Second Department Holds That No-Fault But Not UM Coverage Owed For Injuries From Intentional Vehicular Assault

NO-FAULT – UM – "ACCIDENT" – INTENTIONAL CRIMINAL CONDUCT – HIT-AND-RUN INCIDENT
State Farm Mut. Auto. Ins. Co. v. Langan
(2nd Dept., decided 9/16/2008)

Would forgetting something that happened five years ago constitute a short-term or long-term memory loss?

With this split decision, the Second Department has ruled that injuries and death from an intentional vehicular assault: (1) are NOT covered under an auto policy's UM coverage; but (2) ARE covered under the same policy's no-fault coverage.

Over the course of a week in 2002, Ronald Popadich shot a woman in New Jersey, plowed his car into 19 pedestrians in Manhattan and then stole another car, returned to the city and slammed into pedestrians again two days later. One of the injured Manhattan pedestrians was Neil Conrad Spicehandler, who was taken to a local hospital for treatment of a severely broken leg and died after two surgeries at that hospital from an embolus of "unknown origin". In 2005, the Second Department reversed the Supreme Court's order and dismissed the wrongful death action brought against the hospital by the defendant in this case, John Robert Langan, as the surviving spouse of Spicehandler under a Vermont civil union. Popadich admitted that he was trying to hurt as many people as possible and eventually pleaded guilty of second degree murder in connection with the hit-and-run incident and Spicehandler's death.

Langan had also made claims for no-fault (PIP), UM and death/dismemberment/loss of sight coverages under Spicehandler's auto policy with State Farm. State Farm denied all coverages based, among other grounds, that Spicehandler's injuries and death were caused by Popadich's intentional criminal conduct and thus were not the result of an "accident" as required by the State Farm policy.

On State Farm's motion to renew its summary judgment motion following Popadich's criminal conviction, Nassau Supreme agreed with State Farm, declaring that it was not obligated to provide PIP, UM and death/dismemberment/loss of sight coverages to Spicehandler's estate based on the lack of an "accident".

On appellate Round # 2, (Round # 1 having been the Second Department's affirmance of Nassau Supreme's denial of State Farm's motion), the 3-2 majority of the Second Department upheld the denial of UM coverage:

The purpose of an uninsured motorist endorsement is to help effectuate New York's compulsory automobile liability insurance scheme "by providing coverage to insured persons who suffer automobile accident injuries at the hands of financially irresponsible motorists" (Matter of Country-Wide Ins. Co. v Wagoner, 45 NY2d 581, 586). To that end, the endorsement is designed to afford an injured person "the same protection as he [or she] would have had if he [or she] had been injured in an accident caused by an identifiable automobile covered by a standard automobile liability insurance policy in effect at the time of, and applicable to, the accident" (McCarthy v Motor Veh. Acc. Indem. Corp., 16 AD2d 35, 38, affd 12 NY2d 922; see Matter of Nagel [Motor Veh. Acc. Indem. Corp.], 22 NY2d 165, 170 [noting that "it has been recognized that the purpose of this statute was to provide compensation through the MVAIC to the extent that claims would be recognized and claimants compensated as if the owner or driver of the vehicle causing the injury were insured"]; accord Matter of Knickerbocker Ins. Co. [Faison], 22 NY2d 554, 558, cert denied 393 US 1055). Thus, in New York, the mandatory coverage afforded under an uninsured motorist endorsement is meant to be coextensive with, and therefore no greater than, the standard coverage that would ordinarily be available to the uninsured motorist had he or she been insured (cf. McCarthy v Motor Veh. Acc. Indem. Corp., 16 AD2d at 42). Plainly, no standard automobile liability policy would have provided coverage to Popadich for the injuries he intentionally inflicted on Spicehandler (see Westchester Med. Ctr. v Travelers Prop. Cas. Ins. Co., 309 AD2d 927, 928; Allstate Ins. Co. v Bostic, 228 AD2d 628, 628-629). It follows, then, that, because no coverage would have been provided under a standard automobile liability policy issued to Popadich, State Farm is not obligated to provide benefits under the uninsured motorist endorsement of its policy with Langan (see McCarthy v Motor Veh. Acc. Indem. Corp., 16 AD2d at 42). Accordingly, we conclude that State Farm established its prima facie entitlement to judgment as a matter of law with respect to Langan's claim for uninsured motorist benefits by establishing that Spicehandler's injury and subsequent death were caused by Popadich's intentional criminal acts (see Zuckerman v City of New York, 49 NY2d 557, 562). In opposition, Langan failed to raise a triable issue of fact.

The majority, however, modified Nassau Supreme's order and granted PIP and death/dismemberment/loss of sight coverages, relying mostly on established New York liability coverage case law and principles:

As explained previously, for policy reasons, New York law does not extend coverage under a mandatory uninsured motorist endorsement to injuries caused intentionally by a tortfeasor. In other contexts, however, the issue whether an event may be deemed "accidental" for insurance purposes is "usually determined by looking at the casualty from the point of view of the insured to see whether or not from his [or her] point of view the event was unexpected, unusual and unforeseen'" (Nallan v Union Labor Life Ins. Co., 42 NY2d 884, 885, quoting 30 NY Jur, Insurance, § 1099, p 484 [emphasis added]; see Agoado Realty Corp. v United Intl. Ins. Co., 95 NY2d 141, 145). "In the absence of an express provision in the policy to the contrary, where the insured is intentionally injured or killed by another, and the injury or death is not the result of misconduct, provocation, or assault by the insured, but is unforeseen from the insured's point of view, and occurs without his or her agency, the injury or death is an accident or accidental, or by accidental means, within the meaning of accident insurance policies, and the insurer is liable therefor" (10 Couch on Ins. § 140:41; see New York Insurance Department Regulations § 60-1.1[f] [11 NYCRR § 60-1.1(f)] [requiring every "owner's policy of liability insurance" to include "(a) provision that assault and battery shall be deemed an accident unless committed by or at the direction of the insured."]). Consequently, in contexts other than a claim made under an uninsured motorist endorsement, coverage is unaffected by whether the tortfeasor acted intentionally in causing the injury, provided only that, from the viewpoint of the insured, the event was "unexpected, unusual and unforeseen" and not brought about by the insured's own "misconduct, provocation, or assault" (Nallan v Union Labor Life Ins. Co., 42 NY2d 884).
In this case, from Spicehandler's point of view, the incident that caused his injuries and death was certainly "unexpected, unusual and unforeseen," and was not the result of any "misconduct, provocation, or assault" on his part. Consequently, the question of whether or not Popadich acted with criminal intent, although critical to the issue of coverage under the uninsured motorist endorsement, was entirely irrelevant to State Farm's obligation here to provide coverage under the subject policy's mandatory personal injury protection endorsement, and its death, dismemberment, and loss of sight provisions, neither of which contain a specific exclusion for injury or death caused by an intentional act. Viewed in this context, our observation on the prior appeal that, "if Spicehandler's injuries and death were the result of an intentional assault or an intentional homicide . . . the incident is not covered under the applicable policy" (State Farm Mut. Auto. Ins. Co. v Langan, 18 AD3d at 862), can reasonably be read as directed only at the policy's uninsured motorist endorsement. Moreover, that our holding affords different interpretations of the term "accident" within the subject policy is the inevitable consequence of the fact that current New York law makes uninsured motorist coverage in this State narrower than would be expected under general insurance principles.

With respect to PIP coverage for intentionally caused injuries, this decision seems to be at sharp odds with the Second Department's 2003 decision in Westchester Med. Ctr. a/a/o Aferdita Suljovic v. Travelers Prop. Cas. Ins. Co., 309 AD2d 927 (2nd Dept. 2003), the husband-who-tried-to-kill-his wife-by-driving-their-car-over-a-cliff case, in which the Second Department held:

However, [Travelers] correctly contends that her injuries were not caused by an accident. The assault, committed through the use of a vehicle, was an intentional act, not an accident (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751; Matter of Progressive Northwestern Ins. Co. v Van Dina, 282 AD2d 680; Allstate Ins. Co. v Bostic, 228 AD2d 628; Matter of Aetna Cas. & Sur. Co. v Perry, 220 AD2d 497, 498; McCarthy v Motor Vehicle Acc. Indem. Corp., 16 AD2d 35, affd 12 NY2d 922). Consequently, the first cause of action [seeking to recover no-fault payments for Mrs. Suljovic's hospitalization and treatment] should have been dismissed.

Oddly, the Second Department does mention this 2003 decision in its decision of last week but only in relation to the UM coverage issue and not in its discussion of the PIP coverage issue, leaving claimants and insurers to wonder whether there is any way to distinguish or explain the two seemingly irreconcilable holdings on the no-fault coverage issue. Relying on Westchester Medical Center v. Travelers, the Third Department also made the same ruling in Progressive Northern Ins. Co. v. Rafferty ("Carman's injuries were not caused by an 'accident' and, thus, he was not eligible for no-fault benefits under the policy.") Any thoughts out there?

With respect to UM coverage, the two-justice dissent reluctantly agreed that case law precedent supported State Farm's denial of such coverage but recommended an appeal to the Court of Appeals:

Given the foregoing discussion, the persuasive logic and strong public policy considerations underlying those decisions in other jurisdictions which have allowed the recovery of uninsured motorist benefits in cases such as this, and the overwhelming modern national trend favoring such recovery, I would respectfully suggest that the time may have come for a reexamination of the governing principles in this area by our state's highest court.

Interestingly, on the issue of PIP coverage, however, the dissent thought that State Farm's denial of PIP and death/dismemberment/loss of sight coverages should have been upheld, not because of the Second Department's 2003 ruling in the Westchester Medical Center v. Travelers case, but because of the court's prior ruling in this case. The dissent also disagreed with the majority's "radically different interpretations" of the phrase"caused by accident" as used in the UM and death/dismemberment/loss of sight endorsements:

That determination is inconsistent with our previous order in this very case, in which we unequivocally and unambiguously held that no coverage was available under the policy for Spicehandler's death if it resulted from intentional conduct. Significantly, our previous decision and order was not merely limited to the uninsured motorist endorsement of the policy, but was applicable to the entire policy. Accordingly, recovery under any section of the policy is precluded by the express language of our previous order, which is binding upon us and constitutes the law of the case (see generally J-Mar Serv. Ctr. v Mahoney, Connor & Hussey, 45 AD3d 809; Suffolk County Water Auth. v Schneider, Inc., 288 AD2d 297). In any event, even if we were free to disregard the clear terms of our previous order in this case, I would decline to join in the majority's construction of the policy in such a manner that the phrase "caused by an accident" would have radically different interpretations depending upon whether it appears in the uninsured motorist endorsement or in the death benefit provisions of the subject policy.

I'm going to go out on a limb and predict that the Court of Appeals will get and hear this case. Until that happens, New York UM insurers can continue to deny UM for injuries that result from intentional vehicular assaults, whereas no-fault insurers can no longer be certain based on prior precedent from the Second and Third Departments that a denial in the same situation will be sustained if challenged in litigation or arbitration.

Editor's Note (January 31, 2019) ~~ 

On March 29, 2011, in a 5-2 decision, the New York Court of Appeals MODIFIED the Second Department's order and granted UM coverage to the decedent's estate:

We hold that, consistent with the reasonable expectation of the insured under the policy and the stated purpose of the UM endorsement (to provide coverage against damage caused by uninsured motorists), the intentional assault of an innocent insured is an accident within the meaning of his or her own policy. The occurrence at issue was clearly an accident from the insured's point of view and Langan is entitled to benefits under the UM endorsement.

The Court of Appeals left standing the Second Department's ruling on no-fault coverage:

For many of the same reasons, Langan is entitled to coverage under the PIP endorsement and Coverage S. The average insured's understanding of the term "accident" is unlikely to vary from endorsement to endorsement within the same policy. The occurrence, from the insured's perspective, was certainly unexpected and unforeseen and should be considered an accident subject to coverage. Contrary to State Farm's argument, we perceive no danger that this result will frustrate efforts to fight fraud in the no-fault insurance system. Significantly, there is no allegation whatsoever of fraud in this case and it is patent that benefits should continue to be denied to those who intentionally cause their own injuries.