Mr. Bilyeu suffered broken ribs and a traumatic brain injury.

Cowgill notified his homeowner's insurance company, State Farm General Insurance Company, of the incident, reporting that Mr. Bilyeu was the aggressor and that Cowgill had “struck [him] in the face, knocking him to the ground, in defense of myself and my infant child.”

State Farm responded with a letter in which it “specifically reserve[d] its right to deny defense or indemnity” because there “may be a question whether [State Farm] is obligated to defend or indemnify” given the policy's limitation of coverage to “occurrence[s]” that were “accident[al]” and the policy's exclusion of “willful and malicious” conduct.

Based on the incident, local prosecutors charged Cowgill with the crimes of battery with serious bodily injury and with assault by means likely to cause great bodily injury. Consistent with his initial statement to police that he had struck Mr. Bilyeu in self-defense or in defense of his daughter, the judge instructed the jury that they could convict Cowgill only if they found that he had acted “willfully and unlawfully,” which required the jury to find that Cowgill had acted “willingly or on purpose” and “not … in self-defense or in defense of someone else.”

The jury convicted Cowgill on both counts, rejecting his claims of self-defense and defense of another.

Cowgill's convictions were affirmed on appeal. The appellate court concluded that “[t]here was substantial evidence from which the jury could reasonably infer that Cowgill's claim of [self-defense and defense of another] was false. The evidence showed extensive injuries to [Mr.] Bilyeu: a broken nose, a black left eye, a skull fracture on the left side of his head, abrasions on the right side of his forehead, abrasions to his neck, and broken ribs on his right side. A jury would have to suspend disbelief to conclude these injuries were caused by a single blow … and ensuing fall.”

Mr. Bilyeu asked State Farm to pay him the policy limits under Cowgill's policy. State Farm issued Bilyeu a check for $1,000 for medical expenses with the proviso that “[p]ayments made under the medical payments coverage [of Coverage M] are not an admission of liability.”

State Farm declined to pay Bilyeu the $100,000 policy limit under Coverage L, explaining to Cowgill that it still was investigating whether the claim was covered by Cowgill's policy.

Mr. Bilyeu and his wife sued Cowgill for damages on theories of negligence and negligent infliction of emotional distress. State Farm agreed to defend Cowgill against the Bilyeus' lawsuit, but reaffirmed that it was still reserving its right not to indemnify Cowgill for any damages verdict. Because State Farm was reserving its right not to indemnify him, it offered to fund Cowgill's retention of independent counsel as required by San Diego Federal Credit Union v. Cumis Ins. Society, Inc., 162 Cal.App.3d 358 (1984), but Cowgill waived his right to so-called “Cumis counsel” in writing. Before trial began, State Farm sent Cowgill a letter that for the third time expressly reserved its right not to indemnify him.

The matter proceeded to a jury trial. The judge instructed the jury on self-defense and defense of another. The jury rejected those defenses, found Cowgill liable under both theories, and awarded $14,191,527 in damages to Mr. Bilyeu and $3,000,000 in damages to his wife. The Bilyeus consented to a reduced damages award of $6,303,597.32 to Mr. Bilyeu and $1.25 million to his wife in lieu of a new trial, and an appellate court affirmed the verdict and reduced damages award.

After Cowgill's criminal conviction was upheld on appeal and became final, State Farm determined that Cowgill was not entitled to indemnity under his policy. Relying on Cowgill's admission that he had “struck” Mr. Bilyeu and the two juries' rejection of Cowgill's claim of self-defense and defense of another, State Farm explained that the Bilyeus' claim was not covered by the policy because it was not an “accident[al]” “occurrence” and because it was an excluded, “intentional” act.

Cowgill assigned his claim against State Farm to the Bilyeus, who sued State Farm.

The trial court granted State Farm's motion for summary judgment, and the Bilyeus appealed.

The State Farm Policy

Coverage L of the State Farm policy obligated State Farm to provide a legal defense to Cowgill and to indemnify him:

up to [the] limit of liability for the damages for which the insured is legally liable

[i]f a … suit is brought against an insured for damages because of bodily injury or property damage … caused by an occurrence

(Emphasis added.)

The policy defined:

occurrence

as:

an accident, including exposure to conditions, which results in … bodily injury.

(Emphasis added.)

Coverage M obligated State Farm to pay:

the necessary medical expenses incurred or medically ascertained within three years from the date of an accident causing bodily injury

but the policy separately noted that any such payment was:

not an admission of liability.

(Emphasis added.)

The policy excluded from Coverage L and Coverage M any:

bodily injury … which is either expected or intended by the insured; or … which is the result of willful and malicious acts of the insured.

The appellate court affirmed.

In its decision, the appellate court found that Cowgill's conduct was “not covered by the plain terms of his policy” because it was not an “accident.” The appellate court pointed out that Cowgill had admitted that he had done precisely what he had intended to do: He had struck Mr. Bilyeu in the face. “This act was intentional,” the appellate court said.

It added that although Cowgill asserted that he had acted in self-defense or in defense of his daughter, two juries – the criminal jury that heard the assault charges against him and the civil jury that awarded the Bilyeus millions of dollars – had specifically and necessarily found that Cowgill had not reasonably acted in self-defense. These jury findings were “binding,” the appellate court said.

The appellate court rejected the Bilyeus' argument that an insured's acts in self-defense – whether they were reasonable or unreasonable – were deemed not to be “intentional.” Instead, the appellate court stated that an insured's unreasonable acts of self-defense did not qualify as an “accident” (and thus an “occurrence”) under a policy's coverage clause.

The case is Bilyeu v. State Farm General Ins. Co., No. B262117 (Cal. Ct.App. Sep. 1, 2016). Attorneys involved include: Doumanian & Associates, Nancy P. Doumanian, for Plaintiffs and Appellants; LHB Pacific Law Partners, Clarke B. Holland, Brendan J. Fogarty and Jenny J. Chu, for Defendant and Respondent.