Metro. Prop. v. Morrison

• Decision Date: 11 August 2011
• Docket Number: SJC–10858.
• Citation: 460 Mass. 352,951 N.E.2d 662
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANYv.Robert MORRISON, Jr., & others.1

460 Mass. 352

951 N.E.2d 662

METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY

v.Robert MORRISON, Jr., & others.1

SJC–10858.

Supreme Judicial Court of Massachusetts, Middlesex.

Submitted April 7, 2011.Decided Aug. 11, 2011.

John J. McMaster, Northborough, for the defendants.John P. Graceffa (Richard W. Jensen with him), Boston, for the plaintiff.Myles W. McDonough & Christopher M. Reilly, Boston, for Massachusetts Insurance Federation, Inc., amicus curiae, submitted a brief.Kimberly E. Winter, Weston, & J. Michael Conley, Braintree, for Massachusetts Academy of Trial Attorneys, amicus curiae, submitted a brief.Present: IRELAND, C.J., SPINA, CORDY, BOTSFORD, GANTS, & DUFFLY, JJ.GANTS, J.

To decide this case, we must answer three questions: First, does an exclusion in a liability policy for “intentional and criminal acts” apply where the insured intended to commit the conduct that caused injury and where the conduct was criminal, or does it apply only where the insured intended the harm resulting from the intentional and criminal acts? We conclude that the exclusion applies where the insured intended to commit the conduct that caused injury and where the conduct was criminal. Second, where an insured is sued in a complaint whose allegations of negligence state or roughly sketch a claim covered by a liability policy, does the liability insurer owe a duty to defend the insured where the insured had pleaded guilty to general intent crimes concerning the same incident? We conclude that a guilty plea does not negate an insurer's duty to defend, even where the duty to defend would be negated by a criminal conviction after trial, because a guilty plea is not given preclusive effect and is simply evidence that the insured's acts were intentional and criminal. Third, if the insurer has committed a breach of its duty to an insured by failing to provide a defense, what consequences arise from the breach where the insured defaults and a default judgment enters? We conclude that one of the consequences of such a breach is that, in determining whether the insurer owes a duty to indemnify the insured for the default judgment, the insurer is bound by the factual allegations in the complaint as to liability.

Background. On November 8, 2007, Officer Brian Langelier of the Marlborough police department stopped a motor vehicle driven by Robert Morrison, Jr. (Morrison), after he left a private home that had been under surveillance because of suspected drug dealing. Officer Langelier ordered Morrison out of the vehicle and conducted a patfrisk. During the patfrisk, Morrison “tense[d] up and ... made a run for it.” Officer Langelier attempted to stick his right leg in front of Morrison, but his left boot “caught on the asphalt” and he fell to the ground in pain with a broken ankle. As a result of this incident and a subsequent altercation with three other police officers as they attempted to restrain him, Morrison pleaded guilty to four counts of assault and battery on a public employee, one count of resisting arrest, one count of disorderly conduct, and one count of possession of a Class B substance (cocaine).

On May 22, 2008, Officer Langelier's attorney mailed a letter to Morrison's parents (Morrisons) informing them that their son had caused serious injury to Officer Langelier when “he resisted being taken into custody” and that “your son has plead[ed] guilty to the related charges, including resisting arrest.” The letter also informed the Morrisons that their son had told the police that he resided at their home in Marlborough, that homeowner's insurance policies provide personal liability coverage for such an injury, and that they should cause a copy of the letter to be forwarded immediately to their insurance company, which the Morrisons did. On May 31, 2008, the insurer, Metropolitan Property and Casualty Insurance Company (Metropolitan), wrote the Morrisons to inform them that Metropolitan was asserting a reservation of rights, and “reserves the right to litigate its obligation to defend and/or indemnify you for this loss.” ²

On December 11, 2008, Officer Langelier filed a complaint against Morrison in the Superior Court, alleging that Morrison's “negligent or reckless” conduct in failing “to obey a lawful order to submit to arrest” and attempting to flee caused injury to Langelier.³ Although Metropolitan was aware that suit had been filed, it did not retain an attorney to defend Morrison in the personal injury action. Instead, on February 23, 2009, Metropolitan filed a complaint in the Superior Court against all the parties in the personal injury action, seeking a judgment declaring that Metropolitan had no duty to indemnify Morrison for the damages alleged by Officer Langelier and his wife. On March 4, 2009, Metropolitan wrote to Morrison, acknowledging that he had sought indemnity and a defense in the personal injury action and disclaiming any obligation to provide indemnity or a defense. On March 10, 2009, a Superior Court judge entered a default in the personal injury action because no answer or other defense had been filed. On May 13, 2009, after an assessment of damages hearing, the judge in the personal injury action awarded Officer Langelier $84,391.79 and his wife $10,000, and a judgment entered on their behalf against Morrison.

Morrison filed a counterclaim in the declaratory judgment action that alleged that Metropolitan had committed a breach of its duty to defend and indemnify him in the personal injury action, and he sought a declaration that Metropolitan owed him these duties.⁴ Morrison then filed a motion for partial summary judgment, seeking a declaration that Metropolitan could not deny coverage in the personal injury action based on the exclusion clause in the homeowners insurance policy (policy) for bodily injury resulting from “intentional and criminal acts” of an insured because the default judgment entered against him in the underlying tort action established that his negligence, rather than an intentional act, had caused the injuries to Officer Langelier and his wife. Metropolitan filed a cross motion for summary judgment as to all claims on three grounds: (1) that Morrison had made false statements to Metropolitan's investigator regarding his residence at the time of the incident, which constituted “an act of non-cooperation” that prejudiced its ability to evaluate or defend the claim ⁵; (2) that, regardless of whether Metropolitan suffered prejudice from Morrison's false statements, he committed a breach of the policy's “[c]oncealment or [f]raud” clause ⁶; and (3) that the Langeliers' injuries had resulted from Morrison's intentional and criminal acts and were therefore excluded from coverage under the policy.

The judge denied Morrison's motion for partial summary judgment, allowed Metropolitan's motion for summary judgment, and declared that Metropolitan had no duty to indemnify Morrison in the personal injury action. The judge concluded: “The meaning of the intentional and criminal acts clause is plain. The policy does not cover bodily injury resulting from an act or omission by the insured that is both intentional and criminal.” Having so concluded, the judge found that “there [could] be no doubt” that Morrison engaged in intentional and criminal acts, in part because Morrison had pleaded guilty to assault and battery on a public employee in violation of G.L. c. 265, § 13D, and resisting arrest in violation of G.L. c. 268, § 32B ( a ), both of which require a general intent to do the acts that ultimately caused the Langeliers' injuries. Without addressing Morrison's argument that the factual allegations as to liability must be accepted as true where a default judgment has entered, the judge concluded that the exclusion for the insured's “intentional and criminal acts” barred coverage for personal liability under the policy. A judgment entered declaring that Metropolitan owed no duty to indemnify Morrison in the personal injury action.

We granted Morrison's and the Langeliers' application for direct appellate review. We agree with the judge's interpretation of the clause excluding personal liability coverage for bodily injury that results from the “intentional and criminal acts” of the insured. But we conclude that, if Metropolitan were in breach of its duty to defend when the default judgment entered, it would be bound by the default judgment that established Morrison's liability for negligence.⁷ Because the judge did not determine whether Metropolitan was in breach of the duty to defend when the default judgment entered, we set aside the judge's order on the motions, vacate the judgment, and remand the case for further proceedings consistent with this opinion.⁸

Discussion. The Morrisons, not their son, are the named insureds in the policy, but relatives who are “resident[s] of the same household” are also insured under the policy. The policy provides that Metropolitan agrees to indemnify an insured for “all sums for bodily injury and property damage to others for which the law holds [the insured] responsible because of an occurrence to which [the] coverage applies,” and to defend an insured at its expense against any suit seeking such damages.⁹ The policy excludes from coverage “bodily injury or property damage which is reasonably expected or intended by [an insured] or which is the result of [an insured's] intentional and criminal acts or omissions.”

“It is settled that an insurer's duty to defend is independent from, and broader than, its duty to indemnify.” A.W. Chesterton Co. v. Massachusetts Insurers Insolvency Fund, 445 Mass. 502, 527, 838 N.E.2d 1237 (2005), and cases cited. We recently declared:

“An insurer has a duty to defend an insured when the allegations in a complaint are reasonably susceptible of an interpretation that states or roughly sketches a claim covered by the policy terms. Ruggerio Ambulance Serv., Inc. v. National Grange Mut. Ins. Co....