Rajspic v. Nationwide Mut. Ins. Co., 15479

• Decision Date: 13 March 1986
• Docket Number: No. 15479,15479
• Citation: 718 P.2d 1167,110 Idaho 729
• Parties: Richard RAJSPIC and Grace M. Rajspic, husband and wife, Plaintiffs-Appellants, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 1167

718 P.2d 1167

110 Idaho 729

Richard RAJSPIC and Grace M. Rajspic, husband and wife, Plaintiffs-Appellants, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant-Respondent.

No. 15479.

Supreme Court of Idaho.

March 13, 1986.

Rehearing Denied May 19, 1986.

David A. Frazier, Coeur d'Alene, for plaintiffs-appellants.

John W. Barrett, of Moffatt, Thomas, Barrett & Blanton, Chartered, Boise, for defendant-respondent.

DONALDSON, Chief Justice.

On November 27, 1973, William Brownson was shot during an altercation with appellant Grace Rajspic. Rajspic was acquitted on a charge of assault with a deadly weapon on the ground of mental disease or defect excluding responsibility.

Later, Brownson brought a civil action against Rajspic for assault and battery to recover damages including punitive damages. (The Brownson case). Since the Rajspics had an insurance policy with respondent, Nationwide Mutual Insurance Company (Nationwide), they were defended by counsel employed by Nationwide and their own attorney. During the proceeding, a stipulation was made by the parties that Grace Rajspic was, in the definition of the law, insane at the time of the shooting. The trial court instructed the jury that this stipulation removed the issue of punitive damages from the case. The jury was also instructed that assault and battery were intentional torts and that insanity was not a defense. The jury needed to find Grace Rajspic intended to do the act complained of and not necessarily that she intended to kill or injure Brownson.

After the jury rendered judgment in favor of Brownson for $14,000.00, the Rajspics were informed by Nationwide that their insurance policy did not cover the judgment. The policy had a provision excluding coverage for injuries caused intentionally by or at the direction of the insured.

The Rajspics sued Nationwide alleging the exclusionary provision was improperly invoked. The trial court granted the Rajspic's motion for partial summary judgment on the issue of liability. The trial court held that Nationwide was collaterally estopped from litigating the issue of insanity based on the verdict in the prior criminal case and the stipulation in the Brownson case. This Court reversed the trial court in Rajspic v. Nationwide Mut. Ins. Co., 104 Idaho 662, 662 P.2d 534 (1983) (Rajspic I ), holding that Nationwide was erroneously denied an opportunity to litigate the insurance coverage issue. This Court declined to apply the doctrine of collateral estoppel to the stipulation in the Brownson case and held that Nationwide's motion to exclude evidence of the stipulation should have been granted.

This Court also held that an insane person is capable of committing intentional torts and stated that "in the present case insanity under the law would not be dispositive of whether the act committed by Mrs. Rajspic was an intentional act and therefore within the embrace of the intentional act exclusion. On the record when examined in a light most favorable to the opposing party, it presents a question of fact." Rajspic I, supra at 664, 662 P.2d at 536.

Based on this Court's opinion in Rajspic I, Nationwide then moved for summary judgment on liability. The trial court granted the motion and held that since the jury in Brownson found Grace Rajspic had committed an intentional tort, the Rajspics were collaterally estopped from litigating whether the injuries caused by Mrs. Rajspic's conduct would be covered by the insurance policy.

This Court is once again faced with the issue of whether the doctrine of collateral estoppel was correctly applied by the district court. In this appeal, we must determine whether the jury verdict in the Brownson case operates to collaterally estop the Rajspics from litigating the intentional injury exclusion clause of their insurance policy. In order for the doctrine of collateral estoppel to apply, the finding of the jury in Brownson that Grace Rajspic committed the intentional torts of assault and battery must necessarily be identical to a finding that she intentionally caused an injury within the meaning of her insurance policy.

Initially, we must address what our opinion in Rajspic I did and did not decide. The central issue in that case was whether Nationwide should be precluded from litigating whether Mrs. Rajspic intentionally caused injury within the meaning of the exclusion clause in her insurance policy. We held that they should not, but did not go so far as to hold that the Rajspic's should instead be precluded from litigating that issue. Indeed, we specifically found that "there exists a genuine issue of material fact with respect to the sanity of Mrs. Rajspic. Such issue is particularly relevant to the issue of insurance coverage." Rajspic I, supra at 665, 662 P.2d at 537.

Respondent argues that our determination whether collateral estoppel should apply has nothing to do with the fact that Mrs. Rajspic was insane. Rather, respondents assert, we need only consider the finding that Mrs. Rajspic's contact with Brownson constituted an intentional tort and that is sufficient to bar the Rajspics from litigating any issue dealing with Mrs. Rajspic's intent as it relates to her insurance coverage. We disagree. As we stated in Rajspic I, Mrs. Rajspic's sanity is particularly relevant in determining whether she was capable of forming a state of mind to have intentionally injured Brownson. In Rajspic I, when we cited McGuire v. Almy, 297 Mass. 323, 8 N.E.2d 760 (1937), we did not thereby adopt a rule that where an insane person is found to have committed an intentional tort, an insurance policy excluding coverage for injuries intentionally caused by the insured will always operate to relieve the insurance carrier of liability for the tort judgment. If we had adopted such a rule--which has precedent in no modern jurisdiction--only then would the district court's grant of summary judgment to the respondent have been justified. Rather, we cited McGuire to support the general proposition that a person who is considered insane may still be capable of entertaining the intent to commit certain tortious acts even though he entertains that intent as a consequence of his delusion or affliction. Id. at 327-29, 8 N.E.2d at 762-63; Rajspic I, supra at 664, 662 P.2d at 536. The McGuire case had nothing to do with insurance coverage, let alone clauses that excluded coverage for injuries intentionally caused by the insured. McGuire was not cited by this Court to insinuate that the treatment of intentional torts and the application of insurance exclusion clauses should be synonymous. They involve two fundamentally different areas of the law, each founded on separate and distinct legal theories and principles.

An insane person may be liable for an intentional tort, yet may still not have intentionally caused an injury within the meaning of the insurance exclusion. In fact, many courts have held that, as a matter of law, an insane person cannot intentionally cause injury as excluded in insurance policies. Parkinson v. Farmers Ins. Co., 122 Ariz. 343, 594 P.2d 1039 (App.1979); Globe American Cas. Co. v. Lyons, 131 Ariz. 337, 641 P.2d 251, 33 A.L.R.4th 972 (App.1981); Clemmer v. Hartford Ins. Co., 22 Cal.3d 865, 151 Cal.Rptr. 285, 587 P.2d 1098 (1978); Mangus v. Western Cas. & Sur. Co., 41 Colo.App. 217, 585 P.2d 304 (1978); Rosa v. Liberty Mut. Ins. Co., 243 F.Supp. 407 (D.Conn.1965); George v. Stone, 260 So.2d 259 (Fla.App.1972); Arkwright-Boston Mfrs. Mut. Ins. Co. v. Dunkel, 363 So.2d 190 (Fla.App.1978); Northland Ins. Co. v. Mautino, 433 So.2d 1225 (Fla.App.1983); Aetna Cas. & Sur. Co. v. Dichtl, 78 Ill.App.3d 970, 34 Ill.Dec. 759, 398 N.E.2d 582 (1979); Aetna Cas. & Sur. Co. v. Freyer, 89 Ill.App.3d 617, 44 Ill.Dec. 791, 411 N.E.2d 1157 (1980); von Dameck v. St. Paul Fire & Marine Ins., 361 So.2d 283 (La.App.), cert. denied, 362 So.2d 794 (La.1978); Ruvolo v. American Cas. Co., 39 N.J. 490, 189 A.2d 204 (1963); U.S.F. & G. Ins. Co. v. Brannan, 22 Wash.App. 341, 589 P.2d 817 (1979). Today, we are not called upon to go so far, but we do recognize that, as a matter of fact, an intentional tort and an intentional injury exclusion clause cannot be treated synonymously. We noted in Rajspic I that is is possible that an otherwise insane person may have sufficient capacity to understand and contemplate the nature and consequences of her actions. Rajspic I, supra at 664, 662 P.2d at 536. It is also possible that the insane person may be completely incapable of understanding the nature and consequences of her actions, depending on the extent of her mental disabilities. Which of these characterizations appropriately applies to Mrs. Rajspic has yet to be determined by a trier of fact.

To hold that a mental defect is irrelevant for purposes of determining whether an act is "intentional" is inconsistent with long-standing principles and policy considerations of insurance law. Exclusionary provisions are to be strictly construed against an insurer. Miller v. Farmers Insurance Co., 108 Idaho 896, 702 P.2d 1356 (1985); C.H. Leavell & Co. v. Fireman's Fund Insurance Co., 372 F.2d 784 (9th Cir.1967); Globe American Casualty Co. v. Lyons, 131 Ariz. 337, 339, 641 P.2d 251, 253 (App.1981). Furthermore, "to deny coverage for acts caused by an individual lacking the mental capacity to act rationally is inconsistent with a primary purpose for incorporating intentional act exclusions into insurance policies, i.e., to preclude individuals from benefiting financially when they deliberately cause...