While making an arrested of the insured, a Marlborough police officer broke his ankle and was otherwise injured. The insured lived with his parents, who notified their homeowner's insurance carrier of potential claims by the officer and the Marlborough police department. In connection with the incident, the insured pleaded guilty to four counts of assault and battery on a public employee, one count of resisting arrest, one count of disorderly conduct, and one count of possession of cocaine. Subsequently, the officer filed a civil complaint against the insured in Superior Court, alleging that his negligent or reckless conduct in failing to obey a lawful order to submit to arrest caused the officer's injuries.
The carrier was aware that the suit was filed against its insured, but did not retain a defense attorney. Instead, it filed a declaratory judgment action seeking a judgment that it had no duty to indemnify the insured for the damages to the officer. The carrier also wrote to the insured disclaiming a duty to defend or indemnify. The insured defaulted in the underlying action and a judgment of approximately $95,000 was entered against him. He then counterclaimed in the declaratory judgment action, and filed a partial motion for summary judgment on the grounds that the carrier could not deny coverage under the "Intentional and Criminal Acts Exclusion" in the homeowner's policy, because the judgment against him was for negligence in tort, not intentional acts. The carrier cross-moved for summary judgment, asserting, among other things, that the officer's injuries resulted from the insured's intentional and criminal acts and were excluded from coverage. The Superior Court agreed with the carrier, concluding that "there can be no doubt" that the insured engaged in intentional and criminal acts, partly because he pleaded guilty to crimes that require a general intent.
Upon review, the Supreme Judicial Court disagreed. Noting that the carrier could have defended with a reservation of rights while determining its coverage obligations, the court observed that the officer brought a negligence claim supported by sufficient factual allegations, and that a finding of negligence is inconsistent with a finding of an intentional and criminal act. In order to avoid its duty to defend, the carrier would have had to "undisputedly demonstrate that [the insured's] acts fell within the exclusion for acts that were intentional and criminal. . . ."
Finding that if the carrier were in breach of its duty to defend when default judgment was entered, it would be bound by the judgment, the SJC remanded on that issue. If the insrued had gone to trial and been found guilty, the carrier would have no duty to defend. However, because he pled guilty, that plea is not necessarily conclusive as to the facts admitted, because prior case law has established that a plea may be offered as evidence of a defendant's guilt in subsequent civil litigation but it is not give preclusive effect. Thus, the plea was not sufficient evidence for the carrier to deny coverage based on the exclusion, and it had a duty to defend its insured until it could otherwise establish that the exclusion applied.
The opinion, Metropolitan Prop. & Cas. Ins. Co. v. Morrison, SJC-10858 (Mass. Aug. 11, 2011) can be found here by selecting "Supreme Judicial Court" and entering "08/11/2011" in the release date field.