Economy Preferred Ins. Co. v. Mass

• Decision Date: 12 March 1993
• Docket Number: No. S-90-1076,S-90-1076
• Parties: ECONOMY PREFERRED INSURANCE COMPANY, Appellant, v. Cynthia Ann MASS, Personal Representative of the Estate of Dwight E. Ehlert, Deceased, and Mark E. Ehlert, Appellees.
• Court: Nebraska Supreme Court

Page 6

497 N.W.2d 6

242 Neb. 842

ECONOMY PREFERRED INSURANCE COMPANY, Appellant, v. Cynthia Ann MASS, Personal Representative of the Estate of Dwight E. Ehlert, Deceased, and Mark E. Ehlert, Appellees.

No. S-90-1076.

Supreme Court of Nebraska.

March 12, 1993.

Syllabus by the Court

1. Summary Judgment: Appeal and Error. In the appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.

2. Summary Judgment. Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and the moving party is entitled to judgment as a matter of law.

3. Insurance: Contracts: Intent. An insurance policy is to be construed as any other contract to give effect to the parties' intentions at the time the contract was made. When the terms of the contract are clear, they are to be accorded their plain and ordinary meaning.

4. Insurance: Contracts. When a clause of an insurance policy can be fairly interpreted in more than one way, there is an ambiguity to be resolved by the court as a matter of law.

5. Insurance: Contracts. While an ambiguous policy will be construed in favor of the insured, an ambiguity will not be read into policy language which is plain and unambiguous in order to construe it against the preparer of the contract.

6. Insurance: Contracts: Proof. The burden to prove that an exclusionary clause applies rests upon the insurer.

Mark J. Peterson, of Erickson & Sederstrom, P.C., Omaha, for appellant.

Thomas J. Walsh, Jr., of Walsh, Fullenkamp & Doyle, Omaha, for appellee Mark E. Ehlert.

HASTINGS, C.J., and BOSLAUGH, CAPORALE, SHANAHAN, and FAHRNBRUCH, JJ.

BOSLAUGH, Justice.

This action for a declaratory judgment was brought by the plaintiff, Economy Preferred Insurance Company (Economy), against the defendants, Cynthia Ann Mass as personal representative of Dwight E. Ehlert, deceased and Mark E. Ehlert, to determine coverage under a homeowners insurance policy issued by the plaintiff to Dwight E. Ehlert and containing an exclusion for "bodily injury or property damage expected or intended by an insured."

The facts are not in dispute, and are stated in a stipulation submitted by the parties on motions for summary judgment.

Dwight Ehlert was the named insured under the homeowners insurance policy issued by Economy Preferred Insurance Company to him. The insurance policy insured the family home of Dwight Ehlert located at 8533 Templeton Drive in Omaha, Nebraska. Mark Ehlert, Dwight Ehlert's son, was included as an insured under the policy. On June 18, 1988, Mark Ehlert began arguing with his father, Dwight Ehlert at the family residence. Immediately thereafter, Mark Ehlert removed a rifle from his bedroom and proceeded to shoot and kill his father, Dwight Ehlert. Mark Ehlert also shot and injured his father's friend, Stanley Rozell. The district court for Douglas County determined that Mark Ehlert was not competent to stand trial for the crimes of killing his father and the injury of Stanley Rozell and was not guilty by reason of insanity.

Subsequent to the shooting, Stanley Rozell sued Mark Ehlert for damages for the injuries he sustained in the incident. Mark Ehlert tendered the defense of that claim to Economy under the terms of the homeowners policy. Economy then brought this declaratory judgment action to determine its rights and obligations under the homeowners policy.

The policy excludes coverage for "intentional" acts by an insured which cause bodily injury. The policy provides, in relevant part: "1. Coverage E--Personal Liability and Coverage F--Medical Payments to Others do not apply to bodily injury or property damage: a. which is expected, anticipated, foreseeable or intended by the insured; ...."

Economy contends that it has no liability under the policy because Mark Ehlert intentionally shot Stanley Rozell. The parties stipulated to the facts and submitted the matter to the district court upon cross-motions for summary judgment. The district court sustained Mark Ehlert's motion, and found that the policy issued by Economy provided coverage and that Economy was obligated to defend Ehlert in any and all lawsuits filed by Stanley Rozell arising out of the incident occurring at Ehlert's home. The trial court found that because Mark was legally insane at the time of the incident, his acts were not "intentional" so as to fall within the purview of the "intentional acts" exclusion of the policy. Therefore, Economy was required to provide liability coverage to Mark Ehlert for the claims alleged by Stanley Rozell. Economy also was ordered to pay Mark Ehlert's costs and attorneys fees. Economy appealed from that judgment.

Economy has assigned as error that the trial court erred in denying Economy's motion for summary judgment and in sustaining Mark Ehlert's motion for summary judgment. Economy also assigns as error the district court's award of attorneys fees to Mark Ehlert.

In the appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Metropolitan Life Ins. Co. v. Beaty, 242 Neb. 169, 493 N.W.2d 627 (1993).

Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and the moving party is entitled to judgment as a matter of law. Id.

An insurance policy is to be construed as any other contract to give effect to the parties' intentions at the time the contract was made. When the terms of the contract are clear, they are to be accorded their plain and ordinary meaning. When a clause can be fairly interpreted in more than one way, there is an ambiguity to be resolved by the court as a matter of law. Thorell v. Union Ins. Co., 242 Neb. 57, 492 N.W.2d 879 (1992). While an ambiguous policy will be construed in favor of the insured, an ambiguity will not be read into policy language which is plain and unambiguous in order to construe it against the preparer of the contract. Id.

Under Nebraska law, the burden to prove that an exclusionary clause applies rests upon the insurer. Jaramillo v. Mercury Ins. Co., 242 Neb. 223, 494 N.W.2d 335 (1993).

The issue on this appeal is whether insurance coverage is precluded as a matter of law by an exclusion for bodily injury coverage when the injury was "expected, anticipated, foreseeable or intended by the insured" and the insured is mentally ill or insane. Specifically, we must determine whether the fact that the insured, Mark Ehlert, was found to be insane and therefore not criminally liable for the injury to Stanley Rozell, is a sufficient ground to preclude application of the intentional act exclusion under the terms of the homeowners policy. This is a question of first impression for this court. However, this issue has been extensively litigated in other jurisdictions, and two conflicting lines of authority have emerged. One line of authority holds that if an insured is insane or is suffering from a mental illness, the insured's act cannot be treated as "intentional" so as to exclude the resulting loss from coverage under an insurance policy containing an "intentional or expected" injury exclusion. See, Ruvolo v. American Casualty Co., 39 N.J. 490, 189 A.2d 204 (1963); Globe v. American Casualty Co. v. Lyons, 131 Ariz. 337, 641 P.2d 251 (1981).

However, we believe the better reasoned view is that while an insane or mentally ill insured may be unable to form the criminal intent necessary to be guilty of a crime, such an individual can still intend or expect the results of injuries he or she causes. Several recent decisions in other jurisdictions support this view. See, Auto-Owners Ins. Co. v. Churchman, 440 Mich. 560, 489 N.W.2d 431 (1992); Public Employees Mut. Ins. v. James F., 65 Wash.App. 307, 828 P.2d 63 (1992); Mallin v. Farmers Ins. Exchange, 108 Nev. 788, 839 P.2d 105 (1992); Shelter Mut. Ins. v. Williams, 248 Kan. 17, 804 P.2d 1374 (1991).

The decision of the Virginia Supreme Court in Johnson v. Ins. Co. of North America, 232 Va. 340, 350 S.E.2d 616 (1986), also supports this view. In Johnson, a mentally ill person shot and severely injured the plaintiff. The mentally ill person had specifically planned to kill the plaintiff, telling police that he simply wanted to shoot the plaintiff, so he did. The Johnson court stated:

Here, when Davis aimed the pistol at Johnson, he knew that he was shooting a human being. Acting deliberately and methodically, Davis had searched for and found a pistol, loaded it, travelled to the victim's home, waited for him, begun talking with him, and shot him from close range. He acted with resolve and determination, not knowing that what he was doing was wrong because God had ordered him to act. In pointing the pistol at Johnson, Davis did not think, for example, that he was peeling a banana; he wasn't psychotic to an extreme degree, as the victim readily recognizes when he notes that Davis 'did have this minimal degree of awareness of his actions.' That is sufficient. The shooting was not accidental, a risk insured against, but intentional.

Id. at 347-348, 350 S.E.2d at 620. The Johnson court concluded that a finding of not guilty by reason of insanity does not negate intent, it merely excuses the act of the individual committing the crime. Such an individual can have every intention of performing an act and can also fully intend or expect the consequences of his act.

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