Third Department: Insurer Unable to Disclaim Coverage for Injuries Sustained by Victim of Intentional Assault

In a decision dated, June 14, 2018, the Third Department was asked to decide if an insurance company could disclaim coverage under a homeowner’s policy for injuries sustained by an assault victim at the hands of an insured under said policy.

The facts of this particular case (State Farm Fire & Cas. Co. v. McCabe, 162 A.D.3d 1294 [3d Dept 2018]) are as follows. In August of 2014, Rebekah Haschytz was visiting her boyfriend (“McCabe”) at a residence owned by his mother. McCabe physically assaulted Haschytz by strangling her with a rope and striking her head. McCabe was eventually convicted of assault (1st degree), strangulation (1st degree) and criminal possession of a weapon (4th degree) after a jury trial.

Haschytz thereafter commenced a personal injury action against McCabe and his mother, alleging that McCabe had “negligently rendered defendant partially incapacitated and that, after she was in this state, she tripped and fell due to a defective condition on the property.” State Farm disclaimed coverage under the homeowner’s policy “because the injuries sustained by [Haschytz] did not arise out of an ‘occurrence,’ which is defined in the policy as an accident, and because those injuries fell within an exclusion for intended injuries or willful and malicious acts.”

Thereafter, State Farm filed a separate action seeking a declaration that it had no duty to defend or indemnify McCabe under the policy terms (in the underlying action filed by Haschytz). State Farm eventually moved for summary judgment which was granted under the theory of collateral estoppel, prompting Haschytz, McCabe, and McCabe’s mother to appeal.

In analyzing the lower court’s decisions, the Third Department opined as follows:

“Generally, ‘[w]hen an insurer seeks to disclaim coverage on the . . . basis of an exclusion, . . . the insurer will be required to provide a defense unless it can demonstrate that the allegations of the complaint cast that pleading solely and entirely within the policy exclusions, and, further, that the allegations . . . are subject to no other interpretation’ (citations omitted). An insurer may avoid coverage under a policy’s intentional acts exclusion only if the insurer establishes as a matter of law the absence of any possible legal or factual basis to support a finding that the bodily injury at issue was, from the insured’s point of view, unexpected and unintended (citations omitted). In moving for summary judgment based on McCabe’s criminal trial and convictions, [State Farm] essentially argued that it was entitled, based on collateral estoppel, to a declaration that the policy did not provide coverage in the underlying action. Collateral estoppel is an equitable doctrine ‘grounded on concepts of fairness’ (citations omitted). The two requirements of the doctrine are ‘that the identical issue was necessarily decided in the prior action and is decisive in the present action,’ and that ‘the party to be precluded from relitigating an issue must have had a full and fair opportunity to contest the prior determination’ (id.). ‘[I]n appropriate situations, an issue decided in a criminal proceeding may be given preclusive effect in a subsequent civil action’ (citations omitted).”

The jury finding in the criminal proceeding established that McCabe intended to cause Hazchytz serious physical injury. Normally, this finding by the criminal court would be sufficient to establish the intent element necessary to disclaim coverage under the homeowner’s policy, assuming they related to the same conduct of the insured. However, in the civil proceeding, Haschytz alleged that “McCabe permitted and failed to remedy a tripping hazard in a doorway and exacerbated the dangerous condition by obstructing the doorway with a couch and other items, and defendant tripped and fell into a cement wall, causing her serious injuries.” These allegations addressed McCabe’s actions both before and after the assault, with Haschytz specifically claiming that she may have suffered additional injuries as a result McCabe’s negligent conduct.

State Farm argued that, based upon McCabe criminal conviction, the criminal jury could not have believed his allegations regarding the incident. However, the Court disagreed and reversed the lower court’s decision, finding that the criminal jury could have convicted McCabe while believing only portions of his testimony.

For example, the criminal jury could have believed that McCabe caused only some of Haschytz’s injuries by slamming her head into the ground or wall (the others potentially have been suffered by Haschytz after she walked and fell following the assault). However, what happened in the aftermath of the assault was never determined as part of the criminal proceeding. As a result, the Court agreed with Haschytz, finding that the “issues as to insurance coverage and exclusions [were] not identical to the issues decided at McCabe’s criminal trial.”