American Family Mut. Ins. Co. v. Johnson

• Citation: 816 P.2d 952
• Decision Date: 16 September 1991
• Docket Number: No. 90SC286,90SC286
• Parties: AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Petitioner, v. Daniel C. JOHNSON and Charlotte Maria Brown, Respondents.
• Court: Supreme Court of Colorado

Page 952

816 P.2d 952

AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Petitioner, v. Daniel C. JOHNSON and Charlotte Maria Brown, Respondents.

No. 90SC286.

Supreme Court of Colorado En Banc.

Sept. 16, 1991.

Dickinson, Everstine, Kelly & Prud'Homme, Michelle R. Prud'Homme, Denver, for petitioner-appellant.

Robert A. Millman, P.C., Robert A. Millman, Colorado Springs, for respondents-appellees.

Justice KIRSHBAUM delivered the Opinion of the Court.

In American Family Mutual Insurance Co. v. Johnson, 796 P.2d 43 (Colo.App.1990), the Colorado Court of Appeals held that a clause of a homeowner's liability insurance contract excluding injuries "intended or expected" from the general coverage provisions of the contract does not relieve an insurer from liability for damages resulting from an insured's infliction of injuries on a person mistaken for someone else. Having granted the request of petitioner American Family Mutual Insurance Company (American Family) for certiorari review of the Court of Appeals judgment, we reverse and remand with directions.

I

The basic factual circumstances underlying this dispute are not controverted. During the evening of August 21, 1984, Daniel Johnson, the insured (Johnson); his estranged wife, Christine Johnson; and Charlotte Maria Brown (Brown) were present at a bar. When Johnson saw a woman he assumed to be his wife leave the bar accompanied by one or more men, he followed them to the parking lot, approached her from behind, and kicked her. When the woman turned around, he discovered she was in fact Brown and apologized for his mistake. Brown subsequently filed a civil action against Johnson seeking damages for injuries resulting from the attack on claims of assault and battery and negligence. Brown also filed a civil action against the bar, and the two cases were consolidated for trial.

Prior to trial, Johnson filed a petition in bankruptcy in the United States Bankruptcy Court for the District of Colorado. Brown and Johnson then entered into a limited covenant wherein she agreed to dismiss her assault and battery claim and to seek satisfaction of any judgment she might obtain on her negligence claim from the proceeds of Johnson's American Family insurance policy.

At trial, the trial court entered a directed verdict in favor of Brown and against Johnson on the negligence claim. Issues of co-defendant liability and damages were submitted to the jury, which returned a verdict finding Johnson seventy-five percent negligent, finding the bar twenty-five percent negligent, and awarding damages in the amount of $120,000. Neither defendant appealed the verdict.

While Brown's personal injury action against Johnson was pending, American Family filed a declaratory judgment action seeking determination of its obligations under the contract of insurance. The contract provided general personal liability coverage of $100,000 per occurrence for bodily injury or property damage. The contract also contained an exclusion for bodily injury or property damage "expected or intended by any insured." In the declaratory judgment action, the trial court entered partial summary judgment in favor of American Family. The trial court applied the doctrine of transferred intent, Restatement (Second) of Torts § 20 (1965), to conclude that because Johnson expected and intended injury to his wife the injury to Brown was also expected and intended and therefore excluded from coverage.

On appeal, the Court of Appeals reversed. Concluding that the act of kicking Brown was not the probable and expected consequence of Johnson's intended act, the Court of Appeals determined that the exclusionary clause of the insurance contract was not applicable because Johnson acted with the intent to accomplish a certain result but instead accomplished a result that was improbable and unexpected.

II

American Family argues that the language of the exclusionary clause applies to Johnson's conduct in this case and prohibits coverage for the results of that conduct. Johnson contends that the language is inherently ambiguous and therefore should be construed in his favor to permit coverage. We agree that under the circumstances here the exclusionary clause is applicable.

An insurance contract is to be construed pursuant to established principles of contract law. Chacon v. American Family Mut. Ins. Co., 788 P.2d 748 (Colo.1990). Unambiguous provisions of an insurance contract must be construed to give effect to their plain meaning. Northern Ins. Co. of New York v. Ekstrom, 784 P.2d 320 (Colo.1989); Kane v. Royal Ins. Co., 768 P.2d 678 (Colo.1989). Ambiguous provisions of an insurance contract are to be construed against the drafter thereof and in favor of providing coverage to the insured. Chacon, 788 P.2d at 750; Republic Ins. Co. v. Jernigan, 753 P.2d 229 (Colo.1988). Exclusionary clauses designed to insulate particular conduct from general liability coverage provisions must be drafted in clear and specific language. Ryder Truck Rental, Inc. v. Guaranty Nat'l Ins. Co., 770 P.2d 1380 (Colo.App.1989). To benefit from an exclusionary provision in a particular contract of insurance the insurer must establish that the exemption claimed applies in the particular case and that the exclusions are not subject to any other reasonable interpretations. Hecla Mining Co. v. New Hampshire Ins. Co., 811 P.2d 1083, 1090 (Colo.1991). See Republic Ins. Co. v. Jernigan, 753 P.2d 229 (Colo.1988); Coxen v. Western Empire Life Ins. Co., 168 Colo. 444, 452 P.2d 16 (1969); Ferndale Dev. Co., Inc. v. Great American Ins. Co., 34 Colo.App. 258, 527 P.2d 939 (1974).

The insurance contract in this case provides personal liability coverage as follows:

[ ] LIABILITY COVERAGES--SECTION II

COVERAGE D--PERSONAL LIABILITY COVERAGE

We will pay, up to our limit of liability, all sums for which any insured is legally liable because of bodily injury or property damage covered by this policy.

The parties do not dispute that Brown's injuries fall within this basic coverage provision. The exclusionary clause upon which American Family relies states as follows:

[ ] EXCLUSIONS--SECTION II

1. Coverage D--Personal Liability and Coverage E--Medical Expense do not apply to bodily injury or property damage:

a. which is expected or intended by any insured....

American Family contends that the provision is unambiguous and that coverage is excluded because Johnson intended bodily injury and his lack of intent to injure Brown is irrelevant. Johnson concedes that the exclusionary language is not ambiguous in most circumstances, but argues that in the factual context of this case it is ambiguous because he had no intent to injure Brown and because general coverage should be deemed available for

unforeseen and unexpected consequences of intentional acts.

Courts construing intentional injury exclusions of insurance contracts have, not surprisingly, reached different results. Many courts have concluded that such exclusions are inherently ambiguous. See, e.g., Farmers Ins. Group v. Sessions, 100 Idaho 914, 607 P.2d 422 (1980); Grinnell Mut. Reinsurance Co. v. Frierdich, 79 Ill.App.3d 1146, 35 Ill.Dec. 418, 399 N.E.2d 252 (1979); Home Ins. Co. v. Neilsen, 165 Ind.App. 445, 332 N.E.2d 240 (1975); Gowing v. Great Plains Mut. Ins. Co., 207 Kan. 78, 483 P.2d 1072 (1971); Patrons-Oxford Mut. Ins. Co. v. Dodge, 426 A.2d 888 (Me.1981); Caspersen v. Webber, 298 Minn. 93, 213 N.W.2d 327 (1973). Other courts have found no ambiguity. Allstate Ins. Co. v. Roelfs, 698 F.Supp. 815 (D. Alaska 1987); Steinmetz v. National Am. Ins. Co., 121 Ariz. 268, 589 P.2d 911 (1978); Colonial Penn Ins. Co. v. Hart, 162 Ga.App. 333, 291 S.E.2d 410 (1982); Thornton v. Illinois Founders Ins. Co., 84 Ill.2d 365, 49 Ill.Dec. 724, 418 N.E.2d 744 (1981); Auto-Owners Ins. Co. v. Gardipey, 173 Mich.App. 711, 434 N.W.2d 220 (1988); Hartford Fire Ins. Co. v. Wagner, 296 Minn. 510, 207 N.W.2d 354 (1973); Commercial Union Ins. Co. v. Mauldin, 62 N.C.App. 461, 303 S.E.2d 214 (1983); Poston v. United States Fidelity & Guarantee Co., 107 Wis.2d 215, 320 N.W.2d 9 (Wis.Ct.App.1982). See generally Annotation, Construction and Application of Provision of Liability Insurance Policy Expressly Excluding Injuries Intended or Expected by Insured, 31 A.L.R.4th 957 (1984).

This court considered identical exclusionary language in Chacon v. American Family Mut. Ins. Co., 788 P.2d 748 (Colo.1990), albeit in a context that differs from the circumstances of this case. In Chacon, we concluded that the provision unambiguously "expresses an intention to deny coverage to all insureds when damage is intended or expected as a result of the actions of any insured." Id. at 752. While it is instructive that we found no ambiguity in the language of the exclusionary clause, that decision is not controlling here because it did not require an interpretation of what constitutes an intentional injury. The question in Chacon was whether a concededly intentional act of a co-insured precluded recovery by the insured under a severability clause of the insurance contract.

Similar exclusionary language was examined by our Court of Appeals in Butler v. Behaeghe, 37 Colo.App. 282, 548 P.2d 934 (1976), wherein the court rejected the argument that injuries admittedly caused by the insured were not excluded because the insured did not intend the precise injuries that resulted from his conduct. The court determined that the exclusion applies whenever some injury is intended, even though the injury that actually results differs in character or degree from the injury actually intended. Butler, 37 Colo.App. at 288, 548 P.2d at 938. See also State Farm Fire & Casualty Co. v. Bomke, 849 F.2d 1218 (9th Cir.1988) (applying Calif. law); City of Newton v. Krasnigor, 404 Mass. 682, 536 N.E.2d 1078 (1989); State Farm Fire & Casualty Co. v. Muth, 190 Neb. 248, 207 N.W.2d 364 (1973). But see Rajspic v. Nationwide Mut. Ins. Co., 110 Idaho 729, 718 P.2d 1167 (1986) (focus of...