Auto-Owners Ins. Co. v. Harvey

• Decision Date: 22 February 2006
• Docket Number: No. 83S01-0501-CV-00007.,83S01-0501-CV-00007.
• Citation: 842 N.E.2d 1279
• Parties: AUTO-OWNERS INSURANCE COMPANY, Appellant (Defendant below), v. Jon HARVEY and Misty Johnson, as Co-Personal Representatives of The Estate of Brandy Nicole Harvey, Appellees (Plaintiffs below), and Toby Michael Gearheart (Co-Defendant below)<SMALL><SUP>1</SUP></SMALL>.
• Court: Indiana Supreme Court

Page 1279

842 N.E.2d 1279

AUTO-OWNERS INSURANCE COMPANY, Appellant (Defendant below), v. Jon HARVEY and Misty Johnson, as Co-Personal Representatives of The Estate of Brandy Nicole Harvey, Appellees (Plaintiffs below), and Toby Michael Gearheart (Co-Defendant below)¹.

No. 83S01-0501-CV-00007.

Supreme Court of Indiana.

February 22, 2006.

COPYRIGHT MATERIAL OMITTED

David L. Taylor, Thomas R. Haley III, Joseph A. Samreta, Jennings Taylor Wheeler & Haley, P.C., Carmel, for Appellant.

James O. McDonald, Everett, Everett & McDonald, Terre Haute, for Appellee.

Indiana Trial Lawyers Association, Adrian P. Smith, Smith & DeBonis, LLC, Highland, Amicus Curiae.

DICKSON, Justice.

This interlocutory appeal challenges the denial of summary judgment in an insurance policy coverage dispute. Finding that the insured's statements and his plea of guilty to involuntary manslaughter conclusively established his alleged tortious act was committed "knowingly or intentionally," the Court of Appeals held that coverage for the claim was excluded by the policy's definition and requirement of an "occurrence," and it remanded for the entry of summary judgment in favor of the insurer. Auto-Owners Ins. Co. v. Harvey, 813 N.E.2d 1190, 1193-95 (Ind.Ct.App. 2004). We granted transfer and now affirm the trial court.

The case arises from an incident in which Brandy Nicole Harvey, age 16, fell into the Wabash River and drowned. For purposes of this summary judgment proceeding, the parties agree that Toby Michael Gearheart, the co-defendant, states that the incident occurred just after he, age 19, and Brandy one evening visited a Wabash River boat ramp, where they partially disrobed and engaged in sexual intercourse. After five to ten minutes, Brandy told Gearheart to stop, which he did, and both stood up. When Gearheart twice asked Brandy, "What's wrong?," she did not answer but came toward him and repeatedly pushed him toward the water. When she came toward him a third time, he put his hands on her shoulders and pushed her. Brandy lost her balance and fell off of the edge of the boat ramp, down a rocky embankment, and into the river. There is also no dispute that, as a result of the incident, Gearheart entered a plea of guilty to involuntary manslaughter. But the parties disagree regarding the voluntariness of Brandy's presence and activities on the ramp, Gearheart's conduct and intent at the time of the push, and the significance of his intent upon the personal liability insurance coverage provided for Gearheart under a homeowner's policy issued by defendant-appellant Auto-Owners Insurance Company to Gearheart's parents, in whose home Gearheart was residing.

Brandy's surviving parents, Jon Harvey and Misty Johnson, as co-personal representatives of her estate, filed a wrongful death action against Gearheart, alleging that his "negligence and recklessness" had caused Brandy's death. Appellees' App'x. at 1. Three months later, Brandy's parents filed in the same court the present action, denominated as a "Complaint for Damages and Declaratory Judgment," naming as defendants both Gearheart and Auto-Owners. Appellant's App'x. at 8. In part, this second action sought a declaration that Auto-Owners was obligated to pay any judgment entered against Gearheart in the two cases. By agreement, the trial court consolidated these causes "[f]or purposes of discovery," and took under advisement the consolidation of the two actions for trial purposes. Id. at 756. Discovery ensued, and Auto-Owners filed a motion for summary judgment asserting "there is no liability coverage under its policy for Toby Gearheart's conduct because his acts were intentional and his intent to harm [Brandy] Harvey should be implied as a matter of law." Id. at 100. The trial court denied the motion, finding without elaboration that "there is a material question of fact such that ... Auto-Owners Insurance Company is not entitled to judgment as a matter of law." Id. at 7. At the request of Auto-Owners, the trial court then certified its denial of summary judgment for interlocutory appeal, and the Court of Appeals accepted jurisdiction.

In its appeal, Auto-Owners contends that it was entitled to summary judgment on two separate grounds, which it contends establish as a matter of law that there is no coverage under its policy: (1) Gearheart's conduct does not constitute an "occurrence" as required by the policy's insuring agreement; and (2) Gearheart's conduct falls under the "intended or expected harm" exclusion in the policy. Appellant's Reply Br. at 1-2.

In the appellate review of a denial of summary judgment, we apply the same standard as the trial court. Reeder v. Harper, 788 N.E.2d 1236, 1240 (Ind. 2003). Summary judgment "shall be rendered forthwith if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Ind. Trial Rule 56(C). During our review, all facts and reasonable inferences drawn from them are construed in favor of the non-moving party. Reeder, 788 N.E.2d at 1240.

Requirement for Occurrence

Auto-Owners first contends that the insurance policy it issued requires an "occurrence" for liability coverage to be available, that the policy defines "occurrence" as "an accident," that Indiana law defines "accident" as something unintentional, and that the drowning death of Brandy Harvey in the Wabash River was the result of intentional conduct by Gearheart. Auto-Owners thus argues that the policy provides no liability coverage for Gearheart's conduct.

The relevant portion of the insuring agreement in the Auto-Owners insurance policy provides as follows: "We will pay all sums any Insured becomes legally obligated to pay as damages because of or arising out of bodily injury or property damage caused by an occurrence to which this coverage applies." Appellant's App'x. at 146 (emphasis added). The insurance policy also states that "[t]o understand this policy, you must understand the meaning of the following words," and then defines "occurrence" to mean "an accident that results in bodily injury or property damage and includes, as one occurrence, all continuous or repeated exposure to substantially the same generally harmful conditions." Id. at 129, 130. The word "accident" is not defined in the policy.

To support its contention that Brandy's death did not result from an "occurrence" as defined in the policy, Auto-Owners first argues that it was not an "accident" because Gearheart, though insisting that he did not intend to harm Brandy, admitted that he intended to push her. Auto-Owners asserts that because Gearheart's conduct was intentional, the incident was not an accident. It urges that Gearheart's testimony regarding whether he intended harm to result from his intentional act of pushing "is not relevant as to whether there was an `occurrence.'" Br. of Appellant at 10. Rather, Auto-Owners urges that Brandy's death was the natural and probable result of Gearheart's voluntary and intentional act of pushing, and thus her death should not be considered an "accident" for insurance purposes.

Certain disparity in bargaining power, which is characteristic of the parties to insurance contracts, has led courts to develop distinct rules of construction for those contracts. Beam v. Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002). If a contract is clear and unambiguous, its language is given its plain meaning. Id. But if there is ambiguity, the contract is construed strictly against the insurer, and the language of the policy is viewed from the insured's perspective. Bosecker v. West-field Ins. Co., 724 N.E.2d 241, 244 (Ind. 2000). "An ambiguity exists where a provision is susceptible to more than one interpretation and reasonable persons would differ as to its meaning." Id.

Indiana case law has held that, "in the context of insurance coverage, an accident means an unexpected happening without an intention or design." Terre Haute First Nat. v. Pacific Employers Ins. Co., 634 N.E.2d 1336, 1338 (Ind.Ct.App.1993), trans. not sought; Nat. Mut. Ins. Co. v. Eward, 517 N.E.2d 95, 100 (Ind.Ct.App.1987), trans. not sought. This description is consistent with the plain meaning of "accident," as indicated by the primary definition provided in several modern dictionaries: "1. an unintentional or unexpected happening that is undesirable or unfortunate, esp. one resulting in injury, damage, harm, or loss," THE RANDOM HOUSE COLLEGE DICTIONARY 9 (1984); "1. a: an unforeseen and unplanned event or circumstance b: lack of intention or necessity," WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 49 (1987); "1. An unexpected and undesirable event. 2. Something that occurs unexpectedly or unintentionally," THE AMERICAN HERITAGE DICTIONARY 71 (2d ed.1985). We agree with Auto-Owners that implicit in the meaning of "accident" is the lack of intentionality.

Indiana courts have often been confronted with claims disputing the application of "occurrence" or "accident" language in liability insurance policies. The closest parallel to the present case is Eward, which addressed an insurer's claim of no liability coverage for claims against its insured who allegedly drove a vehicle while intoxicated, striking a pedestrian. The insuring agreement there provided liability coverage for bodily injury claims "caused by an accident" and expressly defined "accident" to require "bodily injury or property damage the insured neither expected nor intended." Eward, 517 N.E.2d at 100. Focusing on the plain meaning of "accident," the court emphasized:

In fact, in practically every incident out of which liability arises under such a policy there is a violation of some traffic law or regulation. It is obvious that protection against liability for negligence is the primary reason for holding such a policy. Is it reasonable then to say that one who is driving while intoxicated is so negligent that (1) his manner of...