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A Better Partnership
January 14, 2016

COA – Insured’s sexual molestation of a minor did not constitute an “occurrence” under the plain meaning of insurance policy

A 16-year-old insured’s deposition testimony established that he reasonably should have expected to injure a minor child when he sexually molested her; therefore, his actions did not constitute an “occurrence” under the plain meaning of an insurance policy, concluded the Michigan Court of Appeals in Home-Owners Insurance Company and Auto-Owners Insurance Company v. Kristen Smith, No. 322694.  The Court also held that the exclusionary provision contained in the policy precluded coverage for the insured’s actions because the victim’s injuries were “reasonably expected or intended by the insured.”
 
In August 2012, 16-year-old Allen Dueweke sexually molested a seven-year-old girl while supervising a group of children as a camp counselor.  He was later convicted of fourth-degree criminal sexual conduct.  The minor girl’s next friend, Kristen Smith, sued Dueweke’s next friend for battery and intentional infliction of emotional distress.  Dueweke was insured under insurance policies issued by the plaintiffs.  The Home-Owners policy stated that it would “pay all sums any insured becomes legally obligated to pay as damage because of or arising out of bodily injury or property damage caused by an occurrence to which this coverage applies.”  The policy defined “occurrence” as an “accident . . .”  The policy also contained an exclusionary provision stating that it would not cover bodily injury “reasonably expected or intended by the insured.”  The Auto-Owners Insurance Company (“Auto-Owners”) policy contained a similar exclusionary provision. 
 
Dueweke’s next friend claimed coverage under the two policies with regard to Smith’s underlying lawsuit.  Home-Owners informed the next friend that it would defend the underlying lawsuit, but reserved its right to challenge its duty to do so.  The plaintiffs filed a motion for summary disposition arguing that because Dueweke’s actions were intended or expected to cause injuries, the damages arising from those injuries were not covered under their policies.  The trial court denied their motion; the plaintiffs filed an application for leave to appeal, which was denied by the Court of Appeals.  The Michigan Supreme Court, in lieu of granting leave to appeal, remanded the case to the Court of Appeals for consideration on leave granted.
 
On appeal, the Court of Appeals looked at the plain language of the insurance policies to determine the intent of the parties.  It also referred to the definition of “accident” as defined by the Michigan Supreme Court in Allstate Ins. Co. v. McCarn, 466 Mich 277 (2002) 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.”  Here, the Court of Appeals reasoned that because there was no evidence that Dueweke intended to harm the victim, his actions “constitute an accident, unless the intended act created a direct risk of harm from which the consequences should reasonably have been expected by the insured.”  The Court ultimately held that Dueweke’s deposition testimony established that he reasonably should have expected to injure the victim with his sexual misconduct, and therefore his actions did not constitute an “accident” or an “occurrence” under the plain meaning of the Home-Owners insurance policy.
 
In addition, the Court held that the exclusionary provision in both the Home-Owners and Auto-Owners policies applied because the injury caused to the victim was “reasonably expected or intended” by Dueweke.  The Court of Appeals reversed the trial court’s denial of the plaintiffs’ motion for summary disposition and remanded for entering an order granting their motions.

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