Allstate Insurance Company v. Scott et al
Filing
27
ORDER GRANTING SUMMARY JUDGMENT FOR PLAINTIFF, DENYING DEFENDANTS' REQUEST FOR A STAY, AND DISMISSING DEFENDANTS' COUNTERCLAIM AS MOOT 16 . Signed by JUDGE ALAN C KAY on 04/03/2012. (eps)CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
ALLSTATE INSURANCE COMPANY,
Plaintiff,
vs.
JEFFERSON J. SCOTT AND KEVIN
A. SCOTT,
Defendants.
_____________________________
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CIVIL NO. 11-00036 ACK-KSC
ORDER GRANTING SUMMARY JUDGMENT FOR PLAINTIFF, DENYING
DEFENDANTS’ REQUEST FOR A STAY, AND DISMISSING DEFENDANTS’
COUNTERCLAIM AS MOOT
PROCEDURAL BACKGROUND
On January 19, 2011, Plaintiff Allstate Insurance
Company (“Plaintiff” or “Allstate”) filed a declaratory judgment
action against Jefferson J. Scott and Kevin A. Scott
(“Defendants” or the “Scotts”).
Doc. No. 1.
Allstate seeks a
declaration that Jefferson Scott’s homeowner policy does not
require Allstate to defend the Scotts in a state civil action.
Compl. ¶ 19.
On February 2, 2011, Defendants filed an answer and
a counterclaim seeking a declaration that Allstate has a duty to
defend and a duty to indemnify them.
Doc. No. 7.
On December 7, 2011, Allstate filed a motion for
summary judgment, which was accompanied by a supporting
memorandum (“Pl.’s Mot. Mem.”) and a concise statement of facts
(“Pl.’s CSF”).
Doc. Nos. 16 & 17.
On March 12, 2012, Defendants
filed an opposition (“Defs.’ Opp’n”) and a response to Allstate’s
CSF (“Defs.’ CSF”).
Doc. Nos. 20 & 21.
On March 16, 2012,
Allstate filed a reply.
Doc. No. 25.
The Court held a hearing on April 2, 2012.
FACTUAL BACKGROUND1/
I.
The Underlying Action
On September 10, 2010, Leif and Kerry Martin,
Jefferson’s neighbors, filed a complaint in state court (the
“underlying complaint”) against Jefferson and Kevin Scott.
CSF ¶ 1.
Pl.’s
In the underlying complaint, the Martins assert that
Jefferson Scott punched Leif Martin in the face; Leif fell to the
ground and lost consciousness; Jefferson kicked Leif in the upper
body while he was unconscious; Kerry Martin helped a disoriented
Leif to his feet; and that Kevin pulled a handgun from his
waistband, threatened Leif, and then hit him in the face with the
handgun.
See Defs.’s Opp’n Ex. 2 (“Underlying Compl.”), ¶ 9.
The Martins assert a cause of action for assault and battery, a
cause of action for negligence, a cause of action asserting the
Scotts were “negligently engaged in the use of physical force
upon [Leif] amounting to tortuous activity causing harm to [the
Martins]”; and a cause of action asserting that the Scotts were
jointly engaged in tortuous activity.
Id. at 1-6.
All counts
are based on the same aforementioned actions of Jefferson and
Kevin.
Both Jefferson and Kevin were convicted in state court
1/
The facts as recited in this Order are for the purpose of
disposing of the current motion and are not to be construed as
findings of fact that the parties may rely on in future
proceedings.
2
of assault and terroristic threatening as a result of the
incident.
Specifically, on April 13, 2010, a jury convicted
Jefferson of Assault in the Third Degree; Terroristic Threatening
in the Second Degree; and a separate offense of Assault in the
Third Degree.
Pl.’s CSF Ex. A.
On July 7, 2010, a jury
convicted Kevin of Assault in the Second Degree; Terroristic
Threatening in the Second Degree; and Terroristic Threatening in
the First Degree.
II.
Pl.’s CSF Ex. B.
The Insurance Policy
At the time of the underlying claims, Jefferson was
insured under an Allstate Deluxe Homeowners’ Policy, applicable
to his residence located in Kailua-Kona (the “Policy”).
The
Policy provides the following coverage:
Section II Family Liability and Guest Medical
Protection
Coverage X Family Medical Protection
Subject to the terms, conditions and
limitations of this policy, Allstate will pay
damages which an insured person becomes
legally obligated to pay because of bodily
injury or property damage arising from an
occurrence to which this policy applies and
covered by this part of the policy.
Pl.’s Mot. Ex. 1, Form AP-2, at 2-3.
“Occurrence” is defined in
the Policy as “an accident, including continuous or repeated
exposure to substantially the same general harmful conditions
during the policy period, resulting in bodily injury or property
damage.”
Id. at 19.
The liability coverage provided in Coverage X was subject to
3
the following exclusion:
Losses We Do Not Cover Under Coverage X
1.
We do not cover any bodily injury or
property damage intended by, or which may
reasonably be expected to result from the
intentional or criminal acts or omissions of,
any insured person. . . .
Id.
Allstate seeks a declaration that it has no duty to
defend Jefferson or Kevin in the underlying action pursuant to
the Policy.
STANDARD
I.
Summary Judgment Standard
The purpose of summary judgment is to identify and
dispose of factually unsupported claims and defenses.
See
Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).
Summary
judgment is therefore appropriate if “the movant shows that there
is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
“A party asserting that a fact cannot be or is genuinely disputed
must support the assertion,” and can do so in either of two ways:
by “citing to particular parts of materials in the record,
including depositions, documents, electronically stored
information, affidavits or declarations, stipulations (including
those made for purposes of the motion only), admissions,
interrogatory answers, or other materials”; or by “showing that
the materials cited do not establish the absence or presence of a
4
genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.”
Fed. R. Civ. P.
56(c)(1).
“A fact is ‘material’ when, under the governing
substantive law, it could affect the outcome of the case.
A
‘genuine issue’ of material fact arises if ‘the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party.’”
Thrifty Oil Co. v. Bank of Am. Nat’l Trust & Sav.
Ass’n, 322 F.3d 1039, 1046 (9th Cir. 2003) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).2/
Conversely,
where the evidence could not lead a rational trier of fact to
find for the nonmoving party, no genuine issue exists for trial.
See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986) (citing First Nat’l Bank v. Cities Serv. Co., 391
U.S. 253, 289 (1968)).
The moving party has the burden of persuading the court
as to the absence of a genuine issue of material fact.
Celotex,
477 U.S. at 323; Miller v. Glenn Miller Prods., 454 F.3d 975, 987
(9th Cir. 2006).
The moving party may do so with affirmative
evidence or by “‘showing’—that is, pointing out to the district
court—that there is an absence of evidence to support the
nonmoving party’s case.”
Celotex, 477 U.S. at 325.3/
Once the
2/
Disputes as to immaterial facts do “not preclude summary
judgment.” Lynn v. Sheet Metal Workers’ Int’l Ass’n, 804 F.2d
1472, 1483 (9th Cir. 1986).
3/
When the moving party would bear the burden of proof at
trial, that party must satisfy its burden with respect to the
5
moving party satisfies its burden, the nonmoving party cannot
simply rest on the pleadings or argue that any disagreement or
“metaphysical doubt” about a material issue of fact precludes
summary judgment.
See Celotex, 477 U.S. at 324; Matsushita
Elec., 475 U.S. at 586; Cal. Architectural Bldg. Prods., Inc. v.
Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987).4/
The nonmoving party must instead set forth “significant probative
evidence” in support of its position.
T.W. Elec. Serv., Inc. v.
Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987)
(quoting First Nat’l, 391 U.S. at 290).
Summary judgment will
thus be granted against a party who fails to demonstrate facts
sufficient to establish an element essential to his case when
motion for summary judgment by coming forward with affirmative
evidence that would entitle it to a directed verdict if the
evidence were to go uncontroverted at trial. See Miller, 454
F.3d at 987 (quoting C.A.R. Transp. Brokerage Co. v. Darden
Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000)). When the
nonmoving party would bear the burden of proof at trial, the
party moving for summary judgment may satisfy its burden with
respect to the motion for summary judgment by pointing out to the
court an absence of evidence from the nonmoving party. See id.
(citing Celotex, 477 U.S. at 325).
4/
Nor will uncorroborated allegations and “self-serving
testimony” create a genuine issue of material fact. Villiarimo
v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002);
see also T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n,
809 F.2d 626, 630 (9th Cir. 1987); Johnson v. Wash. Metro. Area
Transit Auth., 883 F.2d 125, 128 (D.C. Cir. 1989) (“The removal
of a factual question from the jury is most likely when a
plaintiff’s claim is supported solely by the plaintiff’s own
self-serving testimony, unsupported by corroborating evidence,
and undermined either by other credible evidence, physical
impossibility or other persuasive evidence that the plaintiff has
deliberately committed perjury.”), cited in Villiarimo, 281 F.3d
at 1061.
6
that party will ultimately bear the burden of proof at trial.
See Celotex, 477 U.S. at 322.
When evaluating a motion for summary judgment, the
court must construe all evidence and reasonable inferences drawn
therefrom in the light most favorable to the nonmoving party.
See T.W. Elec. Serv., 809 F.2d at 630–31.5/
Accordingly, if
“reasonable minds could differ as to the import of the evidence,”
summary judgment will be denied.
II.
Anderson, 477 U.S. at 250–51.
An Insurer’s Duty to Defend
Hawaii law provides for a broad duty to defend whenever
the pleadings raise a potential for indemnification liability of
the insurer to the insured.
Burlington Ins. Co. v. Oceanic
Design & Constr., Inc., 383 F.3d 940, 944 (9th Cir. 2004); First
Ins. Co. of Hawaii, Inc. v. Hawaii, 665 P.2d 648, 653 (Haw.
1983).
“The duty to defend exists irrespective of whether the
insurer is ultimately found not liable to the insured and is
based on the possibility for coverage, even if remote, determined
at the time suit is filed.”
Burlington Ins. Co., 383 F.3d at
944; see also First Ins. Co., 665 P.2d at 653.
“‘Furthermore,
where a suit raises a potential for indemnification liability of
the insurer to the insured, the insurer has a duty to accept the
defense of the entire suit even though other claims of the
complaint fall outside the policy’s coverage.’”
5/
Burlington Ins.
At the summary judgment stage, the court may not make
credibility assessments or weigh conflicting evidence. See
Anderson, 477 U.S. at 249; Bator v. Hawaii, 39 F.3d 1021, 1026
(9th Cir. 1994).
7
Co., 383 F.3d at 944 (quoting Hawaiian Holiday Macadamia Nut Co.
v. Indus. Indem. Co., 872 P.2d 230, 233 (Haw. 1994)).
Hawaii adheres to the “complaint allegation rule.”
Burlington Ins. Co., 383 F.3d at 944.
Therefore, the duty to
defend is limited to situations where the underlying pleadings
have alleged a claim for relief which falls within the terms for
coverage of the insurance contract.
See id.
“‘Where pleadings
fail to allege any basis for recovery within the coverage clause,
the insurer has no obligation to defend.’”
Holiday, 872 P.2d at 233).
Id. (quoting Hawaiian
Yet, “where the complaint in the
underlying lawsuit alleges facts within coverage,” an insurer
that wishes to avoid providing a defense has a high burden.
Dairy Rd. Partners v. Island Ins. Co., 992 P.2d 93, 117 (Haw.
2000).
The insurer may rely on extrinsic facts to deny a
defense, but only “by showing that none of the facts upon which
it relies might be resolved differently in the underlying
lawsuit.”
Id.; see also Allan D. Windt, 1 Insurance Claims &
Disputes: Representation of Insurance Companies & Insureds § 4:4
(5th ed. 2011) (stating that “[i]nsurers, as a general rule, are
not allowed to refuse to defend on the grounds that they are in
possession of information establishing that the allegations in
the complaint giving rise to coverage are untrue” and noting four
common exceptions to that rule).
To obtain summary judgment that it has no duty to
defend, an insurer has the burden of proving that there is “no
genuine issue of material fact with respect to whether a
8
possibility exist[s]” that the insured will incur liability for a
claim covered by the policy.
Dairy Road, 992 P.2d at 107.
In
other words, Allstate must prove that it would be impossible for
the Martins in the underlying suit to prevail against the Scotts
on a claim covered by the policy.
See id. at 107–08.
An insurer’s duty to defend is contractual in nature
and a court must examine the terms of the policy to determine the
scope of the duty.
Commerce & Indus. Ins. Co. v. Bank of Hawaii,
832 P.2d 733, 735 (Haw. 1992).
Insurance policies are “subject
to the general rules of contract construction.”
P.2d at 106.
Dairy Road, 992
Yet insurance contracts are contracts of adhesion,
so they “must be construed liberally in favor of the insured and
any ambiguities must be resolved against the insurer.”
Road, 992 P.2d at 106–07.
Dairy
“Put another way, the rule is that
policies are to be construed in accord with the reasonable
expectations of a layperson.”
Id. at 107.
DISCUSSION
Allstate requests this Court determine as a matter of
law that it has no duty to defend Defendants.
Defendant Kevin
Scott does not oppose this motion as against himself.
Accordingly, the Court GRANTS Allstate’s Motion for Summary
Judgment as against Kevin.
Defendant Jefferson Scott opposes the motion as against
himself.
Defendants request, alternatively, that this Court stay
these proceedings until the underlying state court action is
9
resolved.6/
A stay, however, is not warranted in this situation
and Allstate is entitled to summary judgment as against
Jefferson.
I.
Stay
Defendants request that the court stay this case until
the underlying action is finally resolved to avoid the risk of
contradictory judgments.
Defs.’ Opp’n 2-3.
Defendants cite no
authority supporting their position and make no further argument
regarding this request.
As the Court will explain, there is not
a risk of inconsistent judgments as Allstate is not a party in
the underlying action.
The Court will nonetheless consider
Defendants’ request pursuant to the factors set forth by the
Supreme Court and Ninth Circuit.
On balance, these factors do
not support a stay.
A.
Legal Framework
The Declaratory Judgment Act provides, in relevant
part, that “[i]n a case of actual controversy within its
jurisdiction . . . any court of the United States, upon the
filing of an appropriate pleading, may declare the rights and
other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be
sought.”
28 U.S.C. § 2201(a) (emphasis added).
District courts
have discretion in whether to exercise jurisdiction under the
6/
At the hearing, Defendants’ counsel stated that an
arbitration is scheduled for the underlying action in three
weeks.
10
Declaratory Judgment Act.
See Wilton v. Seven Falls Co., 515
U.S. 277, 289 (1995); Brillhart v. Excess Ins. Co. of Am., 316
U.S. 491, 494–95, (1942).
In Government Employees Insurance Co.
v. Dizol, 133 F.3d 1220 (9th Cir. 1998) (en banc), the Ninth
Circuit Court of Appeals set forth guidelines for applying such
discretion.
The Ninth Circuit instructed that a district court
should consider the following three criteria set forth in
Brillhart v. Excess Insurance Co. of America, 316 U.S. 491
(1942): (1) district courts should not needlessly determine
issues of state law; (2) district courts should discourage
litigants from forum shopping; and (3) district courts should
avoid duplicative litigation.
Dizol, 133 F.3d at 1225.
In
addition to these three considerations, a district court may also
weigh “other considerations,” such as:
whether the declaratory action will settle
all aspects of the controversy; whether the
declaratory action will serve a useful
purpose in clarifying the legal relations at
issue; whether the declaratory action is
being sought merely for the purposes of
procedural fencing or to obtain a “res
judicata” advantage; or whether the use of a
declaratory action will result in
entanglement between the federal and state
court systems. In addition, the district
court might also consider the convenience of
the parties, and the availability and
relative convenience of other remedies.
Id. at 1225 n. 5 (internal quotations omitted).
The Ninth Circuit further counseled that “[t]he
pendency of a state court action does not, of itself, require a
district court to refuse federal declaratory relief.”
11
Id. at
1225.
“Nonetheless, federal courts should generally decline to
entertain reactive declaratory actions.”
Id.
The Court further
clarified that “there is no presumption in favor of abstention in
declaratory actions generally, nor in insurance coverage cases
specifically.”
Id. (“We know of no authority for the proposition
that an insurer is barred from invoking diversity jurisdiction to
bring a declaratory judgment action against an insured on an
issue of coverage.”) (internal quotations omitted).
In reviewing the application of the Brillhart doctrine,
the Ninth Circuit allows district courts “broad discretion as
long as it furthers the Declaratory Judgment Act’s purpose of
enhancing judicial economy and cooperative federalism.”
R.R. St.
& Co. Inc. v. Transport Ins. Co., 656 F.3d 966, 975 (9th Cir.
2011) (internal quotations omitted).
B.
Application
1. Needlessly Determining Issues of State Law
This case involves an insurer’s obligations to an
insured under an insurance policy, which is purely a question of
state law.
See Cont’l Cas. Co. v. Robsac Indus., 947 F.2d 1367,
1371 (9th Cir. 1991), overruled in part on other grounds by
Dizol, 133 F.3d at 1227, (“[T]his case involves insurance law, an
area that Congress has expressly left to the states.”).
On
numerous occasions, however, the United States District Court in
the District of Hawaii has interpreted insurance policies
pursuant to Hawaii state law to determine the scope of an
12
insurer’s duties to an insured.
Additionally, there are no
unsettled issues of state law that this Court must decide.
This factor is also concerned with a court needlessly
determining state law issues because “the precise” issues “are
the subject of a parallel proceeding in state court.”
Id.
Allstate is not a party to the state court action; consequently,
there are not parallel proceedings in state court, as will be
discussed in more detail under the duplicative litigation factor.
Thus, this concern is not implicated here, favoring the denial of
a stay.
The Court finds this factor weighs against a stay.
2.
Forum Shopping
A party is typically understood to have engaged in
improper forum shopping when it files “reactive litigation.”
The
“archetype” of reactive litigation is when an insurer files a
declaratory judgment suit in federal court while a non-removable
state court action presenting the same issues is pending merely
to obtain a tactical advantage from litigating in a federal
forum.
See R.R. St. & Co., 656 F.3d at 976.
Allstate was never named as a party to the State Court
Action.
Moreover, any attempt by Allstate to intervene in the
State Court Action would likely be barred.
Hawaii law disfavors
the joinder of an insurer in a third-party tort action absent
some contractual or statutory provision.
See Olokele Sugar Co.
v. McCabe, Hamilton & Renny Co., 487 P.2d 769 (1971).
Therefore,
Allstate’s only recourse, if jurisdiction in this Court is
13
denied, would be to file a similar claim for declaratory relief
in a separate state court action.
Declining jurisdiction under these circumstances would
deprive Allstate of its choice to litigate this matter in federal
court, and undermine the federal interest in providing a neutral
forum free from an appearance of favoritism against an
out-of-state party.
The Court finds this factor weighs in favor of
continuing with the case.
3.
Duplicative Litigation
The policy of avoiding duplicative litigation does not
weigh in favor of declining to move forward with this action.
The underlying state court suit does not involve the same parties
or issues; Allstate is not a party and the state court has no
reason to decide whether Allstate has a duty to defend
Defendants.
Moreover, this Court’s determination regarding
Allstate’s duty to defend does not hinge on a finding that will
also be addressed in the state court because as subsequently
discussed.
In determining whether Allstate has a duty to defend,
this Court only relies on the allegations in the underlying state
court complaint and extrinsic evidence of facts that could not be
resolved differently in the state court.
Thus, although similar
facts and issues might be addressed, no duplicative litigation
need transpire for this Court to complete its analysis.
The Court thus finds this factor weighs against a stay.
4.
Other Considerations
14
Although this case will not settle the underlying
dispute in the state court action, it will clarify the legal
obligations between the parties.
See Harris v. United States
Fid. & Guar. Co., 569 F.2d 850, 852 (5th Cir. 1978) (stating that
a declaratory judgment need not resolve all the issues or the
entire controversy, “[t]he controversy settled by the declaratory
judgment need only be an autonomous dispute”).
A clarification
of whether Allstate has a duty to defend the Scotts will inform
Allstate in a timely manner as to its obligations and will inform
all parties of their ultimate burdens, which could assist
settlement negotiations.
There is no further evidence that Allstate brought this
action to try and gain a “res judicata” advantage or for
procedural fencing; Allstate could have brought the same request
in state court.
There is no significant threat that
determination of Allstate’s duties will result in entanglement
between the federal and state court systems.
Consequently, all of the foregoing factors weigh
against a stay and the Court DENIES Defendants’ request.
II.
Allstate’s Duty to Defend
A.
The Parties’ Arguments
Allstate asserts that the conduct alleged in the
underlying suit relating to intentional assault and terroristic
threatening does not constitute an accident and thus is not an
occurrence under the Policy and within the Policy’s intentional
acts exclusion.
Pl.’s Mot. Mem. 10.
15
Allstate asserts that
although the underlying complaint contains a claim for
negligence, the claim is based on the same non-accidental conduct
and not on separate negligent acts, and thus it does not provide
a basis for coverage.
Id. at 15.
Allstate further contends that
Jefferson’s conduct is criminal, and thus falls within the
exclusion for injuries that result from criminal acts.
Id. at
16-17.
Jefferson argues that the underlying complaint states a
separate negligence claim and that the plain language of the
underlying complaint – “namely that Jefferson negligently
understood the actions by the Plaintiffs in the Underlying Action
as a threat to himself or his property and based on this
understanding defended himself, others, and his property” –
establishes a basis by which the jury could find him guilty of
negligence.
Defs.’ Opp’n 8.
Jefferson contends that therefore
these allegations establish the possibility of an occurrence and
thus a covered claim.
Id. at 9.
Jefferson asserts that the
court considering the criminal matter did not decide whether
Jefferson committed any negligent acts and thus his conduct is
not within the criminal acts exclusion.
Id. at 12.
The Court disagrees with Jefferson; the fact the
Martins brought a negligence claim does not, of itself, render
Jefferson’s conduct within the Policy.
It is unnecessary for
this Court to consider whether Jefferson’s conduct is an
occurrence or excluded from the Policy as an intentional act
because the underlying complaint unambiguously establishes that
16
the criminal acts exclusion applies.
Allstate therefore has no
duty to defend Jefferson.
B.
The Negligence Claim Is Not Dispositive
The Hawaii Supreme Court provides that “[t]he duty to
defend is limited to situations where the pleadings have alleged
claims for relief which fall within the terms for coverage of the
insurance contract.”
Hawaiian Holiday Macadamia Nut Co. v.
Indus. Indem. Co., 872 P.2d 230, 233 (Haw. 1994).
The Hawaii
Supreme Court jurisprudence establishes that the mere fact
negligence is alleged in a complaint does not “raise[] the clear
possibility of a covered claim” as Defendants assert.
In Hawaiian Insurance & Guaranty Co. v. Blanco, 804
P.2d 876 (Haw. 1991), overruled on other grounds by Dairy Road
Partners v. Island Insurance Co., 992 P.2d 93 (Haw. 2000), the
Hawaii Supreme Court concluded that there was no “accident” and
thus no “occurrence” with respect to a wife’s negligent
infliction of emotional distress claim against her husband’s
shooter.
Id. at 881.
The Supreme Court reasoned that “a
reasonable man in [the insured’s] position, firing a rifle
intentionally in the direction of a woman’s husband, would
anticipate, and hence expect, that that woman might suffer
emotional injury and distress at witnessing the incident.”
Id.
Similarly, in Hawaiian Insurance & Guaranty Co. v. Brooks, 686
P.2d 23, 27-28 (Haw. 1984), overruled on other grounds by Dairy
Road, 992 P.2d 93, the Hawaii Supreme Court held that the insurer
did not have a duty to defend the driver of an insured automobile
17
for a negligence claim despite the driver’s assertion that he did
not “intend” or “expect” the rape of a passenger by another
passenger in his vehicle’s back seat.7/
Id. at 24, 27-28.
The
Hawaii Supreme Court explained that from the driver’s standpoint,
“it was not an accident that resulted in bodily injury neither
expected nor intended,” and thus “it was definitely unreasonable
for [the driver] to think [the] automobile liability policy would
protect him from liability in this instance.”
Id. at 28.
Noting these cases, the Hawaii Supreme Court cautioned
the need to carefully review a complaint “to ensure that
plaintiffs could not, through artful pleading, bootstrap the
availability of insurance coverage under an insured defendant’s
policy by purporting to state a claim for negligence based on
facts that, in reality, reflect[] manifestly intentional, rather
than negligent, conduct.”
Dairy Road, 992 P.2d at 112; see
Bayudan v. Tradewind Ins. Co., 957 P.2d 1061 (Haw. App. 1998)
(concluding that despite the fact the underlying complaint
alleged negligence, the insured’s alleged conduct was not an
occurrence because “the only facts alleged” in the insured’s
negligence claims related to the alleged kidnapping and assault
claims, which were uncovered by the policy because they were
intentional acts).
7/
Although the Hawaii Supreme Court overruled Blanco and
Brooks with respect to an insurer’s use of extrinsic facts that
may be subject to dispute in the underlying lawsuit as a basis
for disclaiming a duty to defend, the Hawaii Supreme Court stated
that these cases remained good authority in all other respects.
See Dairy Road, 992 P.2d at 117 n.13.
18
Based on the foregoing Hawaii insurance cases, the
Martins’ negligence claim does not per se render Jefferson’s
conduct as covered acts under the Policy.
Jefferson’s reliance
solely on the fact the underlying complaint raises a negligence
claim is therefore misplaced.
C.
The Criminal Acts Exclusion
Based on the four corners of the underlying complaint,
the Martins’ allegations are based on Jefferson’s criminal
conduct.
Jefferson has not argued that any other pleadings
establish a basis for coverage.
The pleadings therefore
establish that Jefferson’s actions fall within the criminal acts
exclusion of the Policy.
There is thus no possibility that
coverage exists and Allstate has no duty to defend Jefferson.
The policy exclusion provides: “We do not cover any
bodily injury . . . which may reasonably be expected to result
from the . . . criminal acts or omissions of[] any insured
person. . . .
This exclusion applies regardless of whether or
not such insured person is actually charged with, or convicted of
a crime.”
Pl.’s CSF ¶ 12, Ex. 1, Form AP-2, at 19.
The
underlying complaint states that Jefferson committed assault and
battery by punching and kicking Leif.
See Underlying Compl. ¶ 9.
Assault is a crime under the Hawaii Penal Code.8/
8/
The least serious assault offense under the Hawaii Penal
Code is assault in the third degree. A person commits assault in
the third degree if the person:
(a) Intentionally, knowingly, or recklessly
causes bodily injury to another person; or
19
The underlying complaint also asserts a claim for
negligent self-defense.
See id. ¶ 21 (“At the time and place
hereinbefore alleged, Defendants and each of them, negligently
interpreted the conversations or actions of Plaintiffs as a
threat to Defendants and to the Scott property, and thereafter,
negligently used physical violence and a deadly weapon to deter
such a perceived threat.”).
Accordingly, were it not for other
allegations in the complaint, based on the complaint alone, there
would remain a question of fact as to whether Jefferson’s conduct
was criminal.
Specifically, because justification, which
includes self-protection, is a defense to any prosecution, all of
Jefferson’s conduct as pled would not be undisputedly criminal.
See H.R.S. §§ 703-301, 703-304; State v. Culkin, 215, 35 P.3d
233, 242 (Haw. 2001).
In that situation, Allstate might not be
able to rely solely on the fact of Jefferson’s conviction to
disclaim a duty to defend because the Hawaii Supreme Court has
held that although the fact of a conviction may be admissible in
a civil action as evidence of facts upon which it was necessarily
based, it would not be conclusive evidence.
See Asato v.
Furtado, 474 P.2d 288, 290 (Haw. 1970) (holding that a conviction
after a jury trial can be evidence, but not conclusive evidence,
in a subsequent civil action); Blanco, 804 P.2d at 880
(concluding that the insured’s no contest plea could not be used
(b) Negligently causes bodily injury to
another person with a dangerous instrument.
H.R.S. § 707-712(1).
20
against the insured and that because a conviction is “not
conclusive evidence of [the insured’s] commission of the crime in
question,” the insurer “could not rely solely on the conviction
in refusing to defend”); see also Allstate Ins. Co. v. Takeda,
243 F. Supp. 2d 1100, 1108 (D. Haw. 2003) (concluding that
insurer was not entitled to summary judgment on its claim that
the criminal acts exclusion bars coverage, despite that the
insured had pled no contest to assault, because the insured
claims he acted in self-defense); but see Tradewind Ins. Co. v.
Stout, 938 P.2d 1196, 1204-08 (Haw. App. 1997) (applying
collateral estoppel to a jury verdict finding the insured guilty
of attempted murder to prevent the relitigation of the insured’s
intent and thus concluding the insured’s actions were within an
intentional acts exclusion).
The underlying complaint in this case, however, asserts
that Jefferson entered a plea of not guilty to a charge of
assaulting Leif Martin and that a jury found him guilty of two
counts of Assault in the Third Degree and one count of
Terroristic Threatening in the Second Degree.
¶ 10.
Underlying Compl.
The underlying complaint further states that “[t]he
criminal action arose from the same conduct of the Defendant that
is the basis of Plaintiffs’ complaint for damages in this
action.”
Id. (emphasis added).
Attached to the underlying
complaint was the jury verdict against Jefferson.
at 8-12.
21
Id. at Ex. 2,
Thus, because the underlying complaint states that the
basis of the Martins’ complaint arose from the same conduct that
Jefferson’s criminal conviction was based on, the Martins’ claims
are unambiguously based on Jefferson’s criminal acts.
This
situation is the type that the Hawaii Supreme Court warned about
in Dairy Road, i.e., an attempt by plaintiff to create Allstate’s
duty to defend by artful pleading.
112.
See Dairy Road, 992 P.2d at
The Supreme Court explained that “when the facts alleged in
the underlying complaint unambiguously exclude the possibility of
coverage, conclusory assertions contained in the complaint
regarding the legal significance of those facts . . . are
insufficient to trigger the insurer’s duty to defend.”
Id.
Here, the underlying facts supporting the Martins’
negligence claim are Jefferson’s criminal actions.
Consequently,
Jefferson’s conduct, as alleged in the complaint, falls within
the criminal acts exclusion and Allstate has no duty to defend.
III. Defendants’ Counterclaim
On February 17, 2011, Defendants filed a counterclaim
against Allstate.
Doc. No. 7.
The Counterclaim seeks a
declaration that Allstate has a duty to defend the Scotts in the
underlying action.
The granting of Allstate’s Motion for Summary
Judgment renders the issues raised by Defendants’ Counterclaim
moot.
The Counterclaim is thus DISMISSED AS MOOT.
CONCLUSION
For the foregoing reasons, the Court GRANTS Allstate’s
Motion for Summary Judgment as against both Kevin and Jefferson
22
Scott, DENIES the Scotts’ request for a stay, and DISMISSES the
Scotts’ Counterclaim as moot.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, April 3, 2012.
________________________________
Alan C. Kay
Sr. United States District Judge
Allstate Insurance Co. v. Jefferson J. Scott, et al., Civ. No. 11-00036
ACK-KSC: Order Granting Plaintiff’s Motion for Summary Judgment, Denying
Defendants’ request for a stay, and Dismissing Defendants’ Counterclaim as
Moot.
23
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