When the punishment fits the crime …
INSURANCE-RELATED COURT CASES
Digested from case reports published online
Seventeen-year-old Nicholas Sempf Nyren and his two minor-aged friends were hunting while using flashlights after lawful hunting hours.
Nicholas discharged a firearm across a field, causing injury to Dianna Sunday, who was walking along the tree line on the other side of the field after descending from her bow hunting tree stand at the end of hunting hours. The youths fled the scene without providing aid to Dianna. She was able to call a family member for help, but ultimately sustained significant permanent injuries.
Nicholas was later criminally charged with injury by negligent use of a weapon/explosive, a Class I felony. He pleaded guilty and was convicted of the crime.
The Sundays commenced a civil lawsuit against the youths, alleging that their negligence and concerted actions caused Dianna’s injuries. At the time of the incident, Nicholas was insured under his parents’ homeowners policies, which were issued by McMillan-Warner Mutual Insurance Company and Mt. Morris Mutual Insurance Company, respectively. Accordingly, the insurers were named as additional defendants in the lawsuit.
Both policies contained exclusions for bodily injuries resulting from the criminal acts of an insured. Based on this exclusion, Mt. Morris filed a motion seeking declaratory judgment that its policy provided no coverage for the claims at issue. McMillan-Warner filed a similar motion based on its exclusion.
The circuit court granted motions to bifurcate and stay the merits on the Sundays’ claims, pending the coverage determinations. After discovery the insurers sought summary judgment on the coverage issue based on each policy’s criminal acts exclusion, and each further argued that an exclusion for punitive damages also applied. The court granted summary judgment in favor of the insurers. The Sundays appealed.
On appeal, the Sundays did not challenge the punitive damages issue, and the appellate court declined to further address the issue.
The appellate court assumed without deciding that the policies provided an initial grant of coverage for the Sundays’ claims. Furthermore, the Sundays did not contend that the criminal acts exclusions differ substantively between the Mt. Morris and McMillan-Warner policies. The court declared that it consequently need only determine whether the exclusion for bodily injuries that are “the result of a criminal act of an insured” precludes coverage under the undisputed facts.
The Sundays argued that the phrase “criminal act” is ambiguous. They contended that most insureds would understand many behaviors to be criminal—such as murder, battery, and armed robbery. The Sundays nevertheless contended that reasonable insureds would not understand that Wisconsin law criminalizes “far more behaviors than the average person may consider.” According to the Sundays, a reasonable insured “does not know, let alone contemplate,” the Wisconsin Criminal Code and would not expect coverage to be excluded for negligent and reckless acts. Instead, the Sundays argued that reasonable insureds “think of homicide, sexual assault, battery, theft, etc.—the big ones,” as acts that would carry potential criminal charges and penalties.
The Sundays also contended that the use of the term “criminal” gives a layperson the impression that “criminal” implies “a wicked or heinous act.” Thus, the Sundays asserted that a reasonable insured would understand that the exclusion does not apply to every act that is technically classified as a crime, but only to “serious core criminal offenses.” The Sundays also stated that “it is questionable whether the purpose of the criminal acts exclusion is served by denying protection to an insured who was incapable of forming a criminal intention.” The Sundays claimed there was “nothing in the policy to alert a reasonable insured that a hunting accident involving ordinary negligence is excluded.”
At the outset, the appellate court affirmatively rejected any notion that the exclusion applies only to acts that require criminal intent. The exclusion does not distinguish between criminal acts that require a specific kind of criminal intent and those that do not. Indeed, the exclusion says nothing about the intent of the person who engages in the criminal act, and the phrase “criminal act” does not have any modifiers, such as “serious” or “intentional.” The circuit court held that the phrase “criminal act” plainly means any act that violates a provision of the criminal code. In fact, the Sundays’ argument that the exclusion applies only to “serious” crimes would itself create ambiguity, as reasonable insureds could dispute what crimes qualify as “serious.”
Moreover, “criminal” and “intentional” acts are enumerated as separate and distinct exclusions in the policies. The court also noted that if the criminal acts exclusion applied only to crimes with an intent element, the criminal acts exclusion would be swallowed by the intentional acts exclusion. A construction of an insurance policy that entirely neutralizes one provision should not be adopted if the contract is susceptible of another construction that gives effect to all of its provisions.
The court essentially agreed with the circuit court that public policy in this case requires that insurance companies not be allowed to provide coverage for damages related to an insured’s criminal acts. Applying the criminal acts exclusion in this instance is consistent with the public policy of deterring crime, as well as requiring an insured who commits a criminal act to bear the resulting financial responsibility for bodily injuries caused by the criminal act.
Even if the appellate court could agree with the Sundays that the criminal acts exclusion is ambiguous under the facts of the present case and that it applies only to “serious core criminal offenses,” the court said that a reasonable insured would understand that Nicholas’s acts undeniably constituted a serious crime.
Under these circumstances, the court properly concluded that there was no coverage under the policies for the claims in this case.
Sunday v. McMillan-Warner Mutual Insurance Company—Wisconsin Court of Appeals, District III—June 15, 2021—No. 2019CV141.
