The Michigan Court of Appeals finds an insurance policy’s criminal act exclusion inapplicable and sounds a cautionary note for insurers and their counsel


The Michigan Court of Appeals’ March 5, 2013 opinion in Auto Club Group Insurance Co v. Kondziolka is a cautionary tale– not just for hunters but for insurers and their counsel as well. The case arose out of a hunting accident in which an insured shot a person he thought was a deer. The hunter’s insurer sought a declaratory judgment based on the policy’s criminal exclusion and a statute that criminalizes firing a gun at a person intentionally but without malice. The Court of Appeals found the insurer’s argument–that the statute applied as long as the insured intentionally fired a gun, even if the gun was not intentionally fired “at a person”–unpersuasive. The court also indicated that its hands were effectively tied by the insurer’s failure to raise any theory under the criminal acts exclusion except the one that proved unsuccessful. Michigan is a “raise or waive” state and, as Auto Club demonstrates, a party can hamper its chances of prevailing by failing to raise all plausible arguments at the trial level.

The insured, Kondziolka, was hunting on private land owned by a family friend. He walked south to the property line to check a deer stand his father had set up, and saw two other hunters at a distance. He saw one sit down but did not see where the other hunter went. Walking to the other blind, he heard what he thought was a deer. Seeing a flash of white, he raised his muzzle loader and shot. Kondziolka heard someone yell: “You shot me!” This was the first moment he became aware that he had a person, not a deer. He immediately summoned help.

The shooting victim, John Patrick Shwary, sued Kondziolka, and Auto Club, Kondziolka’s insurer, filed a separate action for declaratory relief. It moved for summary disposition based on the policy’s criminal acts exclusion, contending that Kondziolka had violated a Michigan criminal statute that prohibited injuring another person by discharging a firearm pointed or aimed intentionally but without malice at another person.” Auto Club did not dispute that the shooting constituted an “occurrence” under the policy but argued that the shooting was criminal and, therefore, coverage was excluded. Shwary responded in opposition to Auto Club’s motion, arguing that Kondziolka did not violate the statute because he was unaware he was pointing or aiming his firearm at a person. The trial court entered an order denying Auto Club’s motion, granting Shwary’s counter motion, and declaring that Auto Club had a duty to defend and indemnify Kondziolka in the underlying tort action. Auto Club appealed.

On appeal, Auto Club tried to extend its argument, contending that Kondziolka had also violated another criminal statute. It also attempted to rely on evidence that had not been presented to the trial court. But the Court of Appeals declined to consider Auto Club’s additional argument and evidence.

It also rejected Auto Club’s attempted reconstruction of the criminal statute at issue. Auto Club argued that, in order to violate the statute, one need not intend to aim or point a firearm at a person, but need only intentionally aim or point a firearm at anything. Citing principles of grammar and 150 years of case law, the Court of Appeals concluded that the statute at issue required the firearm-holding individual to intend to point or aim the firearm at a person. The only evidence – a police report (assuming it was admissible) and Kondziolka’s deposition testimony – demonstrated that Kondziolka did not intend to aim or point his firearm at a person and therefore Auto Club’s argument was unavailing.

The Court of Appeals stressed the unique procedural posture of the case. Auto Club did not plead or attempt to prove that the policy’s criminal acts exclusion applied for any other reason. Nor did Auto Club seek to amend its complaint to include alternate bases for establishing the application of the criminal acts exclusion.

Auto Club demonstrates that an insurer must raise at the outset any bases for denying coverage that it may rely on later — including alternate arguments. This flexibility is especially important when an insurer’s primary argument, as in Auto Club, relies on a potentially difficult question of statutory interpretation.

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