Opinion ID: 1316290
Heading Depth: 4
Heading Rank: 2

Heading: The exclusions and the joint obligations clause

Text: The coverage language was potentially subject to other relevant policy provisions: the criminal and intentional act exclusions and the joint obligations clause. The intentional act exclusion excluded coverage for bodily injury resulting from ... an act or omission intended or expected to cause bodily injury. [56] The criminal act exclusion excluded coverage for bodily injury resulting from ... a criminal act or omission. [57] The joint obligations clause is found in the policy's insuring agreement. The joint obligations clause provides: The terms of this policy impose joint obligations on persons defined as an insured person. This means that the responsibilities, acts and failures to act of a person defined as an insured person will be binding upon another person defined as an insured person. Allstate argues that both exclusions apply because C.P.'s injuries resulted from Harold's intentional and criminal acts. Further, it argues that the joint obligations clause attributes the conduct of one insured person  Harold  to the other insured persons  the elder Lancasters, thus confirming that the exclusions apply to the claims against Dolan and Eleanor. It consequently does not matter to Allstate that only Harold's conduct was intentional or criminal and that the elder Lancasters' unintentional and noncriminal acts may also have been a causal factor in C.P.'s injuries. C.P. does not deny that she was injured as a result of Harold's intentional or criminal acts. But she contends that the Lancasters' negligence also caused her injuries, and that their negligence should be treated independently for purposes of determining coverage. Her claims against the elder Lancasters allege their direct liability and are based on her theory that they negligently breached duties they owed to her. Her claims do not attempt to make the elder Lancasters vicariously liable for Harold's intentional and criminal actions. According to her, the relevant question is what coverage does the policy provide, or possibly provide, for losses resulting from a combination of both covered and excluded causes? She asserts that the policy does not unambiguously exclude her claims because the exclusions do not explicitly exclude coverage for a claim which results partly or entirely from an excluded cause, regardless of the cause, causes, or combination of causes of the loss. The district court correctly noted that there is [p]ersuasive but conflicting authority in other jurisdictions regarding the effect of such policy language in context of injuries allegedly caused by both negligent acts and intentional or criminal acts. It also correctly noted that we have considered the effect of multiple causation in cases resolving insurance disputes, but not in a case involving a joint obligations clause. Finally, the court recognized that Allstate's policy contains no severability of interest clause that would clearly limit the effect of an exclusion to the person claiming coverage. [58] Allstate refers us to cases applying similar policy language and holding that innocent insureds are not covered in comparable circumstances. [59] C.P. seeks to distinguish these cases. Some of these cases cannot be distinguished; they involve policy terms that are substantially identical to the terms of Allstate's policy here. [60] Our analysis here focuses on the policy's language and our case law. The district court has not referred us to any extrinsic evidence relevant to the contracting parties' expectations. The exclusions do not resolve the question presented here: is there coverage for a loss claimed to have resulted from a combination of covered and uncovered conduct? Instead, they specify the types of injury to be excluded: injury resulting from criminal or intentional conduct. [61] In doing so, they do not expressly exclude injury caused in part by both unintentional or noncriminal conduct. The terms can be interpreted broadly to exclude the resulting harm even if negligence was a contributing cause, or they can be read narrowly to apply only to injuries caused solely by intentional or criminal conduct. We must interpret exclusions narrowly. [62] And our discussion above concerning coverage for an accident applies equally here. From the perspective of insureds whose acts are alleged to have negligently, but not criminally or intentionally, been a cause of a claimant's injury, these exclusions do not apply to the negligence claims against them. Likewise, with respect to C.P., the elder Lancasters' alleged conduct was allegedly negligent, and therefore neither intentional nor criminal. It thus triggered neither exclusion. The broad exclusionary reading Allstate urges is permissible. But we conclude that reading the exclusions narrowly is more consistent with the insureds' reasonable expectations that they will be covered against claims that they negligently caused injury. Worthington, which interpreted identical policy language, supports this conclusion. The court there declined Allstate's invitation to focus only on the intentional act or underlying cause of the complainant's injury. [63] Instead, the court focused on the actual allegations of negligence against the nonacting insured and reasoned that this negligence constituted an accident under the policy terms and that the policy's intentional act exclusion was inapplicable to these claims. [64] We next consider the effect of Allstate's joint obligations clause. We assume for discussion's sake that Allstate is correct in asserting that this clause has the effect of attributing Harold's intentional and criminal conduct to the elder Lancasters. [65] But, for two reasons, this attribution does not resolve the issue of whether the exclusions apply to the negligence claims against the elder Lancasters. First, it is not clear how the joint obligations clause even bears on the exclusionary language critical here. The pertinent language of the intentional act exclusion, Exclusion 1.a), [66] seems to apply without regard to who has acted intentionally. In comparison, Exclusion 1.b) [67] applies only to acts of an insured person. If it does not matter for purposes of Exclusion 1.a) whether an insured person was the intentional actor, the joint obligations clause, which attributes Harold's acts to the elder Lancasters, is not relevant to Exclusion 1.a) either. That means that the exclusion must be interpreted without reference to the joint obligations clause. Second, if the joint obligations clause does apply to this exclusion, it does not resolve the multiple-cause problem discussed above. Attributing Harold's alleged conduct to the elder Lancasters still leaves open the possibility that the injury was the result of both intentional and negligent acts. Allstate had to take the complaint's allegations as true, and had to assume that the elder Lancasters' negligent acts or omissions were at least a contributing cause of C.P.'s injuries. Simply attributing Harold's intentional conduct to the elder Lancasters does not clearly and unambiguously withdraw coverage for C.P.'s claim that the elder Lancasters' negligent, unintentional conduct injured her. A similar analysis applies to the pertinent criminal act exclusion, Exclusion 2.a). Again, the joint obligations clause does not clearly apply to this exclusion because it is not unambiguously limited to the acts of insured persons. [68] And again, the joint obligations clause does not deal unambiguously with multiple causes of injury. We conclude that the attribution is irrelevant to either exclusion where the claims against the insureds who claim coverage are based on their negligent, unintentional, noncriminal conduct. A provision in a different part of Allstate's policy supports our conclusion that the joint obligations clause does not unambiguously resolve the problem of multiple causation. The property loss coverage part contains this exclusion: We do not cover loss to the property ... resulting in any manner from: .... 7. One or more of the items listed below, if that item is one of two or more causes of a loss and if the other causes(s) of the loss is (are) excluded by this policy: a) Conduct, act, failure to act, or decision of any person, group, organization or governmental body whether intentional, wrongful, negligent or without fault. This exclusion makes it clear that there is no coverage for property losses in cases of multiple causes where all of the causes are excluded under the policy. Moreover, this clause defines one class of excluded losses in terms of a cause, which, even though it could be covered if it acted alone, is excluded because it combines with a cause of loss expressly excluded by the policy. This clause therefore has the effect of excluding losses in multi-cause situations. This clause demonstrates that Allstate knew how to address this multi-cause problem when it wanted to. No equivalent provision is to be found in Allstate's liability coverage. The joint obligations clause does not address this issue. The property coverage part provides a second interesting comparison. It covers a direct loss caused by some events which are otherwise excluded. [69] The policy defines direct loss to include a loss caused by a named peril if it is the last in time to occur when the loss is caused by more than one peril. This definition again demonstrates that Allstate knew how to deal with losses with multiple causes, in this example by using a last-in-time approach. We have held that the presence of a multi-cause exclusion is significant. [70] In State Farm Fire & Casualty Co. v. Bongen, [71] we held that a multi-cause exclusion was not ambiguous and that an insurer may expressly preclude coverage when damage to an insured's property is caused by both a covered and an excluded risk. [72] The clause in Bongen expressly and unambiguously resolved the problem presented by a loss that was caused in part by both a covered cause and an excluded cause. [73] The Lancasters' policy contains no equivalent clause in its liability coverage part. Its use of analogous clauses in the property loss coverage part demonstrates that Allstate knew how to phrase an exclusion unambiguously when it wished to address multiple causes. An insured familiar with the entire policy could reasonably conclude from the absence of a similar clause in the liability coverage part that Allstate was not attempting to exclude multiple causes with respect to the intentional and criminal act liability exclusions. Both sides discuss the efficient proximate cause doctrine in passing. Allstate argues that we have never adopted the doctrine in Alaska and that, in any event, it must yield to unambiguous policy provisions. It also argues that Harold's conduct, not that of the elder Lancasters, was the efficient cause of the loss. In Bongen we considered the efficient proximate cause rule, which we described as follows: [W]hen a loss is sustained by a sequence or concurrence of at least two causes, one covered under [an insurance] policy and the other excluded under the policy, the cause setting the chain of events in motion is the cause to which the loss is attributed.... Other courts have defined efficient proximate cause to mean the predominant cause, rather than the cause which is first in time. [74] We decided to recognize the efficient proximate cause rule only when the parties have not chosen freely to contract out of it. [75] We held there that the unambiguous policy terms excluded the loss. [76] Justice Matthews, dissenting, stated that it seems correct to conclude that we have impliedly accepted the efficient proximate cause doctrine. Moreover, as noted, the efficient proximate cause doctrine is widely accepted among American jurisdictions. There is no reason not to accept it in Alaska. [77] Allstate and the Lancasters did not contract out of the efficient proximate cause rule, but that does not mean that it applies here in order to defeat coverage. The doctrine is a court-made rule applied to preserve insureds' reasonable expectations. [78] If a policy is ambiguous because it can be interpreted reasonably both to cover and not to cover particular losses, there is no reason to invoke the efficient proximate cause rule because the ambiguous policy terms must be interpreted in favor of coverage. Perhaps the rule would apply if the claimant has asserted that the insured seeking coverage has acted both intentionally and negligently. Consider, for example, an insured homeowner who unjustifiably points a loaded pistol at a visitor, who then flees in fright and is injured when he falls on the homeowner's negligently maintained icy steps. What is the predominant cause of the injury, the criminal assault or the negligent maintenance? But C.P.'s complaint does not claim that the elder Lancasters' acts were both negligent and intentional or criminal. And Allstate does not suggest that they knew Harold had any propensity to assault children and that their conduct was in fact intentional. [79] Accordingly, we see no reason to apply the efficient proximate cause rule here. [80] We conclude from the language of the entire policy that Allstate did not clearly and unambiguously exclude coverage for the claims that the elder Lancasters negligently contributed to C.P.'s injuries. We therefore hold that Allstate's policy covered C.P.'s claims against the elder Lancasters.