No Duty to Defend Where Underlying Complaints Allege Intentional Acts

 

In Adolph Coors Co. v. Truck Ins. Exchange, 2008 WL 4997865 (D.C), the insurer Truck Insurance Exchange (“TIE”) contracted to indemnify the insured, Adolph Coors Company and Coors Brewing Company (“Coors”) for damages the insured had to pay “because of bodily injury caused by an occurrence to which this insurance applies” during the policy coverage periods. TIE further contracted to defend Coors in any suit “seeking damages on account of such bodily injury, even if any of the allegations of the suit are groundless, false, or fraudulent.”

 

Subsequently, Coors and several other alcohol manufacturers became defendants in five putative class action lawsuits that included allegations of unfair business practices, unjust enrichment, negligence, civil conspiracy, and corrupt activity, all in connection with the marketing of alcoholic beverages to underage consumers.

 

TIE refused to defend Coors in the suits, and Coors filed suit against TIE for breach of the duty to defend. The superior court granted summary judgment to TIE, concluding that TIE had no duty to defend because it could not find that the lawsuits alleged damages that occurred as a result of bodily harm.

 

The insured appealed, and the District of Columbia Court of Appeals affirmed, holding that 1) the law of Colorado applied in the suit to determine when the insurer had a duty to defend the insured, and 2) under Colorado law, the insurer had no duty to defend the insured.

 

In its decision, the court, applying the governmental interest test, agreed with the trial court that Colorado law should govern because the insured was incorporated and had its principal place of business in Colorado, the insurer was incorporated and headquartered in California, and lacked any relevant relationship with the District of Columbia, and the correspondence between the parties indicated that Colorado was where they negotiated and finalized the insurance contract and performed their contractual obligations.

In addition, under Colorado law, TIE had no duty to defend Coors in the lawsuits because these complaints alleged and sought relief on account of injury that resulted from Coors' intentional commission of harmful acts. Under the insurance contract, the court explained, TIE had a duty to defend only if the underlying complaints could be read to allege that, through its acts or omissions, Coors caused bodily injury that was both unintentional and unexpected. And, there was no distinction between the desire to engage in activity that was harmful and the desire to actually cause harm.

Finally, the court stated that psychological harm was not “bodily injury” when there is no physical impact, fear of physical harm, or physical manifestation of emotional distress, and the parties had focused their disagreement on whether the underlying complaints sought damages on account of bodily injury.

According to the court, the complaints alleged that Coors knew that underage drinking and its accompanying dangers “would flow directly and immediately” from its actions. However, whether Coors maliciously wished harm upon underage consumers or whether the underlying complaints accused it of such malice was irrelevant.

 

Because the underlying complaints alleged and sought relief on account of injury that resulted from Coors' intentional commission of harmful acts, the court held that they did not trigger TIE's duty to defend.