No Homeowner Liability Coverage for an Insured’s ‘Negligent’ Assault, Even if Insured Was Intoxicated

Nicholas Fiocchi sued Ronald Zatyco for assaulting him after a verbal argument between them at a bar earlier the same evening. Fiocchi’s complaint in Pennsylvania state court attempted by artful pleading to capture Zatyco’s parents’ homeowners coverage, alleging that the assault was made “negligently” and “without provocation,” but offering no other factual detail. In fact, the complaint was limited to just four paragraphs and, significantly, did not allege that Zatyco consumed any alcohol, was intoxicated or in any way cognitively impaired at the time of the assault.

Zatyco asked his parents’ homeowners insurer, Nationwide Property & Casualty, to defend and indemnify him against Fiocchi’s claim. Nationwide defended Zatyco under a reservation of rights but refused to agree to indemnify him. Instead, Nationwide brought its own lawsuit against Zatyco in Pennsylvania federal court to support a denial of all coverage for the claim.

Applying Pennsylvania law, a U.S. district judge for the Eastern District of Pennsylvania on December 20, 2016 granted Nationwide summary judgment on coverage in a decision entitled Nationwide Property & Casualty Insurance Company v. Zatyco, reported at 2016 U. S. Dist. LEXIS 176004.

Whether an insured is covered for liability claims, the court said, is generally determined by comparing the factual allegations of the complaint against him to the language of the subject policy. Since the court’s analysis is based on the indisputable wording of these two documents, this approach frequently makes such a case ripe for summary judgment – a decision without trial.

The court said:

“[A]n insurer’s duty to defend an action against the insured is measured, in the first instance, by the allegations in the plaintiff’s pleadings…. In determining the duty to defend, the complaint claiming damages must be compared to the policy and a determination made as to whether, if the allegations are sustained, the insurer would be required to pay [the] resulting judgment…. [T]he language of the policy and the allegations of the complaint must be construed together to determine the insurer’s obligation.”

The key policy language of this case consisted of the policy definition of the term “occurrence” and the liability exclusions of the policy negating coverage for intentional conduct. The policy defined the term “occurrence” to mean bodily injury or property damage resulting from an accident during the policy period. The policy excluded liability coverage for bodily injury or property damage caused by an act of the insured intending to cause harm, or caused by an act or omission that was criminal in nature and committed by an insured.

In order to determine whether Nationwide owed Zatyco a duty to defend and/or indemnify him in the suit brought by Fiocchi, the allegations in the complaint in that case must be examined and compared to the policy wording.

Since the insurer’s duty to defend the insured is broader than its duty to indemnify him or her, if the operative complaint alleges an injury that may be within the scope of coverage, the insurer must defend the insured until the claim is confined to a recovery that the policy does not cover.

In order to prevent “artful pleading” from creating coverage where none was intended by the parties, a court must look at the factual allegations of the injured party’s complaint, not the title of the cause of action he or she pleads, nor how he or she frames the request for relief. Thus, the “mere allegation of ‘negligence’ in a complaint is insufficient to trigger an insurer’s duty to defend,” the court said. Even the duty to defend is properly denied where the allegations fall within a clear and unambiguous exclusion of coverage.

Applying these rules to the case at hand, the court upheld Nationwide’s position that it owed no duty to defend Zatyco because the facts alleged by him did not plead a claim that satisfied the policy definition of a covered “occurrence,” and in fact pleaded a claim falling squarely within the clear policy exclusion for intentional and/or criminal conduct by an insured. Specifically, in a an argument adopted by the court, Nationwide contended that the facts pleaded by Fiocci supported a conclusion that he was injured by an intentional assault by Zatyco, an incident that was no accident and therefore did not fall within the policy definition of “occurrence.” The conduct alleged, furthermore, was expressly excluded by the clear language of the intentional act policy exclusion.

As for the allegation of “negligence” by Fiocci, the court noted that Fiocci “baldly alleges that he was ‘negligently’ assaulted by Zatyco,” but his complaint was “conspicuously void” of any facts supporting the allegation of a “negligent” assault, other than that the assault occurred sometime after Zatyco had had a verbal argument with Fiocci earlier that evening inside a bar. Absent facts indicating negligence, the court noted, under Pennsylvania law assault is considered an intentional tort, is not an “accident,” and therefore is excluded from Nationwide’s insurance coverage.

Zatyco urged the court to defer ruling on coverage until final resolution of the injury lawsuit which, he claimed, might reveal that Zatyco’s conduct was not intentional but was due to his “potential” intoxication at the time of the incident. The court noted that there are court decisions holding that an insured’s apparent intentional conduct may be overcome by an allegation of intoxication, but found those cases to be irrelevant to this matter because Fiocci’s complaint in the injury lawsuit contained no allegation of the insured’s intoxication.

The court noted that a similar argument was addressed by the Third Circuit U.S. Court of Appeals in 2009. In that case an insured’s estate sought defense and indemnification under its decedent’s homeowner’s policy for a state court action brought against the estate for injuries suffered by a plaintiff as a result of the insured’s conduct before he died.

In a declaratory judgment action by the insurer contending it did not have a duty to defend the insured, the court noted that the injury lawsuit against the insured alleged that the insured consumed numerous alcoholic beverages within a short period of time and that he became visibly intoxicated and cognitively impaired. In that physical state, the insured pointed a loaded gun at the injury case plaintiff several times and pulled the trigger but the gun misfired each time. After an unsuccessful attempt by the police to negotiate the insured’s surrender the insured took his own life with the gun.

At the time of the incident the insured had a blood alcohol level that was above the legal limit. The threatened party asserted claims against the estate of the deceased insured for intentional infliction of emotional distress, negligent infliction of emotional distress, assault with a firearm and negligence.

Even under these extreme facts, more favorable to coverage, the Third Circuit held that the insurer had no duty to defend, because Pennsylvania law does not permit an insured to shift to his insurer responsibility for damages resulting from this type of behavior.

The crux of the Third Circuit decision was that “‘voluntary intoxication ordinarily will not prevent the formation of the general intent necessary for the commission of an assault of the kind that [the injured party] alleges to have suffered.'”

Unlike the Third Circuit decision, which actually alleged the insured’s excessive consumption of alcohol, the complaint in the subject case was completely silent with respect to alcohol use and/or intoxication of Zatyco. The court noted the complaint in the subject case did not contain any allegations that Zatyco was in the midst of an alcoholic blackout, or lost awareness of his actions. Zatyco’s actions, as alleged in the injury lawsuit, cannot reasonably be characterized as anything other than intentional conduct. It was not an accident, and the intentional conduct triggered the exclusion for intentional acts.