Expected or Intended Harm II
Prof. Bill Long 3/28/05
Now that we have seen how expectation is "up for grabs," though there seems to be consensus that it ought not to provide an easy out for insurers to deny coverage, we are ready to understand the debate over "intended." It mirrors some of the discussion over "expected" in the previous essay, but because some courts have collapsed the terms, and some policies still only use the word "intended" harm, I need to say a word about the discussion.
Jerry's Categories
Robert Jerry (Understanding Insurance Law, 3rd Ed., 483) divides the approach to "intended" into three categories, which he calls the "minority view-negligence," the "majority view" and the "minority view-intention" approaches. Under the first view, the "classic tort doctrine of looking to the natural and probable consequences of the insured's act determines intent." This, of course, yields the narrowest coverage and most pro-insurer results. If the loss that results from the insured's acts is the natural and probable consequence of the act, under this theory the loss is intentional for purposes of the exclusion and there is no coverage.
The majority view requires that the insured must have intended both the act and to cause some kind of injury or damage. As with the debate over "expected harm," the intent to cause injury may be garnered from testimony about mental state as well as inferred from the nature of the act and the foreseeability that harm would result. Unlike Abraham's approach to expected harm, however, there is no requirement here that the harm be of the same type or magnitude as that intended.
Finally, the minority view-intent approach would only trigger the exclusion if the insured had the specific intent not only to injure but to cause the particular type of injury that developed. This is the most pro-insured approach to the question.
A Case Study
The MN case of Farmers Insurance v. Hastings (358 NW2d 473 (Minn. App 1984), rev'd, 366 NW2d 293 (Minn 1985)) provides a window into examining these approaches. Kenyon, who was the insured, and his friend Hastings were at a party. A fight almost broke out when someone passed an offensive rumor about Hastings. Kenyon interceded to keep a fight from happening. As Hastings and Kenyon then decided to walk away from the party, Kenyon grabbed his friend, pummeled him, struck him in the face, permanently injuring Hastings' eyes. The ultimate question was to be whether the insurer was on the hook for these damages or whether coverage was excluded by the "expected or intended harm" exclusion.
The trial court found there to be no coverage, but the Ct of App reversed. It admitted that under the "minority rule--negligence" that the insurer would not have to pay. However, under the majority rule, things were not as clear. The court felt that it was not obvious that Kenyon intended to injure his friend. After all, they were good friends and there was no indication of prior conflict between them. Because of the recently averted fight, the court concluded that Kenyon's anger was reflexive in nature, that no injury was intended and that the exclusion should not apply.
On further review, however, the MN Supreme Court reversed the Ct of App, concluding that the trial court's judgment that Kenyon intended to injure Hastings was not clearly erroneous. Though the court didn't go through the three approaches systematically laid out above, it did say that "intent to injure may be inferred from the character of the act or established by proof of an actual intent to injure....here the character of the act showed that Kenyon did in fact intend to hit and injure Hastings." 366 NW2d at 294. Thus, the Supreme Court held that the exclusion applied.
Other Difficult Issues
The biggest issue in insurance law these days with respect to this exclusion is whether an insurance company is on the hook for priest sexual abuse of children when the named insured of the policy is the Diocese. Case law has made it pretty clear that if the policy is in the name of the individual charged with the abuse, then there is no coverage. Sexual abuse of children has universally been held to be intentional activity, even if the perpetrator argues that he held the belief that the child was not harmed or that the child might even be benefitted in some way.
However, when the policy is in the name of the supervising entity, like a Diocese, the analysis is not so easy. Should the provision of liabilty insurance to the insured for their negligence related to sexual abuse by others be deemed to violate public policy? One could argue, of course, that once a priest was on the "radar" screen of the Diocese by formerly abusive conduct that the Diocese would be charged with knowledge amounting to expectation or even intent with respect to the priest if it decided either to leave him in his parish or move him to another assignment where the risk of the same behavior was possible.
The most recent revisions of the CGL (not reflected in the book) and liabilty sections of Homeowner's Policies (in the book) would add an exclusion for liability "arising out of sexual molestation, corporal punishment or physical or mental abuse." However, almost all of the deeds being litigated now were done under previous policies which did not have such an explicit exclusion. You can bet that intense negotiations are going on with respect to the very issue of coverage in the hundreds of such high-profile cases across the country.
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