Regular readers of CO know that I constantly discuss how challenging “what is an accident” cases can be. The question whether an event qualifies as an “accident,” to trigger liability coverage, is the oldest and one of the most contentious in the book. It is also one of the most frequently litigated. But despite all this guidance, the answer can still be as difficult to predict as the weather. Whether injury or damage was caused by an “accident” is generally tied to issues involving fortuity. And the answer to such question is often in the eye of the beholder. For this reason, two sides do not always see eye-to-eye on whether an event qualifies as an “accident.” But even when that’s the case, adversaries they can probably at least understand where the other is coming from.
But I’m not sure that I understand one of the sides of the argument in Auto-Owners Inc. Co. v. Nyhof, No. 320256 (Mich. Ct. App. May 7, 2015). And even though I represent insurers, it’s the insurer’s that I’m struggling with.
The facts of Nyhof are unsettling but simple. William Anthony Jones was sentenced to jail for `first-degree home invasion and first-degree criminal sexual conduct against Chandra Nyhof. Nyhof filed suit against Lynn and Glenn Glaser, who were her landlords. Nyhof asserted counts against the Glasers for negligence, breach of the common-law covenant of quiet enjoyment and violation of a Michigan statute requiring a landlord to maintain the premises in a manner fit for use by the intended parties. Nyhof alleged that the Glasers breached their duties to her and such breach was the actual, proximate, and foreseeable cause of the rape by Jones.
The Glasers sought coverage under two policies issued by Auto-Owners, both of which were triggered by bodily injury caused by an “occurrence,” defined, in pertinent part, as an accident. Auto-Owners filed an action seeking a determination that it had no duty to defend or indemnify the Glasers against the Nyhof suit. The trial court granted summary judgment for Auto-Owners. The case went to the Michigan Court of Appeals, which affirmed the decision that the insurer had no duty to defend or indemnify.
Noting that the policies at issue did not define the term “accident” (which is typical), the court turned to Michigan case law, which defines it as “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. . . The appropriate focus of the term ‘accident’ must be on both the injury-causing act or event and its relation to the resulting injury.”
From here, the court concluded that the rape was not an accident: “Rape is an intentional criminal act. Jones was convicted of raping defendant, so it is clear that he intended to rape defendant and that the rape was not an accident. Because the rape was not an accident, defendant’s bodily injury was not caused by an ‘occurrence.’”
It would likely be difficult to find anyone who disagrees with the court’s conclusion that the rape by Jones was not an accident. However, the issue before the court was not whether Jones was entitled to insurance coverage. Rather, the issue was whether the Glasers were entitled to coverage on the basis of bodily injury caused by an accident. And the court held that they were not: “In this case, the Glasers’ alleged breaches of duty were not the cause of defendant’s bodily injury. Without the underlying rape, there would have been no bodily injury and, obviously, no basis for defendant’s civil suit. Further, in the underlying complaint, defendant never alleged that the Glasers caused defendant bodily injury. Instead, defendant only alleged that the intentional acts of Jones caused her bodily injury. Therefore, defendant’s bodily injury was caused by the rape.”
I’m having some trouble with this conclusion. Yes, true, without the underlying rape, there would have been no bodily injury and no basis for the underlying suit. However, the court’s conclusion, that the Glasers’ alleged breaches of duty were not the cause of the bodily injury, seems to ignore that the Glasers are being sued for breaches of duty to Nyhof that were alleged to be the actual, proximate and foreseeable cause of the rape by Jones.
If the Glasers are found liable, for having breached duties that allowed the rape by Jones – and that may be an issue fairly in dispute -- it means that, even if one step removed from the actual perpetrator, the Glasers, by their acts or omissions, caused bodily injury. However, the Michigan Court of Appeals concluded otherwise. By doing so, the court seems to have set up a situation where the Glasers can be found liable for having caused bodily injury -- but not be entitled to liability coverage because, well, they did not cause bodily injury.
Have I mentioned how challenging “accident” can be?
