Essex Insurance Company v. Hegira Programs, Inc.

Full title: ESSEX INSURANCE COMPANY, A Delaware corporation Plaintiff, vs. HEGIRA…

Court: United States District Court, E.D. Michigan, Southern Division

Date published: Jan 25, 2001

Case No. 00-CV-72464-DT (E.D. Mich. Jan. 25, 2001)

Opinion

Case No. 00-CV-72464-DT

January 25, 2001

OPINION AND ORDER

THE HONORABLE LAWRENCE P. ZATKOFF, CHIEF UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This matter is before the Court on cross-motions for summary judgment. Plaintiff filed a motion for summary judgment pursuant to Fed.R.Civ.P. 56 to which defendant responded and plaintiff replied. Further, defendant has also filed a motion for summary judgment, to which plaintiff responded and defendant replied. The Court finds that the parties have adequately set forth the relevant law and facts and oral argument would not aid in the disposition of the instant motions. See E.D. Mich. LR 7.1(e)(2). Accordingly, the Court ORDERS that the motions be decided on the briefs submitted. For the reasons set forth below, plaintiff's motion for summary judgment is GRANTED and defendant's motion for summary judgment is DENIED.

II. BACKGROUND

The case before the Court is a declaratory judgment action brought by plaintiff, Essex Insurance Company (hereinafter "Essex"), and arises out of a case currently pending in the Wayne County Circuit Court. A discussion of the facts of that case is necessary to understand the case presently before this Court.

Defendant, Hegira Programs, Inc. (hereinafter "Hegira"), operates a psychiatric facility called the Psychiatric Intervention Center. This facility screens and treats psychiatric patients. On April 14, 1997, Jena Keeney sought treatment at Hegira's facility. While Keeney was waiting to be admitted into the facility, she "was physically attacked and punched in the face by another patient who had already been admitted or was in the process of being admitted."

On April 10, 2000, Keeney filed suit in Wayne County Circuit Court against Hegira. Keeney alleged negligence, nuisance, and the hospital exception to the Government Tort Liability Act. Basically, Keeney's suit against Hegira alleges that it failed to "detect and prevent the alleged battery."

Hegira states in its brief that "[a]t all times relevant to the alleged incident, Hegira was under a Professional Liability Coverage insurance policy . . . issued by Plaintiff, Essex Insurance Company." Essex states that the insurance policy it issued to Hegira is policy number 3AN 2847. Apparently, Hegira made a claim against this policy. However, instead of covering Hegira under the insurance policy, Essex filed the present declaratory judgment case in which it asks the Court to find that Hegira is not covered under the insurance policy, and therefore, has no duty to defend or indemnify Hegira as to the Wayne County Circuit Court case filed by Keeney.

III. SUMMARY JUDGMENT STANDARDS

Summary judgment is appropriate only if the answers to interrogatories, depositions, admissions, and pleadings combined with the affidavits in support show that no genuine issue as to any material fact remains and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). A genuine issue of material fact exists when there is "sufficient evidence favoring the non-moving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986) (citations omitted). In application of this summary judgment standard, the Court must view all materials supplied, including all pleadings, in the light most favorable to the non-moving party. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). "If the evidence is merely colorable or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (citations omitted).

The moving party bears the initial responsibility of informing the Court of the basis for its motion and identifying those portions of the record that establish the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and come forward with specific facts to demonstrate that there is a genuine issue for trial. See Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324. The non-moving party must do more than show that there is some metaphysical doubt as to the material facts. It must present significant probative evidence in support of its opposition to the motion for summary judgment in order to defeat the motion for summary judgment. See Moore v. Philip Morris Co., 8 F.3d 335, 339-40 (6th Cir. 1993).

Finally, because this is a diversity action, Michigan law governs. See Erie v. Tompkins, 304 U.S. 64, 78 (1938); see also Jandro v. Ohio Edison Co., 167 F.3d 309, 313 (6th Cir. 1999).

IV. THE MOTIONS FOR SUMMARY JUDGMENT

Because the two motions for summary judgment deal with essentially the same issues, the Court will address them simultaneously. The first issue to consider is whether the claims raised in the Wayne County Circuit Court case were accidental, and therefore, constitute an "occurrence" under the policy. The following language is contained in the insurance policy issued by Essex to Hegira:

b. This insurance policy applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory"; and

(2) The "bodily injury" or "property damage" occurs during the policy period.

The insurance policy defines the term "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." As noted by Essex, the insurance policy does not define the term "accident." However, the Michigan Supreme Court has interpreted several insurance policies containing the term "accident."

Initially the Court will set forth the rules of insurance policy construction. In Frankenmuth Mut. Ins. Co. v. Masters, 460 Mich. 105 (1999), the Michigan Supreme Court stated:

An insurance policy must be enforced in accordance with its terms. We will not hold an insurance company liable for a risk it did not assume. In interpreting ambiguous terms of an insurance policy, this Court will construe the policy in favor of the insured. However, we will not create ambiguity where the terms of the contract are clear. Where there is no ambiguity, we will enforce the terms of the contract as written. Furthermore, this Court will interpret the terms of an insurance contract in accordance with their "commonly used meaning." We take into account the reasonable expectations of the parties.

Id. at 111-12.

In Frankenmuth, the Michigan Supreme Court examined language in an insurance policy which is nearly identical to the language at issue in the present case. In that case, coverage under the policy existed only if an "occurrence" had taken place. The term "occurrence" was defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in . . . bodily injury . . . or . . . property damage." Id. at 112. Much like the present case, the term "accident" was not defined in the insurance policy. Id. at 114. Nonetheless, the Michigan Supreme Court stated: "using the common meaning of the term, we have repeatedly stated that `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.'" Id. In addition, the Court also held that "the definition of accident should be framed from the standpoint of the insured, not the injured party." Id. Finally, the Michigan Supreme Court held "that the appropriate focus of the term `accident' must be on both `the injury-causing act or event and its relation to the resulting property damage or personal injury.'" Id. at 115.

Applying the facts of the present case to the Michigan Supreme Court's holding in Frankenmuth, the Court finds that the physical attack on Keeney is not an accident under the terms of the insurance policy, and therefore, not an occurrence. This was not a situation in which Keeney slipped and fell. Instead, this was a situation in which a person deliberately chose to strike Keeney. Focusing on "the injury-causing act," and considering the matter from Hegira's viewpoint, injuries from being struck in the face by another are the result of a deliberate act. Consequently, Keeney's injury falls outside of the scope of the insurance policy between Essex and Hegira. Keeney's injury was not the result of an "accident," and therefore, there is no "occurrence" under the policy triggering coverage.

The second issue to consider is whether the "sexual abuse and/or misconduct" endorsement attached to the insurance policy is applicable to the present case. The following provision is contained in the endorsement:

In consideration of the premium charged, this endorsement will provide limited coverage under COMMERCIAL GENERAL LIABILITY claims made against you, caused by one of your employees . . . alleging injury or damages arising out of SEXUAL ABUSE AND/OR MISCONDUCT which is caused by or contributed to by your failure to:

1. Properly train, hire or supervise any employee; or

2. Properly control, monitor or supervise the treatment and care of the person whose care has been entrusted to you.

Further, the term "sexual abuse and/or misconduct" is defined as:

[S]exual and/or physical abuse, misconduct, molestation or licentious, immoral or sexual behavior whether intended or not intended to lead to or culminating in any sexual act, whether caused by, or at the instigation of, or at the direction of, or omission by any insured, employees, patrons or anyone whatsoever; and shall further include, but is not limited to, the negligent or intentional infliction of physical, emotional, or psychological injury or harm on any person or persons in the care, custody, or control of the insured.

Essex argues that the term "sexual abuse and/or misconduct" does not encompass the attack on Keeney, and therefore, this endorsement does not extend coverage to the present case. However, Hegira disagrees with Essex, essentially arguing that the term "sexual abuse and/or misconduct" refers to two separate things, namely sexual abuse on the one hand, and misconduct on the other.

The Court disagrees with Hegira's interpretation of the term "sexual abuse and/or misconduct." Initially, the Court notes that the endorsement defines "sexual abuse and/or misconduct" as one term. The endorsement does not break the term down into its parts and define the term "sexual abuse" and the term "misconduct" separately, as Hegira's interpretation suggests. Further, examining the definition of the term "sexual abuse and/or misconduct," it is clear that the term contemplates misconduct of a sexual nature. Again, the definition states that "sexual abuse and/or misconduct" is defined as "sexual and/or physical abuse, misconduct, molestation or licentious, immoral or sexual behavior whether intended or not intended to lead to or culminating in any sexual act. . . ." The definition provides that it encompasses certain types of actions, such as misconduct, molestation, and sexual behavior, regardless of whether or not such actions were intended to lead to or result in a sexual act. The definition covers sexual acts and the misconduct, molestation, or physical abuse which leads up to the sexual act, not simply any act of misconduct. The Court finds that Hegira's interpretation of the term "sexual abuse and/or misconduct" is inconsistent with the definition provided in the endorsement. Therefore, the attack on Keeney does not fall under the definition of "sexual abuse and/or misconduct." Consequently, Hegira's claim under the insurance policy falls outside of the scope of coverage provided by the "sexual abuse and/or misconduct" endorsement.

V. CONCLUSION

For the reasons discussed above, plaintiff's motion for summary judgment is GRANTED. Further, because the Court has granted plaintiff's motion, defendant's motion for summary judgment is DENIED.

IT IS SO ORDERED.