Allstate Ins. Co. v. Juniel
| Decision Date | 11 July 1996 |
| Docket Number | No. 95CA0471,95CA0471 |
| Citation | 931 P.2d 511 |
| Parties | ALLSTATE INSURANCE COMPANY, Plaintiff-Appellee, v. Thomas H. JUNIEL and Vernon E. Green, Defendants-Appellants. . IV |
| Court | Colorado Court of Appeals |
Holland & Hart, Brian Muldoon, Steven C. Choquette, Denver, for Plaintiff-Appellee.
Fogel, Keating & Wagner, P.C., William L. Keating, Steven R. Polidori, Kristin D. Sanko, Denver, DiManna & Jackson, Gary M. Jackson, Denver, Breit, Bosch, Levin & Coppola, P.C., John L. Breit, Bradley A. Levin, Denver, for Defendants-Appellants.
Opinion by Judge DAVIDSON.
In this action for declaratory relief regarding the criminal acts exclusion clause of an insurance policy, defendants, Thomas H. Juniel (insured) and Vernon E. Green (neighbor), appeal from a judgment of the trial court ruling that plaintiff, Allstate Insurance Co. (insurer), had no duty to defend or indemnify the insured. We affirm.
Unsatisfied after confronting a neighbor who was shooting fireworks into his yard, the insured went into his house, retrieved a handgun with a loaded clip, hid the gun in the waistband of his pants, and returned outside. After he again confronted his neighbor about the fireworks, the neighbor approached insured in a threatening manner. Insured then drew the gun, loaded a round into the chamber, and pointed it at the ground. In an attempt to grab the gun from the insured, the neighbor was seriously injured when the gun discharged.
Insured pled guilty to second degree felony assault and misdemeanor menacing. See §§ 18-3-203 & 18-3-206, C.R.S. (1986 Repl.Vol. 8B). Neighbor subsequently sued insured for recklessly and negligently causing him physical injury, specifically citing these two crimes in his complaint. Insurer refused to pay or to defend insured in the suit and sought a declaratory judgment to define its obligations under insured's homeowner's policy. As pertinent here, neighbor and insured stipulated to a judgment in favor of neighbor and insured agreed to litigate this action with insurer.
On cross-motions for summary judgment, the trial court ruled that the criminal exclusion clause was unambiguous, not void as against public policy, and, consequently, that insurer had no duty either to defend or to indemnify the insured.
On appeal, defendants contend that the trial court's ruling is in error. Defendants assert that the policy's criminal acts exclusion does not exclude neighbor's injuries from coverage because the clause is ambiguous and, if interpreted as they suggest, neighbor's injuries would be within the terms of policy coverage. We disagree.
An insurer's duty to defend arises from allegations in the complaint which, if sustained, would impose upon the insured liability within the policy coverage. Whether coverage is ultimately available under the policy is a question of fact for the trier of fact. But, since the duty to defend is broader than the duty to indemnify, see Hecla Mining Co. v. New Hampshire Insurance Co., 811 P.2d 1083 (Colo.1991), there is no liability if there is no duty to defend. Thus, insurer has no duty either to defend or to indemnify if insurer can establish that the factual allegations in the complaint reveal a situation that is solely and entirely within an exclusion in the insurance policy, and that the exclusion is not subject to any other reasonable interpretation. Hecla Mining Co. v. New Hampshire Insurance Co., supra.
Here, the coverage grant clause of insured's homeowner's policy provides that:
Subject to the terms, limitations and conditions of this policy, [insurer] will pay damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an accident and covered by this part of the policy.
The criminal acts exclusion provides:
We do not cover bodily injury or property damage resulting from:
(a) A criminal act or omission.
First, defendants argue, the criminal acts exclusion is ambiguous because the term "criminal acts" is susceptible to more than one interpretation. Defendants assert that the term could fairly be interpreted to mean either acts which are crimes under the relevant criminal code or, alternatively, acts that the general population considers to be "criminal" in nature. However, if we assume that "criminal acts" could, in the abstract, be interpreted in more than one way, such a potential does not create an ambiguity here.
When a policy does not define a term such as "criminal acts," interpretation of that term is dependent on whether the phrase is used ambiguously in the context of the policy's exclusionary clause. However, although a term used in a contract is ambiguous when it is susceptible to more than one reasonable interpretation, Hecla Mining Co. v. New Hampshire Insurance Co., supra, a mere potential for more than one interpretation of such term considered in the abstract, does not create an ambiguity.
To the contrary, whether a policy term is ambiguous is not determined in a vacuum, but by use of an objective standard within the context of circumstances at issue. Regional Bank of Colorado v. St. Paul Fire & Marine Insurance Co., 35 F.3d 494 (10th Cir.1994) (applying Colorado law). That is, terms are construed "as they would be understood by a person of ordinary intelligence," State Farm Mutual Auto. Insurance Co. v. Nissen, 851 P.2d 165, 167 (Colo.1993); see also L. Russ, Couch on Insurance 3D § 22.38 at 22-83 (1995) (), evaluating policy language and the factual circumstances to which the terms are applied. See American Family Mutual Insurance Co. v. Johnson, 816 P.2d 952 (Colo.1991) (); see also Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Insurance Co., 5 Cal.4th 854, 21 Cal.Rptr.2d 691, 855 P.2d 1263 (1993) (); Youngwirth v. State Farm Mutual Auto. Insurance Co., 258 Iowa 974, 140 N.W.2d 881 (1966) ().
Hence, the fact that "terms of a policy of insurance may be construed as ambiguous where applied to one set of facts does not make them ambiguous as to other facts which come directly within the purview of such terms." L. Russ, Couch on Insurance 3D § 21.14 at 21-26 (1995); see American Family Mutual Insurance Co. v. Johnson, supra ().
Here, insured argues, "criminal acts" might be variously interpreted, for example, as statutorily defined crimes or as actions of a "criminal nature" as regionally perceived. Even so, considering the conduct at issue in this case--assault and menacing--we conclude that any "objectively reasonable" interpretation of "criminal acts" would exclude insured's actions from coverage under the policy. Thus, the term "criminal acts" is unambiguous under the circumstances at issue in which injuries were sustained as the result of insured's recklessly drawing a loaded gun on a neighbor.
Indeed, a variety of jurisdictions have found identical or substantially similar criminal acts exclusion language to be unambiguous under the particular circumstances at issue. See Castro v. Allstate Insurance Co., 855 F.Supp. 1152 (S.D.Cal.1994) (); Horace Mann Insurance Co. v. Drury, 213 Ga.App. 321, 445 S.E.2d 272 (1994) (); Ideal Mutual Insurance Co. v. Winker, 319 N.W.2d 289 (Iowa 1982) (); New Mexico Physicians Mutual Liability Co. v. LaMure, 116 N.M. 92, 860 P.2d 734 (1993) ().
Alternatively, defendants maintain that the policy is ambiguous when the criminal acts exclusion, as written, is read in conjunction with the coverage grant clause of the policy, which provides that insurer will pay damages for injuries "arising from an accident." Specifically, defendants argue, in order to give effect to the coverage grant clause, the criminal acts exclusion should be narrowly interpreted to exclude only "injuries which the insured either intended or reasonably expected to result from criminal acts." This interpretation, defendants assert, would mean that neighbor's injuries, resulting from one of the parties "accidentally" pulling the trigger during a scuffle for the gun, would be within the policy's coverage. We disagree.
First, the policy is not ambiguous when the coverage grant and exclusion clause are read together.
Contrary to defendants' contention, the exclusion clause does not conflict directly with the coverage grant clause. The grant clause of insured's homeowners' policy explicitly provides that payment of damages arising from an accident is subject to "terms, limitations and conditions of this policy." Thus, the policy is clear that not all injuries arising from accidents will be covered.
Secondly, in the insurance context, the language of the exclusion--"injuries resulting from [an action]"--has been interpreted as meaning injuries "caused by or contributed to" by the action, regardless whether the party causing the injuries either intended to cause injury or even knew how the accident which caused the injuries occurred. Ackerman v. Hilton's Mechanical Men, Inc. 914 P.2d 524 (Colo.App.1996) ().
Further,...
To continue reading
Request your trial