Cooperative Fire Insurance Assn. of Vermont v. Bizon

Cooperative Fire Insurance Assoc. of VT v. Bizon  (95-214); 166 Vt. 326; 
693 A.2d 722

[Filed 28-Mar-1997]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 95-214


Cooperative Fire Insurance                        Supreme Court
Association of Vermont
                                                  On Appeal from
     v.                                           Addison Superior Court

Robert Bizon, James W. Ashcroft,                  March Term, 1996
Administrator of Estate of James R.
Ashcroft, James W. and Marta Ashcroft


Edward J. Cashman, J.

       Allan R. Keyes and Joseph H. Badgewick of Ryan Smith & Carbine, Ltd.,
  Rutland, for plaintiff-appellee

       James A. Dumont, Marybeth McCaffrey, and Sandra M. Lee and Mary Kay
  Lanthier, Law Clerks (On the Brief), of Keiner & Dumont, P.C., Middlebury,
  for defendants-appellants


PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


       DOOLEY, J.  This appeal arises from a declaratory judgment action
  brought by plaintiff Cooperative Fire Insurance Association of Vermont
  against its insured, Robert Bizon, to seek a determination that it did not
  have to defend or indemnify Bizon in a civil action over the shooting death
  of James R. Ashcroft on Bizon's property.  Cooperative Fire subsequently
  added by motion James W. Ashcroft (hereinafter defendant), as administrator
  of James R. Ashcroft's estate and his parent.(FN1)  James W. Ashcroft is
  plaintiff in the underlying tort action against Bizon. After a trial
  without jury, the trial court found that Cooperative Fire did not have the
  duty either to defend or indemnify Bizon against the underlying tort claim. 
  Only defendant James W. Ashcroft has appealed.  We affirm.

       The facts are as follows.  Bizon owns and manages a bar in the City of
  Rutland.  For

 

  a period of time, he regularly stored liquor supplies in his garage at his
  North Clarendon home. As a result of several burglaries of the supplies,
  Bizon's son installed a motion monitor so that movement within the garage
  would turn on a radio in Bizon's bedroom.  Bizon also installed flood
  lights to illuminate the garage area and kept a loaded .357 magnum handgun
  in the house to protect against burglars.  At some time prior to March 17,
  1991, Bizon stopped putting liquor in the storage building and placed a
  sign on the garage giving notice that all the liquor had been removed.  He
  left the garage door unlocked and the flood lights unlit, but activated the
  motion alarm and kept the loaded handgun in the kitchen near the rear door.

       In the early morning of March 17, 1991, the motion alarm awakened
  Bizon.  He immediately rose from bed, armed himself with the loaded gun to
  confront the burglars he suspected were in the garage, and turned on the
  flood lights.  He did not call the police.  He placed himself near the rear
  of a parked Ford truck in front of the garage door and ordered those inside
  to come out.

       As the first two persons came running out of the garage door, Bizon
  yelled to them to stop and fired a warning shot into the air.  The two
  figures continued running away.  A third person appeared; Bizon ordered him
  to stop, and then fired in the direction of the doorway. This third person,
  who was James R. Ashcroft, started to follow the first two individuals. 
  Bizon shot twice at him.  One of the bullets struck Ashcroft's right hip,
  severing major blood vessels in his legs.  A fourth person then appeared at
  the door and surrendered, crawling towards Bizon on his hands and knees.

       As Ashcroft lay on the ground bleeding to death, he said to Bizon,
  "I'm shot, you hit me."  Bizon replied, "I shot you once and I'll shoot you
  again if you don't tell me who your buddies were."  Then Bizon called to
  his girlfriend, watching from inside the house, to phone the police.  The
  police arrived about eight minutes after the call and thirteen minutes
  after the shooting incident.  Medical help arrived too late to save
  Ashcroft's life.

       At the criminal trial, a Rutland County jury acquitted Bizon of
  involuntary manslaughter

 

  in the killing of Ashcroft.  Meanwhile, Bizon filed for bankruptcy.

       The lawyer for Ashcroft's family and estate notified Bizon that he
  would pursue a damage claim, and Bizon notified Cooperative Fire, which
  brought a declaratory judgment action in the Addison Superior Court to
  determine whether it was obligated to defend or indemnify Bizon.  Shortly
  thereafter, the Ashcrofts brought a wrongful death action in Rutland
  Superior Court against Bizon, alleging three theories of negligence: (1)
  Bizon's recklessness or negligence led to the armed confrontation that
  resulted in the killing, (2) Bizon shot at Ashcroft in the negligent belief
  he had a right to self-defense, and (3) Bizon's negligent delay in
  obtaining medical aid for the injured youth caused an otherwise avoidable
  death.

       Cooperative Fire joined the Ashcrofts in its declaratory judgment
  action seeking an injunction against pursuit of the Rutland liability suit
  while the coverage question was unresolved.  Both the declaratory judgment
  and wrongful death actions were delayed by the inability to obtain
  discovery from Bizon while his criminal case was pending and later by
  Bizon's bankruptcy filing.  The last barrier was removed when the
  bankruptcy court lifted its stay of the tort action to the extent of
  insurance coverage.  Although Cooperative Fire did not obtain an
  injunction, its action went forward first.

       At trial, plaintiff Cooperative Fire argued that the insurance policy
  contained exclusions from coverage claims for damages arising from the
  insured's intentional acts or from claims arising from the insured's
  business activities and that either or both of these exclusions applied to
  bar coverage of the Ashcrofts' civil suit.  Defendant Ashcroft denied that
  either exclusion applied because (1) Bizon acted involuntarily to fend off
  what appeared to be an unexpected attack on himself and his home, and (2)
  no business supplies were stored in the garage at the time of the incident. 
  Although Bizon did not actively participate in the trial, he supported
  plaintiff's position that the policy exclusions applied.

       The trial court held that the business exclusion did not apply because
  Bizon was not using the garage for business purposes at the time of the
  incident.  It held that the intentional acts

 

  exclusion applied because "Mr. Bizon deliberately fired the hand gun at Mr.
  Ashcroft several times for the purpose of hitting him with the bullet." 
  The court concluded that Cooperative Fire did not have to defend or
  indemnify Bizon against the Ashcroft claim.

       On appeal, defendant focuses exclusively on his claim that Bizon was
  negligent in shooting Ashcroft.  He contends that the trial court erred in
  finding the intentional act exclusion applied without finding that Bizon
  had the subjective intent to harm Ashcroft.  Plaintiff first challenges
  defendant's standing to appeal.(FN2)   On the merits, plaintiff argues that
  the court's finding that Bizon intended to shoot Ashcroft was sufficient to
  invoke the intentional act exclusion, without a finding that Bizon intended
  to harm Ashcroft.  Alternatively, plaintiff argues that coverage should be
  denied because the killing was not an "accident" as required for coverage
  under the policy.

       We turn first to the issue of standing.(FN3)   We note that this is a
  declaratory judgment action and in such an action "all persons shall be
  made parties who have or claim any interest which would be affected by the
  declaration, and no declaration shall prejudice the rights of persons not
  parties to the proceeding."  12 V.S.A. § 4721.  We also note that
  Cooperative Fire made defendant a party, initially so that it could seek a
  restraining order against defendant's prosecution of the wrongful death
  suit, but thereafter defendant participated as the only party opposing
  plaintiff's claim.  Further, we note that Bizon's bankruptcy action meant
  that the only method defendant had of collecting a judgment was from
  plaintiff, and that the Legislature has specifically authorized suits
  against insurance carriers to collect in such situations.  See 8 V.S.A.

 

  § 4203(3).

       We have no difficulty in holding that defendant has standing to appeal
  in these circumstances.  Ordinarily, a party may appeal if the party has
  some legal interest which may be, by the judgment appealed from, either
  enlarged or diminished.  See In re Estate of Walsh, 133 Vt. 429, 430, 341 A.2d 706, 706 (1975); see also In re M.C., 156 Vt. 642, 642, 590 A.2d 882,
  882 (1991) (party must be "aggrieved" by decision in order to appeal). 
  Generally, an intervenor, or third party, may appeal, by virtue of the
  party status, any issue on which the party is aggrieved.  See State v.
  Schaefer, 157 Vt. 339, 344, 599 A.2d 337, 341 (1991), cert. denied, 502 U.S. 1077 (1992).

       The purpose of a declaratory judgment is "to declare rights, status
  and other legal relations whether or not further relief is or could be
  claimed."  12 V.S.A. § 4711.  Thus, "[a] person interested under a . . .
  written contract . . . may have determined any question of construction . .
  . arising under the . . . contract . . . and obtain a declaration of
  rights, status or other legal relations thereunder."  Id. § 4712.  The
  Declaratory Judgment Act is a remedial statute that must be construed
  liberally to effectuate its purpose.  See Poulin v. Town of Danville, 128
  Vt. 161, 163, 260 A.2d 208, 209 (1969).  The Act "opened . . . to
  plaintiffs at an early stage of the controversy a right to petition for
  relief not heretofore possessed."  Gifford Memorial Hosp. v. Town of
  Randolph, 119 Vt. 66, 70, 118 A.2d 480, 483 (1955).  A declaratory judgment
  will issue if it serves the useful purpose of clarifying the legal
  relations of the parties or terminating the insecurity and uncertainty of
  the controversy.  See Commercial Ins. Co. v. Papandrea, 121 Vt. 386, 392,
  159 A.2d 333, 337 (1960).

       Although we have never definitively determined the role of the
  tort-plaintiff in a declaratory judgment action over liability insurance
  coverage, the standard practice has been to join tort-plaintiffs as
  parties.  Indeed, we have considered numerous coverage disputes based on an
  appeal to this Court by the tort-plaintiff.  See, e.g., United States
  Fidelity & Guar. Co. v. Giroux, 129 Vt. 155, 156-57, 274 A.2d 487, 488-89
  (1971).  The inclusion of the tort-plaintiff

 

  is desirable because "`from a pragmatic viewpoint . . . the most real
  dispute is between the injured third party and the insurance company, not
  between the injured and an oftentimes impecunious insured.'"  Federal
  Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 354 (3rd Cir. 1986) (quoting 6A
  J. Moore et al., Moore's Federal Practice  57.19).

       A declaratory judgment proceeding was needed here because the question
  of insurance coverage would not be resolved by the tort action, and
  plaintiff would be in the position of defending the tort action while
  asserting that Bizon's actions were intentional.  See Orleans Village v.
  Union Mut. Fire Ins. Co., 133 Vt. 217, 220, 335 A.2d 315, 317-18 (1975). 
  Indeed, one of the main advantages of proceeding by declaratory judgment is
  that it resolves the critical question of whether any judgment obtained in
  the tort action will be collectible and makes it likely that the tort
  action will either be settled or dismissed.  If defendant had not been a
  full party in the declaratory judgment action, however, he would not be
  bound by it.  12 V.S.A. § 4721.  Thus, he could obtain a judgment against
  Bizon and relitigate the question of coverage pursuant to 8 V.S.A. §
  4203(3).(FN4)   Consistent with the remedial purpose of the Declaratory
  Judgment Act, the only efficient course of action was to join the
  tort-plaintiff in the declaratory judgment action and give him full-party
  status.  Once he was joined as a party, his legal rights were determined by
  the declaratory judgment, and he could appeal because that judgment
  affected him adversely.

       Second, we address plaintiff's position that Bizon's shooting of
  Ashcroft may be excluded from coverage under either of two policy clauses. 
  At the time of Ashcroft's death, plaintiff insured Bizon under a
  homeowner's policy.  The relevant passages are as follows:

 

         DEFINITIONS
          . . . .

         11.  Occurrence means an accident.  This includes loss from
         repeated exposure to similar conditions.

          . . . .

         PRINCIPAL COVERAGES -- LIABILITY AND MEDICAL
         PAYMENTS TO OTHERS
         Coverage L -- Personal Liability -- We pay . . . all sums for
         which an insured is liable by law because of bodily injury or
         property damage caused by an occurrence to which this coverage
         applies.  We will defend a suit seeking damages if the suit resulted
         from  bodily injury or property damage not excluded under this
         coverage.

         . . . .

         EXCLUSIONS THAT APPLY TO COVERAGES L AND M
         This policy does not apply to liability which results directly or
         indirectly from:

         . . . .

         8.  an intentional act of an insured or an act done at the direction
         of an insured . . . .

  Plaintiff alleges that the shooting was an intentional act by Bizon and
  therefore was excluded from coverage.  In the alternative, plaintiff
  contends that the policy does not cover Bizon's actions because they did
  not involve an accident.  The trial court ruled that the intentional act
  exclusion applies.  We agree and do not reach plaintiff's alternative
  ground for affirmance.

       An insurance policy must be interpreted according to its terms and the
  evident intent of the parties as expressed in the policy language.  Select
  Design, Ltd. v. Union Mut. Fire Ins. Co., ___ Vt. ___, ___, 674 A.2d 798,
  800 (1996).  Any ambiguity in an insurance contract must be construed in
  favor of the insured.  Garneau v. Curtis & Bedell, Inc., 158 Vt. 363, 367,
  610 A.2d 132, 134 (1992).  Policies should be interpreted to favor complete
  coverage.  Gerrish Corp. v. Universal Underwriters Ins. Co., 947 F.2d 1023,
  1029-30 (2d Cir. 1991), cert. denied, 504 U.S. 973 (1992).  As long as the
  trial court's construction of the contract is reasonable, we

 

  will sustain it.  C.D. v. N.M., 160 Vt. 495, 501, 631 A.2d 848, 852 (1993). 
  Here, the court's construction is reasonable and well within the ambit of
  our case law.  See Espinet v. Horvath, 157 Vt. 257, 259, 597 A.2d 307, 309
  (1991) (insured must be taken to have intended injury where circumstances
  indicate he knew act would damage injured party); Wendell v. Union Mut.
  Fire Ins. Co., 123 Vt. 294, 297, 187 A.2d 331, 332 (1963) ("In its
  customary usage, intentionally means an act done with intention of purpose,
  designed and voluntary.").

       The trial court held that the exclusion applied if Bizon fired the gun
  at Ashcroft "with the intention of hitting him with the bullet," adding
  that it would make no difference that Bizon intended to wound but not kill
  Ashcroft.  Because the court found Bizon fired at the fleeing Ashcroft for
  the purpose of hitting him with a bullet, it concluded that the exclusion
  applied.

       Defendant argues that the phrase "intentional act of an insured" is
  ambiguous and, consistent with our rule that ambiguity should be resolved
  in favor of the insured, argues that the term should be construed to
  require that Bizon have the subjective intent to cause injury. We stress
  that the wording of the policy makes the exclusion applicable when the
  "act," not the injury, is intentional.  Moreover, defendant's distinction
  is unworkable in this context.  A person who deliberately fires a gun at
  another knows that it will inflict injury although the shooter cannot
  necessarily predict the extent of that injury.  In a conceptually similar
  context in City of Burlington v. National Union Fire Ins. Co., 163 Vt. 124,
  655 A.2d 719 (1994), we rejected a rule that would require coverage unless
  the court found that the insured intended the injury that resulted from the
  wrongful act.  In National Union, the insured city sought coverage for a
  suit filed against it arising out of its termination of a contract to buy
  wood chips for its electric plant, and argued that the injury to the wood
  chip suppliers was not intended.  We held there was no coverage:

     Burlington intended or expected economic injury to the wood chip
     suppliers when it reduced its purchases from them.

     The distinction Burlington draws is unworkable and would
     result in a duty to defend in virtually any commercial contractual

 

     dispute.  No doubt Burlington took the actions it did because of its
     economic interests in the electricity generation business.  There is
     no reason that it, or more properly its managers, would have
     precise knowledge of the amount or nature of the damage it might
     inflict on others as a consequence of its business actions.

  Id. at 129, 655 A.2d  at 722.  Under any common-sense definition, Bizon
  intended harm when he deliberately shot at Ashcroft.  See Nationwide Mut.
  Fire Ins. Co. v. Lajoie, 163 Vt. 619, 620, 661 A.2d 85, 85 (1995) (sexual
  abuse of minor involves intent to injure as matter of law).

       We have addressed defendant's argument in the past as an evidentiary
  matter.  Thus, we have allowed evidence of subjective intent in some cases,
  but only if the circumstances are "equivocal."  See, e.g., State v. Glens
  Falls Ins. Co., 137 Vt. 313, 317, 404 A.2d 101, 104 (1979).  These holdings
  necessarily mean where the circumstances are not equivocal, subjective
  intent is irrelevant.  The circumstances are not equivocal here.

       This result is not changed even if Bizon were found to have acted in
  self-defense.(FN5)   As we held in Espinet, 157 Vt. at 261, 597 A.2d  at 310,
  another case involving an intentional act policy exclusion:

     Though justified, an injury inflicted by an act taken in self-defense
     may be expected and/or intended.  To accept defendant's theory
     that injuries inflicted in the course of self-defense are included in
     coverage, we would be forced to read into the policy that only
     injuries inflicted wrongfully are excluded.  We may not read such
     a requirement into the contract.

  We agree with the Supreme Court of Florida, which recognized:

     The intent underlying an act of self-defense where the defender
     intends to harm the attacker is identical to that underlying an
     assault.  In each, the actor intends to inflict harm on the other. .
     . .  The difference between the two lies in the motive or purpose
     governing the act; the motive for one is worthy, that for the other
     is not.  Nevertheless, such acts of self-defense are undeniably
     intentional and have been held to be embraced within intentional
     act exclusions by a majority of courts.

  State Farm Fire & Casualty Co. v. Marshall, 554 So. 2d 504, 505 (Fla. 1989)
  (citation omitted);

 

  see also Century Mut. Ins. Co. v. Paddock, 425 N.W.2d 214, 217 (Mich. Ct.
  App. 1988) (insurer not obligated to pay damages for liability of insureds
  who allegedly kicked victims out of self-defense).  Bizon could have acted
  both intentionally and in self-defense.  His motive in shooting at Ashcroft
  is not determinative of insurance coverage.

       Nor do we find particular significance in the precise language used in
  the policy.  In Espinet, the policy excluded bodily injury that was
  "expected or intended by an insured," 157 Vt. at 259, 597 A.2d  at 308, and
  defendant stresses the breadth of that exclusionary language. We can
  conceive of circumstances that are expected, but not intended.  Based on
  the court's findings, such circumstances were not present here.

       Nor do we believe that the fact that defendant phrased his tort claim
  in terms of negligence is determinative.  The wording was clearly chosen to
  produce insurance coverage. See Lajoie, 163 Vt. at 620, 661 A.2d  at 86
  (drafting of complaint to state intentional torts in terms of negligence is
  disingenuous attempt to create duty on insurer to defend).  In the absence
  of this declaratory judgment to determine the true facts, the complaint
  drafting may have been sufficient to obligate plaintiff to defend the tort
  action.  See National Union, 163 Vt. at 127, 655 A.2d  at 721 (duty to
  defend is normally determined by comparing allegations in complaint to
  terms of coverage in insurance policy; if any claims are "potentially
  covered," there is duty to defend).  In this proceeding, we must look at
  the obligation to defend and indemnify in terms of the facts found by the
  trial court, and those facts show that the exclusion applies.

       Finally, we do not believe that our holding in Cooperative Fire Ins.
  Ass'n v. Combs, 162 Vt. 443, 648 A.2d 857 (1994), the principal case relied
  upon by defendant, changes the result. Combs held that as a matter of law
  an insane person is not capable of forming an intent to cause harm, id. at
  448, 648 A.2d  at 860, so an intentional act exclusion cannot apply to the
  act of an insane person.  We did not hold that the intent required to
  exclude coverage must be wrongful. Nor did we hold that subjective intent
  to injure, or to injure in a particular way, was required to invoke the
  exclusion.  Instead we noted that mental illness may impair a person's will
  and

 

  emotions so that he cannot control his actions even though he understands
  their consequences and is therefore deprived of the normal check against
  harmful conduct.  Id. at 447, 648 A.2d  at 859.  Thus, we viewed "intent" as
  a more complex concept than that sought by the insurance carrier and as not
  including harmful acts committed while insane.  Id. at 447-48, 648 A.2d  at
  860.  There is no indication that Bizon was insane at the time of the
  shooting.  In the absence of some evidence of impaired mental capacity or
  functioning,  Combs is not relevant to this case.

       We find no clear error was committed by the trial court in ruling that
  Cooperative Fire has no duty to defend or indemnify Bizon in the wrongful
  death suit brought by defendant.

       Affirmed.


                              FOR THE COURT:



                              _______________________________________
                              Associate Justice



  ----------------------------------------------------------------------------
                                  Footnotes




       FN1.  Marta Ashcroft, the mother of James R. Ashcroft, was also joined
  as a party defendant, but she has subsequently died.  James W. Ashcroft is
  also a party as administrator of her estate.

       FN2.  This argument was first raised by motion for summary affirmance. 
  This Court denied the motion, but stated that plaintiff's argument that
  defendant lacked standing to appeal would be considered with the merits of
  the appeal.

       FN3.  At oral argument Cooperative Fire waived the question of whether
  the Ashcrofts had standing to appeal the declaratory action.  We
  nonetheless address this issue because standing is a jurisdictional issue
  which cannot be conferred by agreement of the opposing party.  See Sevigny
  v. Home Builders Ass'n of Maine, 429 A.2d 197, 200 (Me. 1981) (Standing to
  appeal "cannot be conferred by agreement of the opposing party, any more
  than jurisdiction may be conferred upon a court by agreement.").

       FN4.  Plaintiff would have us read the statute and policy as giving
  the insured exclusive control over the coverage question with the power to
  waive coverage or agree that there is no coverage under the policy
  language.  In this case, this power would determine whether the insured is
  liable at all because under the bankruptcy order any liability is limited
  by the extent of insurance availability.  Plaintiff's interpretation would
  effectively nullify the direct-action statute in the case of a bankrupt
  tort-defendant, and we reject it.

       FN5.  We address this argument although the court's factual findings
  appear to be inconsistent with it.  The court found that Bizon shot at the
  "fleeing" Ashcroft.