Defense Digest

Pennsylvania - Insurance Coverage
"Accidental" First Degree Murder And The $30 Million "Y"

On April 28, 2000, in multiple locations over a span of 90 minutes, one man murdered five people, seriously wounded a sixth victim, set fire to the home of one of the victims and shot out the glass doors of two synagogues. He was charged with five counts of first degree murder, one count of attempted murder, aggravated assault, arson, ethnic intimidation, reckless endangerment and weapons offenses. He pled not guilty by reason of insanity to all charges.  On May 9, 2001, a jury convicted the man of five counts of first degree murder, attempted homicide and numerous other charges. On May 11, 2001, he was sentenced to death, indicating that the jury rejected his claims that he did not act intentionally when he murdered the five individuals. 

In a related civil action, a dispute arose regarding insurance coverage resulting from the man's criminal actions and the alleged negligence of his parents. The parents possessed two insurance policies – a homeowner's policy through Company A and an umbrella policy through Company B. The dispute focused on whether or not the policies covered these shootings and whether or not each of the shootings qualified as separate "occurrences."

The trial court judge entered a four-part ruling stating, in part, that Company A had a duty to defend and indemnify the parents and that each shooting constituted its own occurrence. Upon appeal, the Superior Court affirmed the trial court's conclusion. The case was reported at 2006 PA Super 32.

The Superior Court considered first whether Company A's policy did, in fact, provide coverage for the killer's conduct and whether or not that conduct qualified as an "accident." From there the court also considered the question of whether or not each shooting constituted a separate "occurrence." Finally, the court addressed whether Company B's umbrella policy provided coverage for these losses or loss.

The Superior Court affirmed the trial court's conclusion and, in doing so, clarified the relevant case law pertaining to the definition of an "accident." The court parted with the trial court's reasoning that killer's actions were accidental and, instead, affirmed the original decision on the grounds that the parents' actions constituted an adequate degree of negligence required to hold Company A responsible. The parents' alleged actions included failure to take possession of the weapon the killer used or failure to alert authorities or mental health care providers about his alleged mental problems.

As part of its reasoning that these actions were not "accidental," the court cited Gene's Restaurant Inc. v. Nationwide Ins. Co. in which the Supreme Court established that "willful and malicious assault does not qualify. . .as an accident, but rather is an intentional tort" and, therefore, was not covered by the insurance policy. Additionally, Britamco Underwriters, Inc. v. Grzeskiewicz relied upon Gene's with respect to the issue of intentional malicious acts, however, Gene's did not address negligence claims – a critical component of the case under discussion. Instead, the case of Nationwide Mutual Fire Insurance Co. of Columbus v. Pipher established the critical case law upon which the instant case was decided. In Pipher, an apartment owner removed and negligently failed to reinstall the doors to a tenant's apartment, which allegedly led to the tenant's murder by a workman hired by the apartment owner. Although this case also involved a third party committing intentional acts of misconduct, the court ruled that the apartment owner's negligence was sufficient to hold the insurance company liable. As a result, the Superior Court agreed that the negligence of the parents was enough to establish coverage.

The court next explored whether or not the parents' negligence itself qualified as an "accident." As part of its reasoning, the court cited Mohn v. American Cas. Co. of Reading, where the Supreme Court established that an intentional act did not preclude a determination that the preceding negligence was an accident warranting coverage. Therefore, the court stated, "We find that the instant [Company A's] policy provides coverage for the negligence of an insured even where that negligence leads to intentional acts of third parties or another insured. . .Accordingly, we conclude there is coverage under the [Company A's] policy for the allegations of negligence against the parents, requiring [Company A's] defense and potential indemnification." Although the court's decision was the same as the trial court's, it parts from the trial court's determination that the killer acted negligently. The Superior Court maintained that he acted intentionally, and while that alone did not constitute an accident, the negligence of the parents in this case did, in fact, meet the requirements for the actions to be considered "accidental."

The next issue the court confronted pertained to the number of "occurrences" under Company A's policy and whether or not each shooting qualified as its own "occurrence." In concurring with the trial court's opinion that there were six occurrences, the court cited numerous cases in support. The Superior Court cited case law involving child abuse where it was determined that, despite the fact that the actions were committed by a single person, "each child's injuries are independent and caused by the separate acts of sexual abuse." In applying such reasoning to the instant case, the court concluded that the killer's actions constitute six independent acts of shooting each victim and allowing the shootings to occur, and, therefore, there are six occurrences under Company A's policy.

The final issue addressed was whether Company B's umbrella policy provided coverage for the shootings. Company B's policy contained two exclusions. The first one excluded coverage for bodily injury or property damage caused by intentional or purposeful acts of any insured. The second excluded damages arising out of malicious or criminal acts or omissions by any insured.

The parents claimed that these exclusions invalidly precluded coverage when compared to the umbrella policy's insuring agreement's language, "We will pay for damages an insured becomes legally obligated to pay. . . ." The parents focused upon an insured in the insuring agreement, while Company B and ultimately the court focused upon any insured as set forth in the exclusions to coverage.

The court specifically citing to "an" insured vs. "any" insured determined that the excluded actions of any insured precluded coverage for all insureds. It appears clear from the court's reasoning that had the exclusion's language included "an" instead of "any," the killer's actions would have been excluded from coverage, but the parents would have been covered. Considering that Company B's policy had policy limits of $5 million per occurrence and the trial and Superior Court held that there were six separate occurrences, the difference between "an" and "any," the single letter "y" may have been worth $30 million of available coverage.

Although the instant matter remains in the appellate process, this decision requires every carrier's full attention. Simply concluding that shootings, murders, assaults, and/or bar fights are intentional acts excluded from coverage may easily become a multimillion dollar mistake.

*Mark is CPCU candidate and an associate in the firm's Scranton, PA office.  Mark may be reached at MAFontanella@mdwcg.com or (570) 496-4613.