Republic Ins. Co. v. Feidler, 1

• Decision Date: 28 December 1993
• Docket Number: CA-CV,No. 1,1
• Citation: 178 Ariz. 528,875 P.2d 187
• Parties: REPUBLIC INSURANCE COMPANY, a Delaware corporation, Plaintiff-Appellee, v. Robert Michael FEIDLER, Defendant-Appellant. 91-0504.
• Court: Arizona Court of Appeals

Page 187

875 P.2d 187

178 Ariz. 528

REPUBLIC INSURANCE COMPANY, a Delaware corporation, Plaintiff-Appellee, v. Robert Michael FEIDLER, Defendant-Appellant.

No. 1 CA-CV 91-0504.

Court of Appeals of Arizona,

Division 1, Department C.

Dec. 28, 1993.

As Amended Jan. 27, 1994.

Review Denied June 21, 1994. ^*

Susemihl & Davis, P.C. by Terry Davis, Phoenix, for defendant-appellant.

Joseph C. Dolan, Phoenix, for plaintiff-appellee.

OPINION

LANKFORD, Presiding Judge.

Michael Feidler was injured by Tom Davis, an insured under a Republic homeowners insurance policy. Feidler appeals from a summary judgment in favor of Republic in a declaratory judgment action brought by the insurer. The judgment declared that the Republic policy does not cover injuries sustained by Feidler when Davis stabbed him. The superior court's judgment rests on its finding that an intentional acts exclusion in Republic's policy excludes coverage.

The central issue presented is whether Ariz.Rev.Stat.Ann. ("A.R.S.") section 13-807 ¹ and Davis's no contest plea to aggravated assault preclude Feidler from arguing that Davis was so intoxicated that he did not "intend" his acts. We hold that section 13-807 does not preclude Feidler from arguing that Davis acted without an intent to injure. Consequently, an issue of fact remains: Did Davis act with an intent to injure? We reverse the summary judgment and remand for further proceedings.

We view the facts in a light most favorable to Feidler, as the party who opposed summary judgment. The evidence shows that on the evening of November 12, 1988, Tom Davis drank several beers, smoked marijuana, and drank several shots of tequila. After leaving a party at an apartment complex, Davis attempted to locate his truck, but he was too intoxicated to remember where he had parked it. Davis approached Feidler and his companion, P.F., and asked them to help him locate his truck. They refused, and an altercation ensued. During the fight, P.F. tackled Davis, and Feidler kicked Davis while Davis was on the ground. Eventually Feidler separated P.F. and Davis, and Feidler walked Davis approximately twenty yards away from P.F. While Feidler was walking back towards P.F., Davis ran towards Feidler and stabbed him several times in the back, causing severe injuries.

Davis pled no contest to aggravated assault for his attack on Feidler. Feidler provided statements to the police and in court recounting the attack. Davis, on the other hand, remembers nothing about the stabbing incident.

Davis is insured by a homeowner policy issued by Republic to Davis's parents. The homeowners policy excluded coverage for bodily injury caused by intentional acts of an insured. The "intentional acts" exclusion states that coverage does "not apply to bodily injury ... which is expected or intended by the insured."

Republic notified Davis that the policy did not cover his liability for the attack and that it would not defend him if Feidler were to bring a tort action. Consequently, Davis assigned his rights as an insured against Republic to Feidler in a Damron agreement. See Damron v. Sledge, 105 Ariz. 151, 153, 460 P.2d 997, 999 (1969). Republic agreed with Feidler that if a court found coverage under the homeowners policy, Feidler would receive the policy's limit of $300,000. Republic then filed the instant declaratory judgment action.

Republic moved for summary judgment based on the intentional acts exclusion. It argued that under A.R.S. section 13-807 the no contest plea collaterally estopped Davis from denying that he acted recklessly in disregard of a known risk. Republic also contended that an intent to injure is conclusively presumed when an insured violently attacks another person with a knife.

The superior court granted Republic's motion for summary judgment. The court stated that Davis and Feidler were precluded from denying "the factual basis obtained by the criminal trial judge." ² The court determined that the criminal proceeding had established that Davis unjustifiably attacked Feidler with a dangerous weapon with criminal intent. As a result, the court found no genuine issue of material fact regarding Davis's intent to injure Feidler.

After the superior court entered judgment, Feidler filed a motion for new trial. Feidler reasserted that there were material issues of fact preventing summary judgment. The superior court denied the motion for new trial and Feidler appealed.

Summary judgment is properly granted only when "there is no genuine dispute of material fact, only one reasonable inference can be drawn from those facts, and the moving party is entitled to judgment as a matter of law." Ancell v. Union Station Ass'n, Inc., 166 Ariz. 457, 459, 803 P.2d 450, 452 (App.1990). We review the entry of summary judgment de novo. United Bank v. Allyn, 167 Ariz. 191, 195, 805 P.2d 1012, 1016 (App.1990).

On appeal, Feidler contends that there is a question of disputed fact: Did Davis's extreme intoxication at the time of the stabbing prevent him from having the subjective intent to injure Feidler? He argues that the issue of Davis's intent was not decided by the criminal court and that he cannot be estopped because he was not a party to the criminal proceeding.

Republic concedes that if at the time of attack Davis was intoxicated to the point of being in "total deprivation of intellect" then Davis lacked the requisite mental state to commit an intentional act. Republic asserts, however, that such a mental state is "totally incompatible" with Davis's no contest plea. Republic argues that pursuant to the preclusion statute, A.R.S. section 13-807, Davis's no contest plea to the criminal charge of aggravated assault collaterally estops both Davis and Feidler from arguing that Davis was too intoxicated to control his actions.

We hold that the superior court erred in granting summary judgment. The particular mental state required for Davis to be convicted of aggravated assault is not conclusive of whether Davis acted with the different mental state that would exclude coverage under the intentional act exclusion. Because a reasonable trier of fact could reasonably infer that Davis did intend to injure or that he did not, summary judgment was improperly granted.

We first examine the mental state required to bar coverage for Davis's acts under an intentional acts exclusion. When construing an exclusionary term in an insurance contract, we examine "the purpose of the exclusion in question, the public policy considerations involved and the transaction as a whole." Transamerica Ins. Group v. Meere, 143 Ariz. 351, 355, 694 P.2d 181, 185 (1984). In Meere, the Arizona Supreme Court considered an intentional acts exclusion virtually identical to the exclusion in Republic's policy. The court said that the provision is designed to exclude coverage when an insured acts from the "exercise of his own volition." Id. at 356, 694 P.2d at 186. The court explained that this provision excludes coverage for losses when the insured controls the risk and when the loss results from the insured's "own willful wrongdoing." Id. It is not enough that an insured commits an intentional act: the exclusion applies only when the insured has the subjective, specific intent to injure the victim. Id. at 356, 359, 694 P.2d at 186, 189. Determining an insured's subjective intent to injure is ordinarily a question of fact. Farmers Ins. Co. v. Vagnozzi, 138 Ariz. 443, 449, 675 P.2d 703, 709 (1983); Safeco Ins. v. McGrath, 63 Wash.App. 170, 817 P.2d 861, 864 (1991).

Although intent to injure is a fact question, a conclusive presumption of intent to injure arises when the insured commits an act "virtually certain to cause injury." St. Paul Property & Liab. Ins Co. v. Eymann, 166 Ariz. 344, 349, 802 P.2d 1043, 1048 (App.1990). This presumption, known as the Steinmetz- Clark presumption, may apply "if the nature and circumstances of the insured's intentional act were such that harm was substantially certain to result." Phoenix Control Sys. Inc. v. Insurance Co. of N. Am., 165 Ariz. 31, 36, 796 P.2d 463, 468 (1990); see also Steinmetz v. National Am. Ins. Co., 121 Ariz. 268, 271, 589 P.2d 911, 914 (App.1979) (insured punched victim in the face); Clark v. Allstate Ins. Co., 22 Ariz.App. 601, 602, 529 [178 Ariz. 532] P.2d 1195, 1196 (App.1975) (insured struck person in the face).

In this case, Davis attacked Feidler with a knife. Ordinarily, this fact would be enough to justify a conclusive presumption that Davis intended to harm Feidler.

However, the overriding question is whether Davis was in control of his actions at the time of the attack. Globe Am. Casualty Co. v. Lyons, 131 Ariz. 337, 339-40, 641 P.2d 251, 253-54 (App.1981); Eymann, 166 Ariz. at 351, 802 Ariz. at 1050. The conclusive presumption of intent does not apply when the insured lacks the "mental capacity to act rationally." Lyons, 131 Ariz. at 339-40, 641 P.2d at 253-54. If the insured lacks the "mental capacity to act 'rationally,' " then the insured lacks the requisite subjective intent and the intentional acts exclusion does not apply. Meere, 143 Ariz. at 359, 694 P.2d at 189. In such a case the insured does not act "intentionally" because he does not control the risk of loss. Id. Application of the exclusionary clause would be "inconsistent with a primary purpose for incorporating intentional injury exclusions ..., i.e. to preclude individuals from benefiting financially when they deliberately cause injury." Id. (citations omitted).

We hold that the conclusive presumption does not apply if Davis were so intoxicated that he lacked the mental capacity to act intentionally. Courts in Arizona and other states, as well as commentators, have recognized that a voluntarily intoxicated insured may lack the mental capacity to act intentionally. See Eymann, 166 Ariz. at 352, 802 P.2d at 1051 (dictum); Parkinson v. Farmers Ins. Co., 122 Ariz. 343, 345, 594 P.2d 1039, 1041 (App.1979) (dictum); see also State...