DENISE PAGE HOOD, Chief District Judge.
Plaintiff has filed a Motion for Declaratory Judgment [Dkt. No. 22] asking the Court to hold that Plaintiff is not liable to Defendants pursuant to insurance policies Plaintiff issued to Defendants. Defendants have filed a joint response, to which Plaintiff replied. The Court, having concluded that the decision process would not be aided by oral argument, previously ordered that the Motion be resolved on the briefs submitted by the parties. E.D. Mich. L.R. 7.1(f)(2). [Dkt. No. 26] For the reasons that follow, Plaintiff's Motion for Declaratory Judgment is granted.
On February 15, 2017, Michael O'Shea and Sandra O'Shea (the "O'Sheas") filed suit against Defendants Lisa Bishop ("Bishop"), Doris Resetar ("Resetar"), Patrice McGrath and Carol McGrath (the "McCraths"), and others in Oakland County Circuit Court (the "Underlying Suit"). The Underlying Suit was then removed to this Court. See Case No. 2:17-cv-116891. The complaint in the Underlying Suit (the "Underlying Complaint") includes four counts against each of Bishop, Resetar, and the McGraths (collectively, "Defendants"): (a) Count II — Abuse of Process; (b) Count III — Intentional Infliction of Emotional Distress; (c) Count IV — Preliminary/Permanent Injunction; and (d) Count VIII — Malicious Prosecution.
The factual foundation of the Underlying Complaint is the O'Sheas' unhappiness with alleged actions or complaints to the Northville Police Department by the defendants in the underlying suit (including the four Defendants in this case) regarding the O'Sheas' dog running free in the common areas of a condominium complex. As the Underlying Complaint states, in part: "This action centers around a series of actions taken by the individual Defendants, all of whom reside in the same condominium complex/neighborhood in which the Plaintiffs used to reside, designed to intimidate, harass, physically harm and/or inflict severe emotional distress and pain upon the [O'Sheas]." Dkt. No. 1, Ex. C at ¶15.
In Count II (Abuse of Process) of the Underlying Complaint, the O'Sheas allege that: (1) "all of the [d]efendants came to an agreement and formed and carried out a plan to accomplish an unlawful purpose so as to damage the [O'Sheas];" and (2) the defendants made police reports with the "ulterior motive to harass, intimidate, harm and cause [the O'Sheas] to suffer emotional distress." Dkt. No. 22, Ex. A at ¶¶ 25, 27. The same allegations are made in Count III (Intentional Infliction of Emotional Distress), see Dkt. No. 22, Ex. A at ¶¶ 32, 34, together with an allegation that "the [d]efendants' [sic] committed these acts with the intent to cause harm to the [O'Sheas]." Id. at ¶ 38. In Count VIII (Malicious Prosecution), the O'Sheas allege that the defendants initiated allegations of "criminal and quasi-criminal activity" against the O'Sheas for the "improper and personal reasons meant to vex, harm, harass, and injure the [O'Sheas]." Dkt. No. 22, Ex. A at ¶¶61-62.
Prior to the events that are the subject of the Underlying Suit, Plaintiff issued five insurance policies, including three separate Condominium Unitowners insurance policies (each, a "Primary Policy") to: (a) Resetar (Policy No. 82-BU-Z242-1, for the policy periods of March 4, 2011 to March 4, 2018), see Dkt. No. 22, Ex. B at Pg ID 295-329, 365-98; (b) the McGraths (Policy No. 82-BV-R532-0, for the policy periods of May 2, 2015 to May 2, 2018), id. at Pg ID 330-43, 365-98; and (c) Bishop (Policy No. 22-BK-X223-5, for the policy periods of March 10, 2015 to March 10, 2018), id. at Pg ID 344-98. In addition to the Primary Policies, Plaintiff also issued umbrella insurance policies (each, an "Umbrella Policy") to: (1) the McGraths (Policy No. 82-BV-R486-1, for the policy periods of May 2, 2015 to May 2, 2018), id. at 401-25; and (2) Bishop (policy and policy number not provided).
A district court has the discretion whether to exercise jurisdiction under the Declaratory Judgment Act. 28 U.S.C. § 2201(a); Brillhart v. Excess Ins. Co., 316 U.S. 491, 494 (1942). Defendants do not contest the Court's jurisdiction over this matter, Dkt. No. 24, PgID 533 (at n.1), and the Court finds that a consideration of the relevant factors weighs in favor of exercising jurisdiction under the Declaratory Judgment Act. See Bituminous Cas. Corp. v. J & L Lumber Co., Inc., 373 F.3d 807, 813 (6th Cir. 2004).
The rules of construction for insurance contracts are the same as those for any other written contract. Comerica Bank v. Lexington Ins. Co., 3 F.3d 939, 942 (6th Cir. 1993). First, the Court must determine whether the contract language at issue is ambiguous or unambiguous. Second, the Court must construe the contract. The question of whether a contract is ambiguous is a question of law for the Court. Mayer v. Auto-Owners Ins. Co., 127 Mich.App. 23, 27 (1983). Construction of a contract, whether it is ambiguous or unambiguous, also is a question of law for the Court. Fragner v. American Community Mut. Ins. Co., 199 Mich.App. 537, 540 (1993). In this case, neither party argues that any of the relevant terms of the Primary Policy or the Umbrella Policy are ambiguous, and the Court finds that there are no ambiguous relevant terms in the Primary Policy or the Umbrella Policy.
There are specific rules of construction a court must follow construing an insurance contract. Ambiguous terms in an insurance policy are construed in favor of the insured, Arco Indus. Corp. v. Am. Motorists Ins., 448 Mich. 395, 403 (1995), and it is the insurer's responsibility to clearly express any limits on its insurance coverage. Auto Club Ins. Ass'n v. DeLaGarza, 433 Mich. 208, 214 (1989). Exclusionary clauses in insurance contracts are to be strictly and narrowly construed. Farm Bureau Mut. Ins. Co. v. Stark, 437 Mich. 175, 181 (1991).
An insurer has a duty to defend its insured if the allegations of the underlying suit arguably fall within the coverage of the policy. GAF Sales & Service, Inc. v. Hastings Mut. Ins. Co., 224 Mich.App. 259, 261 (1997). 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 period. Dochod v. Central Mut. Ins. Co., 81 Mich.App. 63, 66 (1978).
The insurer's duty to defend depends upon the allegations in the complaint against the insured. Smorch v. Auto Club Group Ins. Co., 179 Mich.App. 125, 128 (1989). The insurer has a duty to look behind the parties' allegations to analyze whether coverage is possible. Shepard Marine Constr. Co. v. Maryland Cas. Co., 73 Mich.App. 62, 65 (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. Detroit Edison Co. v. Michigan Mut. Ins. Co., 102 Mich.App. 136, 142 (1980); 14 Couch on Insurance 2d, § 51:45, at 538. It is settled law in Michigan that an insurer's duty to defend is broader than its duty to indemnify. Auto-Owners Ins. Co. v. City of Clare, 446 Mich. 1, 15 (1994).
Each Primary Policy includes a number of relevant terms and provisions.
Dkt. No. 22, Ex. B at PgID 381 (bold in original). The Primary Policy provides that "bodily injury" means "physical injury, sickness, or disease to a person. This includes required care, loss of services and death resulting therefrom." Id. at PgID 367. "Bodily injury" does not include:
Id. (bold in original).
The Primary Policy provides that "`
Id. at PgID 368-69 (bold in original).
The Umbrella Policies issued to the McGraths and Bishop provide, in relevant part:
Dkt. No. 22, Ex. C at PgID 417.
The Umbrella Policy defines "loss" as:
Id. at PgID 413 (bold in original).
The Umbrella Policy provides that "bodily injury" means "physical injury, sickness, or disease to a person. This includes required care, loss of services and death resulting therefrom." Id. at PgID 412. For purposes of the Umbrella Policy, "bodily injury" does not include:
Id. at PgID 412-13 (bold in original). "Property damage" is defined in the Umbrella Policy as:
Id. at PgID 414 (bold in original). The Umbrella Policy also includes the following definition of "personal injury:"
Id. at Pg ID 413-14 (bold in original).
Finally, Exclusion 17 under the Umbrella Policy provides that "[t]here is no coverage under this policy for any: . . .
Although it is well-established that an insurer's duty to defend is broader than its duty to indemnify, Auto-Owners Ins. Co. v. City of Clare, 446 Mich. 1, 15 (1994), it is equally well-established that a court must give the terms of an insurance policy their plain meaning and may not "create an ambiguity where none exists." Heniser v. Frankenmuth Ins. Co., 449 Mich. 155, 161 (1995). "[T]he terms of an insurance policy, and not the language in the pleadings, trigger an insurer's duty to defend." State Farm Fire & Cas. Co. v. Stone, 2017 U.S. Dist. LEXIS 110283, at *9 (E.D. Mich. July 17, 2017) (citation omitted). As stated in Stone:
Id. at *10.
Pursuant to the Primary Policy provisions, Plaintiff does not have a duty to defend or indemnify Defendants in the Underlying Suit unless the "occurrence" upon which the claim against the insured (Defendants) is based seeks recovery "for damages because of
For those reasons, the Court concludes that there is no genuine dispute of material fact that Defendants have no right pursuant to the Primary Policy to indemnification or a defense with respect to the claims in Counts II, III, and VIII of the Underlying Complaint. Plaintiff is entitled to a declaratory judgment that it has no duty to defend or indemnify Defendants with respect to the Primary Policies.
Defendants do not contest Plaintiff's argument that Plaintiff cannot be liable for a "loss" based on "bodily injury" or "property damage." For the reasons stated above, the Court holds that there is no "loss" pursuant to part a. of the definition of "loss" in the Umbrella Policy, which requires a bodily injury or property damage. Defendants argue that there is a genuine dispute of material fact whether there was a "loss" pursuant to part b. of the definition of "loss" in the Umbrella Policy, which requires a "personal injury." Defendants accurately note that "personal injury" includes an injury "other than bodily injury" that arises out of the "[a]buse of process, malicious prosecution[.]" Dkt. No. 22, Ex. C at PgID 413. Plaintiff does not dispute that argument, but Plaintiff contends that coverage for a "loss" based on personal injury is barred by one of the Umbrella Policy Exclusions. Exclusion 17 under the Umbrella Policy provides that "[t]here is no coverage under this policy for any: . . .
Defendants argue that there is no evidence in the Underlying Suit that any Defendant acted with specific intent to cause any harm to the O'Sheas. Defendants contend that, because Defendants' only alleged actions were contacting and speaking to the Northville Police Department or its officers about a loose dog in the condominium complex's common areas, it was not a natural, foreseeable, and anticipated (expected) result that the O'Sheas would suffer a personal injury (or bodily injury) as a result of Defendants' actions. Defendants assert that the Court must look to the cause of the alleged injury to determine whether coverage exists, State Farm v. Basham, 206 Mich.App. 240 (1994), because coverage for damages is precluded only if the damages should reasonably have been expected due to the direct risk of harm created by the Defendants' intentional actions. Auto Club Ins. Co. v. Burchell, 249 Mich.App. 468, 482-83 (2001). Defendants propose that, until the O'Sheas are deposed, there is little known about: (a) the O'Sheas' alleged bodily injuries and personal injuries; and (b) whether any of these alleged injuries were expected as a natural, foreseeable, and anticipated result of any alleged intentional act by the McGraths or Bishop.
Plaintiff argues that all of the alleged acts (abuse of process, intentional infliction of emotional distress, malicious prosecution) require a showing of intent, such that they could not have been accidental, which is necessary for there to be a "loss" under the Umbrella Policy (or an "occurrence" under the Primary Policy). Plaintiff relies on a number of allegations in the Underlying Complaint, especially allegations in Count II, Count III, and Count VIII. Plaintiff asserts, and the Court agrees, that those allegations require a finding that Defendants acted with intent to injure the O'Sheas.
In Count II, the O'Sheas allege that the underlying defendants (including Defendants) "came to an agreement and carried out a plan to accomplish an unlawful purpose . . . to damage the [O'Sheas]," making police reports with the "ulterior motive to harass . . . harm and cause [the O'Sheas] to suffer emotional distress." Dkt. No. 22, Ex. A at ¶¶ 25, 27. The Court finds that alleging that Defendants "came to an agreement . . . to accomplish an unlawful purpose" evidences intent, not recklessness or negligence. Having the "ulterior motive" to take action, especially to harass, harm and cause emotional distress, also shows an intent to harm.
In Count III, the O'Sheas make the same allegations made in Count II and discussed in the preceding paragraph. See Dkt. No. 22, Ex. A at ¶¶ 32, 34. Those allegations alone demonstrate that the O'Sheas' Intentional Infliction of Emotional Distress claim was based on the intentional acts of Defendants (and others). Neither of those allegations allows for a finding of liability based on recklessness or negligence by Defendants, even though a claim for intentional infliction of emotional distress could survive upon a showing of recklessness. Roberts v. Auto-Owners Ins. Co., 422 Mich. 594, 601 (1985); Hilden v. Hurley Med. Ctr., 831 F.Supp.2d 1024, 1046 (E.D. Mich. 2011) (citation omitted) (the second element of a claim for intentional infliction of emotional distress requires Plaintiff to prove "intent or recklessness"). That is particularly true because the O'Sheas also alleged in Count III that "the Defendants' [sic] committed these acts with the intent to cause harm to the Plaintiffs." Id. at ¶ 38. The Court finds that the O'Sheas and the Underlying Complaint could not have alleged any more clearly that the acts Defendants committed were conducted "
In Count VIII, the O'Sheas allege that the defendants (including Defendants) in the Underlying Suit took "criminal and quasi-criminal activity" against the O'Sheas for the "improper and personal reasons meant to vex, harm, harass, and injure the Plaintiffs." Dkt. No. 22, Ex. A at ¶¶61-62. The Court notes that criminal activity generally requires intentional actions. The Court also finds that the allegation that Defendants had "improper reasons
The Court further notes that the "General Allegations and Factual Background" portion of the Underlying Complaint includes allegations that demonstrate that the claims against Defendants are based on Defendants' intentional acts. As Paragraph 15 of the Underlying Complaint states: "
The Court finds that the O'Sheas can only recover against Defendants in Counts II, III, and VIII of the Underlying Suit if the factfinder determines that a personal injury was caused by Defendants "act[ing] with specific intent to cause . . . harm." Dkt. No. 22, Ex. C at PgID 420. As those allegations will require a showing of intentional acts by Defendants, the Court holds that Exclusion 17 applies to bar coverage for personal injury under the Umbrella Policies applicable to this case. Plaintiff is entitled to a declaratory judgment of no duty to defend or indemnify Defendants with respect to the Umbrella Policies.
Plaintiff argues, and Defendants do not contest, that Plaintiff has no duty to defend or indemnify Defendants with respect to the claim for injunctive relief in Count IV of the Underlying Complaint. Both the Primary Policy and the Umbrella Policy offer coverage for damages to which Defendants (as insureds) might be subject pursuant to the terms of those policies. As the Michigan Court of Appeals has recognized, an insured does not have a duty to defend or indemnify an insured in an underlying case where injunctive relief was sought. See, e.g., Jones v. Farm Bureau Mut. Ins. Co., 172 Mich.App. 24, 29 (1988). The relevant Primary Policy and Umbrella Policy terms provide that: (a) Plaintiff will pay on "liability for damages for which the insured is legally liable;" (b) "we will pay on behalf of the insured, the damages . . .;" and (c) "[i]f a suit is brought against an insured for damages because of a loss to which this policy applies, we will provide a defense to the insured . . ." Dkt. No. 22, Ex. B at PgID 381, Ex. C at PgID 417. There are no provisions under the Primary Policy or the Umbrella Policy that extend coverage to an injunctive action or claims for injunctive relief. The Court holds — and will enter a declaratory judgment — that Plaintiff has no duty to indemnify or defend against Plaintiff's injunctive relief claim (Count IV).
For the reasons stated above,
IT IS ORDERED that Plaintiff's Motion for Declaratory Judgment [Dkt. No. 22] is
IT IS FURTHER ORDERED that Plaintiff is entitled to a declaratory judgment that Plaintiff has no duty to defend or indemnify Defendants under the Primary Policy and/or the Umbrella Policy with respect to the Underlying Suit.
Judgment shall be entered accordingly.
IT IS ORDERED.
