Klatt v. Continental Ins. Co.

• Decision Date: 08 July 1987
• Docket Number: No. 15536,15536
• Citation: 409 N.W.2d 366
• Parties: Gary L. KLATT, Plaintiff and Appellant, v. The CONTINENTAL INSURANCE COMPANY; First Insurance Clark; and Rick Worth, individually and as agent of First Insurance Clark, Defendants and Appellees, and The City of Clark, South Dakota, Defendants.
• Court: South Dakota Supreme Court

Page 366

409 N.W.2d 366

Gary L. KLATT, Plaintiff and Appellant, v. The CONTINENTAL INSURANCE COMPANY; First Insurance Clark; and Rick Worth, individually and as agent of First

Insurance Clark, Defendants and Appellees,

and

The City of Clark, South Dakota, Defendants.

No. 15536.

Supreme Court of South Dakota.

Argued April 23, 1987.

Decided July 8, 1987.

R. Greg Bartron of Osheim, Fox, Bartron & Wiles, Watertown, for plaintiff and appellant.

Ellsworth E. Evans and Edwin E. Evans of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendant and appellee Continental Ins. Co.

Joseph P. Barnett of Siegel, Barnett & Schutz, Aberdeen, for defendants and appellees First Ins. Clark and Rick Worth.

SABERS, Justice.

Gary L. Klatt (Klatt) appeals summary judgment orders entered against him and in favor of Continental Insurance Company (Continental) and First Insurance Clark and Rick Worth (FIC/Worth). We affirm.

Facts

On December 28, 1980, City of Clark Police Chief Robert J. Moden (Moden) and Police Officer David Lee Momsen (Momsen) committed an assault and battery upon Klatt while arresting him several miles outside the City of Clark, South Dakota. Klatt was charged with speeding, eluding police officers, aggravated assault, and resisting arrest. ¹ On June 24, 1981, Klatt initiated a civil suit against Moden, Momsen, and the City of Clark ² for the injuries he sustained in the incident. In his amended complaint, Klatt alleged assault and battery, unlawful arrest, false imprisonment, invasion of privacy, violation of constitutional civil rights, and defamation. According to the complaint, after the officers handcuffed Klatt, they slammed him against his automobile and proceeded to kick, knee, punch, hit, club, and viciously beat him about the head and body. Klatt sustained severe and extensive bodily injuries that included chemical burns from mace to his face and eyes which seriously impaired his vision. He sued for $500,000 in general damages and $500,000 in exemplary damages. Moden and Momsen did not appear and in a jury trial on September 15, 1983, Klatt was awarded a total judgment of $436,115.17, which included $250,000 compensatory and $125,000 punitive damages.

The judgment remained unsatisfied. Consequently, Klatt brought suit on May 21, 1984, against Continental and FIC/Worth to recover the unsatisfied judgment entered against Moden and Momsen. As against Continental, Klatt sought to include liability for the actions of the police officers within the comprehensive general liability insurance policy it issued to the City of Clark. Klatt also sought to recover from the City's insurance agent (FIC) and its employee (Worth) for their failure to obtain liability insurance for City employees such as Moden and Momsen, for acts committed while on duty pursuant to SDCL 9-12-7.

Klatt, Continental, and FIC/Worth filed separate motions for summary judgment. On August 19, 1986, the trial court denied Klatt's motion and granted summary judgment in favor of Continental and FIC/Worth.

Klatt's Claims

Klatt claims that Continental, or in the alternative, FIC/Worth, are liable for the unsatisfied judgment because (1) Moden and Momsen's conduct constituted an "occurrence" within the Continental policy or (2) FIC/Worth negligently failed to provide the City with insurance to cover the acts of Moden and Momsen committed within the scope of their official duty in accordance with SDCL 9-12-7.

Summary Judgment

Summary judgment is authorized only when the movant is entitled to judgment as a matter of law because there are no genuine issues of material fact. SDCL 15-6-56(c); Trapp v. Madera Pacific, Inc., 390 N.W.2d 558, 564 (S.D.1986) citing Nemec v. Deering, 350 N.W.2d 53, 55 (S.D.1984); Caneva v. Miners and Merchants Bank, 335 N.W.2d 339, 341 (S.D.1983). The burden is on the moving party to clearly show that there is no genuine issue of material fact. The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. Trapp, supra at 562; Wilson v. Great Northern Railway Company, 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968). When no genuine issue of material fact exists in a case, the legal questions may be properly decided by summary judgment. Hamaker v. Kenwel-Jackson Mach., Inc., 387 N.W.2d 515 (S.D.1986); SDCL 15-6-56(c). Therefore, we affirm only if there are no genuine issues of material fact and the legal questions have been correctly decided. Trapp, supra. There are no genuine issues of material fact here, ³ so we proceed to the legal questions.

1. CONTINENTAL'S POLICY LANGUAGE EXCLUDES LIABILITY FOR INTENTIONAL ACTS

On January 30, 1986, a hearing was held on Klatt and Continental's motions for summary judgment. Klatt argued that:

--Insurance contracts should be construed liberally and in favor of the insured;

--Any ambiguity in an insurance contract must be construed against the insurer;

--The personal liability endorsement, although not a part of the instant contract of insurance, shows that coverage was available for the actions of Moden and Momsen;

--SDCL 9-12-7 mandates that city employees should be covered by liability insurance, and that this statute must be incorporated into this insurance contract.

Klatt is correct in reciting the general rule that an insurance contract is to be construed liberally in favor of the insured and strictly against the insurer. However, he neglects to go far enough in his recitation. There are definite limitations to the application of this rule. Strong v. State Farm Mutual Ins. Co., 76 S.D. 367, 369, 78 N.W.2d 828, 829 (1956). The rule of liberal construction applies only where the language of the insurance contract is ambiguous and susceptible of more than one interpretation. Id. It is further limited by the fact that the contract language cannot be construed other than according to its plain and ordinary meaning. Id. Therefore, this rule does not permit the court to make a forced construction or a new contract of insurance for the parties. Id. See, e.g., Larson v. Continental Casualty Co., 377 N.W.2d 148 (S.D.1985); Great Central Ins. Co. v. Roemmich, 291 N.W.2d 772 (S.D.1980); Grandpre v. Northwestern Nat'l Life Ins. Co., 261 N.W.2d 804 (S.D.1977). The facts of this case place it within the limitations rather than within the general rule.

The insurance contract Continental issued to the City of Clark provides in part:

COMPREHENSIVE GENERAL LIABILITY INSURANCE

* * *

* * *

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

A. bodily injury or

B. property damage

to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.

The policy defines "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured[.]" (emphasis added). Continental concedes that the police officers were "insureds" under this policy. It contends, however, that the policy language is clear and unambiguous in its exclusion of liability for intentional acts, thus making construction of the contract unnecessary. Continental argues that Moden and Momsen intended to cause Klatt's injuries and that their conduct was neither accidental, nor unexpected or unintentional from the standpoint of the officers. It is Continental's contention, therefore, that the police officers' conduct was not an "occurrence" which would obligate it under the plain terms of the policy.

In Travelers Indem. Co. v. Walburn, 378 F.Supp. 860 (D.D.C.1974), the policy provided coverage for bodily injury "caused by an occurrence," which term was defined as an accident resulting in bodily injury "neither expected nor intended from the standpoint of the Insured." Id. at 862. The court stated:

[T]he question of coverage in this case rises or falls on whether the killing was an accident 'neither expected nor intended from the standpoint of the Insured.' ... [T]he court cannot find that this exclusion is in any way ambiguous. The language, an accident 'neither expected nor intended from the standpoint of the Insured,' means simply that if [insured] either intended to do serious bodily injury to [victim] or expected such a result from his actions, then there is no coverage.

Id. at 865-866. Similarly, in Briscoe v. Travelers Indem. Co., 571 P.2d 226 (Wash.App.1977), the court wrote:

The policy before us is not ambiguous. Under it, an 'occurrence' covered by the personal liability provisions of the policy is 'an accident ... which results ... in bodily injury or property damage neither expected nor intended from the standpoint of the Insured.' In order for the minor insured to be covered for the consequences of his actions, his tort must have been an 'accident' and the accident must have resulted in unexpected and unintentional injuries.

Where the minor insured allegedly viciously assaulted and beat another youngster, we cannot conclude that the means was accidental. (citations omitted)

Id. at 228-229. Courts in other jurisdictions which have considered this same type of provision have uniformly held it to be clear and unambiguous in its exclusion of intentional acts. ⁴

Following the Walburn and Briscoe cases, the present coverage question stands or falls on whether Klatt's injuries were caused by an accident "neither expected nor...