Recently, the California Supreme Court in Delgado v. Interinsurance Exchange of the Automobile Club of Southern California (2009) 47 Cal.4th 302 ruled that an assertion of self defense by the insured does not convert an intentional attack into an “accident” for coverage under a liability policy. The court addressed whether a liability policy covering injury resulting from an “occurrence,” where occurrence is defined as an “accident,” is triggered where it was alleged that the insured’s conduct was an “accident” because either (1) from the injured party’s perspective, the insured’s acts were unexpected and unforeseen, or (2) the insured’s mistaken and unreasonable belief in the need for self defense converted the insured’s intentional and injurious act into an unintentional act.

California’s highest state court unanimously rejected both theories and held that (1) the determination of whether an act is an “accident” as defined in the policy should not be viewed from the perspective of the injured party, but rather from that of the insured/acting party, and (2) the insured’s unreasonable belief in the need for self defense does not turn the purposeful and intentional act of assault and battery into an “accident” within the policy’s coverage clause.

Background

Interinsurance Exchange of the Automobile Club of Southern California (“ACSC”) issued to Craig Reid a homeowner’s insurance policy providing liability coverage for up to $100,000. The policy provided liability coverage for bodily injury caused by an “occurrence.” An “occurrence” was defined as “an accident . . . which, during the policy period, results in bodily injury . . . .”

During the policy period, Reid repeatedly hit and kicked minor Jonathan Delgado, causing serious and permanent injuries. Delgado sued Reid for an intentional tort alleging that the attack was unprovoked and without justification and, in the alternative, alleged that Reid “negligently and unreasonably believed” he was engaging in self defense in attacking Delgado.

Reid tendered the defense of Delgado’s lawsuit to his insurer. ACSC denied coverage and refused to defend Reid on the ground that the alleged assault and battery, as set forth in the complaint, was not an “accident” and therefore not an “occurrence” under the policy.

Delgado subsequently dismissed the intentional tort claim and settled with Reid. The parties stipulated that Reid negligently believed he was acting in self defense and also stipulated to the entry of a $150,000 judgment. Reid paid $25,000 and assigned his claims against ACSC in exchange for a covenant not to execute on the rest of the judgment.

Delgado, the injured party, then sued ACSC, Reid’s insurer. At the trial court level, the insurer successfully demurred. In its first amended complaint, Delgado alleged that Reid’s actions were not “willful or malicious”, but overreactions to a perceived threat of harm and, thus, were an “accident” within the meaning of the insurance policy. ACSC successfully demurred again and no further leave to amend was granted because the court found the settlement and stipulated judgment between Reid and Delgado to be “contrived” to expose ACSC to liability and that it was “disingenuous at best” to characterize Reid’s assault and battery as an “accident.”

Delgado appealed and the California appellate court reversed, holding the first amended complaint alleged “nonintentional tortious conduct” that potentially was an “accident” covered by the policy.

Contentions

Before the California Supreme Court, Delgado asserted two main arguments in support of his position that the insurer had a duty to defend because the insured’s acts fell within the policy’s definition of “accident.” First, Delgado argued that any interpretation of the policy term “accident” should be based solely on whether the injury-causing event was expected or foreseen by the injured party. Stated another way, Reid’s acts were an “accident” because from the perspective of Delgado the assault was “unexpected, unforeseen, and undesigned.”

Second, Delgado argued that the insured’s mistaken and unreasonable belief in the need for self defense converts an intentional act into an unintentional act. In other words, Reid’s subjective belief in the need for self defense converted the assault and battery, an act that is purposeful and intended to cause injury, into an unintentional act and therefore is an “accident” within the policy’s coverage.

Holding

The California high court disagreed. In rejecting Delgado’s first argument, the court held that the injured party’s perspective is not taken into account when determining whether an event qualifies as an “accident.”1 The court reasoned that if Delgado’s argument was accepted, then any intentional act (even child molestation) would be rendered an “accident” simply because it was not foreseen by the injured party.

The court rejected Delgado’s second argument as nonsensical because “a purposeful and intentional act remains purposeful and intentional regardless of the reason or motivation for the act.” Additionally, the court explained that in prior insurance cases the courts have properly rejected the notion that an insured’s mistake of fact and law transforms knowingly and purposefully inflicted harm into an accidental injury.

Commentary

The Delgado decision is a reflection of the California Supreme Court’s ongoing efforts to both bar the availability of insurance coverage for an insured’s intentional acts as well as to have an insurance contract objectively interpreted as the actual contract it is, wherever possible.

Although insureds and their counsel have sought to avoid the application of long standing California law and public policy barring coverage for intentional acts, they have been met with little success as evidenced by the Court’s refusal to step away from California’s long standing law and policy. (See J. C. Penny Casualty Ins. Co. v. M.K. (1991) 52 Cal.3d 1009; Hogan v. Midland Nat’l Ins. Co. (1970) 3 Cal.3d 553; Quan v. Truck Ins. Exchange (1998) 67 Cal.App.4th 583; Cal. Ins. Code § 533). Perhaps of even broader significance and future application, the Court’s refusal to adopt a “subjective” interpretation of “accident” in the coverage provisions may be of use in those cases where the insured seeks to get out from under traditional contract interpretation by arguing that such provisions are interpreted more broadly. Importantly, the Delgado court expressly ties its holding to the policy’s coverage clause, in which case coverage for an “accident” was construed broadly, and not in the context of a policy’s exclusionary clause. The Supreme Court has now indicated that such “broader” interpretations does not include a subjective interpretation.