Hawaiian Ins. & Guar. Co., Ltd. v. Blanco, 14242

• Decision Date: 31 December 1990
• Docket Number: No. 14242,14242
• Court: Hawaii Supreme Court
• Parties: HAWAIIAN INSURANCE & GUARANTY COMPANY, LTD., Plaintiff-Appellee, v. Saturnino BLANCO, Gloria Blanco, Charlene Blanco, Allen Blanco and Jay Blanco, Defendants-Appellants, and Ireneo V. Garcia, Defendant.

Page 876

804 P.2d 876

72 Haw. 9

HAWAIIAN INSURANCE & GUARANTY COMPANY, LTD., Plaintiff-Appellee, v. Saturnino BLANCO, Gloria Blanco, Charlene Blanco, Allen Blanco and Jay Blanco, Defendants-Appellants and Ireneo V. Garcia, Defendant.

No. 14242.

Supreme Court of Hawai'i.

Dec. 31, 1990.

Syllabus by the Court

1. An insurer's duty to defend under a policy which provides for that duty regardless of whether the suit is groundless, false or fraudulent, arises whenever there is a potential for indemnification liability of the insurer to the insured under the terms of the policy.

2. An insurer called upon to defend an action against its insured must make a determined effort to ascertain not only from the pleadings but from the insurer's own independent investigation whether the insured is entitled to defense representation under the policy.

3. Where there is an exception to policy coverage for injuries expected or intended by the insured, the insurer in denying a defense to the insured cannot rely on a no contest plea to the criminal assault charge.

4. Where an insured is convicted of a crime of assault involving willful or knowing infliction of injury, the insurer in making a determination of whether to defend the insured in a civil suit arising out of the injury can consider the conviction but cannot rely solely on the conviction.

5. The reasonable expectation of policyholders regarding terms of insurance will govern the construction of the insurance policy.

6. An insurer's duty to defend requires that there be an occurrence defined as an accident.

7. Where an insured intentionally fires a gun in the direction of another person intending to frighten that person, it is reasonably to be expected that some physical injury will result, and hence the incident is not an occurrence, that is an accident, and therefore there is no coverage for the injury.

8. Where an insurer's investigation reveals that the insured intentionally fired a gun in the direction of the injured party intending to frighten him, and a physical injury results, there is no accident, and there is no duty to defend against a claim by the party at whom the gun was fired.

9. A reasonable person firing a gun in the direction of a man with the intention of scaring him could anticipate that the man's wife, observing the incident, would suffer emotional injury and distress, and hence, with respect to the wife's emotional injury and distress also, there is no accident and no coverage.

10. Where an insurer's investigation reveals that the insured intentionally fired a gun in the direction of another party intending to frighten him, and the investigation indicates that the insured knew the other party was married, and was in a position to see that the wife could observe the incident so that the insured could expect that emotional injury and distress to the wife would result, there was no duty to defend.

John M. Adams, Dixon & Okura, Hilo, for defendants-appellants.

Melvyn M. Miyagi (Davis, Reid & Richards, of counsel), Honolulu, for plaintiff-appellee.

Before LUM, C.J., and PADGETT, HAYASHI, WAKATSUKI and MOON, JJ.

PADGETT, Justice.

This is an appeal from a summary judgment entered below in favor of plaintiff-appellee Hawaiian Insurance and Guaranty Company, Ltd. (HIG) in a declaratory judgment action brought by it. We affirm.

On May 6, 1987, defendant-appellant Saturnino Blanco (Saturnino) was injured when defendant Ireneo V. Garcia (Garcia) shot a rifle in his direction. Gloria Blanco (Gloria), Saturnino's wife, was standing in the doorway of their home and observed the shooting incident. She claims to have suffered serious mental and emotional distress as a result thereof.

At the time of the shooting, Garcia was standing in the yard of his home. He was insured by HIG under a homeowner's policy issued by that company which provided in part:

If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, we will:

1. pay up to our limit of liability for the damages for which the insured is legally liable; and

2. provide a defense at our expense by counsel of our choice even if the suit is groundless, false or fraudulent.

There is an exclusion in the policy which provides in part:

Coverage E--Personal Liability and Coverage F--Medical Payments to Others do not apply to bodily injury or property damage:

a. which is expected or intended by the insured[.]

The definitions portion of the policy provides in part:

"occurrence" means an accident, including exposure to conditions, which results, during the policy period, in:

a. bodily injury; or

b. property damage.

On May 14, Garcia was indicted for the crimes of second degree attempted murder and place to keep firearms. On July 31, 1987, he entered a plea of no contest to attempted assault in the first degree.

HRS § 707-710, reads as follows:

Assault in the first degree. (1) A person commits the offense of assault in the first degree if he intentionally or knowingly causes serious bodily injury to another person.

(2) Assault in the first degree is a class B felony.

On November 18, 1987, Saturnino and Gloria Blanco and their children filed an amended complaint for personal injury against Garcia. That complaint alleged in Count I that Garcia willfully and intentionally fired a rifle at Saturnino, striking him in the leg. Alternatively in Count III, it was alleged that Garcia fired the rifle negligently. In Count IV it alleged that Gloria was standing a few feet away from Saturnino when Garcia maliciously and/or negligently discharged his loaded rifle at Saturnino, that she witnessed the shooting, and that Garcia's acts thus negligently inflicted serious emotional and psychological trauma and distress upon her.

On December 29, 1987, Garcia's attorney tendered the defense of the Blancos' suit to HIG. On February 3, 1988, HIG replied, acknowledging receipt of the letter, reserving its rights and asking cooperation in its investigation. The letter said in part:

At face, and in the main, Plaintiff Saturnino Blanco is saying our named insured intentionally shot him in the presence of eyewitness family members, who are also plaintiffs in this action. You have raised the affirmative defense of provocation in your Answer. Please explain to Mrs. Fujitake your understanding of the facts of this case.

(Emphasis in original.)

Apparently Garcia's attorney did not respond because on March 28, 1988, HIG again wrote to the attorney, rejecting the tendered defense, calling attention to the failure to respond and stating:

We have contacted counsel Brian Delima, who represented Mr. Garcia in the criminal case. We have reviewed the in-depth police report, and the Judgment papers concerning CR. No. 87-205.

It's clearly evident by these documents that Mr. Garcia committed an intentional act, was convicted of "attempted assault in the first degree", and is currently serving a sentence.

Under these circumstances, Mr. Garcia cannot reasonably expect us to defend him under his homeowners. Unless you can show us any facts to the contrary, we hereby disclaim any insurance relief for the Blanco suit and claims.

(Emphasis in original.)

On April 18, 1988, Garcia's attorney belatedly replied, again tendering defense and stating:

I am advised that your representative have been told explicitly the following:

1) That Mr. Garcia did not intend to [shoot] Mr. Blanco but shot away from Mr. Blanco and there must have been a ricochet if Mr. Blanco was hit at all;

2) That based upon the discussion with the Prosecutor's Office, a plea agreement was entered and Mr. Garcia pleaded no contest to a reduced charge;

3) At no time did Mr. Garcia state to Counsel or to Police that he intended to injure Mr. Blanco.

On September 15, 1988, Garcia and the Blancos entered into a stipulation which stated in part:

6. On or about May 6, 1987, Defendant negligently failed to act with due care towards Saturnino by discharging his loaded rifle four (4) times from a distance of about 25 feet, and thus, did negligently injure and harm Saturnino. Each bullet struck objects located fifteen (15) feet from where Saturnino was standing. As a direct and proximate result of the several shots fired, one of the bullets struck an object which in turn struck Saturnino in his right leg, causing bodily injury to Saturnino.

7. Defendant did not intend to injure Saturnino, but only wanted to scare him.

8. Such injuries were caused without any intentional act, negligence, or provocation on the part of Saturnino, Gloria,....

....

11. During the incident above described, Gloria, Charline [sic], and Allen were lawfully standing a few feet away from Saturnino on their residence property while Defendant was negligently discharging his loaded rifle, and did witness said shooting.

12. Defendant negligently failed to act with due care with respect to Gloria, and thus, negligently inflicted serious emotional and psychological trauma and distress upon Gloria.

Thereafter, the arbitrator entered awards, denying compensation to the Blanco children but awarding Saturnino $1,917 in special damages and $8,083 in general damages, and awarding Gloria $7,518.01 in special damages and $32,481.99 in general damages. (The record before us does not disclose what the special damages awarded in either case were.)

Subsequently Gloria and Saturnino made demand upon HIG to pay the...