Court Opinion

ID: 9669016
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:36:54.900702+00
Date Added: 2024-06-11T18:15:51.190102
License: Public Domain

Hendry, C.J.,
concurring.
I concur with the result reached by the majority. However, I write separately as I believe it unnecessary to decide this case on the violation of law exclusion. In my view, the intentional acts exclusion excludes coverage. I therefore reserve judgment on whether the violation of law exclusion violates the public policy of Nebraska. While the majority notes that the violation of law exclusion was the sole basis argued by American Family in the hearing on the motion for summary judgment, the motion for summary judgment contains no such limitation, stating only that American Family was entitled to judgment as a matter of law. In addition, the intentional acts exclusion was pled by American Family in its operative petition in the district court as one of the *450bases for declaring there was no coverage. Finally, American Family argues in its brief that the insured’s actions were “intentional.” Brief for appellee at 29.
The policy at issue states in pertinent part: “10. Intentional Injury. We will not cover bodily injury or property damage caused intentionally by or at the direction of any insured even if the actual bodily injury or property damage is different than that which was expected or intended from the standpoint of any insured.” A similar exclusion is contained in the umbrella policy.
American Family offered the insured’s statement at the hearing on the motion for summary judgment. This statement was taken by police on January 24, 1996, the day after Rainier was injured, and received by the court as exhibit 6. In this statement, the insured said:
A.... [A]nd I... and I’m looking at him in the eye and I’m going, what am I doing wrong. Why won’t you take the bottle? Why won’t you burp? What’s going on?
Q. . . . [Y]ou were shaking him?
A.. . . [N]ot violently, like that. I was you know ....
Q.. . . [B]ut shaking [?]
A. . .. [J]iggling him.
Q. Okay.
A. Now why won’t you take this bottle. You know. And I ... I could see myself getting’ [sic] real tense and I thought, okay, LINDA, calm down and I... you know, put him on the bed.
Q. Okay, you told me earlier you had . . .
A.... [Y]ou know, forcibly threw him on the bed. But I mean it wasn’t like I threw him up in the air. I didn’t do that.
Q. But you forcibly threw him down on the bed? Is that correct?
A. Yeah ....
Together with the statement, the insured’s answers to requests for admission were also received at the summary judgment hearing. In these answers, the insured admitted: “Exhibit [6] accurately sets forth your responses to each of the questions asked of you by Officer Mailander during the statement given by you on January 24, 1996.” No evidence was offered at the summary judgment hearing that the insured was incapable of *451formulating the intent to shake Rainier or forcibly throw him on the bed, or that the insured was incapable of understanding the nature of her acts.
I recognize that in these same requests for admission the insured also denied that she “intentionally shook” or “forcibly threw Rainier Hadley down on a bed on January 23, 1996.” However, “ ‘ “ ‘[w]here a party without reasonable explanation testifies to facts materially different concerning a vital issue, the change clearly being made to meet the exigencies of pending litigation, such evidence is discredited as a matter of law and should be disregarded.’ ” ’ ” Neill v. Hemphill, 258 Neb. 949, 954, 607 N.W.2d 500, 504 (2000), quoting Momsen v. Nebraska Methodist Hospital, 210 Neb. 45, 313 N.W.2d 208 (1981). I would therefore disregard the inconsistent denials.
In my view, the record is undisputed that the insured shook Rainier and threw him on the bed. Based on the policy’s intentional acts exclusion, there is no coverage. See, Farm Bureau Ins. Co. v. Witte, 256 Neb. 919, 594 N.W.2d 574 (1999); Columbia Nat. Ins. v. Pacesetter Homes, 248 Neb. 1, 532 N.W.2d 1 (1995). I would therefore affirm the district court’s decision, albeit on other grounds. The majority’s decision to do otherwise, in my view, is not compelled by this record. Furthermore, the majority’s holding that the violation of law exclusion does not offend Nebraska’s public policy is troubling for several reasons.
The plain language of the violation of law exclusion permits the denial of coverage upon the conviction of the insured. I have found no other court which has been called upon to interpret the specific exclusionary language utilized in these policies. While the majority concludes, based in part on the conduct of the insured in this case, that such exclusions are not violative of public policy, under the plain language of the exclusion the insured’s underlying conduct plays no part in determining the applicability of the exclusion. The conviction is the sole determinative factor.
I agree the trend regarding “criminal acts” exclusions follows the reasoning that public policy is not offended when a homeowner’s liability policy excludes coverage for reckless, as well as intentional, criminal acts. See Allstate Ins. Co. v. Peasley, 131 Wash. 2d 420, 932 P.2d 1244 (1997). However, as noted in Swift *452v. Fitchburg Mut. Ins. Co., 45 Mass. App. 617, 627, 700 N.E.2d 288, 295 (1998):
In situations where the offense of which the insured was guilty verges toward the unintentional—say criminal negligence or recklessness—courts might possibly hesitate about holding that the criminal acts exclusion applies, for here the historic justification for the exclusion falters. See Allstate Ins. Co. v. Zuk, 78 N.Y.2d 41, 46-47, 571 N.Y.S.2d 429, 574 N.E.2d 1035 (1991); Tower Ins. Co. v. Judge, 840 F.Supp. 679, 692-693 (D.Minn.1993); Young v. Brown, 658 So.2d 750, 753-754 (La.Ct.App. 1995).
In Swift, the insured was not convicted of an intentional or even a reckless violation of the criminal law, but, rather, a negligent one.
The majority assumes in its analysis that the term “criminal act” as used in the cases cited in support of its conclusion is synonymous with the terms “violation of any criminal law” and “violation of a penal law or ordinance” used in the policy exclusions at issue in this case. The problem with trying to equate the category of “criminal act” with the category of “any conviction for violation of a criminal law or ordinance” was highlighted in Allstate Ins. Co. v. Raynor, 93 Wash. App. 484, 969 P.2d 510 (1999). In Raynor, the insured shot and killed his neighbor and her daughter. He then killed himself. The court held that the insured’s actions constituted criminal acts. Therefore, the victims’ estates could not recover against the insured’s homeowner’s policy, which excluded coverage for “ ‘bodily injury or property damage which may reasonably be expected to result from the intentional or criminal acts of an insured.’ ” Id. at 492, 969 P.2d at 515. The court nonetheless stated in a footnote:
We do not hold, however, that every violation of a Washington criminal statute will constitute a “criminal” act releasing an insurer from liability for an insured’s act or omission. As noted in Peasley, 131 Wn.2d at 434-36 (Madsen, J., concurring), some violations of criminal statutes would certainly not be contemplated by the average purchaser of insurance as precluding coverage under a “criminal acts” exclusion in a homeowners policy. But [the insured]’s actions here were so extreme as to constitute *453clearly excluded “criminal acts” in the minds of an average purchaser of insurance.
93 Wash. App. at 496 n.10, 969 P.2d at 516 n.10.
I agree with the Washington Court of Appeals. The breadth of the majority’s holding with respect to this exclusion would cause me to “hesitate.” See Swift, 45 Mass. App. at 628, 700 N.E.2d at 295.
Under its plain meaning, this policy excludes coverage for any acts committed by the insured, if the insured is convicted of violating any “criminal” law, “penal” law, or “ordinance” in connection with the incident. The problem with such broad exclusionary language was addressed in Safeco Ins. Co. of America v. Robert S., 26 Cal. 4th 758, 28 P.3d 889, 110 Cal. Rptr. 2d 844 (2001). In that case, the policy excluded coverage for bodily injury “ ‘arising out of any illegal act committed by or at the direction of an insured.’” Id. at 763, 28 P.3d at 893, 110 Cal. Rptr. 2d at 848. The court concluded that this exclusion was too broad, reasoning that
the homeowners policy that the insureds here bought from Safeco expressly provided that Safeco would defend and indemnify them for bodily injury caused by “an occurrence,” which the policy defines as “an accident... which results, during the policy period, in bodily injury or property damage.” Because the term “accident” is more comprehensive than the term “negligence” and thus includes negligence (Black’s Law Dictionary 14 (5th ed. 1979)], Safeco’s homeowners policy promised coverage for liability resulting from the insured’s negligent acts. That promise would be rendered illusory if, as discussed above, we were to construe the phrase “illegal act,” as contained in the policy’s exclusionary clause, to mean violation of any law, whether criminal or civil.
Safeco Ins. Co. of America, 26 Cal. 4th at 764-65, 28 P.3d at 894, 110 Cal. Rptr. 2d at 850.
Applying this reasoning, the Safeco court refused to apply the illegal act exclusion. The court held that because “the illegal act exclusion cannot reasonably be given meaning under established rules of construction of a contract, it must be rejected as invalid.” Id. at 766, 28 P.2d at 895, 110 Cal. Rptr. at 852. Nebraska has a *454similar definition of the term “accident.” See City of Kimball v. St. Paul Fire & Marine Ins. Co., 190 Neb. 152, 154, 206 N.W.2d 632, 634 (1973) (“[t]he word ‘accident’ as used in liability insurance is a more comprehensive term than ‘negligence’ and in its common signification the word means an unexpected happening without intention”). See, also, Columbia Nat. Ins. v. Pacesetter Homes, Inc., 248 Neb. 1, 532 N.W.2d 1 (1995); Sullivan v. Great Plains Ins. Co., 210 Neb. 846, 317 N.W.2d 375 (1982).
The majority’s holding would, in my view, exclude from coverage situations “for which people classically seek insurance coverage.” See Tower Ins. Co., Inc. v. Judge, 840 F. Supp. 679, 693 (D. Minn. 1993). Tower Ins. Co., Inc. involved a homeowner’s insurance policy which excluded coverage for bodily injury which “ *result[s] from the criminal acts of an insured.’ ” 840 F. Supp. at 683. The insured accidentally electrocuted a friend while attempting to play a practical joke. The insurer asserted that there was no coverage because the insured’s actions constituted a criminal act. The court found that the criminal act exclusion violated public policy, noting:
The court is convinced that it would be bad policy to find that the exclusion applies in this case just because the state of Wisconsin decided to pursue criminal charges. . . . Persons who suffer unintended and unexpected injuries should not be denied compensation because of such a discretionary decision by the state.
Id. at 693. The concern recognized in Tower Ins. Co., Inc., supra, is even greater here, wherein the exclusionary language of the policy is applicable to any conviction.
Under the majority’s holding, one can foresee “accidents” involving a child who is injured by placing his or her hand on a hot heat register, falling out of a swing, or accidentally pulling over a bookcase while playing. These are the types of accidents for which a daycare provider would typically purchase insurance to both protect themselves and provide compensation for the innocent child. In each of the above “accidents,” there is no conduct by the daycare provider which fits into the traditional concept of a “criminal act.” However, if the daycare provider is convicted of negligent child abuse, then the insured has committed a violation of law under the terms of this policy. There is *455no room to debate whether the daycare provider committed a criminal act, intentional or otherwise. There will be no coverage. The conviction is all that is needed.
Another concern which would cause me to hesitate is that under this exclusion, the insured would not know, and could not know at the time of entering into the contract, what “accidents” would be covered under the insurance policy. That determination could be made only after the fact, depending on whether any conviction arises in connection with an occurrence for which coverage is sought. See Safeco Ins. Co. of America v. Robert S., 26 Cal. 4th 758, 28 P.3d 889, 110 Cal. Rptr. 2d 844 (2001).
Neb. Rev. Stat. § 44-102 (Reissue 1998) defines an insurance policy as
a contract whereby one party, called the insurer, for a consideration, undertakes to pay money or its equivalent or to do an act valuable to another party, called the insured, or to his or her beneficiary, upon the happening of the hazard or peril insured against whereby the party insured or his or her beneficiary suffers loss or injury.
The violation of law exclusion as interpreted by the majority would in effect make coverage dependent not on the “happening of the hazard or peril insured against,” but on the discretionary decision of a prosecuting attorney. See, Tower Ins. Co., Inc. v. Judge, 840 F. Supp. 679 (D. Minn. 1993); Safeco Ins. Co. of America, supra. Under such exclusions, two identical “accidents” may or may not be covered under two identical policies, depending on how aggressively the prosecuting authority responds to the incident. This occurs notwithstanding the fact that each insured paid the same premium for the identical contract.
Accordingly, I reserve judgment on the enforceability of the violation of law exclusion contained in this policy. Such exclusions could exclude from coverage those occurrences for which people classically seek coverage, see Tower Ins. Co., Inc., supra, and render the insurance contract illusory. See Safeco Ins. Co. of America, supra.
Gerrard and McCormack, JJ., join in this concurrence.