Haisten v. Audubon Indem. Co.

• Citation: 642 So.2d 404
• Parties: Elizabeth HAISTEN, as administratrix of the Estate of James Larry Haisten, deceased; et al. v. AUDUBON INDEMNITY COMPANY. J.E. O'TOOLE ENGINEERING COMPANY v. AUDUBON INDEMNITY COMPANY. 1921326, 1921378.
• Decision Date: 06 May 1994
• Court: Supreme Court of Alabama

Page 404

642 So.2d 404

Elizabeth HAISTEN, as administratrix of the Estate of James Larry Haisten, deceased; et al. v. AUDUBON INDEMNITY COMPANY.

J.E. O'TOOLE ENGINEERING COMPANY v. AUDUBON INDEMNITY COMPANY.

1921326, 1921378.

Supreme Court of Alabama.

May 6, 1994.

Leah O. Taylor of Taylor & Roberson, Birmingham, for Elizabeth Haisten.

Tom Burgess and Thomas S. Hale of London, Yancey, Elliott & Burgess, Birmingham, for J.E. O'Toole Engineering Co.

J. Mitchell Frost, Jr. of Dominick, Fletcher, Yeilding, Wood & Lloyd, Birmingham, for appellee.

ALMON, Justice.

These appeals are from a judgment declaring that the plaintiff insurer is not obligated to provide coverage for the acts alleged in an underlying tort action. One appeal questions whether the trial court erred in holding applicable a provision in the insurance policy excluding coverage for injuries "expected or intended from the standpoint of the insured." The other appeal questions whether the trial court erred in holding that a party who had contracted for indemnity from the insured was not entitled to coverage as an additional insured, because of cases holding that indemnity contracts such as the one at issue are void.

James Larry Haisten was an employee of Bunt Construction Company; he died when a trench collapsed on him while he was working. Bunt Construction was insured by Audubon Indemnity Company under a commercial general liability policy. The work in which Bunt Construction was engaged when Haisten died was a sewer project for the City of Cullman. J.E. O'Toole Engineering Company was the engineer for the project. The contract for the project required Bunt to maintain liability insurance and to "indemnify and save harmless the Owner and Engineer."

Mr. Haisten's widow, as administratrix of his estate, brought an action against James H. Bunt, the owner of Bunt Construction. She alleged that Bunt, as a co-employee of Haisten's, had willfully removed a safety device from the trench and had willfully violated a written safety rule and that those willful actions had caused Mr. Haisten's death. By these allegations she sought to come under the provisions of §§ 25-5-11(c)(2) and -(c)(4), respectively, which allow recovery against co-employees for the injurious conduct defined therein as "willful conduct." Her action also sought recovery from O'Toole Engineering based on what she alleged to be wrongful conduct causing or contributing to the trench collapse.

Audubon thereupon brought an action seeking a declaration that Bunt Construction's policy of insurance provided no coverage to either James H. Bunt or O'Toole Engineering for the acts alleged in Mrs. Haisten's complaint. As to the claims against Mr. Bunt, Audubon asserted that, because Mrs. Haisten could recover only if she proved "willful conduct" as defined in § 25-5-11(c), any recovery would necessarily be excluded from coverage, because the policy does not cover injuries "expected or intended from the standpoint of the insured."

The circuit court, in agreeing with this argument, treated the claims as falling under § 25-5-11(c)(1), which defines "willful conduct" as "A purpose or intent or design to injure another...." The circuit court appears to have read Reed v. Brunson, 527 So.2d 102, 119 (Ala.1988), as incorporating this portion of § 25-5-11(c)(1) into -(c)(2) and -(c)(4). Section 25-5-11(c)(2) provides, in pertinent part:

"['Willful conduct' means] [t]he willful and intentional removal from a machine of a safety guard or safety device provided by the manufacturer of the machine with knowledge that injury or death would likely or probably result from the removal...."

Section 25-5-11(c)(4) provides, in part:

"['Willful conduct' means] [w]illful and intentional violation of a specific written safety rule of the employer after written notice to the violating employee by another employee who, within six months after the date of receipt of the written notice, suffers injury resulting in death or permanent total disability as a proximate result of the willful and intentional violation."

After discussing Reed v. Brunson and other cases, the trial court concluded:

"All of the above cases make it clear that in order for Elizabeth Haisten to recover against James H. Bunt, she must allege and prove to the reasonable satisfaction of the trier of fact that it was James H. Bunt's design, intent and purpose to inflict injury and death on Haisten. Otherwise, James H. Bunt is immune from the claims asserted by Elizabeth Haisten under § 25-5-11.

"It is not possible for Elizabeth Haisten to allege and seek to prove that James H. Bunt conscientiously [sic] pursued a course of conduct with the design, intent and purpose of inflicting injury on Haisten in the underlying lawsuit and at the same time allege and seek to prove in the present case that the bodily injuries resulting in Haisten's death were not bodily injuries expected or intended from the standpoint of James H. Bunt.

"In other words, Elizabeth Haisten can only recover against James H. Bunt if she alleges and proves willful conduct (the design, intent and purpose to inflict injury by Bunt); such proof would have the effect of excluding coverage for such liability by Audubon."

This conclusion is a misreading of the separate fields of operation of § 25-5-11(c)(1), -(c)(2), and -(c)(4). As shown by the above quotations, neither -(c)(2) nor -(c)(4) requires a purpose, intent, or design to injure. See, e.g., Harris v. Gill, 585 So.2d 831 (Ala.1991); Pressley v. Wiltz, 565 So.2d 26 (Ala.1990); Bailey v. Hogg, 547 So.2d 498 (Ala.1989). Subsection -(c)(2) requires "willful and intentional removal ... of a ... safety device ... with knowledge that injury or death would likely or probably result." Subsection -(c)(4) requires "[w]illful and intentional violation of a ... safety rule" after notice of prior violations.

This Court has consistently interpreted insurance exclusions phrased exactly like the one at issue here, excluding coverage for injuries "expected or intended from the standpoint of the insured," as requiring a subjective analysis of what the insured expected or intended.

"Under this subjective test, an injury is 'intended from the standpoint of the insured' if the insured possessed the specific intent to cause bodily injury to another, whereas an injury is 'expected from the standpoint of the insured' if the insured subjectively possessed a high degree of certainty that bodily injury to another would result from his or her act. See Continental Western Ins. Co. v. Toal, 244 N.W.2d 121, 125 (Minn.1976), for a thorough discussion of the proper standard used to interpret this policy exclusion."

Alabama Farm Bureau Mut. Cas. Ins. Co. v. Dyer, 454 So.2d 921, 925 (Ala.1984); State Farm Fire & Cas. Co. v. Davis, 612 So.2d 458 ...