No Coverage under Homeowner's Policy for Lethal Punch of Minor
In Estate of Sustache v. American Family Mut. Ins. Co., 2008 WL 2680443 (Wis., 2008), the question for the Wisconsin Supreme Court was whether an insurer has a duty to defend an insured, under the liability coverage provisions of a homeowner's insurance policy, when the insured “without warning or provocation, punched decedent out, causing him to fall into a curb thereby causing serious injuries and ultimately death,” leading to a count of “battery … by intentionally causing bodily harm … thereby causing decedent's death.”
James Sustache died from injuries sustained after an altercation at an underage drinking party hosted by Carrie Roman and her minor son, Anthony Fuller. Jeffrey Matthews, the youth who struck Sustache, came to the home after a number of those attending the party called his cell phone and goaded him into coming to the party to fight Sustache. During this altercation, Jeffrey punched Sustache in the face, causing him to fall to the curb and sustain severe injuries that ultimately led to his death. There was no dispute that Jeffrey intended to strike Sustache or that Jeffrey did not intend the blow to be fatal.
Sustache's estate and his parents sued Jeffrey, the Mathewses, Roman, and American Family, which had issued separate homeowner's insurance policies to Roman and Mathews.
Although the plaintiffs' opening complaint did not identify American Family as the Mathewses' insurer, American Family provided a defense under a reservation of rights. The assigned attorney denied all allegations against the Mathewses and affirmatively defended, in part, on the ground that Jeffrey acted in self-defense.
American Family moved for summary judgment on the grounds that its policy did not cover the plaintiffs' claims and that it had no duty to continue to defend the Mathewses because: (1) the plaintiffs' damages were not caused by an “occurrence” covered under the policy; (2) the policy expressly excluded coverage for punitive damages; (3) the policy expressly excluded coverage for imputed liability-such as vicarious liability under Wis. Stat. § 895.035-“which is otherwise excluded in th[e] policy”; and (4) the policy expressly excluded coverage for intentional injury. American Family asserted that the four-corners rule, which provided that an insurer's duty to defend was determined solely on the allegations in the complaint, not extrinsic facts, precluded any inquiry into Jeffrey's self-defense claim.
The Mathewses opposed American Family's motion by relying upon the court of appeals' opinion in Berg v. Fall, 138 Wis.2d (Wis.App., 1987), which carved out an exception to the four-corners rule in a situation where the insured's claim of self-defense renders an intentional acts exclusion ambiguous. American Family responded that Berg did not apply because the policy language at issue differed significantly from that in Berg. American Family also asserted that Berg contradicted the four-corners rule of earlier court decisions and that subsequent decisions had undermined its continuing validity.
While acknowledging the similarities between Berg and the case at bar, the circuit court concluded that the four-corners rule “has been well settled law in the State of Wisconsin for many decades.” The circuit court held that American Family had no duty to defend the Mathewses because coverage was excluded. The court granted summary judgment to American Family and dismissed the insurer from the plaintiffs' suit. The Mathewses appealed, contending that Jeffrey's affirmative defense of self-defense required the insurer to look beyond the four corners of the complaint to continue to provide a defense.
The court explained that in determining whether there is a duty to defend, it must consider whether the insuring agreement made an initial grant of coverage-i.e., whether the insurer had a duty to indemnify its insured-for the claims asserted. If it determined that the policy was not intended to cover the claims asserted, the inquiry ended.
In this case, the court stated, it was beyond the initial duty to defend stage of the proceedings. American Family had satisfied its duty to defend by providing the Mathewses with an attorney. It had then moved the court to stay the proceedings on liability so that it could contest the issue of coverage, moved for summary judgment and asked for a coverage hearing, and presented the court with affidavits that included more evidence than the insurance policies and the complaint; they included transcripts of the depositions of Jeffrey and Fuller.
The court explained that where the insurer had provided a defense to its insured, a party had provided extrinsic evidence to the court, and the court had focused in a coverage hearing on whether the insured's policy provides coverage for the plaintiff's claim, it could not be said that the proceedings were governed by the four-corners rule. The insurer's duty to continue to defend was contingent upon the court's determination that the insured had coverage if the plaintiff proved his case.
To court stated that to determine whether the policy provided coverage for the plaintiffs' claims, it had to consider whether the facts in the complaint alleged an “occurrence” covered under the policy.
The court explained that even if it we were to assume that Jeffrey was negligent in failing to ascertain whether it was Sustache who called him to propose a fight, Jeffrey's subsequent and separate volitional act of punching Sustache was inconsistent with the term “accident.”
Therefore, no reasonable person would regard the alleged intentional battery perpetrated by Jeffrey against Sustache as an “unexpected … event,” or an “unforeseen incident … characterized by a lack of intention,” or “an event … occurring by chance or arising from unknown or remote causes .” In addition, striking the words “without provocation” from the complaint would not alter the essence of the complaint: that Jeffrey intentionally caused bodily harm to Sustache. Accordingly, the court held that the Mathewses' policy did not cover the plaintiffs' claims because Jeffrey's actions were not accidental and, thus, did not give rise to an “occurrence.”
Since it concluded that the plaintiffs' suit did not give rise to coverage for Jeffrey's actions, the court explained that it did not need to consider the policy's intentional injury exclusion.
The language of the Mathewses' policy resolved the question of the duty to continue to defend once the question of coverage has been decided. The defense provision of the policy stated that defense counsel would be provided by American Family “[i]f a suit is brought against any insured for damages because of bodily injury or property damage caused by an occurrence to which this policy applies.”
Since the plaintiffs' suit was not brought against the Mathewses for damages “caused by an occurrence to which th[e] policy applies,” American Family had no duty to continue to defend.
Accordingly, the court affirmed the court of appeals decision to dismiss American Family with respect to the defense of the Mathewses.