Court Opinion

ID: 6759660
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:30:13.983808+00
Date Added: 2024-06-11T16:02:08.547548
License: Public Domain

Holmes, J.,
dissenting. The holding of the majority is not mandated by applicable case law and creates more problems than it resolves. While I agree generally that the pleading of the complaint ought to establish the duty of the insurer to defend, I also believe that when the insurer has obtained facts by its own investigation, such facts serving as the basis for a criminal conviction, then a declaratory judgment will lie for the insurer to dispute false allegations in the pleading. This court should never encourage fraud.
There are a number of reasons why the duty to defend ought not to depend solely upon those allegations set forth in the plaintiff’s complaint. Since the complaint’s wording is fully within the control of plaintiff’s counsel, it is a simple matter to frame the complaint to include an allegation which would fit within the policy of insurance. The majority would have the insurer defend regardless of facts — an expensive and unfair burden. Later, in order to avoid payment of the judgment, the insurer must formally litigate in another proceeding and pay again for the litigation costs. Not only is this result unfair, but the attendant expense cannot be recovered from the insured and is passed directly on to the consumers in the form of higher insurance premiums.
On the other hand, the insurer, faced with the prospect of such financial losses, now indisputably is burdened with a motive to settle the case early, regardless of the merits of plaintiff’s suit under the terms of the policy. The direct consequence is that potential plaintiffs need not care*316fully weigh the legal merits and circumstances of a case before filing suit. Where insurers are forced to settle numerous nuisance suits, these costs, too, are passed to the consumer. Obviously, a preliminary declaratory judgment action, where warranted, would be far less expensive.
The law of other jurisdictions has been “well settled * * *, generally speaking, [that] the obligation of a liability insurance company under a policy provision requiring it to defend an action brought against the insured by a third party is to be determined by the allegations of the complaint in such action.” Annotation (1956), 50 A.L.R. 2d 465, Section 4, and cases collected therein. A special situation is created when “there is a conflict between the alleged facts and the actual facts as known to the insurer.” Id. at fn 19. In such situation, there has been a division of authority among those jurisdictions to consider the issue. See id. at 497-504, Section 17-21, and those cases collected therein. However, when confronted with circumstances like those in the present case, i.e., where the insured perpetrated the intentional crime of shooting another, the larger number of jurisdictions have held that the insurer is entitled to prove its known facts in a declaratory judgment proceeding prior to trial on the tort complaint. See, e.g., Armstrong v. Security Ins. Group (1973), 292 Ala. 27, 288 So. 2d 134; Lockhart v. Allstate Ins. Co. (1978), 119 Ariz. 150, 579 P. 2d 1120; National Investors Life & Cos. Ins. Co. v. Arrowood (App. 1980), 270 Ark. 617, 606 S.W. 2d 97; National Union Fire Ins. Co. v. Lenox Liquors, Inc. (1977 Fla.), 358 So. 2d 533; Colonial Penn Ins. Co. v. Hart (1982), 162 Ga. App. 333, 291 S.E. 2d 410; Bay State Ins. Co. v. Wilson (1983), 96 Ill. 2d 487, 71 Ill. Dec. 726, 451 N.E. 2d 880; All-Star Ins. Corp. v. Steel Bar, Inc. (N.D. Ind. 1971), 324 F. Supp. 160; Casualty Reciprocal Exchange v. Thomas (1982), 7 Kan. App. 2d 718, 647 P. 2d 1361; Hartford Fire Ins. Co. v. Wagner (1973), 296 Minn. 510, 207 N.W. 2d 354; Woida v. North Star Mut. Ins. Co. (Minn. 1981), 306 N.W. 2d 570; Travelers Ins. Co. v. Cole (1982 Mo. App.), 631 S.W. 2d 661; Blue Ridge Ins. Co. v. Nicholas (E.D. Mo. 1977), 425 F. Supp. 827; Commercial Union Ins. Co. v. Mauldin (1983), 62 N. C. App. 461, 303 S.E. 2d 214; Allstate Ins. Co. v. Carr (1979), 119 N.H. 851, 409 A. 2d 782; Travelers Indemnity Co. v. Obenshain (1978), 219 Va. 44, 245 S.E. 2d 247; U.S.F. & G. Ins. Co. v. Brannan (1979), 22 Wash. App. 341, 589 P. 2d 817.
In U.S.F. & G. Co. v. Baugh (1970), 146 Ind. App. 583, 257 N.E. 2d 699, it was considered that strict application of the rule espoused by the majority “could lead to fraud perpetrated upon the insurer in that allegations of the complaint could be intentionally framed to force the insurer to appear and defend. This could be true even though the insurer made its investigation of facts and conditions surrounding the incident sued on and determined that there was no coverage.
“* * * [Also] considering the new Rules of Procedure * * *, an injured party could file a complaint, complying with the rules, and have a good complaint but with such brevity that the insurer could not determine *317whether there was coverage under its policy or not.” Id. at 598, 257 N.E. 2d at 709-710.
The latter consideration is particularly applicable where, as here, the tort plaintiff asserts as a cause of action, a single sentence, the operative term of which is the conclusory phrase, “negligently discharged a firearm.” In light of those facts ascertained by the insurer, which were not disputed, i.e., that the tort plaintiff was indicted criminally for murder and plea bargained so as to be found guilty of involuntary manslaughter while committing felonious assault, this court should have developed a more reasonable rule.
Strictly construing R.C. 2903.04(A), the death of the victim need not have resulted from the felony intended to have been committed and might have resulted from negligence or accident. But when the additional facts are considered that the underlying felony consisted of shooting the victim and that such felony required a knowing act, then the single ascertainable conclusion is that the resulting injury was “either intended or expected from the standpoint of the insured.” (Emphasis added.)
It is, therefore, my view that an exception should be made in accordance with these cases. There is a better rule which would protect both the insurer and the insured, avoid fraud under the present-day rules of pleading, and would reduce unnecessary litigation. Courts should, in circumstances such as those we now confront, allow the insurer to assert facts which it has ascertained from a reasonable investigation, in a declaratory judgment action brought to determine the insurer’s duty to defend.
Wright, J., concurs in the foregoing dissenting opinion.