For purposes of an intentional injury exclusion, the intent to cause injury may be established by proof of actual intent to injure or when the character of the act is such that an intention to inflict the injury can be inferred. Under the “inferred-intent rule”, courts conclusively presume intent to harm as a matter of law for liability coverage purposes based on the nature and character of the insured’s alleged act regardless of whether the insured asserts that he or she had no subjective intent to injure. While courts may infer intent to injure as a matter of law only in narrow circumstances, for purposes of liability insurance coverage, the courts may do so if the degree of certainty that the conduct will cause harm is sufficiently great to justify inferring intent to injure as a matter of law. There is no bright-line rule as to when a court should infer intent to injure as a matter of law; rather, the determination is made through a case-by-case factual inquiry.
The Ohio Supreme Court recently considered application of the inferred-intent doctrine in a federal fair housing discrimination lawsuit. Granger v. Auto-Owners Ins., 144 Ohio St.3d 57, 40 N.E.3d 1110 (Ohio 2015). In Granger, the insured owned various rental properties. Those properties were insured by Auto-Owners Insurance Group with a primary dwelling policy that included landlord-liability coverage and a second umbrella policy. The primary policy was issued by Auto-Owners Mutual Insurance Company and the second policy was issued by Owners Insurance Company. Both policies covered personal injuries. However, the definition of what constituted a “personal injury” differed between the policies. The primary policy defined “personal injury” in terms of causes of action, i.e., libel, slander, defamation, false arrest, invasion of privacy, wrongful eviction, etc. The definition of “personal injury” contained within the umbrella policy was broader in scope. The umbrella policy definition included reference to particular types of damages rather than only particular types of causes of action. The broader definition of “personal injury” in the umbrella policy included within the definition “humiliation.”
The insured refused to rent one of the insured properties because the proposed renter was African-American and had a six year old son who would be living with her at the property. It was determined that the insured had discriminated against the tenant on the basis of familial status and race in violation of 42 U.S.C. 3604 and R.C. 4112 .02(H). Part of the damages sought by the putative tenant was emotional distress.
The umbrella policy also contained an intentional act exclusion. Specifically, the policy excluded coverage when “the personal injury … was expected or intended.” Auto-Owners asserted that the exclusion was applicable. Auto-Owners argued that “discriminatory intent is inferred as a matter of law for purposes of an intentional act exclusion under an umbrella policy of insurance on a claim for pre-leasing housing discrimination.” 144 Ohio St.3d at 64, 40 N.E.3d at 1117. Auto-Owners was seeking application of the inferred-intent doctrine. Under the inferred-intent doctrine, “when there is no evidence of direct intent to cause harm and the insured denies the intent to cause any harm, the insured’s intent to cause harm will be inferred as a matter of law in certain instances.” Auto-Owners argued that it could be inferred as a matter of law from the nature of the insured’s act—pre-leasing housing discrimination—that the insured intended to cause the putative tenant’s personal injuries and, therefore, the exclusion applied. The Ohio Supreme Court in Granger disagreed.
Previously, the Ohio Supreme Court had rejected the “substantially certain” test in inferred-intent cases. 144 Ohio St.3d at 65, 40 N.E.3d at 1118. Under the “substantially certain” test, any harm that was substantially certain to result from an intentional act would fall under the intentional act exclusion of the policy. The Ohio Supreme Court adopted a different test for application of the inferred-intent doctrine. Under Ohio law, “the doctrine of inferred intent applie[d] only in cases in which the insured’s intentional act and the harm caused [were] intrinsically tied so that the act [had] necessarily resulted in the harm.” 144 Ohio St.3d at 65, 40 N.E.3d at 1118.
The Ohio Supreme Court then found that humiliation was not so intrinsically tied to pre-leasing discrimination that the insured’s act necessarily resulted in the harm suffered by the putative tenant. While acknowledging that emotional distress damages were available under the law to victims of housing discrimination, the Court found that such damages were not automatically awarded. Therefore, the Court remanded the case to the trial court so that the trier of fact could determine whether the insurance company was able to demonstrate that the insured intended to cause humiliation to the putative tenant without the benefit of the inferred-intent doctrine removing that burden of proof.
Justices Kennedy and O’Donnell dissented. First, they reiterated their belief that the Court had erred previously in rejecting the substantial certainty test in lieu of the intrinsically tied test. Nevertheless, these Justices would have ruled in favor of Auto-Owners even under the stricter test for application of the inferred-intent doctrine. The dissent cited to numerous authorities which had recognized that injury is inherent in the act of discrimination and that inherent injury included humiliation. Because the lawsuit claimed discrimination, because discrimination and injury were intrinsically tied, the dissenting Justices concluded that the inferred-intent doctrine applied which meant that when the insured acted in a discriminatory manner, the insured inferentially intended injury as a matter of law.