Ms. Fuller sued Perez, seeking compensatory damages, punitive damages, and costs arising from injuries she sustained in the car accident.

Unique Insurance Company, which had issued an auto insurance policy to Perez, asked the U.S. District Court for the Middle District of Tennessee to declare that it had no obligation under the policy because Perez was an unlicensed driver and, therefore, not a covered person and because he was engaged in the criminal act of driving under the influence at the time of the accident.

The Unique Insurance Policy

The Unique insurance policy provided:

We will pay damages for bodily injury or property damage for which a Covered Person, as defined in this Part, becomes legally responsible because of an auto accident. We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. We will not pay damages for bodily injury or property damage caused by a Non-Covered Person, nor will we defend or pay any cost of defense.

The policy defined “Non-Covered Person” to include:

an operator of a vehicle who is an unlicensed driver.

The policy also provided:

We do not provide Liability Coverage for any person: …

9. For bodily injury or property damages which may reasonably be expected to result from the acts of an insured person, or from the criminal acts of an insured person, or which are, in fact, intended by an insured person to cause bodily injury or property damage. . . .

10. For the payment of punitive or exemplary damages, whether arising from or resulting from actual or alleged malicious, intentional, fraudulent or reckless conduct.

The District Court's Decision

The court granted Unique's motion.

In its decision, the court explained that the “undisputed evidence” established that Perez had been drinking alcohol before the accident, had failed several field sobriety tests, and ultimately had pled guilty to a criminal charge of driving under the influence. According to the court, there was “no evidence suggesting that the accident was caused by something other than his driving under the influence.” Accordingly, the court ruled, the policy exclusion for criminal conduct foreclosed coverage for the accident caused by Perez while intoxicated.

The court then pointed out that the policy also excluded payment of “punitive damages arising from or resulting from actual or alleged malicious, intentional, fraudulent or reckless conduct,” and it ruled that Perez did not have coverage under the policy for claims for punitive damages.

Given that it found that these two policy exclusions “conclusively” established that there was no coverage for Ms. Fuller's claims, the court concluded that it did not have to address whether Perez was not a “covered person” under the policy because he did not produce a driver's license at the time of the accident.

The case is Unique Ins. Co. v. Perez, No. 1:18-cv-00040 (M.D. Tenn. July 2, 2019).