996), our Supreme
Court construed the first sentence as imposing a specific intent requirement—"the employer
must deliberately act or fail to act with the purpose of inflicting an injury upon the employee."
Id. at 172. The Travis Court then held that the second sentence was to "be employed when there
is no direct evidence of intent to injure, and intent must be proved with circumstantial evidence.
It is a substitute means of proving the intent to injure element of the first sentence." Id. at 173.
The Court noted that the second sentence reads: "An employer shall be deemed to have intended
to injure if the employer had actual knowledge that an injury was certain to occur and willfully
disregarded that knowledge." Id. at 172. The Court concluded:
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If we read both sentences . . . together, it becomes evident that an
employer must have made a conscious choice to injure an employee and have
deliberately acted or failed to act in furtherance of that intent. The second
sentence then allows the employer's intent to injure to be inferred if the employer
had actual knowledge that an injury was certain to occur, under circumstances
indicating deliberate disregard of that knowledge. [Id. at 180.]
Here, the personal representatives of the two deceased employees' estates brought
separate intentional tort actions; the first, concerning Eilar, claimed that this employer
specifically intended an injury, and the second, concerning Dora, claimed that this employer had
actual knowledge that an injury was certain to occur and willfully disregarded it. The issue,
then, is whether defendant had a duty to defend the employer against these allegations, i.e.,
whether it is at least arguable that there had been an occurrence within the scope of coverage
triggering the duty, until it became clear from the factual development that the actions were
outside the scope of coverage. See American Bumper & Mfg Co, supra at 455.
The majority seems to conclude that, because the underlying complaints against the
insured alleged intentional torts, no duty to defend against those claims arose. The reasoning is
that the mere allegations of specific intent to injure and willful disregard of knowledge that an
injury was certain to occur are sufficient to negate the duty to defend. In essence the majority
concludes, as a matter of law, that these allegations automatically trigger the exclusionary part of
the occurrence provision—"for bodily injury . . . neither expected nor intended from the
standpoint of the insured." I respectfully disagree.
The majority looks to Golec v Metal Exchange Corp, unpublished opinion per curiam of
the Court of Appeals, issued January 11, 2002 (Docket Nos. 220166, 220444), for guidance in
this case. However, in Golec the issue was whether the insurer was contractually obligated to
provide coverage, i.e., pay a consent judgment, after the parties negotiated a settlement following
our Supreme Court's holding that there was a genuine issue of material fact regarding whether
the employer committed an intentional tort against its employee. The trial court dismissed the
claim seeking insurance coverage regarding the judgment on the ground that, when an employer
disregards the fact that an injury is certain to occur, the employer's subjective expectation of
injury should be inferred as a matter of law, triggering the exclusionary part of the "occurrence"
provision. The Golec Court disagreed with this absolute rule of law, holding that an employer's
willful disregard of actual knowledge that an injury was certain to occur does not always mean
that the insured "expected or intended" the injury within the contemplation of the insurance
policy "occurrence" provision. In other words, the resolution of the issue whether the employer
expected to injure the employee depends on the facts. I agree with the proposition that an
automatic presumption of an employer's culpable mens rea without proper factual development
is untenable. However, the resolution of the case before this Court does not depend on the Golec
holding. The issue here is not whether the insurer must provide coverage for an alleged
intentional tort; rather, the issue here is whether an insurer can deny its duty to defend simply
because an intentional tort was alleged in a complaint against the employer.
The applicable reasoning in support of concluding that defendant in this case had a duty
to defend can be found in the analogous case of American Bumper, supra. In that case, the
plaintiff was charged by the Environmental Protection Agency with groundwater contamination.
Id. at 445-446. The plaintiff filed claims with their insurance providers demanding that they
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assume the defense against the EPA claims. Id. at 445. The insurers refused on the ground that
they had no duty to defend because the claims did not arise from an "occurrence" (an accident
neither expected nor intended) and because the claims fell within the ambit of the pollution
exclusionary provision. Id. at 449, 453-454. Our Supreme Court rejected these arguments on
the grounds that until factual determinations were made, it was unclear whether an "occurrence"
had taken place and whether the exclusionary provision applied since it was not established
whether the plaintiff had caused a contamination or that any such contamination was expected or
intended. Id. at 453-456. The Court continued that such uncertainty must be resolved in favor of
the policyholder, and thus gives rise to a duty to defend until such time as the uncertainty is
resolved. Id. at 455. Hindsight acquired after the necessary factual development does not relieve
an insurer of its initial duty to defend. Id. The Supreme Court opined that "[w]e find it difficult
to believe that [the plaintiff] 'expected or intended' that its apparently lawful use of the seepage
lagoon would result in property damage requiring remediation." Id. at 456.
Similarly, I find it difficult to believe that, under the "occurrence" provision of the
insurance policy, the employer in this case expected or intended to kill two of its own employees
through the use of a malfunctioning mechanical press. Without the benefit of factual
development that resolves this uncertainty, I would not wholly relieve insurers, including
defendant, of the duty to defend against these intentional tort claims, whether or not the insurers
are eventually relieved of their duty to indemnify. Accordingly, I would affirm the trial court's
decision, albeit for different reasons.
/s/ Mark J. Cavanagh
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