In a decision announced Aug. 4, 2009, the Supreme Court of Ohio held that when a liability insurance policy defines a covered “occurrence” as an “accident,” a negligent act committed by an insured party qualifies as an “occurrence” in cases where the insured’s negligent conduct is predicated on the commission of an intentional tort by another person (for example, where an injured party asserts a negligence claim against an employer for negligent hiring or supervision of an employee who intentionally injured the claimant).
Following is a summary of the Ohio Supreme Court’s decision in Safeco Ins. Co. of Am. v. White, Slip Opinion No. 2009-Ohio-3718, released by the Court’s Office of Public Information. The Court’s slip opinion may be accessed online at: www.supremecourt.ohio.gov/rod/docs/pdf/0/2009/2009-Ohio-3718.pdf.
In a majority decision written by Chief Justice Thomas J. Moyer, the Court held that an insurance policy exclusion of coverage for “intentional acts” committed by an insured party precludes coverage for claims asserted against an insured person who intended or expected to cause injury, but does not preclude coverage under the same policy for separate claims arising from the same events where those claims are asserted against a different insured person, and are based on a theory of negligent, rather than intentional, conduct.
In July 2003, Benjamin White, the 17-year-old son of Lance and Diane White, attacked and repeatedly stabbed Casey Hilmer, the 13-year-old daughter of Steve and Megen Hilmer, as she was jogging in their neighborhood. Her injuries were not fatal.
Benjamin White, who lived with his parents at the time of the attack, pleaded guilty to attempted murder and felonious assault. The trial court convicted him and sentenced him to an aggregate term of 10 years in prison. After Benjamin was convicted, the Hilmers filed a civil lawsuit against Benjamin and the Whites asserting multiple claims, including battery against Benjamin and negligent supervision, negligent entrustment, and negligent infliction of emotional distress against the Whites.
At the time of the attack, the Whites had four insurance policies: a homeowner’s policy and a separate umbrella policy, both issued by Safeco, a second homeowner’s policy issued by appellee Pacific Indemnity Company, and an umbrella policy issued by appellee Federal Insurance Company.
While the Hilmers’ suit was pending, Safeco filed an action in the Hamilton County Court of Common Pleas asking the court to declare that it had no obligation to defend or pay any claims on behalf of Benjamin or his parents on the basis that 1) its policies covered only injuries caused by an “occurrence” which was defined as an “accident,” and 2) its policies explicitly excluded coverage for injuries caused by the intentional acts of an insured person, and all of the damages sought by the Hilmers arose from Benjamin’s intentional actions.
The trial court consolidated the declaratory judgment action with the Hilmers’ civil suit.
Lance and Diane White filed responsive pleadings arguing that the language of the Safeco policies did not preclude coverage for the Hilmers’ claims against them (as opposed to their claims against Benjamin) because the claims against them alleged negligent rather than intentional conduct, and negligent actions qualified as covered “occurrences” under the Safeco policies.
The Jury’s Verdict
The jury found that Benjamin committed a battery, an intentional tort, against Casey Hilmer and that his intentional acts also caused Steve Hilmer to suffer emotional distress.
Second, the jury found that the Whites were negligent in their supervision of Benjamin, and that this negligence also injured Casey Hilmer and caused Steve Hilmer to suffer emotional distress.
Third, the jury found that the Hilmers were owed $6.5 million in compensatory damages for these combined torts.
Fourth, the jury found that Benjamin was 30 percent responsible for the Hilmers’ injuries and that the Whites were 70 percent responsible. The jury also awarded the Hilmers $3.5 million in punitive damages against Benjamin.
Following the jury’s verdict, Pacific and Federal agreed to indemnify the Whites (pay damages on their behalf to the Hilmers) according to the terms of their policies and argued that Safeco should be required to pay an equivalent share of the cost. Safeco continued to argue that the Whites were not entitled to any coverage under its policies.
The trial court entered a declaratory judgment holding that Safeco’s policies provided coverage to defend the Whites and to indemnify them for the damages awarded against them based on the Hilmers’ negligence-based claims.
Pacific and Federal subsequently settled with the Hilmers on behalf of the Whites, and asked the trial court to order Safeco to reimburse Pacific and Federal for Safeco’s share of the Whites’ attorney fees and the settlement. Safeco appealed the declaratory judgment ruling.
The Appeals Court Affirmed
On review, the 1st District Court of Appeals affirmed the trial court’s holding that Safeco’s policies provided coverage to the Whites for the negligence-based claims advanced against them, notwithstanding the fact that those claims arose as a result of their son’s intentional and unlawful attack on Casey Hilmer.
The 1st District certified that its ruling regarding the Safeco policies was in conflict with decisions of two other court of appeals districts with regard to the proper interpretation of similar insurance policy provisions. The Supreme Court agreed to review the case to resolve the conflict among appellate districts.
The Supreme Court’s Opinion
Writing for the majority decision, Chief Justice Moyer affirmed the judgment of the 1st District but disagreed with that court’s legal reasoning on one of two disputed legal issues.
With regard to whether the Whites’ negligent acts or omissions leading to Casey Hilmer’s injuries qualify as covered “occurrences” under their Safeco policies, he wrote: “We addressed a similar issue in Doe v. Shaffer (2000). … Doe, who had been sexually molested while living in a residence for the mentally retarded, sued the facility’s operator for negligent retention and supervision of the employees who committed the molestation. …
“The operator of the facility sought coverage pursuant to its insurance policy, but the carrier denied the claim and filed a declaratory-judgment action claiming that it had no duty to provide coverage. …
“The trial court entered summary judgment in favor of the carrier, and the court of appeals affirmed, holding that public policy bars coverage not only for the intentional act of sexual molestation but also for negligence with regard to the molestation. We reversed, however, and held that ‘Ohio public policy permits a party to obtain liability insurance coverage for negligence related to sexual molestation when that party has not committed the act of sexual molestation.’ …
“Thus, we held that liability coverage hinges on whether the act is intentional from the perspective of the person seeking coverage. As we stated, ‘the intentions of the molester are immaterial to determining whether the allegedly negligent party has coverage.'”
Citing court decisions from several other states holding that an “occurrence” exists if the person seeking coverage was negligent with regard to an intentional act, Chief Justice Moyer concluded: “(W)e hold that when a liability insurance policy defines an ‘occurrence’ as an ‘accident,’ a negligent act committed by an insured that is predicated on the commission of an intentional tort by another person, e.g., negligent hiring or negligent supervision, qualifies as an ‘occurrence.’
“In this case, neither Lance nor Diane intentionally injured Casey Hilmer. From their perspective, the injury was accidental, and thus the act that caused her injury constitutes an ‘occurrence’ as defined in the policies they purchased from Safeco.”
The Chief Justice also agreed with the 1st District’s judgment that Safeco’s policy exclusions for “intentional” or “illegal” acts cannot be invoked to exclude coverage for the Whites’ negligent actions, but based that conclusion on different legal reasoning than that cited by the court of appeals.
While the 1st District found that a severability clause in the Safeco policies created ambiguity about whether the intentional/illegal acts exclusion also applied to the Hilmers’ claims against the Whites, Chief Justice Moyer concluded that the exclusions unambiguously apply only to claims based on intentional injurious conduct.
He wrote: “The two insurance policies at issue in this case each have two exclusions that could apply to these circumstances. …
“Although each exclusion is worded slightly differently, the clear import is that the policies preclude coverage for injuries arising from or caused by the intentional or illegal acts of an insured. These exclusions plainly apply to Benjamin’s acts: he intentionally stabbed Casey, and the injuries he inflicted upon her and her family arose from the illegal acts he committed.
“Safeco would end the analysis there, so that Benjamin’s involvement precludes coverage for all related claims because Benjamin was insured under the same policy as the Whites. This view fails to acknowledge the separate nature of the negligent-supervision and negligent-entrustment torts.
” … The jury determined that the Hilmers were injured by both Benjamin’s intentional battery and intentional infliction of emotional distress and the Whites’ negligent supervision and negligent infliction of emotional distress.
“These separate causes of action produced distinct injuries, for which Benjamin and the Whites were separately liable; the jury found that Benjamin was responsible for 30 percent of the Hilmers’ compensatory damages for his intentional actions, whereas the Whites were responsible for 70 percent of the Hilmers’ damages for their negligence. Thus, the Whites were held separately liable for their own actions, which were neither intentional nor illegal; the injuries they caused were distinct from the injuries caused by Benjamin’s intentional and illegal acts. Therefore, the intentional- and illegal-act policy exclusions do not apply to the negligence claims against the Whites.”
The majority opinion was joined by Justices Paul E. Pfeifer, Maureen O’Connor and Judith Ann Lanzinger.
Justice Robert R. Cupp entered a separate concurring opinion stating that he would also affirm the part of the 1st District decision that holds that the severability clause included in the Safeco umbrella policy, which states that the policy applies independently to each individual insured person, creates ambiguity regarding the applicability of the exclusion for intentional or illegal acts to insured persons like the Whites who did not engage in intentional tortious conduct.
Justice Terrence O’Donnell entered an opinion, joined by Justice Evelyn Lundberg Stratton, partially concurring with and partially dissenting from the majority decision. Justice O’Donnell wrote that he concurred with the majority holding that a negligent act committed by an insured party predicated on the commission of an intentional tort by another person qualifies as a covered “occurrence.”
He dissented however from the majority holding that the exclusions of coverage in the Safeco policies for intentional/illegal acts committed by “an insured” or “any insured” do not apply to the separate claims asserted by the Hilmers against the Whites.
Source: Ohio Supreme Court, www.supremecourt.ohio.gov
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