Intentional Acts Exclusion
Almost all liability insurance policies exclude coverage for injury “expected or intended from the standpoint of the insured.” If the insured acts without an intent to injure, acted in self-defense, with a privilege to act, or with some other justification, with the intent to perform a legitimate act, then the intent to act, if any, is outside the exclusionary provision, even if it caused injury.
The issue of how to define intent in the context of an insurance policy exclusionary provision has been squarely decided in Transamerica Ins. Group v. Meere, 143 Ariz. 351, 360, 694 P.2d 181, 190 (1984). In Meere, Transamerica sought a declaratory judgment that there was no coverage under the homeowner’s policy it issued to Lynne Meere, with respect to a suit filed against Mr. Meere by Dennis Pruitt. The Pruitt suit sought damages for injuries Meere inflicted on Pruitt in a fight. Pruitt had started the fight, but Meere finished it by knocking Pruitt to the ground and then kicking Pruitt in the face while Pruitt was down. Pruitt lost partial use of his eye. His complaint alleged, among other things, that Meere acted with reckless disregard and outrageously, requiring the imposition of punitive damages. Meere asserted that he acted in self-defense and tendered the suit to Transamerica. Transamerica then filed its declaratory judgment action. Meere, 143 Ariz. at 353-54, 694 P.2d at 183-84.
The Arizona Supreme Court framed the question as “whether the insured’s subjective intent to cause or not to cause injury is relevant where the act producing injury was intentional but committed in self-defense”? Id. at 354, 694 P.2d at 184. “Is the insured bound by the natural and probable consequences of his immediate act of striking the blow, even though he may establish that he had no underlying or basic intent to injure the victim”? Id. The court noted that the issue required the court to define “intent” and determine, “Where . . . there is some justification or privilege connected with the insured’s intentional act, do we deal with basic intent or simply with the immediate intent – the natural consequences of the act”? Id. at 355, 694 P.2d at 185.
In addressing the issue of how to define “intent” for purposes of analyzing insurance coverage, the Meere court first examined principles of tort law. The court noted, “‘the mere knowledge and appreciation of a risk . . . is not the equivalent of intent. The defendant who acts in the belief or consciousness that he is causing an appreciable risk of harm to another may be negligent . . . but it is not classed as an intentional wrong.’” Id. at 357, 694 P.2d at 187 (quoting Prosser, Handbook on the Law of Torts at 492 (4th ed. 1971)). The court concluded, “The attacker commits the intentional act; the defender, though he strikes intentionally, may not act with wrongful intent. This distinction is a recognition in tort law that the basic or underlying intent of the actor is more important in characterizing the conduct than the immediate intent accompanying the act which produced the injury.” Id.
Even if the insured uses excessive force in repulsing the attack, he or she has acted negligently, but not intentionally. Id. (“The defendant is not privileged to inflict a beating which goes beyond the real or apparent necessities of his own defense. If he does he is committing a tort as to the excessive force . . . .”). Id. Having defined the “intent” that the law is concerned with when determining whether an insurance policy exclusionary clause applies, the court held,
[I]f the insured can show facts which might establish that he acted with privilege . . . or under claim of right . . . he will be permitted to explain his subjective intent and it will be for the fact finder to determine whether he had an underlying purpose to injure. The basic question is whether the conduct which led to the blow was intentionally wrongful from the view point of the law of torts.
Id. at 359, 694 P.2d at 189. The court concluded by holding, “Since the complaint alleges facts which may be within the policy coverage, the insurer is obligated to assume the defense.” Id. at 360, 694 P.2d at 190.
The Supreme Court also gave three possible scenarios that could result from a jury trial, vis-a-vis, the question of coverage.
[I]f the trier of fact determines that Meere was the aggressor and acted wrongfully by striking Pruitt without legal justification, the basic intent to injure will be presumed and the exclusion will apply. If the finder of fact determines that Meere’s conduct was not intentionally wrongful, but that he acted instead in self-defense with no basic purpose to injure, the exclusion will not apply. . . . If the jury finds that Meere acted in self-defense with no basic desire or intent to harm Pruitt, but negligently used force greater than necessary it is, we believe, within the coverage of the policy and not within the exclusion.
Id. at 360, 694 P.2d at 190. In light of the foregoing, Transamerica had to provide a defense and might have had to have indemnified Meere depending on the jury’s determination in the Pruitt’s action as to whether Meere acted in self-defense, with the intent to injure Pruitt or negligently.
If a jury finds for the insureds in the underlying case, the insurer only would have to defend and the insurer’s “purse would have been spared” with respect to indemnification. Id. at 359, 694 P.2d at 189. If a jury were to find that the insured was the aggressor and “acted wrongly without legal justification,” then the exclusions would apply and the insurer’s purse again would have been spared as it would not owe any duty to indemnify. If a jury were to find that the insured had gone too far in defending himself, that does not necessarily absolve the insurer from its contractual duty. The better practice is for the insurer to defend with a reservation of rights as to indemnification, the duty to indemnify being largely dependent upon the determination of the claims against the insured. “If the insurer refuses to defend and awaits the determination of its obligation in a subsequent proceeding, it acts at its peril, and if it guesses wrong it must bear the consequences of its breach of contract.” Kepner v. Western Fire Ins. Co., 109 Ariz. 329, 509 P.2d 222 (1973).