Unpublished Disposition, 895 F.2d 1418 (9th Cir. 1990)

MEMORANDUM^* 

O'Connell obtained a default judgment in a state court action against Evans for personal injuries. Ranger had issued a policy of insurance to Evans and brought this declaratory judgment action to determine coverage. The district court granted summary judgment, denying coverage. O'Connell timely appealed. Because the resolution of material questions of fact is required to determine liability under the policy, we reverse.

O'Connell's injury occurred when he was shot by Evans. Evans' motive is unclear and O'Connell believes Evans may have been temporarily insane. Evans' insurance policy excludes coverage for "any loss caused or alleged to have been caused by an assault, provoked or unprovoked."¹  Citing this exclusion, Ranger moved for summary judgment.

The district court first denied summary judgment because under Arizona law, intentional act exclusions do not apply if the insured lacked the mental capacity to form intent.²  The court assumed intent was an element of assault and held that the defense could apply to this assault exclusion. After additional briefing, however, the court determined that intent was not an element of the lay definition of "assault" and granted summary judgment. It also held that since Evans was indicted by a grand jury, assault had been "alleged," invoking the exclusion in any event. O'Connell challenges both holdings of the second ruling.

We review a district court's grant of summary judgment de novo. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 629 (9th Cir. 1987). Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); T.W. Elec. Serv., 809 F.2d at 630.

O'Connell first argues that Arizona courts would hold as a matter of law that intent is an element of assault and therefore is an element of an assault exclusion. We agree.

Intent is an element of the tort of assault under Arizona law. Garcia v. United States, 826 F.2d 806, 809 n. 9 (9th Cir. 1987). In construing insurance policies, Arizona courts have cited with approval authorities stating that intent is required for assault. See Transamerica Ins. Group v. Meere, 143 Ariz. 351, 694 P.2d 181, 189 (1984) (en banc). Intent is also accepted by other jurisdictions as an element of assault exclusions. See Monk v. Veillon, 312 So. 2d 377, 380 (La.App.1975) ("historic distinction between assault ... and negligence" is that "former is intentional; the latter is unintentional"); Paul v. Montesino, 535 So. 2d 6, 7 (La.App.1988) (assault exclusion invoked by "the intentional use of force and/or violence" on another). We conclude that Arizona courts would hold as a matter of law that intent is an element of an assault exclusion.

O'Connell next argues that Arizona courts would apply the insanity defense to an assault exclusion. Again we agree.

Arizona courts have consistently held that for insurance purposes, intentional acts require mental capacity. See Globe American Casualty Co. v. Lyons, 131 Ariz. 337, 641 P.2d 251, 253 (Ariz.App.1982); Transamerica, 694 P.2d at 189. Non-accidental acts, such as deliberately driving a car head-on into another vehicle, are therefore not "intentional," so long as intent to cause harm is lacking. Id. at 253.

Even if "intent to cause harm" differs from the intent required in a tort action, see Transamerica, 694 P.2d at 189, we believe Arizona courts would allow the defense in an action construing an assault exclusion in an insurance contract. Under Arizona law, an actor is incapable of "wrongful intent" if he is incapable of reason. Id.; Globe, 641 P.2d at 253. Arizona courts have extended this principle to other contexts, so that acts of self-defense, because provoked, are also considered "unintentional." Transamerica, 694 P.2d at 188.

In addition, Arizona courts have instructed that in construing an insurance contract, the reach of an exclusionary clause must be determined by examining the purpose of the exclusion and public policy considerations. Transamerica, 694 P.2d at 185. The language of this policy, excluding assaults "provoked or unprovoked," is manifestly designed to avoid the rule of Transamerica that "provoked" assaults in self defense are not "intentional." Id. at 188. That purpose remains unaffected if the insanity defense applies here.

Public policy considerations articulated by Arizona courts in other contexts also support application of the defense here. Arizona courts have stressed that exclusionary clauses are to be strictly construed against the insurer. Id.³  Arizona courts have also stated that the goal of insurance law is to cover only risks that are outside the control of the insured and to prevent individuals from benefiting financially from deliberate injury. Id. at 185. An insane person is incapable of deliberate action and will not be deterred by any exclusionary clause, whether an assault or an intentional act exclusion. Globe, 641 P.2d at 254.

We conclude that Arizona courts would hold as a matter of law that intent is an element of an assault exclusion and the insanity defense articulated in Globe is applicable to this policy.

O'Connell next argues that the criminal indictment does not automatically invoke the exclusion. He contends that the exact language of the policy excludes only a "loss caused or alleged to have been caused by an assault," yet the indictment alleges neither loss nor causation. Because O'Connell's complaint asserts the affirmative defense of insanity, it affirmatively alleges that Evans' act was not assault. In short, no one has "alleged" that a "loss" was "caused" by an "assault."

Other jurisdictions have held that the presence of a justification does not change the nature of the act which forms the basis of a claim. See Duplechain v. Turner, 444 So. 2d 1322 (La.App.1984) (justification of self defense irrelevant to fact of underlying intentional battery). Courts will also look past the complaint to examine the underlying act. See Ross v. City of Minneapolis, 408 N.W.2d 910 (Minn.App.1987) (beating constitutes assault despite allegation of negligence).

However, Arizona courts have held that an insane person cannot commit an intentional act. See Globe, 641 P.2d at 253-54. We conclude that the potential insanity defense makes the nature of Evans' act for the purposes of this exclusion a question of fact. We therefore hold that whether or not Evans' act was an assault for the purposes of this exclusion is a material question of fact that precludes summary judgment.

Ranger also presents two arguments that we reject. First, Ranger argues that by pleading guilty, Evans admitted all the necessary elements of assault, including intent. Ranger relies on Ivers v. United States, 581 F.2d 1362 (9th Cir. 1978). However, the Ivers court examined additional evidence and found that together the facts supported the plea. Id. at 1367. Failure to raise an insanity defense presents a different issue. First, the criminal standards of insanity do not apply to insurance cases. Globe, 641 P.2d at 254. In addition, because the burden of proof in a criminal suit exceeds that of a civil suit, a defendant may be motivated to enter a plea despite a potential defense. State v. Coconino County Superior Ct. Div. II, 139 Ariz. 422, 678 P.2d 1386, 1390 (Ariz.1984) (en banc). We agree with the district court that such a plea can be used as evidence only. Kelch v. Courson, 103 Ariz. 576, 447 P.2d 550, 553 (1968) (en banc).

Ranger next argues that lay evidence of Evans' mental state is not sufficient to establish a material issue of fact unless it is corroborated by expert testimony. However, the cases Ranger relies on discuss the weight lay testimony must be given toward establishing insanity at trial, not summary judgment. See State v. Overton, 114 Ariz. 553, 562 P.2d 726 (1977) (en banc); Globe, 641 P.2d at 255. In addition, the Globe court rejected the testimony of lay persons who had known the plaintiff for less than a day, but noted that testimony would be admissible from persons who knew the plaintiff "intimately." O'Connell contends that the two men worked closely together for several months and owned neighboring businesses. This greatly exceeds the short exposure at issue in Globe.

Finally, both parties request attorneys' fees under Ariz.Rev.Stat. Sec. 12-341.01. We decline consideration of such an award because our decision is not a final resolution of this case.

We hold that, under Arizona law, intent is an element of an assault exclusion and the Globe defense is available to the assault exclusion in this insurance contract. Material issues of fact remain regarding the nature of Evans' underlying act. Accordingly, we reverse the district court's grant of summary judgment.

REVERSED.