Nationwide Property and Casualty Insurance Company v. Bliss et al

Filing 25

MEMORANDUM OPINION. Signed by Judge Robert B Propst on 5/30/2013. (AVC)

FILED
2013 May-30 AM 09:59
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
EASTERN DIVISION
NATIONWIDE PROPERTY AND
CASUALTY INSURANCE COMPANY,
Plaintiff,
v.
RICHARD F. BLISS, JR.;
RICHARD F. BLISS, III,
Defendants,
SCOTT RAY BROWN

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Case No: 1:11-CV-03075-RBP

Intervenor.
MEMORANDUM OPINION
This cause comes before the court on the plaintiff’s Motion for Summary Judgment filed
on March 14, 2013. The defendants responded to the motion on April 15, 2013, and the plaintiff
replied to the defendants’ response on April 24, 2013. The defendants followed with a surreply
brief on May 7, 2013. The parties participated in a recorded telephone conference discussing the
motion on May 15, 2013.
Facts1
On December 22, 2010, Scott Brown and Jason Roberts were on the Coosa Valley
Electric Cooperative power line easement near Whiting Road in Talladega County, Alabama.
Zarapharah Bills accompanied Brown and Roberts and was waiting in their running car. Brown

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The court considers the facts in the light most favorable to the non-movant. Hardy v. Regions Mortg., Inc.,
449 F. 3d 1357, 1359 (11th Cir. 2006).

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and his companions admitted to attempting to steal copper from the power poles. The easement is
on or near property owned by defendant Richard Bliss, Jr. The defendants, seeing strangers on
the easement and suspecting criminal activity, retrieved firearms from their house. Bliss Jr.
instructed his son to remain in their truck and park behind the intruders’ car to prevent escape.
Bliss Jr. confronted Brown and Roberts, asking them to explain their presence on the easement.
Brown and Roberts began running toward the car. Bliss Jr. asked them to stop running and fired a
single shot into the air. Brown stopped, but Roberts kept running. Bliss Jr. called 911 and
requested police at the scene.
After calling the police, Bliss Jr. ordered Brown to slowly walk to the car. Bliss III had
exited his truck upon hearing the gunshot from his father’s direction. Bliss III had allowed
Roberts to pass by him unharmed. When Brown and Bliss Jr. arrived at the vehicles, Bills yelled
at Brown and Roberts to get in the car, saying “he’s not going to shoot us, we’ll run over him.”
Brown and Roberts got in the car. Bliss Jr. told them that he had called the police. Bills put the
car into reverse at a high rate of speed. Bliss III was standing behind the car, directly in its path.
Both Bliss Jr. and Bliss III, fearing Bliss III was going to be hit by the reversing car, began to fire
their weapons at the car’s tires in an attempt to disable the car. Bliss III was forced to jump out of
the path of the car. One of the bullets penetrated the body of the car and struck Brown, causing
injury to his spine and resulting in paraplegia.
Both defendants were arrested on December 30, 2010, and charged with discharging a
gun into an occupied vehicle. Ala. Code § 13A-11-61(B). Bliss Jr. was also charged with first
degree assault. Ala. Code § 13A-6-20. Bliss Jr., claiming self-defense, (acting in protection of his
son), was acquitted of all charges in his criminal trial. Bliss III was granted youthful offender
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status.
Scott Brown filed a civil suit in this district court against the defendants on June 7, 2011,
alleging negligence/wantonness and outrage.2 Bliss Jr. contacted Nationwide on or about June
30, 2011 and gave notification of the shooting incident and subsequent civil suit. The
Homeowner’s Policy provisions include:
LIABILITY EXCLUSIONS
1. Coverage E - Personal Liability and Coverage F - Medical Payments to Others do not
apply to bodily injury or property damage:
a) caused intentionally by or at the direction of an insured, including willful acts
the result of which the insured knows or ought to know will follow from the
insured’s conduct. . . .
b) caused by or resulting from an act or omission which is criminal in nature and
committed by an insured.
This exclusion 1.b) applies regardless of whether the insured is actually charged
with, or convicted of a crime.
LIABILITY CONDITIONS
...
3. Duties after Loss. In case of a loss, you must perform the following duties. You must
cooperate with us in seeing that these duties are performed.
a) give notice to us or our agent as soon as practicable setting forth:
(1) identity of the policy and insured.
(2) time, place, and facts of the accident or occurrence.
(3) names and addresses of the claimants and witnesses.
b) immediately forward to us every document relating to the accident or
occurrence.
...
Nationwide filed the instant action on August 22, 2011, seeking declaratory judgment

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Scott Brown has intervened into this case.

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regarding its duties to defend and indemnify the defendants under the Homeowner’s Policy.
Summary Judgment Legal Standard
Under Rule 56(c)(2) of the Federal Rules of Civil Procedure, summary judgment is
proper “if the pleadings, the discovery and disclosure materials on file, and any affidavits show
that there is no genuine issue as to any material fact and that the movant is entitled to judgment
as a matter of law.” “Rule 56(c) mandates the entry of summary judgment, after adequate time
for discovery and upon motion, against a party who fails to make a showing sufficient to
establish the existence of an element essential to that party’s case, and on which that party will
bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The
moving party bears the initial burden of proving the absence of a genuine issue of material fact.
Id. at 323. The burden then shifts to the nonmoving party, who is required to “go beyond the
pleadings” to establish that there is a “genuine issue for trial.” Id. at 324 (citation and internal
quotation marks omitted).
A dispute about a material fact is genuine “if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). The court must construe the evidence and all reasonable inferences arising from it in
the light most favorable to the non-moving party. Adickes v. S. H. Kress & Co., 398 U.S. 144,
157 (1970); see also Anderson, 477 U.S. at 255 (all justifiable inferences must be drawn in the
non-moving party’s favor). “On summary judgment, “[i]f there is conflict between the plaintiff’s
and the defendant’s allegations or in the evidence, the plaintiff’s evidence is to be believed and
all reasonable inferences must be drawn in his favor.” Shotz v. City of Plantation, Fla., 344 F. 3d
1161, 1164 (11th Cir. 2003) (quoting Molina v. Merritt & Furman Ins. Agency, 207 F. 3d 1351,
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1356 (11th Cir. 2000)). However, “mere conclusions and unsupported factual allegations are
legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321,
1326 (11th Cir. 2005) (per curiam) (citing Bald Mountain Park, Ltd. v. Oliver, 863 F.2d 1560,
1563 (11th Cir. 1989)). Moreover, “[a] mere ‘scintilla’ of evidence supporting the opposing
party’s position will not suffice; there must be enough of a showing that the jury could
reasonably find for that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing
Anderson, 477 U.S. at 252).
Analysis
The plaintiff argues that coverage under the instant policy is precluded for the defendants
because of policy exclusions and untimely notice. Its general arguments are that:
(1) The policy excluded the defendants’ coverage because they intentionally caused
Brown’s injuries. (Liability Exclusions 1.a).
(2) The policy excluded the defendants’ coverage because they committed acts which
were criminal in nature that caused Brown’s injuries. (Liability Exclusions 1.b). Nationwide
further argues that exclusion 1.b) applies even if an insured was not charged with or convicted of
a crime. See sentence following 1.b).
(3) The policy excluded the defendants’ coverage because they did not give notice “in
case of a loss” as soon as practicable. (Liability Condition 3. Duties after Loss).
A. Criminal Acts Exclusion
The defendants argue that summary judgment procedure requires the movant to support
its motion with credible evidence and show that no reasonable jury could find for the nonmoving party. Acceptance Ins. v. Brown, 832 So.2d 1, 12 (Ala. 2001). They argue that
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Nationwide has not met its burden to establish that no reasonable jury could find for the
defendants. The defendants offer the father’s acquittal under self-defense laws and the substantial
evidence presented to the criminal case jury regarding the father’s defense of the son during the
shooting.3 Both father and son testified in the criminal case that they were attempting to shoot the
tires on the car to stop the vehicle and had no intention of shooting or injuring any of the car’s
occupants. Even if deadly force was intended, however, the defendants cite the father’s testimony
regarding the driver of the car reversing at a high rate of speed directly toward his son, thus
invoking a “defense of others” justification.
This court does not conclude that a person who acted in self-defense or the defense of
another, and who was presumed to be innocent until found guilty in a court of law, has
committed a criminal act. While the plaintiff has offered cases supporting the policy
considerations upholding criminal act exclusions, including Hooper v. Allstate Insurance Co.,
571 So. 2d 1001, 1003 (Ala. 1990) and Alfa Specialty Ins. Co. v. Jennings, 906 So. 2d 195 (Ala.
Civ. App. 2005), these cases are distinguishable in that the insureds all pled or were found guilty
of criminal acts. There were also no self defense claims.
The plaintiff substantially relies on the case of New Hampshire Ins. Co. v. Blue Water Off
Shore, LLC, 2009 WL 1509458 (S.D. Ala. 2009) to support its “criminal act exclusion”
argument.4 This court is also impressed with Judge Steele’s opinion, but for different reasons.

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The court notes that the son’s youthful offender adjudication does not stand as a conviction under
Alabama law. See Ala. Code § 15-9-7A (1975). Youthful offender status is given to persons under 21 to insulate
them from the harshness of a criminal trial and provide an informal and confidential process. See Raines v. State, 317
So. 2d 559, 561 (1975). This court, consistent with applicable state law, will not interpret a youthful offender
adjudication as any sort of admission or finding of guilt or liability.
4

Apparently, there was no appeal.

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The plaintiff emphasizes the following clause in its policy under “Liability Exclusion:” “This
exclusion 1.b) applies regardless of whether the insured is actually charged with or convicted of a
crime.” It should be noted that the application and significance of this clause, if applicable,
depends upon the wording of 1.b), which includes: “caused by or resulting from an act or
omission which is criminal in nature and committed by an insured.” (Emphasis added). Note that
there must be an act which is criminal in nature. The policy does not say that a non-crime
becomes a crime whether there is a conviction or not. Judge Steele did an excellent job of
discussing the terms “crime” and “criminal.” His statements include:
The word “criminal” is commonly defined as “relating to, involving, or being a crime.”
Merriam Webster's Collegiate Dictionary 274 (10th ed.1993). “Crime,” in turn, is defined
as “an act or the commission of an act that is forbidden or the omission of a duty that is
commanded by a public law and that makes the offender liable to punishment by that
law.” Id.; see also Littlefield v. Acadia Insurance Co., 392 F.3d 1, 8 (1st Cir.2004) (using
a similar dictionary definition to construe the term “criminal” in a policy exclusion). . . .
Nor does anything in the common definition of “crime” or “criminal” suggest that a crime
is not a crime, or a criminal act not a criminal act, until and unless there has been a
conviction. On the contrary, as noted above a crime is a forbidden act, which act makes
the offender liable to punishment. Likewise, the definition employed in Littlefield defines
“crime” as “an act committed ... in violation of law ... and for which punishment is
imposed upon conviction.” 392 F.3d at 8 (internal quotes omitted). . . .
FN2 . . . (“[A] reasonable policy holder would understand the phrase ‘criminal acts' to
refer to conduct for which a person could be convicted and punished.”); . . .
Id. at *3 (Emphasis added).
Essential elements of an act which is considered to be a “crime” or “criminal” are that the
act be “forbidden” and that it be one for which the actor is liable for “punishment.” The instant
case presents a question involving whether acting in self-defense is criminal in nature, This court
does not so hold. Under Alabama law, a person cannot be "convicted and punished" when he

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acted in self-defense or in the defense of others. This court does not now decide, as a matter of
law, whether either defendant acted in self defense. On the other hand, this court clearly cannot
determine, as a matter of law, that they did not so act. An issue which has not been clearly
addressed is whether the fact that the father has been acquitted and that the son has not been
convicted will be admissible.
B. Intentional Acts Exclusion
The plaintiff also relies upon exclusion clause 1. a) which includes: “caused intentionally
by or at the direction of an insured, including willful acts the result of which the insured knows
or ought to know will follow from the insured’s conduct. . . .”
The defendants note that no Alabama appellate court has interpreted the exact language at
issue but offer cases from other jurisdictions involving Nationwide and interpreting the precise
policy language. While the court notes that these cases are not controlling, it finds them
instructive. In Tanner v. Nationwide, 289 S. W. 3d 828 (Tex. 2009), the Texas Supreme Court
concluded that “‘intentionally’ as used in the exclusion speaks to the resulting damage or injury,
not to the actions that led to it. . . . To forfeit coverage, the insured must intend to harm, not
merely intend to act.” Id. at 833-834. See also Nationwide Mut. v. Irish, 857 N.E. 2d 169 (Ohio
Ct. App. 2006) (“the insurer must demonstrate that the injury itself was intentional or expected”);
Massa v. Nationwide Mut., 904 N.Y.S. 2d 531, 533 (App. Div. 2010) (“Coverage may be barred
under such an exclusion only if there is no possible legal or factual basis to support a finding that,
from the point of view of the insured, the bodily injuries inflicted were unexpected, unintended
and unforeseen”). Note that the exclusion clauses here apply to “bodily injury” or “property
damage” not just “acts.”
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The language in 1.a) substantially differs from some of the exclusion clauses discussed in
Tapscott v. Allstate Ins. Co., 526 So. 2d 570 (Ala. 1988) in that it includes “of which the insured
knows or ought to know.” This language is more closely related to that in Alabama Farm Bureau
Mut. Ins. Co. v. Dyer, 454 So. 2d 921, 922 (Ala. 1984) (“to bodily injury or property damage
which is either expected or intended from the standpoint of the insured.”). As Tapscott notes, the
insurer in Dyer was required to defend and indemnify, unlike in other cases cited in Tapscott.
526 So.2d at 572. Although the Dyer court also gave an additional reason for its decision,
Tapscott notes that “a subjective approach was required within the terms of the policy itself. Id
(Emphasis in original).
This court first notes that there is at least an ambiguity and/or an otherwise question of
fact as to whether an insured “knew or ought to know” the result which would follow from his
action. Beyond that, there is at best, an ambiguity and question of fact as to the appropriate
interpretation of the word “intentionally.” There are various meanings of the word. Among
others, there is “specific” intent, “general” intent, “corrupt” intent, “willful” intent, etc. Compare
Ratzlaf v. U.S., 510 U.S. 135 (1994) and Spies v. U.S., 325 U.S. 91 (1945). “Willfull” usually
means acting with the intent to violate the law; that is, acting with a bad purpose to disobey or
disregard the law. See Cheek v. U.S., 498 U.S. 192 (1991); Eleventh Circuit Pattern Instructions;
Bryan v. U.S., 524 U.S. 184 (1998); and U.S. v. Starks, 157 F. 3d 833 (11th Cir. 1998). Further,
the statement “intentionally” caused acts “including willful acts” is confusing and ambiguous.
Are “willful” acts not always intentional? The cited cases suggest an innate ambiguity.
Alabama law requires that “exceptions to coverage must be interpreted as narrowly as
possible in order to provide maximum coverage to the insured.” Nationwide Mut. Ins. Co. v.
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Thomas, 103 So. 3d 795, 803 (Ala. 2012). This court reads the policy language of “ought to
know will follow” as requiring a subjective analysis. Applying the subjective standard, this court
finds a genuine issue of material fact to exist regarding whether the defendants “ought to know
that injury could follow.”
C. Notice
It is undisputed that the Bliss defendants did not notify Nationwide of the incident until
shortly after receiving the civil complaint. The notice provision in the policy refers to “Duties
after Loss.” The defendants notified the plaintiff 23 days after suit was filed. Nationwide
contends that this notification was not timely and violated the policy’s requirement to provide
notice “as soon as practicable,” but it also argues that the time to notify began running on the
date of the incident.
Under Alabama law, “notice is not required until some claim within the coverage of the
policy has been presented or is reasonably to be anticipated, in which event the requirement as to
notice is satisfied if notice is given within a reasonable time after the situation assumes an aspect
suggestive of a possible claim for damages.” Pan Am. v. DeKalb-Cherokee, 266 So. 2d 763, 771
(Ala. 1972). “The factors to be considered are the length of the delay in giving notice and the
reasons therefor.5 Absence of prejudice to the insurer is not a factor to be considered.” Id.
Without a reasonable excuse or circumstances justifying a delay, a breach of the notice condition
occurs as a matter of law. Id. However, if a reason is provided, “the question of the
reasonableness of a delay in giving notice . . . is a question of fact for the jury.” S. Guar. Ins. v.
Thomas, 334 So. 2d 879, 882-883 (Ala. 1976).
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Of course, the policy language must also be considered. It says, “after loss.”

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The defendants cite their affidavit testimony where they state that they never received any
type of communication from the victim or his attorney suggesting a civil lawsuit would be filed
until the filed complaint was sent to them. The defendants argue that the evidence that they
notified Nationwide as soon as they knew of a claim creates disputed facts or conflicting
inferences sufficient to make “the question of the reasonableness of a delay in giving notice . . . a
question of fact for the jury.” S. Guar. Ins., 334 So. 2d at 882-883 (Ala. 1976).
The “Liability Conditions” section of the policy states:
3. Duties after Loss. In case of a loss, you must perform the following duties. You must
cooperate with us in seeing that these duties are performed.
a) give notice to us or our agent as soon as practicable setting forth:
(1) identity of the policy and insured.
(2) time, place, and facts of the accident or occurrence.
(3) names and addresses of the claimants and witnesses.
b) immediately forward to us every document relating to the accident or
occurrence. (Emphasis added).
Significantly, the only “Definitions” section of the policy does not define “loss,” intentional,”
“willful,” “crime,” or “criminal.” There is a reference to “Intentional Acts,” but in the “Property
Exclusions” section. The “Definitions” section adds that all words which are defined in other
sections are in bold print. There are no pertinent bold print definitions under “Liability
Exclusions,” or the “Duties After Loss” provision.
No definition of “loss” in Merriam Webster’s Collegiate Dictionary appears to suggest
that the possibility of a future detriment, damage, injury, claims, suit, etc. is a “loss;” certainly
not a present loss which would necessitate a notice under “Duties after Loss.” An insured could
reasonably believe that no loss had occurred before he received the law suit document(s). He
might well think, “I am at a loss as to what ‘loss’ means in this clause.”

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Reeves v. State Farm Fire and Casualty Company, 539 So.2d 252 (Ala. 1989) states the
difference between the “Duties after Loss” clause in that case and the one in this case. That
clause reads, “In case of an accident or occurrence, the insured shall . . . . .” The clause here
says, “In case of a loss, you must . . . . .” Interestingly, Reeves also notes that even a State Farm
insurance agent testified that an article in the newspaper about a shooting did not indicate to him
the existence of an “occurrence” within the meaning of the policy. The Reeves court
distinguished American Liberty Ins. Co. v. Soules, 288 Ala. 163, 258 So.2d 872 (1972), noting
that the delay of 11 months in filing occurred before any suit papers were filed. Reeves also cites
Watts v. Preferred Risk Mut. Co., 423 So.2d 171 (Ala. 1982), noting that State Farm never had
the opportunity to control the litigation. Nationwide did.6
The motion will be denied.
This the 30th day of May, 2013.

ROBERT B. PROPST
SENIOR UNITED STATES DISTRICT JUDGE

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Without regard to the confusion caused by the meaning, or lack of meaning, of “loss,” the “delay” of six
months is likely not unreasonable as to either defendant. As to Bliss III, also see the Reeves discussion concerning
knowledge of the policy.

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