Duty to Defend "Intentional Acts"
Our insureds often do bizarre things. A recent case had the insured's son involved in a fight at a party, biting his adversary on the ear and in the stomach. What carrier contemplated such actions when they issued a Homeowner's policy? Does the carrier have to defend such indiscretions when the inevitable lawsuit comes in?
A leading case regarding disclaimer for Intentional Act is Automobile Insurance Company of Hartford v. Cook, 7 NY 3d 131 (Court of Appeals, 2006). Therein, the Court had to decide whether the Carrier had a duty to defend an insured sued in a wrongful death action, resulting from a shooting committed in self defense. The Court noted the size of the decedent was three times the size of Cook (the shooter), and the decedent had previously attacked Cook and injured him. The Complaint alleged that Cook "negligently discharged a loaded shotgun into the decedent's abdomen" and further separately alleged that this was intentionally done. Cook acknowledged that he knew the shot would injure the decedent, but he "had to stop him" and he did not anticipate killing him. The Court analyzed whether "an occurrence" was involved, giving rise to policy coverage, and if so, whether it was excluded, as "expected or intended". The Court noted that the duty to defend is "exceedingly broad," and the insurer is required to provide a defense where the allegations "suggest a reasonable possibility of coverage" Continental Cas. Co. v. Rapid American Corp., 80 NY 2d 640 (1993). If liberally construed, the claim is within the embrace of the policy, the insurer must defend its insured, no matter how groundless, false or baseless the suit may be. Ruder & Finn 180 v. Seaboard Sur. Co., 52 NY 2d 663 (1981). Importantly, our courts have held that the duty remains "even though the facts outside the four corners of the pleadings indicate the claim may not be covered". Fitzpatrick v. American Honda Motor Co., 78 NY 2d 61 (1991). Thus, the carrier may be required to defend under the policy, even though it may not be required to pay once the litigation has run its course.
The Court of Appeals in Cook, supra, additionally held that unless the carrier can demonstrate that the allegations of the Complaint are "solely and entirely within the policy exclusions" and that the allegations are "in toto" subject to no other interpretation, the carrier owes the duty to defend. Allstate Ins. Co. v. Mugavero, 79 NY 2d 153 (1992).
The Court of Appeals held, where the Complaint alleged negligence against Cook, the allegations, if proven, would fall within the scope of the policy as a covered "occurrence" (i.e. either an unintentional or unexpected event, or to an intentional event with an unintentional or unexpected result. Miller v. Continental Ins. Co., 40 NY 2d 675 (1976). The Court conceded that the fact finder could ultimately reject that Cook negligently caused decedent's death, given the evidence of intentional behavior, "but that uncertain outcome is immaterial to the insurer's duty to defend in an action where it is alleged that the injury was caused by the negligent conduct of the insured."
If the complaint alleges "negligence" in the commission of the act, the more prudent course would be to defend under a reservation of rights. A separate declaratory judgment action may be required to disclaim coverage under the terms of the policy.