A policy that excludes damages caused by “physical abuse” does not take a property insurer off the hook for a claim by an insured who agreed to pay $500,000 to settle a lawsuit stemming from injuries caused by an alleged assault, the Massachusetts Supreme Judicial Court ruled.
The high court said in an Aug. 13 ruling that the term is too ambiguous to bar coverage for the incident, which involved a physical altercation that started during an argument about a record-breaking fish.
The case is Dorchester Mutual Insurance Co. v. Krusell.
Timothy Krusell was a 23-year-old trustee with an ownership interest in his parents’ house, which was insured by Dorchester Mutual. Shortly after midnight on Sept. 13, 2014, he and a college friend were walking in downtown Newport, Rhode Island and struck up a sidewalk conversation with 62-year-old Robert C. Haufler and Haufler’s companion.
Haufler was discussing a record-breaking swordfish he had caught, but Krusell was skeptical. At some point he pushed Haufler, who lost his balance and fell onto a parked automobile before striking the pavement. The fall caused permanent injury to Haufler’s right arm.
Krusell said he acted defensively because he was startled when Haufler suddenly raised his cellphone up to his face — although he later learned that the older man was trying to show him a photo of the fish. Haufler said the younger man ran from several feet away to attack him. Police charged Krussel with assault of a person over 60 causing grave physical injury.
The judge handling the criminal case hinted that he would be less likely to sentence Krusell to jail if a civil settlement was reached. He and his parents agreed to a settlement after being told that the case might go to trial “within days.” They agreed to pay Haufler $750,000, expecting $500,000 of that to be paid by Dorchester Mutual.
The judge reduced the charge to simple assault and put the case on hold for one year. The charge would be expunged in one year if Krusell did not commit any crimes during that period.
Dorchester Mutual denied the Krusell’s insurance claim because the policy excluded coverage for “intentional acts” and injuries caused by “physical abuse” were also excluded. A Superior Court judge found that no coverage was owed because of the physical abuse exclusion.
The Supreme Judicial Court took up the case from there, rather than allow the matter to go before the intermediate Appeals Court.
In its analysis, the high court said the history of policy language that excludes physical abuse, sexual molestation and corporal punishment is important to understand the meaning. Those exclusions were inserted into policies by insurers after they defended themselves from numerous claims against institutions that were accused of negligently allowing molesters to prey on children.
The court said the dictionary definition of “abuse” includes any actions that cause physical harm, but that meaning would make no sense in an insurance context. A homeowner who spilled hot coffee on a guest, for example, could be denied coverage for the injury because it was caused by “abuse.”
The high court said the term abuse is often used to connote misuse of power, such as by a teacher or a spouse.
“The term routinely has been applied to conduct causing harm to a vulnerable type of victim, where the alleged abuser may be responsible for the vulnerable individual’s care,” the court said in a 6-0 decision written by Justice Barbara A. Lenk.
The court concluded that the policy’s use of the term physical abuse was ambiguous, so the wording must be interpeted in favor of the policyholder. The court reversed the trial court’s ruling to dismiss the case.
The high court, however, rejected the Kusell’s counterclaim alleging that Dorchester Mutual had violated state laws that require insurers to settle claims in good faith. The court said the insurer was not aware that Kusell had denied he intentionally attacked Haufler until the family’s attorney submitted a report from a forensic psychologist shortly before a settlement was reached.
The court said it has no opinion on whether the policy’s intentional acts exclusion applies. It remanded the case to the trial court, meaning that question may have to be answered by a jury.
Haufler, a family law attorney, died in January 2017, according to an obituary posted on Legacy.com. He had been a “lifelong sportsman” and was buried privately at sea.
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