CNA Ins. Co. v. McGinnis

• Decision Date: 18 January 1984
• Docket Number: No. CA,CA
• Citation: 663 S.W.2d 182,10 Ark.App. 234
• Parties: CNA INSURANCE COMPANY, Appellant, v. James Ralph McGINNIS and Vicky Lynn Hills, Appellees. 83-88.
• Court: Arkansas Court of Appeals

Page 182

663 S.W.2d 182

10 Ark.App. 234

CNA INSURANCE COMPANY, Appellant, v. James Ralph McGINNIS and Vicky Lynn Hills, Appellees.

No. CA 83-88.

Court of Appeals of Arkansas.

Jan. 18, 1984.

Rehearing Denied Feb. 8, 1984.

Davis, Cox & Wright by Walter B. Cox, Fayetteville, for appellant.

Sexton, Nolan & Robb, P.A. by Bennett S. Nolan, and Jones, Gilbreath & Jones by Kendall B. Jones, Fort Smith, for appellees.

COOPER, Judge.

The appellant, CNA Insurance Company, filed a declaratory judgment action against the appellees, James Ralph McGinnis and Vicky Lynn Hills, seeking an adjudication that it had neither the duty to defend a federal court action pending between the appellees, nor the duty to pay any judgment which might be entered in that case. This appeal follows a decision by the trial court that the appellant was not entitled to the declaratory relief sought; that the appellee McGinnis was entitled to declaratory relief on his counterclaim; and therefore he was entitled to a defense by appellant, as well as payment of any judgment up to the policy limits, plus a 12% penalty and attorney's fees. We affirm.

The appellee Hills had filed suit against McGinnis, her stepfather, in federal court, seeking $150,000.00 in damages for injuries allegedly received as a result of sexual assaults and abuse by the appellee McGinnis. The appellant refused to defend McGinnis, and then filed this action for declaratory judgment.

The appellant issued a homeowners policy to McGinnis which covered the Fort Smith residence where the alleged sexual assaults took place. The policy period was from June 29, 1978 to June 29, 1979, during which time Hills was 16 years old. The appellant contended that there was no insurance coverage under its policy of insurance for the conduct alleged by Hills and that it had no duty to defend McGinnis or to pay any judgment which might be entered by reason of both a lack of coverage and the exclusionary provisions of the policy. The pertinent exclusionary clause in the policy states as follows:

Exclusions. There are certain instances which we do not intend to cover for liability. Under this policy, liability to others and medical expenses do not apply to personal injury or property damage:

1. Which is expected or intended by an insured.

The appellant had the burden of establishing that the acts which allegedly caused damage or injury fall within this exclusionary clause. Riverside Insurance Co. of America v. McGlothin, 231 Ark. 764, 332 S.W.2d 486 (1960). Insurance policies must be construed liberally so as to resolve doubts in favor of the insured, both as to coverage and exclusions. First Heritage Life Assur. Co. v. Butler, 248 Ark. 1164, 455 S.W.2d 135 (1970).

On appeal, the appellant argues that the trial court erred in finding that it had a duty to defend McGinnis as well as pay any judgment entered in the federal court action pending between the appellees.

The chancellor, in a well-reasoned opinion, analyzed the law relative to an insurance carrier's duty to defend and to pay damages, as well as the law concerning the interpretation of exclusionary clauses. He then found that, regarding the exclusion from coverage of damages resulting from intentional acts, the rule in Arkansas was that recovery was not precluded where the results of intentional acts were accidental or unintended. The trial court found that while McGinnis intended to commit the acts complained of, the appellant had not met its burden of proof in establishing that he either intended or expected any injury or damage to his step-daughter. We think the chancellor correctly analyzed the evidence and the law, and that his decision was correct.

Talley v. MFA Mutual Ins. Co., 273 Ark. 269, 620 S.W.2d 260 (1981) is controlling. There the Arkansas Supreme Court stated:

We see no violation of public policy in allowing recovery in circumstances in which it is shown the results were accidental or unintended. Nor do we adopt the tort concept that one intends the natural and foreseeable consequences of his acts so as to bar recovery from unintended results.

In the case at bar, there was no direct evidence presented which tended to prove that McGinnis intended to inflict harm or damage upon Hills. In fact, the evidence was to the contrary. Therefore, the only way to find that he intended harm to result would be to find that harm was a natural and foreseeable consequence of his acts, and that approach was specifically rejected in Talley.

We find no error, and therefore we affirm.

Affirmed.

MAYFIELD and GLAZE, JJ., agree.

CORBIN, CLONINGER and CRACRAFT, JJ., dissent.

CORBIN, Judge.

This is a case of the cart pulling the horse. It is yet another example of the unnecessary rigidity of our precedent-following system of jurisprudence.

The majority relies on Talley v. MFA Mutual Ins. Co., 273 Ark. 269, 620 S.W.2d 260 (1981), as the controlling case law to be applicable to the facts of the case at bar. The issue presented in Talley, supra, was whether the liability policy provided coverage for the unintended results of an intentional act. It arose out of a shooting incident involving an altercation between three boys at a party. The trial court there granted appellee MFA's motion for summary judgment based on the pleadings and affidavits, finding appellee MFA had no liability under the terms of the policy. Exclusionary language in the homeowner's policy stated that the policy did not cover bodily injury which was either expected or intended from the standpoint of the insured. In reversing and remanding the decision of the trial court, the Supreme Court held that it did not adopt the tort concept that one intends the natural and foreseeable consequences of his acts so as to bar recovery for unintended results. It concluded by finding that a fact issue existed as to whether appellant Davis intended to hit or injure appellants Talley and Evans and that the award of summary judgment constituted reversible error.

In Nat'l Inv. Life & Cas. Ins. v. Arrowood, 270 Ark. 617, 606 S.W.2d 97 (1980), the Arkansas Court of Appeals construed an exclusionary clause in a homeowner's insurance policy which provided This policy does not apply: 1. Under Coverage E--Personal Liability ... f. To bodily injury or property damage which is either expected or intended from the standpoint of the insured.

That case also arose from a shooting incident wherein appellee James Arrowood shot his former wife at the parties' home, the possession of which had been awarded to the wife in a divorce action. Appellants contended that appellee Sandra Arrowood's injury was intentionally caused by appellee James Arrowood and, therefore, liability coverage was excluded under the policies. The trial court found that the insurance companies had failed to meet the burden of proving that the exclusions were applicable. The Court of Appeals held that the judgment of the trial court was clearly against the preponderance of the evidence and reversed and remanded. The Court noted that although there was no authority within this jurisdiction, many cases from other jurisdictions did exist. It determined that no two cases were factually identical and it was essentially a matter of gleaning the intent behind human transactions and the outcome was dependent on the judgment of common sense and experience as applied to human behavior. However, the Court stated that it was not confronted with reconciling an intentional act with an unintended result.

I believe that the facts and evidence in the case at bar are distinguishable from those of Talley, supra. That case involved a shooting incident between young boys who were...