Casey v. Northwestern Sec. Ins. Co.
| Decision Date | 01 December 1971 |
| Parties | Joyce CASEY, Administratrix of the Estate of Harvey Lee Casey, deceased, Respondent, v. NORTHWESTERN SECURITY INSURANCE COMPANY, a corporation, Appellant. |
| Court | Oregon Supreme Court |
Edward H. Warren, Portland, argued the cause for appellant. With him on the briefs were Hershiser, Mitchell & Warren, Portland.
J. Warren Rosacker, Portland, argued the cause for respondent. on the brief were Glen McCarty and McCarty & Rosacker, Portland.
Before O'CONNELL, C.J., and McALLISTER, DENECKE, HOLMAN, TONGUE and HOWELL, JJ.
Plaintiff brought this action against his liability insurance carrier for the attorney's fee he incurred in defending himself against a personal injury claim.
Plaintiff was driving an automobile and he ran into one Shelton, allegedly causing injuries to Shelton. Because of this occurrence plaintiff was charged with assault with a dangerous weapon. Plaintiff pleaded not guilty; however, he was found guilty. The defendant insurance company knew this. Thereafter, Shelton sued plaintiff for personal injuries inflicted by assault and battery. The defendant rejected the tender of the defense of this action. Defendant's policy excluded coverage of intentionally inflicted injuries. Plaintiff's attorney consulted with Shelton's attorney and as a result Shelton's attorney amended his complaint and alleged both assault and battery and, in another court, negligence. Defendant again rejected the tender of the defense of the action. Plaintiff retained counsel for his defense and this action is for their fee. Defendant settled Shelton's action.
The trial court, sitting without a jury, found that the plaintiff had intentionally injured Shelton. The trial court was of the opinion, however, that because the amended complaint alleged a claim on the basis of negligence, which, if proved, would be covered by the insurance company, it had an obligation to defend plaintiff.
The trial court and counsel were of the opinion that two of our recent decisions hold the answer to the present problem.
In Williams v. Farmers Mut. of Enumclaw, 245 Or. 557, 423 P.2d 518 (1967), we departed from the usual rule we had followed that the duty to defend depends upon the allegations in the complaint against which the company is called upon to defend. In Williams the insured, Miller, pleaded guilty to a charge of assault with a dangerous weapon accomplished by intentionally driving his automobile into Williams. Williams then brought an action for personal injuries against the insured, Miller, alleging that Miller negligently injured him. The defendant had liability coverage on Miller for negligently inflicted injuries but not for intentionally inflicted injuries. The insurer declined the defense and a default judgment was taken against Miller. Williams brought an action to recover the amount of the judgment against Milller. The defendant insurer alleged that it did not have coverage because Miller intentionally injured Williams. The trial court held the defendant had a duty to defend Miller because the complaint alleged a negligently inflicted injury. From this premise the trial court followed the usual rule that when an insurer has a duty to defend, and it fails to defend, it is estopped from contesting the finding implicit in the judgment by Williams against Miller that the injury was negligently inflicted.
We reversed, holding that the insurer would have a conflict of interest if it attempted to defend Miller. It would be to the insurer's interest to prove that Miller intentionally inflicted the injury, whereas, it would be to Miller's interest to show that he negligently inflicted the injury. We further held that the insurer would not be collaterally estopped, in an action by Miller against it, from contending that Miller intentionally inflicted the injuries upon Williams. This is because whether the insurer is an indemnitor for Miller is dependent upon whether Miller intentionally or negligently inflicted the injuries upon Williams and the insurer has a right to litigate this issue, independent of the lawsuit by Williams against Miller.
In Ferguson v. Birmingham Fire Ins., 254 Or. 496, 460 P.2d 342 (1969), the complaint alleged an intentional tort for which there was no coverage. We held, nevertheless, that the insurer owed a duty to defend because under the allegations of the complaint the plaintiff could recover upon a negligence basis for which there was coverage. Likewise, we stated that if a complaint alleged in one count a wilful tort and in another a negligent tort, the insurer had a duty to defend. We also held that the insurer's failure to defend would not estop it from claiming in an action against it by its insured that the tort was intentional and, therefore, it had no coverage. We adopted the rule that a failure of an indemnitor to defend its indemnitee estops the indemnitor in a subsequent indemnity action only if the interests of the indemnitor or indemnitee were identical and not conflicting. 254 Or. at 510, 460 P.2d 342.
Ferguson has modified Williams to the extent that under Ferguson the insurer cannot refuse to defend because of a conflict of interest. The conflict does not exist because according to both Williams and Ferguson the insurer will not be collaterally estopped in the action against it by its insured from contending that it has no coverage because the insured intentionally inflicted the damage. Neither case, however, turned upon the significant fact found in the present case that the insured had been found guilty of committing an intentionally criminal act. A plea of guilty to an intentionally criminal act was part of the facts in Williams; however, the decision did not rely upon that.
The insurer has a duty to defend only if the claim made against the insured is one covered by the insurer. MacDonald v. United Pacific Ins. Co., 210 Or. 395, 399, 311 P.2d 425 (1957).
The difficulty arises when there is doubt as to coverage. This doubt sometimes cannot be resolved until a judgment is entered in litigation between the insured and the insurer. This is too late; the lawsuit by the injured party has been filed and probably gone to judgment before this time. The insurer has contracted with its insured to defend him. This benefit to the insured would be curtailed if it could be withheld in the event of a dispute about coverage. For this reason we have adopted the rule that in the absence of any compelling evidence of no coverage, the insurer owes a duty to...
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