Safeco Ins. Co. of America v. Liss

• Decision Date: 28 December 2000
• Docket Number: No. 99-515.,99-515.
• Citation: 303 Mont. 519,2000 MT 380,16 P.3d 399
• Court: Montana Supreme Court
• Parties: SAFECO INSURANCE COMPANY OF AMERICA, Plaintiff and Respondent, v. Vicky LISS and Patricia Bruthers, Defendants and Appellants.

16 P.3d 399

2000 MT 380

303 Mont. 519

SAFECO INSURANCE COMPANY OF AMERICA, Plaintiff and Respondent, v. Vicky LISS and Patricia Bruthers, Defendants and Appellants.

No. 99-515.

Supreme Court of Montana.

Submitted on Briefs February 24, 2000.

Decided December 28, 2000.

Michael J. Lilly, Berg, Lilly, Andriolo & Tollefsen, Bozeman, MT, For Appellants.

John E. Bohyer, Phillips & Boyher, Missoula, MT, For Respondent.

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 Vicky Liss and Patricia Bruthers (hereinafter Bruthers) appeal from the summary judgment entered in favor of Safeco, as well as the denial of their own motion for summary judgment, by the Fifth Judicial District Court, Madison County. Safeco brought a declaratory judgment action, seeking an order that it had no duty to indemnify or defend Liss, its insured, in a lawsuit brought by Bruthers against Liss for the injuries Bruthers received after Liss shot her with a.22 caliber handgun. The District Court granted Safeco's summary judgment based on policy provisions excluding intentional and illegal acts from personal liability coverage, and the undisputed fact that Liss pled guilty to the charge of aggravated assault.

¶ 2 We affirm in part, reverse in part, and remand.

¶ 3 Bruthers raises the following two issues:

1. Did the District Court err in granting Safeco's motion for summary judgment?

2. Did the District Court err in denying Bruthers' motion for summary judgment?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 This action stems from a shooting incident that occurred on July 10, 1997, near Wade Lake in Madison County, Montana. On that day, Liss decided to take lunch out to her husband, Harry, who was grading roads not far from their home. At the time, Liss was allegedly under the influence of numerous prescription medications.

¶ 5 Upon locating Harry driving his road grader, Liss discovered that Patty Bruthers was also in the cab. The record indicates that at one time the three had been mutual friends, but that while Liss and her husband were separated for 10 months in 1996, Bruthers and Harry dated or socialized together. Subsequently, after getting back together with Harry, Liss had grown jealous and suspicious of Bruthers.

¶ 6 Liss stopped her car in front of the grader, got out, and brandished a .22 caliber handgun at Harry and Bruthers, and instructed them in some manner to step down from the grader. Apparently, Liss and her husband stored the pistol in the vehicle's glove box for the purpose of shooting gophers and other vermin. It is alleged that Liss's impulsive response was in part prompted by the fact that Harry did not stop once Liss pulled in front of the grader, and in fact struck the vehicle, which frightened or alarmed her.

¶ 7 The precise facts of what happened next are somewhat confusing. It is undisputed, however, that once Harry and Brothers had stepped down from the grader, Liss instructed Bruthers to get away from Harry and then the gun in her hand discharged a single shot, which struck Bruthers in the neck, traveled downward, collapsed a lung, and exited through Bruthers' back. Harry did not see the shot fired. It is unclear whether Liss was pointing the gun at Bruthers when the gun went off, or whether Liss pulled the trigger.

¶ 8 Liss insisted that the shooting was an accident, that she thought she may have fired a warning shot into the ground, and that due to the influence of several prescription medications, she could not clearly recall the event. The various accounts of the incident indicate that Liss was unaware that Bruthers had in fact been struck after the shot was fired. The record indicates that both Liss and Harry assisted Bruthers after realizing Bruthers had been shot, and drove her to a hospital in Ennis, Montana.

¶ 9 Liss was subsequently charged with aggravated assault, a felony, and pled guilty on February 17, 1998, pursuant to a plea bargain agreement. Her guilty plea was a nolo contendere plea pursuant to § 46-12-212(2), MCA, meaning that while she did not admit her guilt—due to the fact that she could not clearly remember shooting Bruthers and claimed that it was an accident—in view of the state's evidence, she conceded that she would be found guilty should she proceed to trial. The District Court sentenced her to 20 years with all of this time suspended, which was the sentence recommended under the plea bargain agreement.

¶ 10 Bruthers subsequently filed suit in federal court (Bruthers is a resident of New Jersey), alleging Liss had acted negligently as well as intentionally, under an intentional tort theory of battery. Bruthers claimed she was entitled to compensation for her physical injuries, which included the bullet wound to her neck and a punctured lung, as well as compensation for emotional distress. She also claimed that she was entitled to punitive damages in the amount of $500,000. Bruthers eventually dropped the intentional tort claim.

¶ 11 In defense, Liss claimed that she was involuntarily intoxicated at the time, and therefore not responsible for her actions. This action was pending at the time the District Court entered its judgment in this matter, and apparently Liss and Bruthers have subsequently settled the case, with Bruthers taking assignment of Liss's claims for indemnification against Safeco for a judgment of $150,000.

¶ 12 Liss tendered Bruthers' complaint filed against her to Safeco. As Liss's home owner's insurer, under a policy that included coverage for personal liability, Safeco subsequently provided Liss with a legal defense, with a reservation of rights, until the court in this matter rendered its decision,

¶ 13 Safeco filed its petition for declaratory judgment on March 1, 1999. Bruthers filed her Answer on May 17, 1999. (Liss has not entered an appearance in this action, and all subsequent references to Bruthers refer to her, individually.) Safeco sought two specific declarations from the District Court: (1) that it had no duty to defend its insured, Liss, in a tort claim brought by Bruthers pending in federal court; and (2) it had no duty to indemnify its insured, Liss, in the same lawsuit.

¶ 14 Liss's policy with Safeco provided the following coverage:

COVERAGE E—PERSONAL LIABILITY

If a claim is made or a suit is brought against any insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, we will:

1. pay up to our limit of liability for the damages for which the insured is legally liable; and

2. provide a defense at our expense by counsel of our choice even if the allegations are groundless, false or fraudulent....

COVERAGE F—MEDICAL PAYMENTS TO OTHERS

We will pay the necessary medical expenses incurred or medically ascertained within three years from the date of an accident causing bodily injury.

The policy defines "occurrence" as "an accident, including exposure to conditions, which result in: a. bodily injury; or b. property damage." The Safeco policy, however, provided the following exclusions:

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 any insured or which is the foreseeable result of an act or omission intended by any insured;

2. Coverage E—Personal Liability, does not apply to:

a. Liability:

(5) arising out of any illegal act committed by or at the direction of an insured.

¶ 15 Safeco filed a motion for summary judgment on May 19, 1999. Bruthers filed her cross-motion for summary judgment on July 30, 1999. Safeco took numerous procedural steps to avoid discovery prior to the summary judgment hearing, and took further steps to exclude discovery materials that had been filed in Bruthers' lawsuit against Liss. Safeco maintained that such materials were irrelevant due primarily to the conclusive effect of Liss's guilty plea.

¶ 16 Safeco grounded its motion for summary judgment on four theories: (1) that Montana public policy and § 28-2-702, MCA, "forbid the contractual indemnification of an individual for illegal or criminal acts;" (2) the shooting did not constitute an "occurrence" as defined in the policy; (3) the intentional act and illegal act exclusions barred coverage; and (4) Liss was collaterally estopped to contest the issue of intent based on her guilty plea.

¶ 17 A summary judgment hearing took place on August 17, 1999. The court entered its findings, order and memorandum on August 30, 1999, and granted Safeco's motion for summary judgment, and denied Bruthers' motion for summary judgment.

¶ 18 The court based its judgment on the following material facts: Liss shot Bruthers with her .22 caliber revolver inflicting serious injuries; Liss was charged with aggravated assault; she entered a plea of guilty; the guilty plea was pursuant to Montana's nolo contendere statute, § 46-12-212(2), MCA; Liss provided a statement in her guilty plea that "I don't remember shooting Patty Bruthers;" Liss denied to an investigating officer that she was on drugs at the time; and Safeco was defending Liss in the tort action brought by Bruthers with a reservation of rights.

¶ 19 Based on these undisputed facts, the court first concluded Safeco's "illegal act" exclusion was clear and unambiguous, and comported with § 28-2-702, MCA, which prohibits contracts that "exempt anyone from responsibility for his own fraud, for willful injury to the person or property of another, or for violation of law, whether willful or negligent." The court concluded that Liss's conduct was intentional, as a matter of law, based on her conviction for aggravated assault. The court determined that "Liss's defense of loss of memory and the so-called Alford plea is irrelevant." The court determined that the issue of intent could therefore not be re-litigated. The court stated that "authority from the Restatement of Judgments, the case law from all jurisdictions and the text authorities all...