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Bassford Remele is a full service litigation firm located in Minneapolis, Minnesota. Founded in 1882, the firm represents local, national and international clients in all areas of civil litigation and dispute resolution.
Case Law Update
Date: May 23, 2008 — Minneapolis, MN
During the week of May 23, 2008, the Minnesota appellate courts released opinions on the following topics that may be of interest to our clients:
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Homeowner's Insurance - Intent to Injure, Willful and Malicious Act, and Public Policy
1. UNINSURED MOTORIST INSURANCE - DEFINITION OF "POLICYHOLDER"
- Where an insurance policy limits uninsured motorist insurance coverage to the “policyholder” identified on the declarations page, and that page lists only “named insureds” and “drivers,” the term “policyholder” refers unambiguously to the “named insureds” only.
- The doctrine of reasonable expectations does not apply to provide uninsured motorist coverage where the policy unambiguously denies coverage.
After being struck and injured by an uninsured motorist, Carlson sought uninsured motorist coverage under his father’s Allstate policy. Allstate denied coverage.
The district court granted summary judgment to Allstate finding that Carlson was not covered. The court of appeals affirmed.
On review, the Supreme Court affirmed in a 4-3 decision. The Court first looked to the terms of the policy, which afforded uninsured motorist insurance coverage to the “policyholder” named on the policy declarations. However, the policy declarations did not use the term “policyholder” but instead identified “named insureds” and “drivers.” The Court reasoned that based on the standard definition of “policyholder,” there is a connection between the terms “policyholder” and “named insured,” and thus the policy unambiguously afforded coverage to “named insureds” only. Next, the Court determined that subd. 3a(5) of the No-Fault Act, which sets priorities among multiple possible sources of recovery of uninsured or underinsured motorist benefits, was not intended to impose a definition of “insured” that is contrary to unambiguous policy language. Last, the Court rejected application of the doctrine of reasonable expectations, stating the doctrine was to be applied narrowly.
The dissent reasoned that because the term “policyholder” could include “named insured,” “drivers,” or both, the policy was ambiguous and thus should be construed in accordance with the reasonable expectations of the insured.
Carlson v. Allstate Insurance Company v. Fay, A06-1664 (Minn. 05/22/08).
2. HOMEOWNER'S INSURANCE - INTENT TO INJURE, WILLFUL AND MALICIOUS ACT,
AND PUBLIC POLICY
- An insured who knowingly provides an injured party with a syringe of methamphetamine, and encourages the injured party to inject the drug, is not entitled to a defense or indemnity under a general liability insurance policy for claims of harm arising out of that drug use.
Schwich provided decedent with methamphetamine, pressured him to inject rather than snort, and prepared the syringe. Methamphetamine was at least one of the causes of decedent’s death. Decedent’s next of kin brought wrongful death action against Schwich, who tendered the lawsuit to his homeowner’s insurer.
The district court granted summary judgment for Schwich, holding that decedent’s death was not intentional, liability was not excluded as a willful and malicious act, and that the insurer had failed to show coverage for a criminal act should be void as against public policy.
The Court of Appeals reversed, holding that exclusions in the policy precluded coverage because supplying the injured party with methamphetamine and encouraging the injured party to inject was, as a matter of law, an intentional act, willful and malicious, and against public policy.
The Court noted that intent need not be established by proof of actual intent to injure; it may be inferred “when the nature and circumstances of the insured’s act are such that harm is substantially certain to result.” The Court reasoned that while Schwich did not intend the death, he intentionally gave the decedent methamphetamine, and that it was unlikely that the insured was unaware of the serious dangers. Although “willful and malicious acts” was not defined in the policy, the undisputed facts here established as a matter of law that this exclusion barred coverage.
Finally, the Court noted that it would be against public policy to find liability coverage for serious criminal acts, as the public has an interest in controlling the spread of drugs. Insurance exists to protect an insured from the consequences of unintended and accidental actions, not to relieve an insured from the consequences of serious criminal acts.
State Farm Fire and Casualty Company v. Schwich, A07-1093 (Minn. Ct. App. 05/20/08).
Editorial Staff |
C. Lundberg, C. Morris, K. Putney, R.A. Williams, |
Writer this Week: |
Nicole A. Delaney |