Criminal Act Exclusion Successfully Argued By Michael F. Schmidt In Insurance Coverage Litigation
Schomer v MIC General Insurance Corporation, Oakland County Circuit Court. This case was a declaratory action filed by the MIC insured and joined by the underlying plaintiff against MIC to determine whether the criminal act exclusion in the MIC policy excluded coverage and to determine whether the motor vehicle’s operator had permissive use. The MIC insured, Jean Schomer, allowed her granddaughter to use her vehicle. Her granddaughter in turn allowed her boyfriend, who did not have a valid operator’s license, to use the vehicle, contrary to the grandmother’s instructions. While on the way to see his parole officer, the boyfriend decided to stop at a grocery store parking lot to attempt to steal a purse from a customer. He failed in the attempt and then fled the scene. The attempted theft was reported, and as he was driving eastbound on 696 he was spotted by a police officer who began chasing him. He fled eastbound on 696 and then exited onto southbound I—75 and was driving on the shoulder to avoid traffic when he struck the underlying plaintiff’s vehicle causing it to turn over and injuring its occupants. He then continued driving over a hill, down an embankment, over a cement wall and onto southbound I—75 where he continued fleeing until his car failed and he ran from the scene.
He turned himself in the next day. He then pled nolo contendre to third-degree fleeing and eluding. He was sentenced and imprisoned. The policy excluded coverage for bodily injury or property damage which may reasonably be expected to result from the intentional act of an insured or which is in fact intended by an insured or which is a criminal act. The exclusion only applied to damages in excess of the minimum limits provided by the Financial Responsibility Law. We deposed the boyfriend in prison and he admitted all of the elements of third degree fleeing and eluding. We then filed a motion for summary disposition to enforce the policy exclusion in excess of the Financial Responsibility limits. The insured and the underlying plaintiff argued that the exclusion was contrary to public policy as held by several recent Michigan Court of Appeals decisions and was also ambiguous and unenforceable. We argued that the exclusion was not ambiguous, that there was no issue of fact, that the vehicle’s operator admitted all of the elements of third-degree fleeing and eluding at the time of the accident, that the accident occurred during the course of the fleeing and eluding, and that the exclusion was not contrary to public policy or the No Fault Act or Financial Responsibility Act because it was only enforceable in excess of the Financial Responsibility limits. We also argued that regardless of whether coverage for any criminal act in the use of a motor vehicle was excluded, this was not a valid public policy defense because normal traffic offenses are only civil infractions and are not criminal acts, and moreover, the legislature has determined that the only necessary liability coverage is $20,000/$40,000 and that any coverage in excess of this amount is subject to contract limitation. The court agreed with our argument and granted summary disposition enforcing the exclusion which reduced the available coverage from $100,000/$300,000 to $20,000/$40,000.