Coverage Pointers - Volume IX, No. 20a
Ouch That Hurts
between Intentional Injury Exclusions and Assault
The injured party has been hit by the insured with a beer bottle. The bottle is now permanently embedded in his head and he’s now known by the nickname “Molson.” Your insured has timely advised you of the incident and he is being sued for his conduct. Do you have an obligation to defend and indemnify?
With regularity, coverage inquiries are made with respect to injuries sustained in fights and assaults. The questions come up with both personal lines and commercial lines policies.
The first question always to be asked is whether or not the incident is an accident or occurrence under the policy or whether one is alleged. Without the event constituting an accident or occurrence, the policy does not attach and an insurer has neither an obligation to defend or indemnify its insured.
That’s the first response to the insured, if that is what the investigation reveals. However, there may be less clarity than you wish in the facts or the allegations, and it may well be necessary to consider policy exclusions.
We see exclusions focus on the intent to cause injury:
1. Coverage E – Personal Liability and Coverage F – Medical Payments to Others do not apply to “bodily injury” or “property damage”:
a. Which is expected or intended by one or more “insureds” …
This insurance does not apply to:
a. Expected or Intended Injury
"Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property.
The most recent Court of Appeals case analyzing this exclusion was decided in 2006. In Automobile Ins. Co. of Hartford v. Cook, 7 N.Y.3d 131(2006), one Alfred Cook shot and killed Richard Barber inside his home. Barber, weighed about 360 pounds, was approximately three times Cook's size and had previously attacked the smaller man, causing injury to his leg. The facts – as taken from the decision -- are quite compelling:
On the morning of February 20, Barber and another man were outside of Cook's home, hurling objects at the house. They left without further incident, but Barber returned later that day with two other companions. When Cook, who was standing outside his door, saw them approaching, he asked a person visiting him to leave because he expected trouble. He returned inside, locked the door and, anticipating a confrontation, retrieved a .25 caliber handgun from his bedroom.
There was further testimony that the group burst into Cook's home. The four individuals gathered in the kitchen where Barber began demanding money from Cook while pounding his fists on the kitchen table. Cook, alarmed, drew his gun and demanded that they leave his house. Barber apparently laughed at the small size of the pistol, at which point Cook withdrew to his bedroom for a larger weapon. He picked up a loaded, 12 gauge shotgun and stood in his living room at the far end of his pool table. Cook again ordered them to leave the house. Although Barber started to head toward the door with his companions, he stopped at the opposite end of the pool table, turned to face Cook and told his companions to take anything of value, and that he would meet them outside because he had some business to attend to. When Barber menacingly started advancing toward Cook, Cook warned him that he would shoot if he came any closer. Cook aimed his gun toward the lowest part of Barber's body that was not obscured by the pool table--his navel. When Barber was about one step away from the barrel of the gun, Cook fired a shot into Barber's abdomen. Barber died later that day at a hospital.
A wrongful death action was commenced against
Cook. The first cause of action alleged that "[i]njury to the decedent and the
decedent's death were caused by the negligence of the defendant, Alfred S.
Cook." Specifically, the complaint alleges that Cook's behavior "consisted of
negligently playing with a loaded shotgun; negligently pointing that shotgun at
the abdomen of the decedent; negligently discharging that shot gun into the
decedent's abdomen; and engaging in unruly behavior at the Defendant's residence
on February 20, 2002." In a second cause of action, the complaint alleges that
Cook intentionally shot Barber causing Barber's death. At his examination before
trial, Cook testified, "I knew the [shot from the] shotgun would injure Mr.
Barber because I had to stop him, but I did not anticipate it killing him."
The Appellate Division held that since Cook intentionally shot Barber, his actions could not be considered an accident or "occurrence" and, thus, were not covered by the policy and that the acts came within the policy exclusion for bodily injury "expected or intended" by the insured. The Court of Appeals reversed, and held that the insurer had a duty to defend:
It is well settled that an
insurance company's duty to defend is broader than its duty to indemnify.
Indeed, the duty to defend is "exceedingly broad" and an insurer will be called
upon to provide a defense whenever the allegations of the complaint "suggest . .
. a reasonable possibility of coverage" … If, liberally construed, the claim is
within the embrace of the policy, the insurer must come forward to defend its
insured no matter how groundless, false or baseless the suit may be…”
When an insurer seeks to disclaim coverage on the further basis of an exclusion, as it does here, the insurer will be required to "provide a defense unless it can 'demonstrate that the allegations of the complaint cast that pleading solely and entirely within the policy exclusions, and, further, that the allegations, in toto, are subject to no other interpretation'," … In addition, exclusions are subject to strict construction and must be read narrowly …
The Court then held:
… that “an examination of the wrongful death complaint leads to the conclusion that Cook's claim is covered by the policy. Among other things, the complaint alleges that Cook negligently caused Barber's death. If such allegations can be proven, they would fall within the scope of the policy as a covered occurrence. … Thus, if Cook accidentally or negligently caused Barber's death, such event may be considered an "occurrence" within the meaning of the policy and coverage would apply.” … Turning to the exclusion--as an allegation of negligence implies an unintentional or unexpected event, Hartford necessarily has failed to demonstrate that the allegations of the complaint are subject to no other interpretation than that Cook "expected or intended" the harm to Barber.
In light of this disposition, it is unnecessary to address the remaining arguments--specifically, whether acts of self-defense are intentional acts precluding coverage under a homeowner's policy. Suffice it to say that a reasonable insured under these circumstances would have expected coverage under the policy. As to a duty to indemnify, that determination will abide the trial.
The New York courts look at this intentional injury exclusions differently from “assault” exclusions. The latter focuses on the act of assault rather than on the intended results. Compare the exclusions above with the one considered by the Court of Appeals in the Mount Vernon case:
It is agreed that no coverage
shall apply under this policy for any claim, demand or suit based on Assault and
Battery, and Assault and Battery shall not be deemed an accident whether or not
committed by or at the direction of the insured.
Mount Vernon Fire Ins. Co. v. Creative Hous., 88 N.Y.2d 347, 350 (1996)
… arising out of assault or
battery, or out of any act or omission in connection with the prevention or
suppression of an assault or battery.
Mark Mc Nichol Enters. v. First Fin. Ins. Co., 284 A.D.2d 964, 965 (4th Dept. 2001)
Self Defense Cases
In Firemen's Ins. Co. v. 860 West Tower, 246 A.D.2d 401, 401-402 (1st Dept. 1998), the insured argued that his conduct was an exercise of reasonable force to protect him in an unprovoked assault. The lower court declared that the insurer had an obligation to defend and the First Department affirmed:
The IAS Court correctly held that plaintiff is required to defend defendant building, owners, managing agent and their employee in an underlying action brought by two former employees alleging an unprovoked assault by defendant employee. While the policy specifically excludes coverage for bodily injury "expected or intended from the standpoint of the insured", it also specifically excepts from this exclusion bodily injury "resulting from the use of reasonable force to protect persons or property", i.e., acts of self-defense.
How did the court know that this was supposedly an act of self-defense when the complaint only alleged intentional conduct? It was, if you will, push-back from the insured:
Both the answer to the underlying complaint, and a letter from defendants to plaintiff asking it to reconsider its denial of their request for a defense in light of the dismissal of criminal charges that had been brought against defendant employee, and offering to provide it with additional witness statements, gave plaintiff actual knowledge of facts establishing a reasonable possibility that defendant employee was acting in self-defense against the plaintiffs in the underlying action (see, Fitzpatrick v American Honda Motor Co., 78 NY2d 61).
The Appellate Division cites to the famous Fitzpatrick case which holds that an insurer must expand its obligation to defend based on its knowledge of the facts, even outside of the complaint.
In M.J. Frenzy, LLC v. Utica Nat'l Ins. Group, 309 A.D.2d 566, 567 (1st Dept. 2003), the plaintiff, a jazz club was insured under a policy issued by Utica that contains an exclusion for "bodily injury * * * intended from the standpoint of the insured" but which exempts from such exclusion "bodily injury resulting from the use of reasonable force to protect persons or property." Plaintiff's bartender was involved in an altercation after a drunk, disorderly and abusive patron grabbed him. Police responded and the patron was eventually removed from the premises complaining of an injury to his ankle.
Plaintiff was served with a summons and complaint by the patron alleging assault and battery, negligent hiring and supervision and violation of the Dram Shop Act (General Obligations Law § 11-101 ). As relevant here, Utica disclaimed coverage, relying on the exclusion for intentional acts.
The court noted that the policy did not include an ”assault" exclusion and directed the carrier to defend:
cases cited by defendant in support of its contention that the policy's
intentional acts exclusion relieved it of any duty to defend or indemnify
plaintiff for the acts of its employee are inapposite, since the governing
policies in those cases expressly provide for the exclusion of any claims
arising out of assault and battery (see U.S. Underwriters v Val-Blue Corp., 85
N.Y.2d 821, 823, 623 N.Y.S.2d 834, 647 N.E.2d 1342 ; Perez-Mendez v
Roseland Amusement & Dev. Corp., 305 A.D.2d 166, 757 N.Y.S.2d 848 ;
[***3] Handlebar Inc. v Utica First Ins. Co., 290 A.D.2d 633, 735 N.Y.S.2d 249
, lv denied 98 N.Y.2d 601, 744 N.Y.S.2d 761, 771 N.E.2d 834 ).
M.J. Frenzy, LLC v. Utica Nat'l Ins. Group, 309 A.D.2d 566, 567 (1st Dept. 2003)
Compare those cases, to the Handlebar case cited in the M. J. Frenzy, Inc. decision. In that case, there was an intentional injury exclusion like yours but, in addition, an assault exclusion. Note how that led to a different result, because the "reasonable force" exception did NOT apply to the assault exclusion:
Defendant disclaimed any responsibility to defend or indemnify plaintiffs based on two provisions found in the insurance policy or endorsements or attachments. The first of these endorsements (hereinafter referred to as the assault exclusion) provides as follows: "Notwithstanding anything contained herein to the contrary, it is understood and agreed that this policy excludes any and all claims arising out of any assault, battery, fight, altercation, misconduct or any other similar incident or act of violence, whether caused by or at the instigation of, or at the direction of the insured, his employees, customers, patrons, guests or any cause whatsoever, including but not limited to claims of negligence or improper hiring practices, negligent, improper or non-existent supervision of employees, patrons or guests and negligence in failing to protect customers, patrons or guests."
* * * *
Defendant moved for summary judgment, contending that the assault exclusion relieved it of all liability to defend and indemnify plaintiffs for the negligence and assault causes of action ... In addition to opposing defendant's motion for summary judgment, plaintiffs cross-moved for partial summary judgment, contending that the following policy language creates an ambiguity in the policy entitling them to a defense, if not indemnification:
"WE DO NOT PAY FOR:
"a) bodily injury or property damage expected or intended from the standpoint of the insured. This exclusion does not apply to bodily injury resulting from the use of reasonable force to protect persons force to protect persons or property" (emphasis supplied).
Plaintiffs argued that the assault exclusion applied to offensive conduct,
whereas this policy provision applied to defensive conduct and that Greaves
engaged in only defensive conduct by using reasonable force to protect himself
and his patrons. Plaintiffs also
cross-moved for additional discovery asserting that they were unable
to factually determine if the assault exclusion was actually part of their
policy. Supreme Court denied defendant's motion for summary judgment and
partially granted plaintiffs' cross motion for partial summary judgment by
directing that defendant has a duty to defend plaintiffs in the underlying
action. Supreme Court's decision is silent with respect to the cross motion for
additional discovery. Defendant appeals.
... Plaintiffs, as limited by their brief, argue ... that the basic policy provisions and the assault exclusion, "read together," create a duty to defend where the insured allegedly injured Myroniuk while acting in self-defense or in defense of others. As an alternative argument, plaintiffs only argue that an ambiguity is created by the two policy provisions. ... This exclusion must be read with the policy, "and the words of the policy remain in full force and effect except as altered by the words of the endorsement" (County of Columbia v Continental Ins. Co., 83 N.Y.2d 618, 628). The assault exclusion begins, "Notwithstanding anything contained herein to the contrary." Clearly, the language of the exclusion then controls over any contrary language in the policy.
Each of Myroniuk's negligence theories is dependent on the assault and battery and, as they are solely and entirely within the exclusionary provisions of the assault exclusion, defendant has no duty to defend or indemnify plaintiffs (see, Mount Vernon Fire Ins. Co. v Creative Hous., 88 N.Y.2d 347, 351; U.S. Underwriters Ins. Co. v Val-Blue Corp., 85 N.Y.2d 821, 823).
(Handlebar Inc. v. Utica First Ins. Co., 290 A.D.2d 633, 634-635 (3rd Dept. 2002)
The analysis of cases that suggest assault is always the same. First, determine whether the incident constitutes an accident or occurrence as defined in the policy. Secondly, as the claim is presented, examine the exclusions and see (a) which one you have and (b) whether the conduct falls completely within the exclusion. Only then can you determine how to properly respond to the insured. Don’t forget to do it promptly.