Accidents happen, and in every lawsuit insurance coverage is a critical issue. Coverage--or the lack of it--often determines whether the defendant receives a defense and whether the plaintiff recovers compensation.
Many accident cases, such as auto collisions, do not involve serious coverage disputes. But there are other situations that turn on the question of whether the defendant's conduct was accidental (and covered by liability insurance) or intentional (and not covered). These disputes often involve California Insurance Code section 533, which precludes coverage for "willful acts." This section is embedded in every insurance policy in the state (J.C. Penney Cas. Ins. Co. v. M.K., 52 Cal. 3d 1009, 1019 (1991)).
Legally, what determines whether an act is willful or intentional, as opposed to accidental? Is it the actor's intent, or the consequences of the action?
It's not an easy question, for a willful act can result in unintended damage. For example, a person can intend to hit a softball with a bat, but not for the ball to smash though a neighbor's window. In addition, people sometimes simply don't fully analyze the potential ramifications of their conduct, or don't care about the consequences. These circumstances are classic hallmarks of negligence and, in extreme cases, recklessness. Yet insurance policies usually cover them.
In many cases, the term accident is not defined in the insurance policy at issue. However, courts have held that the unintended consequences of intentional actions can qualify for insurance coverage because they are "an unexpected, unforeseen or undesigned happening or consequence." (Hogan v. Midland Nat'l Ins. Co., 3 Cal. 3d 553, 559 (1970); see also Geddes & Smith, Inc. v. St. Paul Mercury Ins. Co., 51 Cal. 2d 558, 563 – 564 (1959)). In one case, the court stated that if the consequential injury "is not intentional and is unexpected[,] it is accidental in character." (Meyer v. Pacific Employers Ins. Co., 233 Cal. App. 2d 321, 327 (1965).)
The debate over what are "accidents" and what are "intentional acts" is an evolving judicial conversation. As one appellate panel observed, "[t]he meaning of the term 'accident' in insurance law is not settled." (State Farm Fire and Cas. Co. v. Superior Court, 164 Cal. App. 4th 317, 325 (2008).) That, and more recent events as well, should be troubling to defendants who have caused injury while intentionally speeding or driving under the influence, or while engaging in mere horseplay--for these acts may wind up being excluded from coverage as intentional misconduct.
Elements of an Accident
Lively battles also are fought in cases where an insurance policy contains language requiring "bodily injury" or "property damage" arising from an "occurrence." Such policies, in turn, usually define an occurrence as "an accident, including exposure to conditions, which results in ... bodily injury."
If the carrier contends that no accident occurred, the burden of proof rests with the insured, who must demonstrate that his or her claim falls within the policy's basic coverage (Royal Globe Ins. Co. v. Whitaker, 181 Cal. App. 3d 532, 537 (1986)).
A helpful example is found in Merced Mut. Ins. Co. v. Mendez (213 Cal. App. 3d 41 (1989)). In that case a coworker had alleged that Bobby Mendez (the insured) sexually assaulted her, while Mendez claimed the encounter was consensual. The court held that the sexual activity was intentional and no accident; hence, there was no duty for the carrier to defend or indemnify Mendez.
The court noted that Mendez admitted he intentionally engaged in sexual activity with the complaining coworker, and that all of the acts alleged occurred exactly as he intended. The court turned to out-of-state authority (see 213 Cal. App. 3d at 50, citing Unigard Mut. Ins. Co. v. Argonaut Ins. Co., 20 Wash. App. 261 (1978)) and concluded that for coverage to apply, both the means of harm as well as the result must be unforeseen, involuntary, unexpected, and unusual. An accident, said the court, is never present when the insured performs a deliberate act, unless the damage is produced by some additional, unanticipated happening.
In other words, if the insured intended all of the acts that resulted in the victim's injury, an assertion by the insured that he didn't intend to cause injury doesn't, for coverage purposes, by itself transform the case into an accident. Conversely, the court stated, an accident exists "when any aspect in the causal series of events ... was unintended by the insured and a matter of fortuity." (213 Cal. App. 3d at 50.)
In addition to the statutory exclusion cited above, insurance policies typically contain an independent provision that bars coverage for injuries caused by intentional conduct. The statutory and policy exclusions can be treated as one, for there is authority that an intentional acts exclusion can be treated the same as Insurance Code section 533. (See Allstate Ins. Co. v. Overton, 160 Cal. App. 3d 843, 849 (1984).)
California's Supreme Court has held that reckless conduct amounting to a conscious disregard for the safety of others is not willful within the meaning of section 533 (Peterson v. Superior Court, 31 Cal. 3d 147, 158 (1982)). State courts have also noted that a willful act "means 'something more than the mere intentional doing of an act constituting ... negligence,' and appears to be something more than intentional violation of a statute." (B&E Convalescent Ctr. v. State Comp. Ins. Fund, 8 Cal. App. 4th 78, 94 (1992).) Thus, insurance may cover nonpunitive damages in cases of drunken driving and the reckless operation of a motor vehicle.
The legal test for determining excluded willful misconduct requires two things. First, there must be an intent to do the act. And second, there must be an intent or motive to cause the resulting harm (Allstate Ins. Co., 160 Cal. App. 3d at 848 – 849). This latter requirement has been referred to as a "preconceived design to inflict injury." (Clemmer v. Hartford Ins. Co., 22 Cal. 3d 865, 887 (1978).)
The inquiry can be somewhat subjective. The insured may deny that he intended to cause the harm, which might create the potential for coverage and thereby trigger the duty to defend. (See Gray v. Zurich Ins. Co., 65 Cal. 2d 263 (1966).) Further, in certain cases, such as those involving "all risk" policies, the insurance carrier has the burden of proving exclusions--and therefore must shoulder the responsibility of disproving the subjective testimony of the insured. (See Garvey v. State Farm Fire & Cas. Co., 48 Cal. 3d 395 (1989).)
Courts have, however, injected some objectivity into the inquiry. In cases of inherently wrongful conduct (such as child molestation), judges will reject the argument that the perpetrator didn't intend the harm. In those situations, the act itself is so heinous that the intent to cause harm is inferred as a matter of law. (J.C. Penney, 52 Cal. 3d 1009 (1991) (child molestation); United States Fid. & Guar. Co. v. Am. Employer's Ins. Co., 159 Cal. App. 3d 277 (1984) (arson); Fire Ins. Exch. v. Altieri, 235 Cal. App. 3d 1352 (1991) (unprovoked assault and battery).)
Part of the rationale for this rule is that Insurance Code section 533 must be construed to effect its purpose, which is to discourage willful torts (B&E Convalescent Ctr., 8 Cal. App. 4th at 93). In the area of inherently wrongful conduct, courts have ruled that the insured can't claim coverage based merely on unintended consequences.
Three years ago, an insurer denied coverage for a defendant who attempted to throw a person into a swimming pool and missed. The court reasoned that the act of throwing the person was intentional, but that coming up short was not--it was the intervening event that made the incident an accident under the applicable insurance policy (State Farm, 164 Cal. App. 4th 317).
Defense commentators took issue with that conclusion, arguing that since the last act (throwing the person into the pool) was intentional, there was no accident and therefore no coverage. However, the State Farm court provided a ready response in its opinion: the example of the batter who intentionally swats a baseball without intending to break a neighbor's window. (See 164 Cal. App. 4th at 328 – 329.)
The state Supreme Court returned to the fray in an assault and battery case. The insured defendant claimed that he acted in self-defense. When the carrier refused to defend, the insured settled and assigned his insurance claims to the injured plaintiff, Jonathan Delgado, who brought suit against the carrier (Delgado v. Interins. Exch. of the Auto. Club of S. Calif., 47 Cal. 4th 302 (2009)).
The state Supreme Court ruled that a person's unreasonable, subjective belief in the need for self-defense could not transform purposeful acts--admittedly intended to inflict injury--into accidental ones. This result was not surprising, given that appellate courts had already rejected such an argument in cases where the assault and battery were unprovoked. (See Altieri, 235 Cal. App. 3d 1352.)
It should be noted that the trial court in Delgado had asked the injured plaintiff--who was standing in the shoes of the insured seeking coverage--to plead facts supporting justifiable self-defense. Delgado admitted that he could not do so, and because there was no evidence justifying the attack, the trial court found the contention regarding self-defense to be disingenuous at best.
The state Supreme Court cited the Geddes and Hogan cases for the proposition that in the context of liability insurance, an accident is "an unexpected, unforeseen, or undersigned happening or consequence from either a known or an unknown cause." The court further stated that "[t]his common law construction of the term 'accident' becomes part of the policy. ..." (Delgado, 47 Cal. 4th at 308.)
While stating that an unexpected consequence can be an accident, the opinion noted that "an injury-producing event is not an 'accident'... when all of the acts, the manner in which they were done and the objective accomplished occurred as intended by the actor." (Delgado, 47 Cal. 4th 302, at 311312.) In holding that there was no insurance coverage, the court noted the absence of any evidence that the insured's acts were "merely shielding" or reflexive, stating that the insured committed assault and battery with the intent to cause injury.
The court rejected Delgado's claim that accidents should be determined from the standpoint of the insured party, observing that such a holding could make even molestation accidental. It also held that an insured's mistake of fact or law does not transform purposefully inflicted harm into accidental injury: Only unintended, accidental, fortuitous events or happenings occurring after the insured's intentional actions can make an injury accidental. Provocation, said the court, does not count.
The trend, then, is toward more objectivity. However, it is dangerous to focus on the insured's conduct in isolation and to forget that deliberate actions can have unintended consequences. Indeed, even the Delgado court recognized that when certain consequences are unintended, an accident may well have occurred. It specifically noted that when a driver intentionally speeds and as a result negligently hits another car, if the driver did not intend to hit anything, the collision would be fortuitous. "Accordingly," said the court, "the occurrence resulting in injury would be deemed an accident." (47 Cal. 4th at 316 (citing the Mendez decision).)
Clearly, coverage does not vanish merely because the insured acted intentionally and the victim was injured. However, as the Mendez court ruled, an accident "is never present when the insured performs a deliberate act unless some additional, unexpected, independent, and unforeseen happening occurs that produces the damage." (Mendez, 213 Cal. App. 3d at 50.)
Given this rule, a look back at the assault and battery circumstances of the Delgado case is instructive. Had the insured's maneuvers been defensive in nature--designed to shield himself as opposed to inflicting injury on the other person--coverage may well have applied. Indeed, the justices specifically noted that this type of allegation was not before the court. Presumably, had the insured acted defensively instead of offensively, the injuries might well have been deemed accidental, at least for coverage purposes.
Taken together, these cases make a simple point: In order to claim coverage for an accident, an insured party needs to demonstrate on an objective scale that the injuries in question were neither expected nor intended.
Provocation May Still Matter
It is one thing to objectify the inquiry into whether an event is accidental, but quite another to bar consideration of the individual, subjective factors that motivated the insured party to act. There was no evidence of provocation in Delgado, yet the court provided an extended discussion on the point that provocation is irrelevant to the analysis of whether conduct is an accident. (See 47 Cal. 4th at 314 – 316.)
In many instances, however, provocation can, like alcohol, make people act recklessly, without thinking, and without intending or considering the consequences. Should policyholders be entitled to insurance coverage if they took action not with an improper motive or the intent to cause injury, but instead due to an impulse they could not control? Future cases may well center on this very point.
Know Your Burden
When an insurance carrier denies coverage based on an exclusion contained in the policy (such as in the Gray case, 65 Cal. 2d at 266), the insurer carries the burden of proof.
However, if the issue is not an exclusion, but rather whether coverage exists in the first place (see Delgado, 47 Cal. 4th at 308), the onus is on the policyholder to make the case. (See Waller v. Truck Ins. Exch., Inc., 11 Cal. 4th 1, 16 (1995).)
The cases discussed above serve as a reminder that injured parties, as well as the insured, should consult with experienced counsel before statements are taken and pleadings prepared.
Mark E. Hancock is a Ventura attorney who handles insurance coverage, personal injury, and real estate matters.