Ohio Cas. Ins. Co. v. Henderson

• Decision Date: 29 May 1997
• Docket Number: No. CV-96-0396-PR,CV-96-0396-PR
• Citation: 189 Ariz. 184,939 P.2d 1337
• Parties: , 244 Ariz. Adv. Rep. 7 OHIO CASUALTY INSURANCE COMPANY, a foreign corporation, Plaintiff/Appellee. v. Joel HENDERSON, a single individual, and Eric Hill and Sylvia Hill, husband and wife, as surviving parents of Padriac Hill, Defendants/Appellants.
• Court: Arizona Supreme Court

Page 1337

939 P.2d 1337

189 Ariz. 184, 244 Ariz. Adv. Rep. 7

OHIO CASUALTY INSURANCE COMPANY, a foreign corporation, Plaintiff/Appellee. v. Joel HENDERSON, a single individual, and Eric Hill and Sylvia Hill, husband and wife, as surviving parents of Padriac Hill, Defendants/Appellants.

No. CV-96-0396-PR.

Supreme Court of Arizona,

In Banc.

May 29, 1997.

Ridenour, Swenson, Cleere & Evans, P.C. by Robert R. Beltz, Scott A. Holden, Phoenix, for Plaintiff/Appellee.

Begam, Lewis, Marks & Wolfe, P.A. by Lisa Kurtz, Stanley J. Marks, Phoenix, for Defendants/Appellants.

Broening, Oberg, Woods, Wilson & Cass by Neal B. Thomas, Phoenix, for Amicus Curiae Farmers Insurance Company.

OPINION

FELDMAN, Justice.

Ohio Casualty Insurance Company sought review of a court of appeals' opinion holding the "expected or intended" injury exclusion in a homeowner's insurance policy did not apply when the insured, Joel Henderson, committed an armed robbery that resulted in the death of Padriac Hill. Ohio Casualty Ins. Co. v. Henderson, 187 Ariz. 155, 927 P.2d 815 (1996). We granted review to determine if Henderson's active participation in the planning, preparation, and commission of a violent armed robbery fell within the exclusion. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3), Ariz. R. Civ.App. P. 23, and A.R.S. § 12-120.24.

FACTS AND PROCEDURAL HISTORY

On April 11, 1993, Henderson and Damon Kerl, armed with guns, entered a Piccadilly Restaurant, while Noel Jackson waited outside in the getaway car. Once inside the office area, either Henderson or Kerl pointed a gun at an employee's head and ordered him to open the safe. After the employee complied and handed over the cash contents of the safe, one of the assailants, probably Kerl, shot the employee in the head and killed him. The trio then fled the area in the car.

Nine days later, Henderson, Kerl, and Jackson, again armed, entered a movie theater. With guns drawn, they ordered Padriac Hill and some fellow employees, who were working at the concession counter, to the floor. They instructed Hill to open the safe; he did not know the combination and offered to call a manager who could open it. Rather than wait, one of the robbers shot Hill in the head. He died at the scene.

Alleging Henderson was acting in concert with Kerl and Jackson, Hill's parents asserted a wrongful death claim and sought recovery from an Ohio Casualty homeowner's insurance policy. Henderson is an insured under the liability coverage section of the policy. The "expected or intended" injury exclusion of the policy states:

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 or intended by the insured;

Ohio Casualty brought a declaratory judgment action against Henderson and the Hills to determine whether the exclusion negated coverage. Ohio Casualty moved for summary judgment and the Hills filed a cross-motion for summary judgment. For purposes of the motions, the parties stipulated to several facts. First, they agreed that Henderson, Jackson, and Kerl "specifically discussed not harming anyone at the theater with any of the weapons. However, prior to the [robbery in which Hill was killed, Henderson and Kerl] committed a robbery at the Piccadilly Restaurant in which another victim was shot and killed." The parties further agreed that Henderson "gave his gun to [Kerl], a minor, during the robbery, and the bullet from that gun killed Hill," and that "Henderson did not pull the trigger of the gun that killed [Hill]."

The trial court granted summary judgment in favor of Ohio Casualty. The court of appeals reversed, a majority finding that the exclusion did not apply because there was no evidence that Henderson expected or intended the injury that caused Hill's death. 187 Ariz. at 155, 927 P.2d at 815. The exclusion, the court held, did not apply to criminal conduct or to recklessness; the fact that the armed robbery risked serious injury and death did not mean that Henderson expected or intended the resulting bodily injury. ¹ Id. at 156, 927 P.2d at 816.

The dissenting judge found that Arizona law did not compel the majority's result. He argued that coverage should not be extended because Henderson actively participated in the armed robbery and even furnished the We disagree with the majority of the court of appeals and vacate the opinion.

[189 Ariz. 186] gun used to kill Hill. Id. at 156, 927 P.2d at 816 (Pelander, J., dissenting). Furthermore, "some type of bodily injury is so substantially certain to occur during the commission of an armed robbery that the law will infer an intent to injure on behalf of the insured actor without regard to his claimed intent." Id. (quoting Raby v. Moe, 153 Wis.2d 101, 450 N.W.2d 452, 457 (1990)).

DISCUSSION

As one commentator aptly remarked, "[i]t is unrealistic to hope that the courts will ever reach anything approaching unanimity in interpreting the 'intended or expected' injury exclusion clause in liability insurance policies." See John Dwight Ingram, The "Expected or Intended" Exclusion Clause in Liability Insurance Policies: What Should it Exclude?, 13 WHITTIER L.REV. 713, 721 (1992). The same commentator called the current state of the law surrounding the exclusion a "hodgepodge of judicial interpretation." Id. at 722. To alleviate the hodgepodge, another commentator has recommended that "[c]ourts that face this issue ... should do what the majority of courts have done--honor the drafting intent and the plain meaning of the policy language." Kirk A. Pasich, Commentary, The "Expected or Intended" Exclusion and California Insurance Code Section 533, 10 NO. 21 MEALEY'S LITIG.REP.: INSURANCE 20, 31 (Apr. 2, 1996). We attempt to do so today.

A. Is the "expected or intended" clause ambiguous?

In addressing the question of coverage in similar cases, many courts have relied on the contra proferentum doctrine: if there is an ambiguity in the language of the insurance contract, the ambiguity will be construed against the insurer that writes the contract and in favor of the insured. Applying this doctrine to the language of "expected or intended" injury exclusions, some courts have held such clauses are inherently ambiguous, while others have found no ambiguity whatsoever. See Annotation, Construction and Application of Provision of Liability Insurance Policy Expressly Excluding Injuries Intended or Expected by Insured, 31 A.L.R.4th 957, 978 (1984 & Supp.1996). The annotation's author concludes that Arizona treats the "expected or intended" exclusion as unambiguous. See 31 A.L.R.4th at 979 (citing Steinmetz v. National Am. Ins. Co., 121 Ariz. 268, 589 P.2d 911 (App.1978), and Lockhart v. Allstate Ins. Co., 119 Ariz. 150, 579 P.2d 1120 (App.1978)). We see no reason to deviate from this approach here because the phrase "expected or intended by the insured" is not so vague as to be incapable of a definition consistent with the expectations of the consumer and the insurance industry. We do not favor artificial findings of ambiguity. In Transamerica Insurance Group v. Meere we stated:

Of course, a finding of ambiguity is the easy way out since it permits the court to create its own version of the contract and to find, or fail to find, ambiguity in order to justify an almost predetermined result. This is an approach we have abandoned. See Darner Motor Sales v. Universal Underwriters Insurance Co., 140 Ariz. 383, 682 P.2d 388 (1984). We believe the proper methodology is to determine the meaning of the clause--where it is susceptible to different constructions--by examining the purpose of the exclusion in question, the public policy considerations involved and the transaction as a whole.

143 Ariz. 351, 355, 694 P.2d 181, 185 (1984). We now turn to explore these considerations in interpreting the phrase "expected or intended."

B. Construing the "expected or intended" exclusion

1. History of the clause

The original exclusion applied to injuries "intended" by the insured. Around 1960, however, insurance companies redrafted the standard liability policy, adding to the exclusion those injuries and damage "expected" by the insured. At the time, the industry was aware that courts had been almost universally unsympathetic to insurers in construing Since this change, courts have grappled with the proper interpretation. The primary areas of disagreement have been: (1) whether the terms "expected" and "intended" are synonymous; (2) whether "expected" connoted an element of conscious awareness by the insured; and (3) what degree of foreseeability is required to exclude an injury as "expected." See id.; 31 A.L.R.4th at 957.

                [189 Ariz. 187] the term "intended" in the older policies. 2  See United Services Auto.  Ass'n v. Elitzky, 358 Pa.Super. 362, 517 A.2d 982, 990 (1986) (citing W. PAGE KEETON, INSURANCE LAW 299-300 (1971)).  The companies added "expected" to newer policies hoping to broaden the class of excluded injuries and damage.  Id
                

Several courts have held that there is no difference between the terms "expected" and "intended," while others have held that the two are not synonymous. See 31 A.L.R.4th at 981-83. For instance, in Grange Mutual Casualty Co. v. Thomas, the court reasoned that there was no difference in substance between the "expected or intended" exclusionary provision and the "intentional" injuries exclusion. The court believed that if it were to apply a "natural and foreseeable" theory in separately construing "expected," then it would have to exclude coverage for any injury that might have been foreseeable, including injury resulting from unintentional torts involving simple or gross negligence. 301 So.2d 158, 159 (Fla.App.1974).

In Bay State Insurance Co. v. Wilson, the court took a contrary view, concluding that the words "expected" and "intended" are not synonymous. It reasoned that were the terms synonymous, no purpose would have been served...