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Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 09-2520

___________

Progressive Northern Insurance *

Company, *

*

Plaintiff - Appellee, *

*

v. *

* Appeal from the United States

Sean David McDonough, * District Court for the District of

 * Minnesota.

Defendant - Appellant, *

*

Nicolaus John Morelli; Mathew John *

Morelli, *

*

Defendants. *

___________

Submitted: May 11, 2010

Filed: June 28, 2010

___________

Before BYE, MELLOY, and SHEPHERD, Circuit Judges.

___________

MELLOY, Circuit Judge.

Nicolaus Morelli (“Morelli”) injured Appellant Sean David McDonough while

driving a car that Appellee Progressive Northern Insurance Company insured. Morelli

subsequently pleaded guilty to attempted assault for the incident. Progressive filed

this declaratory judgment action seeking a declaration that a criminal-act exclusion

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The Honorable Paul A. Magnuson, United States District Judge for the District

of Minnesota.

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and an intentional-act exclusion precluded coverage. The district court1

 found that the

criminal-act exclusion applied and granted summary judgment in Progressive’s favor

without ruling on the intentional-act exclusion. McDonough appeals the application

of the criminal-act exclusion. We affirm.

I. Background

After a night of drinking in August 2007, Morelli drove off the road and struck

McDonough, severely injuring him. Morelli was driving a Dodge Colt insured to his

father, Mathew Morelli, by Progressive. During initial interviews with police and

Progressive, Morelli stated he was bent down looking for a ringing cell phone on the

floorboard when the car ran off the road and injured McDonough. However, in

February 2008, Morelli pleaded guilty to attempted assault in the first degree for the

incident. In both his Petition to Enter a Plea of Guilty (“Petition”) and at his plea

hearing, Morelli stated that he intentionally drove off the roadway and into a group

of people.

After Morelli entered his guilty plea, McDonough filed a lawsuit against

Nicolaus and Mathew Morelli in Minnesota state court for negligence and vicarious

liability. Progressive then filed a declaratory judgment action seeking a declaration

that the policy issued to Mathew Morelli did not cover any liability Morelli incurred

when he injured McDonough. Progressive claimed an intentional-act exclusion and

a criminal-act exclusion in the policy barred recovery. The policy states:

Coverage under this part I, including our duty to defend will not apply

to any insured person for:

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***

8. bodily injury or property damage caused by an intentional act of that

insured person, or at the direction of that insured person, even if the

actual injury or damage is different than that which was intended or

expected.

***

15. bodily injury or property damage caused by, or reasonably expected

to result from, a criminal act or omission of that insured person. This

exclusion applies regardless of whether that insured person is actually

charged with, or convicted of, a crime. For purposes of this exclusion,

criminal acts or omissions do not include traffic violations.

In February 2009, Morelli gave deposition testimony in the declaratory

judgment action and stated that he did not intentionally hit McDonough with his car,

as he had admitted in his criminal case. Instead, Morelli returned to his initial story

and testified that he was looking for a ringing cell phone on the floor of his car when

he hit McDonough. Morelli explained this discrepancy by stating that his attorney

told him to lie in the Petition and during his plea hearing and state that he hit

McDonough intentionally. 

Progressive then filed a motion for summary judgment on the declaratory

judgment action. The district court granted Progressive’s motion, finding Morelli’s

guilty plea triggered the criminal-act exclusion and rejecting McDonough’s claim that

Progressive must prove Morelli acted with intent for the criminal-act exclusion to

apply. The court did not rule on the application of the intentional-act exclusion.

McDonough now appeals.

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II. Discussion

A. Standard of Review

“We review the district court’s grant of summary judgment de novo.” Fischer

v. Andersen Corp., 483 F.3d 553, 556 (8th Cir. 2007). Summary judgment is

appropriate when there is no genuine issue of material fact and the record entitles the

moving party to judgment as a matter of law. Fed. R. Civ. P. 56(c)(2). When making

this determination, we view the evidence in a light most favorable to the non-moving

party. Fischer, 483 F.3d at 556. 

“Interpretation of an insurance policy is a matter of state law.” Stan Koch &

Sons Trucking, Inc. v. Great W. Cas. Co., 517 F.3d 1032, 1039 (8th Cir. 2008).

Minnesota law applies, as Minnesota is the forum state and neither party has raised

a choice-of-law claim. BBSerCo, Inc. v. Metrix Co., 324 F.3d 955, 960 n.3 (8th Cir.

2003). This court is bound by decisions of the highest state court when interpreting

state law. Minn. Supply Co. v. Raymond Corp., 472 F.3d 524, 534 (8th Cir. 2006).

If the highest state court has not decided an issue we must attempt to predict how the

highest court would resolve the issue, with decisions of intermediate state courts being

persuasive authority. Id. 

Under Minnesota law, “[g]eneral principles of contract interpretation apply to

insurance policies.” SECURA Supreme Ins. Co. v. M.S.M., 755 N.W.2d 320, 325

(Minn. Ct. App. 2008) (quoting Lobeck v. State Farm Mut. Auto. Ins. Co., 582

N.W.2d 246, 249 (Minn. 1998). If the policy language is clear and unambiguous, the

court must give the language its usual and accepted meaning. Id.

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B. Morelli’s Guilty Plea and Later Contradictory Testimony on Intent

Morelli’s later deposition testimony contradicting his guilty plea cannot create

a genuine issue of material fact to survive a motion for summary judgment. A party

cannot offer testimony that contradicts the party’s earlier statements made under oath

to create a genuine issue of material fact. See, e.g., Am. Airlines, Inc. v. KLM Royal

Dutch Airlines, Inc., 114 F.3d 108, 111 (8th Cir. 1997); see also Banbury v.

Omnitrition Int’l, Inc., 533 N.W.2d 876, 881 (Minn. Ct. App. 1995). Contradictory

testimony in these instances is typically only allowed when the party was confused

and needs to clarify an earlier statement. RSBI Aerospace, Inc. v. Affiliated FM Ins.

Co., 49 F.3d 399, 402 (8th Cir. 1995); see also Banbury, 533 N.W.2d at 881.

 For summary judgment purposes, the Minnesota Court of Appeals has held that

there is no genuine issue of material fact when party enters a guilty plea admitting an

intentional crime and then attempts to contradict his or her own testimony on intent

later during a civil suit. State Farm Fire & Cas. Co. v. Kistner, No. A08-2096, 2009

WL 2852618, at *3 (Minn. Ct. App. Sept. 8, 2009) (unpublished). In Kistner, the

court found that allowing a party to enter a guilty plea stating he intentionally hurt

someone, and then later allowing contradictory testimony “would undermine the core

principles of both civil and criminal justice, most notably the valuable procedures of

summary judgment and guilty pleas.” Id. We find this reasoning sound. Notably,

Kistner refused later contradictory testimony on intent to dispute a guilty plea even

for purposes of an intentional-act exclusion. Id. at *1.

Morelli’s deposition cannot create a genuine issue of material fact for summary

judgment purposes, as he does not claim that he pleaded guilty because he was

confused, but simply that he lied. Also, Morelli has not attempted to withdraw his

contradictory guilty plea. The district court correctly held that Morelli’s guilty plea

is binding in this case.

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C. Criminal-Act Exclusion and Intent

Even if Morelli’s contradictory testimony were admissible, Progressive does

not need to prove intent for the criminal-act exclusion to apply. The plain language

of Progressive’s criminal-act exclusion has no intent requirement. Absent such

language, Minnesota courts refuse to imply an intent requirement for purposes of the

criminal act exclusion. SECURA, 755 N.W.2d at 325. Also, if the policy has separate

exclusions for criminal and intentional acts, courts interpret the two as entirely

separate, and the intent requirement does not extend to the criminal-act exclusion. See

id.; see also Liebenstein v. Allstate Ins. Co., 517 N.W.2d 73, 75-76 (Minn. Ct. App.

1994).

McDonough argues Liebenstein and SECURA are not controlling because these

cases involved policy holders claiming they lacked the intent to do harm, and Morelli

lacked the intent to complete the act. However, the facts of these cases are not

relevant for purposes of this opinion. The holdings in Liebenstein and SECURA

turned on contract interpretation, not factual circumstances. See Liebenstein, 517

N.W.2d at 75; see also SECURA, 755 N.W.2d at 325. 

Therefore, Morelli’s guilty plea conclusively places the liability for the injuries

to McDonough under the criminal-act exclusion. Whether or not Morelli intended to

complete the act is irrelevant for determining if the exclusion applies. 

The judgment of the district court is affirmed.

______________________________

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