Intentional Acts In Insurance

Fort Worth insurance attorneys and those in North Richland Hills, Saginaw, Lake Worth, Benbrook, and other places in Tarrant County should be aware of this legal opinion that was issued in 2002.
The style of the case is, King v. Dallas Fire Insurance Company. It is a Texas Supreme Court opinion. Here are some facts.
In an underlying lawsuit, Greg Jankowiak sued King for injuries he received when one of King’s employees attacked him. In addition to a claim of respondeat superior, Jankowiak also sued King directly for negligent hiring, training, and supervision. In this case, King sought to enforce the duty to defend contained in a commercial liability policy issued by Dallas Fire.
The question was whether an employer’s alleged negligent hiring, training, and supervision constitute an “occurrence” under the terms of the insurance policy although the injury was directly caused by the employee’s intentional conduct. If the employer’s alleged negligent hiring, training, and supervision constitute an “occurrence,” then Dallas Fire must defend King. The trial court concluded that Dallas Fire did not owe King a duty to defend. The court of appeals affirmed in a divided opinion. This Court concluded there was an “occurrence,” reversed the court of appeals and remanded for trial.
Carlyle King is the sole proprietor of Tiedown Construction Company, which removes excess materials from building sites. Dallas Fire insured King through a commercial general liability policy. Jankowiak, who was an employee of another company working on the same site as King, sued King, claiming that one of King’s employees, Carlos Lopez, assaulted him. According to Jankowiak’s petition, after confronting Lopez about some missing and damaged electrical wiring, Lopez attacked him, kicking him in the face and causing serious injury. Jankowiak also alleges that King was liable for the injuries, not only on the basis of respondeat superior, but also because of King’s own negligence in hiring, training, and supervising Lopez. Jankowiak amended his petition and specifically alleged that King was negligent in failing to run a criminal-background check, in failing to determine whether Lopez had a propensity for violence, or in failing to provide any training on how to “peaceably and responsibly handle work generated construction site situations.”
King forwarded Jankowiak’s petitions to Dallas Fire, which refused to defend King because Jankowiak did not allege an “occurrence” within the meaning of King’s insurance policy. King brought this declaratory judgment action, asking the trial court to determine that Dallas Fire was legally obligated to defend the underlying action against him. After considering cross-motions for summary judgment, the trial court concluded that Dallas Fire did not owe King a duty to defend.
The only question is whether, under the facts alleged in this case, there was an “occurrence” invoking the insurer’s duty to defend. The duty to defend and the duty to indemnify are distinct and separate duties. An insurer’s duty to defend is determined solely by the allegations in the pleadings and the language of the insurance policy. This is the “eight corners” or “complaint allegation rule.” “If a petition does not allege facts within the scope of coverage, an insurer is not legally required to defend a suit against its insured.” Doubts are to be resolved in favor of the duty to defend.
Dallas Fire’s policy covers “bodily injury” or “property damage” “caused by an ‘occurrence’ that takes place in the ‘coverage territory.’ “Occurrence” is further defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
Dallas Fire contended that there is no occurrence in this case because the actions of King’s employee, Lopez, were intentional. King responded by asserting that he, himself, did not intend to injure Jankowiak; his only potential contribution to Jankowiak’s injury was perhaps negligently hiring, training, or supervising Lopez. Therefore, from King’s standpoint, Jankowiak’s injuries were the result of an accident–an occurrence invoking the duty to defend.
In deciding whether there has been an “occurrence” under the policy, the Court must determine from whose standpoint to view the injury-triggering event. There are three choices: the insured’s, the victim’s, or the actor’s. The policy’s express language, our case law, and the history behind the Commercial General Liability policy all support the conclusion that the insured’s standpoint controls in determining whether there has been an “occurrence” that triggers the duty to defend.
At its core, Dallas Fire’s argument is that King’s employee’s intent should control whether there is a duty to defend King under the policy. That is, because the employee’s conduct was intentional, there is no “occurrence” under the policy. That argument not only ignores the policy language that delineates between separate insureds, it also ignores the intended-injury exclusion provision. That exclusion, which excludes coverage for injuries “intended from the standpoint of the insured,” would have no purpose if all intended injuries were excluded at the outset from coverage because they would not be an “occurrence.”
The evolution of the Commercial General Liability (CGL) policy supports the result reached. While there are multiple variations on language in the standard CGL form, a well known treatise on insurance, Appleman On Insurance 2d, identified some broad modifications in language over the years that have affected the construction of the CGL policy.
Appleman says whether the act was intentional was to be determined from the “standpoint of the insured.” This left the definition of “occurrence” presented in this case:
“Occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
This Court got into a lengthy discussion of the policy language and the case law and treatises on this subject. In the end, the Court said the lower courts had erred and remanded this case back to the trial court.
What should be abundantly clear is that these cases can be confusing and an experienced Insurance Law Attorney needs to be consulted.