Insured's Intoxication Does Not Render an Intentional Act Accidental

In State Farm Fire & Casualty Co. v. The Estate of Thomas W. Mehlman, 2009 WL 4827027 [C.A.3 (Pa.)], the U.S. Court of Appeals, Third Circuit, addressed the issue of whether, for purposes of a liability insurance policy, a person's intentional act is rendered accidental because one commits the act while inebriated.

The insured, Mehlman, became intoxicated and walked to the home of his girlfriend, Phyllis Sauter, carrying a backpack containing a handgun. At the home he encountered her roommate, Iacono, who explained that Sauter was out of town. Mehlman became agitated and aggressive and tried to shoot Iacono. Mehlman's gun repeatedly misfired, but, after Iacono fled the house, Mehlman committed suicide.

State Farm had issued a homeowner's policy and an umbrella policy to Mehlman. The insuring agreement of the homeowner's policy provided coverage “if a claim is made or a suit is brought against an insured for damages because of bodily injury . . . caused by an occurrence.” The policy defined an “occurrence” as “an accident, including exposure conditions, which results in” bodily injury. The homeowner's policy excluded a bodily injury “(1) which is either expected or intended by the insured; or (2) which is the result of willful and malicious acts of the insured.”

The umbrella policy provided coverage where the insured is “legally obligated to pay damages for a loss.” The umbrella policy excluded coverage for personal injury “which is either expected or intended” by the insured, or which was a result of the insured's “willful and malicious act, no matter at whom the act was directed.”

Iacono brought suit against the Mehlman Estate, asserting claims for intentional infliction of emotional distress, negligent infliction of emotional distress, assault with a firearm, and negligence. The Mehlman Estate demanded defense and indemnification from State Farm pursuant to the policies. State Farm retained counsel to defend the Mehlman Estate, subject to a reservation of rights.

State Farm then brought a declaratory judgment action against the Mehlman Estate and Iacono to determine whether it owed a duty to defend or indemnify the Mehlman Estate in the underlying action. The district court granted State Farm summary judgment in part, concluding that State Farm did not have a duty to defend or indemnify the Mehlman Estate under the homeowner's policy because Iacono's injuries did not constitute “bodily injury” within the meaning of the policy. The district court, however, held that State Farm did have a duty to defend the Mehlman Estate under the umbrella policy, at least until the factual record could show that Mehlman's purported state of intoxication did not negate any intent on his part.

Appyling Penslycania law, the circuit court reversed, observing that both policies defined “occurrence” and “loss” as accidents. Therefore, the court explained, the dispositive question was whether Mehlman's actions constituted an accident. The court stated that the Pennsylvania Supreme Court had previously emphasized that the fortuity of the events in question was the key factor to consider in making the determination of what incident constituted an accident. And, that inquiry depended on two criteria: 1. the degree of foreseeability and 2. the state of mind of the actor in intending or not intending the result.

In addition, in determining whether Iacono's injuries resulted from an accident, the court explained that it must view the operative events from Mehlman's perspective, not Iacono's. Thus, the dispute centered on the question of whether Mehlman's intoxication might have rendered conduct accidental even though it otherwise would be regarded as intentional.

The court observed that, under Pennsylvania law, insurance was not available for losses that the insured intended or was aware were substantially certain to occur. Further, the mere fact that an insured was intoxicated would not prevent a court from finding that he intended the natural and probable consequences of his actions.

Thus, the court held that State Farm had no obligation to provide coverage for Iacono's lawsuit based on Mehlman's intentional conduct under the homeowner's or umbrella policy.

Editor's Note: Although the court made it clear that Pennsylvania courts would not lightly allow an insured to avoid the financial repercussions of an act of violence “by drinking himself into insurance coverage,” the court did note that situations could arise in which an insured's intoxication, particularly when combined with other factors, may call the insured's intent into question.