Intentional Injury Exclusion for Use of

Date Rape Drug Not Illusory

 

Fire Ins. Exchange v. Sullivan, 2009 WL 1477715 (Colo.App.), arose out of an underlying civil action filed against William Sullivan by a woman who alleged that he used a date rape drug on her and sexually penetrated her against her will.

 

The victim asserted three claims for relief based on Sullivan's conduct—assault and battery, extreme and outrageous conduct, and invasion of privacy. With respect to the invasion of privacy claim, the victim specifically alleged Sullivan “intentionally invaded” her privacy through such conduct. It was undisputed that the addition of the invasion of privacy claim was intended to trigger insurance liability coverage.

 

At the time of the alleged incident, Sullivan was insured under a homeowner's insurance policy issued by Fire Insurance. The policy specifically excluded coverage for “bodily injury, property damage or personal injury which … is either caused intentionally by or at the direction of an insured; or … results from an occurrence caused by an intentional act of any insured where the results are reasonably foreseeable.”

 

Initially, Fire Insurance retained counsel for Sullivan in the underlying suit, under a reservation of rights. Prior to the trial in that action, Fire Insurance determined the victim's claims were not covered by Sullivan's policy, based primarily on the intentional acts exclusion, and it withdrew its defense. As a result, Sullivan retained the law firm initially retained by Fire Insurance to continue to represent him in the case.

 

At the conclusion of the underlying civil trial, a jury found in favor of the victim on all three claims and awarded damages on all three claims. Based on the jury award, Sullivan again requested that Fire Insurance indemnify him for the judgment and pay the fees and costs he incurred in defending himself against the claims. In response, Fire Insurance filed an action seeking a declaratory judgment that it had no duty to defend or indemnify Sullivan under the policy.

 

Sullivan and the victim then entered into a settlement agreement whereby Sullivan paid the victim toward the judgment and dismissed his appeal of that judgment. Sullivan also agreed to pursue counterclaims against Fire Insurance in the declaratory judgment action to collect the remainder of the judgment and agreed to assign any proceeds he collected on the counterclaims to the victim. In compliance with the agreement, Sullivan filed counterclaims against Fire Insurance for breach of contract and bad faith breach of insurance contract.

 

Fire Insurance filed a motion for summary judgment seeking a declaration that, as a matter of law, it had no duty to defend Sullivan. The district court granted summary judgment in favor of Fire Insurance and Fire Insurance filed a second motion for summary judgment on Sullivan's counterclaims, which the court also granted for the same reasons set forth in its earlier order.

 

In granting summary judgment for Fire Insurance, the district court relied on Fire Insurance. Exchange v. Bentley, 953 P.2d 1297 (Colo.App. 1998), where a division of the appeals court ruled in favor of Fire Insurance on very similar facts and virtually identical issues to those presented here.

 

Sullivan contended that Bentley should not control here because it was wrongly decided and that, contrary to Bentley, the court should conclude that Fire Insurance had a duty to defend him in the underlying civil action. Specifically, Sullivan contended the policy provisions that purported to extend coverage to claims for invasion of privacy, but excluded coverage for intentional conduct, were inconsistent, and therefore, the policy was ambiguous and should be construed to grant coverage to him. He also claimed that a contrary result would render coverage illusory and would be inconsistent with his reasonable expectations.

 

Contrary to Sullivan's contentions, the Colorado Court of Appeals concluded that Bentley was directly applicable here; that the division's opinion in Bentley was persuasive and dispositive of Sullivan's claims; and that, accordingly, the district court did not err in granting summary judgment for Fire Insurance.

 

The court explained that the rationale from Bentley that a policy covering invasion of privacy torts, but specifically excluding coverage for intentional acts was not inconsistent, and therefore, did not render the coverage illusory.

 

Furthermore, as in Bentley, the victim's underlying complaint here alleged only intentional conduct in the nature of unreasonable intrusion upon the seclusion of the victim. Regardless of how the claims were framed, the complaint was based on Sullivan's alleged intentional drugging and sexual assault of the victim. Thus, because the underlying complaint alleged only intentional conduct, coverage for such conduct was unambiguously excluded under the policy, and Fire Insurance did not have a duty to defend Sullivan against the victim's claims.

 

Sullivan also contended the court should decline to follow Bentley because the majority of other jurisdictions addressing similar coverage issues had concluded the insurer had a duty to defend. The appeals court disagreed, explaining that while courts in some jurisdictions had concluded policies seeming to provide coverage for a possibly intentional tort, yet excluding coverage for intentional conduct, were ambiguous, decisions in other jurisdictions were consistent with the result and reasoning in Bentley.

 

Moreover, as noted by Fire Insurance in its answer brief, the cases cited by Sullivan to support his contention that the court should decline to follow Bentley were all distinguishable for one or more reasons. Further, the court did not find the cases relied on by Sullivan convincing or persuasive.

 

The court explained that a better way to construe the policy was to assume the purchaser read the policy and recognized that it meant what it plainly said: coverage was available for invasions of privacy, bodily injuries, defamations of character, etc., except when they were committed intentionally; thus there was no coverage when the injury was “expected or intended.”

 

Also, the court stated it would not rewrite Sullivan's policy with Fire Insurance where the policy unambiguously excluded coverage for invasion of privacy based on intentional conduct.