Cooperative Fire Insurance Assn. v. Combs

COOPERATIVE_FIRE_INSURANCE_ASSN_V_COMBS.93-435; 162 Vt. 443; 648 A.2d 857

 Filed 05-Aug-1994

 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. 93-435


 Cooperative Fire Insurance Ass'n             Supreme Court

                                              On Appeal from
      v.                                      Franklin Superior Court

 Ronald Combs and Dudley F. Coy and           May Term, 1994
 Christine Weise, Co-Executors of
 the Estate of Lee Felch Coy


 David A. Jenkins, J.


 Charity A. Downs of Conley & Foote, Middlebury, for plaintiff-appellant

 A. Gregory Rainville of Franco & Rainville and Michael Rose (On the Brief),
    St. Albans, for intervenors-appellees Dudley F. Coy and Christine Weise,
    Co-Executors of the Estate of Lee Felch Coy



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


      GIBSON, J.   Plaintiff sought a declaratory judgment in superior court
 to determine its rights and duties in a wrongful death action brought
 against its insured, Ronald Combs, by the estate of Lee F. Coy.  The
 executors of the Coy estate intervened, and pursuant to stipulation, the
 superior court has certified to this Court a question regarding the coverage
 of plaintiff's policy for an intentional act committed when the actor is
 insane.
      Plaintiff Ronald Combs was charged with the shooting death of Lee Coy
 in June 1990.  He was determined by the court to be incompetent to stand
 trial, and at all subsequent reviews to date, he has been determined

 

 incompetent to stand trial.  For purposes of this proceeding, the parties
 have stipulated that Ronald Combs is insane and was insane on June 3, 1990,
 the day of the shooting.  He is presently hospitalized at the Vermont State
 Hospital in Waterbury.
      Plaintiff's insurance policy contains the following exclusionary
 clause:  "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 . . . ."  In accordance with the stipulation,
 the superior court has certified the following question to this Court:

           Under an insurance contract where there is an exclusion
           under the liability coverage for "liability which
           results directly or indirectly from an intentional act
           of an insured," is there coverage for an intentional act
           done by insured while insane or incompetent?
 The stipulation that Combs was insane renders the phrase "or incompetent"
 superfluous, and we will limit our review to acts done while an insured is
 insane.  See In re W.H., 144 Vt. 595, 600, 481 A.2d 22, 26 (1984) (overbroad
 certified question may be rephrased).  We answer the question in the
 affirmative.
      We have not previously considered this issue.  Other jurisdictions have
 considered the issue, however, and two distinct lines of cases have emerged.
 One view, advocated by the intervenors, is that an insane person cannot act
 intentionally as a matter of law.  See Globe Am. Cas. Co. v. Lyons, 641 P.2d 251, 254 (Ariz. Ct. App. 1981); Mangus v. Western Cas. & Sur. Co., 585 P.2d 304, 306 (Colo. Ct. App. 1978); Northland Ins. Co. v. Mautino, 433 So. 2d 1225, 1227 (Fla. Dist. Ct. App. 1983); von Dameck v. St. Paul Fire & Marine
 Ins. Co., 361 So. 2d 283, 288 (La. Ct. App.), cert. denied, 362 So. 2d 794
 and cert. denied 362 So. 2d 802 (1978); Ruvolo v. American Cas. Co., 189 A.2d 204, 209 (N.J. 1963); Nationwide Mut. Fire Ins. Co. v. Turner, 503 N.E.2d 212, 216-17 (Ohio Ct. App. 1986).  In addition to holding that intent
 can be imputed to rational persons only, these cases also point out that the
 justification for the exclusionary clause -- i.e., to deny financial benefit
 to those who intentionally cause injury -- does not exist where a person is
 unable to conform his behavior to normal standards and will not be
 influenced by a deterrent factor or financial disincentive.  See, e.g.,
 Globe, 641 P.2d  at 253-54.  Moreover, this view adheres to the rule of
 strictly construing exclusionary clauses against the insurer, see Ruvolo,
 180 A.2d  at 208, and reinforces a policy of narrow construction in order to
 serve the strong public interest of providing compensation for victims, see
 Congregation of Rodef Sholom v. American Motorists Ins. Co., 154 Cal. Rptr. 348, 352 (Cal. Ct. App. 1979).
      A second group of cases, which plaintiff insurance company espouses,
 holds that so long as there is evidence that the insured understood the
 physical nature and consequences of his action, he is capable of intent even
 though he may not be capable of distinguishing between right and wrong or of
 controlling his conduct.  In such cases, the exclusionary clause would
 foreclose coverage.  See Rajspic v. Nationwide Mut. Ins. Co., 662 P.2d 534,
 536 (Idaho 1983); Shelter Mut. Ins. Co. v. Williams, 804 P.2d 1374, 1382
 (Kan. 1991); Colonial Life & Accident Ins. Co. v. Wagner, 380 S.W.2d 224,
 226 (Ky. Ct. App. 1964); Auto-Owners Ins. Co. v. Churchman, 489 N.W.2d 431,
 436 (Mich. 1992); Mallin v. Farmers Ins. Exch., 839 P.2d 105, 108 (Nev.
 1992); Johnson v. Insurance Co. of N. Am., 350 S.E.2d 616, 620 (Va. 1986).
 Thus, in Johnson, the insured searched for a pistol, loaded it, travelled to
 the victim's home, waited for the victim, engaged him in conversation, and

 

 then shot him at close range, all under the delusion that God had ordered
 him to do so.  The court concluded the insured "knew that he was shooting a
 human being," and held the exclusionary clause applicable.  Johnson, 350 S.E.2d  at 620.  Even under this line of cases, however, there will be
 coverage if the insured is so mentally ill that he does not, in fact, know
 what he is doing, as when, for instance, he points a pistol thinking he is
 peeling a banana.  Id.  Plaintiff concedes that, in such a case, coverage is
 not excluded.
      Intervenors contend that our case law is consistent with the Globe-
 Turner line of cases.  See Goode v. State, 150 Vt. 651, 652, 553 A.2d 142,
 142-43 (1988) (quoting with approval Goewey v. United States, 612 F.2d 539,
 544 (Ct. Cl. 1979) that term "insane" means "a condition of mental
 derangement which renders the sufferer incapable of . . . understanding the
 nature and effect of his acts, and of comprehending his legal rights and
 liabilities"); Hathaway's Adm'r v. National Life Ins. Co., 48 Vt. 335, 353
 (1875) (policy's exclusionary clause for suicide not applicable where
 decedent insane).  Further, in Otterman v. Union Mut. Fire Ins. Co., 130 Vt.
 636, 298 A.2d 547 (1972), we held an exclusion for intentionally caused
 injury inapplicable where the decedent fired a gun through a wall, injuring
 a police officer.  Not only was there no evidence that decedent knew of the
 presence of the police officer, but his behavior in the preceding three
 weeks, together with a history of mental illness, "made it highly improbable
 that [he] intentionally meant to harm anyone."  Id. at 641, 298 A.2d  at 550.
 Thus, we implied, at least, that mental illness may negate the element of
 intent for purposes of insurance coverage.

 

      Plaintiff argues that the exclusionary clause contains no qualification
 that the actor must be sane, and that the word "intentional" means an act to
 be "done by intention or design," with the word "intention" defined as "a
 determination to act in a certain way."  See Webster's New Collegiate
 Dictionary 596 (1981); see also Restatement (Second) of Torts { 8A (1965)
 ("intention" denotes desire to cause consequences of one's act, or belief
 that given consequences are substantially certain to result from act).
 Under a plain meaning construction of the insurance contract, therefore,
 plaintiff contends that the exclusion should apply.
      Plaintiff relies on the Rajspic-Johnson line of cases, and in
 particular on Mallin, where the Nevada Supreme Court affirmed summary
 judgment for the insurance company after the insured had shot and killed his
 wife and two of her friends, then committed suicide.  The court concluded
 that the insured "knew that shooting his victims in the head would result in
 their deaths.  Thus, it must be fairly said that [he] intended to kill
 them."  Mallin, 839 P.2d  at 107.  (Emphasis in original.)  Mallin thus holds
 that insanity does not necessarily negate intention for purposes of applying
 the exclusionary clause:  "The rather simple idea of what is intentional and
 what is accidental is turned awry by modern psychoanalytical . . . theories,
 which put into question an individual's capacity to exercise free will over
 his or her actions."  Id. (footnote omitted).
      We are unpersuaded by Mallin and by plaintiff's arguments, primarily
 because in our view this approach oversimplifies the matter.  First,
 coverage in such cases will obtain only where the insured does not know the
 nature or consequences of his act -- e.g., where he believes he is pointing
 a banana, not a gun.  See C. Salton, Mental Incapacity and Liability

 

 Insurance Exclusionary Clauses:  The Effect of Insanity Upon Intent, 78 Cal.
 L. Rev. 1027, 1065 (1990) (such cases "are extremely underinclusive,
 retaining coverage for only a very small percentage of people considered
 mentally ill").  We note that these cases formulate a test for applying the
 exclusionary clause that is even stricter than the test for insanity in a
 criminal case, where a defendant is excused from culpability if he was
 afflicted with a mental disease or defect so as not to be able "to
 appreciate the criminality of his conduct or to conform his conduct to the
 requirements of law."  13 V.S.A. { 4801(a)(1); see Model Penal Code { 4.01
 (1985).
       Second, there are more dimensions to mental illness than the nature or
 moral status of one's acts; mental disease or defect may encompass the will
 and the emotions as well.  See Salton, supra, at 1040.  An insane person
 whose will is impaired cannot control his conduct even when he understands
 the consequences of his acts, and one who is emotionally disordered cannot
 feel emotions which might, in an ordinary person, provide a check to harmful
 conduct.  See id.  Although the rationales for excusing criminal conduct and
 for applying intentional-injury exclusionary clauses are not the same, see
 Transamerica Ins. Corp. of Am. v. Boughton, 440 N.W.2d 922, 925 (Mich. Ct.
 App. 1989) ("acquittal by reason of insanity . . . is not an adjudication of
 lack of intent") (emphasis in original), we believe the determination of an
 insane person's intent in a civil case must take into account the multi-
 dimensional nature of mental disease or defect.
      Third, although this approach views "intent" as a more complex word
 than its ordinary, popular sense would indicate, see Mallin, 839 P.2d  at
 107, an insane insured's "intent" is not always clear and unambiguous.  See

 

 id. at 114 (Handelsman, Dist. J., dissenting) ("the term 'intent' is a
 slippery one, subject to myriad applications").  Where exclusionary
 language is susceptible of more than one meaning, we adopt the
 interpretation most favorable to the insured.  Utica Mut. Ins. Co. v.
 Central Vt. Ry., 133 Vt. 292, 295, 336 A.2d 200, 202 (1975); see also
 Congregation of Rodef Sholom, 154 Cal. Rptr.  at 352 (construing exclusionary
 clause in light of strong public interest in compensation for victim).
      Plaintiff also argues that an interpretation that prevents the
 exclusionary clause from operating would amount to a rewriting of the policy
 to insert the term "while sane" into the clause.  Such a result, plaintiff
 asserts, would contradict our holding in Espinet v. Horvath, 157 Vt. 257,
 597 A.2d 307 (1991).  There, the policy excluded coverage for any bodily
 injury "intended or expected" by the insured, who contended, among other
 things, that his action, which resulted in bodily injury to the victim, was
 taken in self-defense and therefore not excluded because it was justified.
 Id. at 261, 597 A.2d  at 309-10.  We declined "to read into the policy that
 only injuries inflicted wrongfully are excluded." Id. at 261, 597 A.2d  at
 310.  Espinet is distinguishable because the language at issue therein was
 not susceptible of interpretations to exclude only wrongfully inflicted
 injuries.  In the present case, the word "intentional" is subject to
 alternative interpretations, which the policy writers can clarify if they
 so desire.  See Ruvolo, 189 A.2d  at 208 (exclusionary clauses are "drawn for
 the company by men learned in the law of insurance").
      For these reasons, we follow the lead of Otterman and the Globe-Turner
 line of cases, and hold that as a matter of law an insane person is to be
 considered incapable of forming an intent to cause injury.  Cf. State Farm

 

 Fire & Cas. Co. v. Wicka, 474 N.W.2d 324, 327 n.4 (Minn. 1991) (citing cases
 following Ruvolo, and noting that leading insurance law treatises lean
 toward Ruvolo view); Mallin, 839 P.2d  at 112 (Handelsman, Dist. J.,
 dissenting) ("The majority of courts have held that acts committed by an
 insane insured are not considered 'intentional' for purposes of insurance
 coverage.") (citing cases).
      The certified question is answered in the affirmative.

                                    FOR THE COURT:


                                    ________________________________
                                    Associate Justice