Allstate Ins. Co. v. Peasley

• Decision Date: 20 March 1997
• Docket Number: No. 63869-1,63869-1
• Citation: 932 P.2d 1244,131 Wn.2d 420
• Court: Washington Supreme Court
• Parties: ALLSTATE INSURANCE COMPANY, a foreign corporation, Respondent, v. James Robert PEASLEY, a single person, Defendant, Ardis Jeanne Parker, a single person, Petitioner.

Page 420

131 Wn.2d 420

932 P.2d 1244

ALLSTATE INSURANCE COMPANY, a foreign corporation, Respondent, v. James Robert PEASLEY, a single person, Defendant Ardis Jeanne Parker, a single person, Petitioner.

No. 63869-1.

Supreme Court of Washington En Banc.

Argued Oct. 9, 1996.

Decided March 20, 1997.

Stephen Anderson, Seattle, for petitioner.

Keller, Rohrback, Irene Hecht, Seattle, for respondent.

Harbaugh & Bloom, Gray N. Bloom, Spokane, Debra Stephens, Spokane, Bryan P. Harnetiaux, Spokane, Amicus Curiae on behalf of Washington State Trial Lawyers Association.

DOLLIVER, Justice.

An insurance company asks for a declaration that a criminal acts exclusion in its homeowner's insurance policy precludes insurance coverage to a guest who was shot by the homeowner, when the shooting constituted the crime of reckless endangerment. We find the criminal acts exclusion applies to the facts of this case.

While a guest in James Peasley's house, Ardis Parker was shot in the stomach by James Peasley. Parker sustained serious but nonfatal injuries. Both Peasley and Parker maintain the shooting was accidental.

After reviewing the facts surrounding the shooting and interviewing Peasley's neighbors who had heard a loud argument from Peasley's house at the time of the shooting, the local prosecutor charged Peasley with second degree assault. Peasley was tried and convicted, but the Court of Appeals reversed the conviction because of an erroneous jury instruction. State v. Peasley, 71 Wash.App. 1055 (1993). Peasley then bargained with the prosecutor and pleaded guilty to second degree reckless endangerment in exchange for the prosecutor's recommendation of a suspended sentence.

Ardis Parker sued Peasley for damages arising from her injuries. Peasley was insured by Allstate Insurance Company (Allstate). When Allstate learned of Parker's lawsuit, Allstate brought this summary judgment against both Peasley and Parker seeking a declaration that a criminal acts exclusion in the Peasley's homeowner's insurance policy (Policy) excluded coverage for Parker's injuries because they were the result of Peasley's criminal acts. The trial court granted summary judgment for Allstate, and the Court of Appeals affirmed. Allstate Ins. Co. v. Peasley, 80 Wash.App. 565, 910 P.2d 483, review granted, 129 Wash.2d 1013, 917 P.2d 576 (1996). We also affirm.

I

Summary judgment in this case is appropriate because the interpretation of language in an insurance policy is a matter of law. Rones v. Safeco Ins. Co. of Am., 119 Wash.2d 650, 654, 835 P.2d 1036 (1992). The insurance contract must be viewed in its entirety; a phrase cannot be interpreted in isolation. Hess v. North Pac. Ins. Co., 122 Wash.2d 180, 186, 859 P.2d 586 (1993). When construing the policy, the court should attempt to give effect to each provision in the policy. Kish v. Insurance Co. of N. Am., 125 Wash.2d 164, 170, 883 P.2d 308 (1994).

Peasley thinks the criminal acts exclusion clause is ambiguous. "An ambiguity exists only 'if the language on its face is fairly susceptible to two different but reasonable interpretations'." Kish, 125 Wash.2d at 171, 883 P.2d 308 (quoting Washington Pub. Util. Dists.' Utils. Sys. v. PUD 1, 112 Wash.2d 1, 11, 771 P.2d 701 (1989)). If an ambiguity is found in an exclusionary clause, the ambiguity is strictly construed against the insurer. Kish, 125 Wash.2d at 170, 883 P.2d 308 (citing Rodriguez v. Williams, 107 Wash.2d 381, 384, 729 P.2d 627 (1986)). If, however, the language in an insurance policy is clear and unambiguous, the court must enforce it as written and cannot modify the contract or create ambiguity where none exists. Transcontinental Ins. Co. v. Washington Pub. Utils. Dists.' Util. Sys., 111 Wash.2d 452, 456, 760 P.2d 337 (1988).

When analyzing an insurance policy and questioning whether an ambiguity exists, we look at the language according to the way it would be read by the average insurance purchaser. State Farm Gen. Ins. Co. v. Emerson, 102 Wash.2d 477, 480, 687 P.2d 1139 (1984). Terms undefined by the insurance contract should be given their ordinary and common meaning, not their technical, legal meaning. Kish, 125 Wash.2d at 170, 883 P.2d 308.

With these rules in mind, we must look to the exclusion at issue in Peasley's Policy:

Losses We Do Not Cover:

1. We do not cover any bodily injury which may reasonably be expected to result from the intentional or criminal acts of an insured person or which are in fact intended by an insured person.

Clerk's Papers at 23. Peasley claims the phrase "criminal acts" is ambiguous. He acknowledges Allstate's reading of the phrase, but he argues a reasonable person could understand the phrase as denoting only intentional crimes. If the phrase is subject to more than one reasonable interpretation, the interpretation most favorable to the insured will be applied. If the phrase is unambiguous on its face, then it must be applied as written. The Court of Appeals held the phrase clearly and unambiguously includes both intentional and unintentional criminal acts. Allstate, 80 Wash.App. at 568, 910 P.2d 483.

Before addressing Peasley's claim of ambiguity, we must break down the exclusion clause. Because the disjunctive conjunction "or" separates "intentional" from "criminal," we can break the clause down into the following order:

Allstate does not cover

A. any bodily injury which may reasonably be expected to result from the

1. intentional acts of an insured person, or

2. criminal acts of an insured person, or

B. injuries which are in fact intended by an insured.

See Hooper v. Allstate Ins. Co., 571 So.2d 1001, 1002-03 (Ala.1990) (outlining the same exclusion in a similar fashion). As used in the clause, the word "intentional" clearly denotes its own category of acts--acts which are intentional, whether or not they are criminal. Likewise, the word "criminal" denotes its own category of acts--acts which are criminal, presumably whether or not they are intentional. We say presumably because Peasley claims the phrase criminal acts can be read by the ordinary person as denoting only intentional criminal acts.

Since Peasley's Policy appears to leave the phrase "criminal acts" undefined, we turn to the dictionary to determine the common meaning of the words. Boeing Co. v. Aetna Casualty & Surety Co., 113 Wash.2d 869, 877, 784 P.2d 507 (1990); see also Kish, 125 Wash.2d at 171, 883 P.2d 308 (looking to the dictionary to define "flood" as used in an exclusionary clause). The definitions for the adjective "criminal" include the following:

1: involving or being a crime 2: relating to crime or its punishment--distinguished from civil 3: guilty of crime or serious offense 4a: REPREHENSIBLE, BLAMEWORTHY, DISGRACEFUL b: EXCESSIVE, EXTORTIONATE 5: of or suitable to a criminal 6: concerned with crime or criminal law[.]

Webster's Third New International Dictionary 536 (1986) (examples of usage omitted). Peasley's claimed ambiguity is not supported by the dictionary. None of the definitions of criminal include intent as part of the adjective's meaning. To the contrary, the dictionary gives the suggestion "criminal carelessness" as an example under the first definition.

Most of the definitions for criminal refer the reader to the noun, "crime," so the definition of crime is relevant to the analysis.

crime ... 1a: ... an offense against public law (as a misdemeanor, felony, or act of treason) providing a penalty against the offender but not including a petty violation of municipal regulation ... b: an offense against the social order or a violation of the mores that is dealt with by community action rather than by an individual or kinship group 2 [obsolete] ... 3a: a gross violation of law--distinguished from misdemeanor, trespass b: a grave or aggravated offense against or departure from moral rectitude 4: criminal activity: conduct in violation of the law 5a: an evil act: SIN: a violation of divine law; esp: a grievous sin b: sinful conduct: WRONGDOING 6: something reprehensible, foolish, indiscreet, or disgraceful ... [.]

Webster's at 536 (examples of usage omitted). The third and fifth definitions offer more restrictive uses than the other definitions, suggesting the word crime could be used to indicate only serious wrongful acts. Even those restrictive definitions do not include intent as a necessary component. The dictionary fails to support Peasley's claim that the phrase criminal acts could be read as denoting only intentional criminal acts.

Peasley supports his argument by citing Van Riper v. Constitutional Gov't League, 1 Wash.2d 635, 96 P.2d 588 (1939). Van Riper concerned a death benefit certificate which a wife sought to enforce after her husband died in a car accident. The certificate provided the payment of benefits would be

incontestable and absolutely free from any conditions as to residence, travel, place or manner of death, except suicide or death due to acts committed in criminal violation of law, including picketing, or the use of intoxicating liquor or narcotics.

Van Riper, 1 Wash.2d at 637-38, 96 P.2d 588. The husband's death was caused by his own negligent driving--driving which, the court found, violated numerous traffic laws and constituted a criminal misdemeanor. Van Riper, 1 Wash.2d at 638, 96 P.2d 588. The defendant argued it was excused from paying benefits on the certificate because the decedent's death was caused by his criminal driving. The court disagreed.

In analyzing the exclusion, Van Riper first looked to the phrase, "violation of law," and cited numerous cases from other jurisdictions where traffic violations qualified as violations of law. Van Riper, 1 Wash.2d at 639, 96 P.2d 588. The court found the adjective "criminal" worked to modify the violation of law phrase, thereby creating a new phrase that was more restrictive. Van Riper, 1 Wash.2d at 640, 96 P.2d 588. After quoting multiple definitions of criminal, the court declared the layperson would read...