Opinion
Docket No. 191640.
Submitted July 1, 1997, at Lansing.
Decided October 24, 1997, at 9:40 A.M.
Garan, Lucow, Miller, Seward Becker, P.C. (by Rosalind Rochkind and Roger A. Smith), for Allstate Insurance Company.
Sommers, Schwartz, Silver Schwartz, P.C. (by Richard L. Groffsky), for Donald L. Fick.
Before: HOOD, P.J., and MCDONALD and YOUNG, JJ.
In this declaratory action, defendant Donald L. Fick, personal representative of the estate of Susan L. Fick, appeals as of right from a circuit court order granting summary disposition in favor of plaintiff Allstate Insurance Company. The trial court determined that, on the basis of an exclusion contained in defendant Nancy Kabalka's homeowner's insurance policy, Allstate was not obligated to indemnify or defend Kabalka in the underlying tort action brought against her by defendant Fick. We affirm.
Kabalka has not appealed from the trial court's decision. Although defendant Fick is not a party to the insurance contract between Allstate and Kalbalka or a third-party beneficiary of that contract, it appears that Allstate has, by naming defendant Fick as a party in this declaratory action, conferred standing upon defendant Fick to contest the coverage question. See Allstate Ins Co v Hayes, 442 Mich. 56, 67-70; 499 N.W.2d 743 (1993).
I
The decedent, Susan Fick, was the live-in girlfriend of Nancy Kabalka's adult foster son, Ken Smolen, and had recently given birth. Kabalka was employed by an obstetrician-gynecologist as an office manager and was authorized to contact pharmacies and verify prescriptions that were issued by the doctor for his patients. However, Kabalka was not authorized to prescribe medications on her own or to obtain them without her employer's approval. At Fick and Smolens' request, Kabalka called a pharmacy, stated that she was calling from her employer's office, and ordered a nonexistent prescription for Parlodel. The couple had requested that medication by name because Fick had used the drug following her two previous pregnancies. However, Fick was not a patient of Kabalka's employer. At the time Kabalka ordered the drug, her employer was out of town and had no knowledge of her actions. Fick apparently suffered an adverse reaction to the medication Kabalka obtained for her and died as a result.
Parlodel is a medication apparently prescribed to stop postdelivery lactation. Kabalka testified in her deposition that she understood only that Parlodel was a "dry-up medication."
Defendant Fick, as personal representative of Susan Fick's estate, brought suit against several defendants, including Kabalka. Consequently, Allstate filed this lawsuit seeking a declaration of its duty to defend and indemnify Kabalka under the homeowner's policy it issued to her. Allstate filed a motion for summary disposition on the ground that Kabalka's actions fell within the criminal acts exclusion of the policy. The trial court issued a written opinion and determined that summary disposition in favor of Allstate was warranted pursuant to MCR 2.116(C)(10). The trial court ruled that the policy unambiguously excluded from coverage harm resulting from criminal acts of an insured, regardless of whether the resulting harm was actually intended, and that Nancy Kabalka's actions fell within the exclusion. We review the trial court's decision de novo. Stehlik v Johnson (On Rehearing), 206 Mich. App. 83, 85; 520 N.W.2d 633 (1994).
Kabalka was charged with, and pleaded nolo contendere to, violating MCL 333.17766(b); MSA 14.15(17766)(b), a misdemeanor.
II
A motion for summary disposition pursuant to MCR 2.116(C)(10) tests the factual basis underlying a plaintiff's claim. Radtke v Everett, 442 Mich. 368, 374; 501 N.W.2d 155 (1993). MCR 2.116(C)(10) permits summary disposition when "[e]xcept as to the amount of damages, there is no genuine issue as to any material fact, and the moving party is entitled to judgment or partial judgment as a matter of law." Id. Therefore, a court reviewing such a motion must consider the pleadings, affidavits, depositions, admissions, and any other admissible record evidence in favor of the party opposing the motion, granting the nonmoving party the benefit of any reasonable doubt, and determine whether there is a genuine issue of disputed material fact. Id.; Skinner v Square D Co, 445 Mich. 153, 161; 516 N.W.2d 475 (1994); Marsh v Dep't of Civil Service (After Remand), 173 Mich. App. 72, 77-78; 433 N.W.2d 820(1988).
A. THE INSURANCE POLICY
The coverage provision of the homeowner's insurance policy at issue states: " Allstate will pay damages which an Insured person becomes legally obligated to pay because of bodily injury or property damage arising from an accident." (Emphasis in original). However, the policy excepts from coverage injuries resulting from intentional acts or from criminal acts. The policy reads, in relevant part, as follows:
1. We do not cover bodily injury or property damage resulting from:
a) an act or omission intended or expected to cause bodily injury or property damage. This exclusion applies even if the bodily injury property or damage is of a different kind or degree, or is sustained by a different person or property, than that intended or expected. . . .
* * *
2. We do not cover bodily injury or property damage resulting from:
a) a criminal act or omission. . . .
* * *
This exclusion applies regardless of whether the Insured person is actually charged with, or convicted of, a crime. [Emphasis in original.]
On appeal, defendant Fick argues that the trial court erred in granting summary disposition to Allstate on the basis of the criminal acts exclusion.
B. ANALYSIS
Although the policy provision at issue has never been interpreted by this Court, we need only apply the well-established principles of construction in order to do so in this case. We enforce an insurance policy according to its terms. Upjohn Co v New Hampshire Ins Co, 438 Mich. 197, 207; 476 N.W.2d 392 (1991). An insurance company will not be held responsible for a risk that it did not assume. Arco Industries Corp v American Motorists Ins Co, 448 Mich. 395, 402; 531 N.W.2d 168 (1995). However, it is well recognized that an insurer's duty to defend is broader than its duty to indemnify. Royce v Citizens Ins Co, 219 Mich. App. 537, 542; 557 N.W.2d 144 (1996). In determining whether an insurer has a duty to defend its insured, we are required to look at the language of the insurance policy and construe its terms. Id. The insurer has a duty to defend if the underlying allegations even arguably come within the policy coverage. Polkow v Citizens Ins Co of America, 438 Mich. 174, 180; 476 N.W.2d 382 (1991). If the policy is ambiguous, it will be construed in favor of the insured to require coverage. Royce, supra at 542-543. However, if the contract is unambiguous, we must enforce it as written. Id. at 543.
We find the criminal acts exclusion in this case to be unambiguous insofar as it clearly precludes coverage for bodily injury resulting from a criminal act. MCL 333.17766; MSA 14.15(17766) provides that a person who "[o]btains or attempts to obtain a prescription drug by falsely representing that he or she is a lawful prescriber, dispenser, or licensee, or acting on behalf of a lawful prescriber, dispenser, or licensee," is guilty of a misdemeanor. MCL 333.17766(b); MSA 14.15(17766)(b) (emphasis added). Here, the undisputed facts reveal that Kabalka phoned in an unauthorized "prescription" for Parlodel, representing to the pharmacist that she was authorized to do so. However, Kabalka's employer had no knowledge of her actions. Because there is no dispute that Kabalka's actions constituted a criminal act, the clear and unambiguous language of the insurance policy excepts her actions from coverage.
Section 17766 also prohibits a person from "falsely mak[ing], utter[ing], publish[ing], pass[ing], alter[ing], or forg[ing] a prescription." MCL 333.17766(c); MSA 14.15(17766)(c).
Indeed, Kabalka admitted in her response to Allstate's motion for summary disposition that her actions constituted a misdemeanor.
Contrary to defendant Fick's assertion, the term "criminal acts" is not ambiguous. Insurance policy language is given its ordinary and plain meaning. Hosking v State Farm Mut Automobile Ins Co, 198 Mich. App. 632, 633-634; 499 N.W.2d 436 (1993). Words are considered to be ambiguous when they may be understood in different ways. Raska v Farm Bureau Mut Ins Co of Michigan, 412 Mich. 355, 362; 314 N.W.2d 440 (1982). Random House Webster's College Dictionary (1995) defines "crime" as "an action that is deemed injurious to the public welfare and is legally prohibited." Id. at 321. We do not see how a reasonable person could fail to appreciate that Kabalka's conduct in obtaining a prescription drug by falsely representing that she had the authority to do so constitutes a crime under this definition and our statute prohibiting this conduct. See, e.g., Allstate Ins Co v Freeman, 432 Mich. 656, 686; 443 N.W.2d 734 (1989) (finding the term "criminal" in an insurance policy to be unambiguous).
Defendant Fick also maintains that, notwithstanding the criminal nature of Kabalka's actions, the policy is ambiguous because the resulting death was an "accident" and therefore included within the coverage grant of the policy. However, we agree with the statement of the Colorado Court of Appeals in Allstate Ins Co v Juniel, 931 P.2d 511, 515 (Colo App, 1996), that a broad criminal acts exclusion like the one in this case "eliminates from coverage more than just intentional crimes or injuries intended or reasonably expected." From an objective standpoint, given Kabalka's admission that she engaged in a criminal act and the all-encompassing criminal acts exclusion at issue, we believe that the insured could not reasonably have expected coverage under these circumstances. See Allstate Ins Co v Keillor (After Remand), 450 Mich. 412, 420; 537 N.W.2d 589 (1995). Therefore, we conclude that Allstate had no duty to defend or indemnify Nancy Kabalka in the underlying action.
Affirmed.