HOMEOWNERS – INTENTIONAL ACT EXCLUSION – CRIMINAL ACT EXCLUSION – "CRIMINAL IN NATURE"
Massa v. Nationwide Mut. Fire Ins. Co.
(3rd Dept., decided 6/24/2010)
This is a good news/bad news post. If you live in the Third Department and are injured when a crazed teenager seeking revenge deliberately drives his car over the tent in which you are sleeping at a state park campsite at 6:15 in the morning, or when a hostile, drunken college student hurls a 55-gallon metal oil drum out of a second-story fraternity house window you just told him to get away from onto your head, there may be liability coverage for your assailants. Good news if you're the injured person; not so good news if you're the miscreant's auto or homeowners insurer.
In
New York Cent. Mut. Fire Ins. Co. v Wood, 36 AD3d 1048 (3d Dept 2007), the Third Department affirmed the Supreme Court's denial of summary judgment to Progressive Northeastern, finding there to be a question of fact as to whether Progressive's insured, defendant Charles Young, knew the tent he deliberately drove over
at 6:15 in the morning at a state park campsite was occupied. Young pleaded guilty attempted reckless assault and was sentenced to 11 years in prison. Said the Court:
Here, Young's assertion that he did not know that the tent was occupied could provide a sufficient basis for a finding that his conduct was merely reckless, rather than intentional or expected. Although one could conclude that Young must have appreciated the substantial risk that a tent would be occupied at such an early hour of the morning, his conduct would not be intentional, but reckless, if he disregarded that known risk in a desire to wreak havoc and damage property, without forming a specific intent to drive over an occupied tent.
In the view of the Third Department, it could not be said as a matter of law that the underlying plaintiff's crushing injuries from having been driven over by the insured's car at 6:15 in the morning were "
bodily injur[ies] caused by an intentional act of an insured person or at the direction of an insured person."
It's a tent. At 6:15 in the morning. At a campsite where you know people are camping. And sleeping. In tents.
Now find and cue
Animal House on your DVR. In this case, the insureds' college-aged son, David Massa, became very intoxicated at a fraternity house and was asked to leave. He did so, for a while, but later returned and reentered the frat house, where students who were outside saw him standing at an open upstairs window. The inebriated David threw a piece of garbage toward the students below and "reacted with confusion and hostility" when they told him to move away from the window, which he eventually did. Thirty seconds after disappearing from the window's opening, a 55-gallon oil drum exited that window and dropped onto one of the students below, injuring that person. An eyewitness who was upstairs in the fraternity house stated to police that Massa was "really drunk" and said she saw him at the window, apparently about to "dump" what she described as a garbage can outside. She took it away and told him to stop, and Massa pushed her, causing her to fall. He then "put the oil drum through the window" and let go; it lodged briefly in the window before dropping to the ground.
Is there liability coverage for the drunken David's drum dropping conduct under his parents' homeowners policy? Supreme Court, Schenectady County (Aulisi, J.) said absolutely, and granted plaintiffs' motion for summary judgment. While agreeing with the lower court's finding that the policy's intentional act exclusion was inapplicable, the Third Department ruled that a jury must decide whether David's conduct was "criminal in nature", thereby triggering the criminal act exclusion of the parents' homeowners policy with Nationwide applies to negate coverage.
In rejecting Nationwide's contention that the resulting harm was inherent in the nature and force of David's wrongful act, the appellate court held that Supreme Court properly determined that the
intentional act exclusion, which negated coverage for bodily injury "
caused intentionally by or at the direction of an insured, including willful acts the result of which the insured knows or ought to know will follow from the insured's conduct", was inapplicable:
The evidence does not conclusively establish that anyone was directly below the window when plaintiff looked outside, that he saw anyone below, or that he knew there was anyone there when he pushed or threw the drum outside. Therefore, there is a possible basis for a factual determination that, from plaintiff's point of view, it was unexpected, unintended, and unforeseen that the drum would strike someone, despite the fact that other interpretations are also possible.
Defendant contends that plaintiff's actions were nonetheless intentional within the meaning of the exclusion because the resulting harm "'was inherent in the nature and force'" of the wrongful act (
Clayburn v Nationwide Mut. Fire Ins. Co., 58 AD3d at 991, quoting
Pennsylvania Millers Mut. Ins. Co. v Rigo, 256 AD2d 769, 770 [1998]). However, as no injuries would have occurred if no one had been below the window, the question as to whether plaintiff knew anyone was there prevents a determination, as a matter of law, that "'to do the act [was] necessarily to do the harm which [was] its consequence'" (
New York Cent. Mut. Fire Ins. Co. v Wood, 36 AD3d 1048, 1050 [2007], quoting
Progressive N. Ins. Co. v Rafferty, 17 AD3d 888, 889 [2005]).
David's parents' homeowners policy with Nationwide also contained a
criminal act exclusion, which negated liability coverage for injury "
caused by or resulting from an act or omission which is criminal in nature and committed by an insured ... regardless of whether the insured is actually charged with, or convicted of a crime[.]" In this case, David had been charged with
second degree assault, a felony, but pleaded guilty only to
disorderly conduct, a violation.
In MODIFYING the order appealed from to deny both parties' summary judgment motions on the criminal act exclusion of the Massas' policy, the Third Department held:
Disorderly conduct is a violation rather than a felony or misdemeanor (
see Penal Law § 240.20)
[FN1] and, thus, is not a "crime" as defined in the Penal Law (
see Penal Law § 10.00 [3], [6];
De Paulo v City of Albany, 49 NY2d 994, 995-996 [1980]). However, conduct may be found to be "criminal in nature" without regard to whether it led to actual criminal prosecution or conviction (
see New York Cent. Mut. Fire Ins. Co. v Nationwide Mut. Ins. Co., 307 AD2d 449, 451 [2003];
see also Kehoe v Nationwide Mut. Fire Ins. Co., 299 AD2d 318, 319 [2002]). Defendant contends that plaintiff's conduct was "criminal in nature" even if his intoxication prevented him from forming an intention to cause injury and therefore from committing intentional assault (
see Penal Law § 120.00 [2]), because proof of voluntary intoxication does not negate recklessness (
see Penal Law § 15.05 [3];
People v Johnson, 277 AD2d 702, 704 [2000],
lv denied 96 NY2d 831 [2001]). In defendant's view, plaintiff's conduct was criminally reckless.
"A person acts recklessly . . . when that person is aware of and consciously disregards a substantial and unjustifiable risk of a result, where the risk is of such a nature and degree that to disregard it constitutes a gross deviation from the standard of conduct of a reasonable person" (Allstate Ins. Co. v Zuk, 78 NY2d 41, 46 [1991]; see Penal Law § 15.05 [3]). As previously discussed, there is a triable issue of fact as to whether plaintiff was aware that someone was below the window. Moreover, neither of the two witnesses who described the accident to police has been deposed or cross-examined. Their statements in the police report do not decisively demonstrate that plaintiff necessarily intended to throw the can through the window. Thus, there are triable issues of fact deserving of further inquiry as to whether plaintiff consciously disregarded a substantial risk that his conduct would cause injury. Construing the exclusion narrowly against the insurer (see Pepper v Allstate Ins. Co., 20 AD3d at 635), we find that these factual issues prevent a determination as to whether plaintiff's conduct was "criminal in nature" as a matter of law.
Defendant did not demonstrate "that there is no possible factual or legal basis on which [it] may eventually be held liable under its policy" (First State Ins. Co. v J & S United Amusement Corp., 67 NY2d 1044, 1046 [1986]; accord Allstate Ins. Co. v Kemp, 144 AD2d 853, 854 [1988]). Thus, defendant was not entitled to a declaratory judgment in its favor as to the applicability of the criminal act exclusion, and Supreme Court properly denied its cross motion for summary judgment. Further, as defendant did not demonstrate that the allegations of negligence in the underlying complaint "cast [the] pleading solely and entirely within the policy exclusions, and, further, that the allegations, in toto, are subject to no other interpretation" (Pennsylvania Millers Mut. Ins. Co. v Rigo, 256 AD2d at 770 [internal quotation marks and citations omitted]), summary judgment was properly granted to plaintiffs as to defendant's broad duty to provide a defense in the underlying action. However, summary determination as to defendant's narrower duty to indemnify was inappropriate, as we find triable issues of fact as to whether plaintiff's conduct was criminal in nature (see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]. That determination must await trial on a full record in the declaratory judgment action (compare Allstate v Zuk, 78 NY2d at 47).
It's a 55-gallon oil drum, for Pete's sake. Pushed or hurled from an open, second story frat house window at a frat party. Where students are known to congregate, both inside and outside the house. Not surprisingly striking a student below. Not intentional? Not criminal? Was liability insurance coverage designed to respond to these kind of acts? I understand the desire to find compensation sources for injured parties, but
Wood and this case distort my notion of liability insurance, which I though was meant to cover accidentally and fortuitously caused injuries and damages.
LEGAL UPDATE
