The Pennsylvania Supreme Court recently issued an opinion on an insurer’s duty to defend in the case of Erie Insurance Exchange v. Tracy L. Moore, Harold E. McCutcheon, III, individually and as administrators of the Estate of Harold Eugene McCutcheon, Jr. and Richard A. Carly, No. 20 WAP 2018, 2020 WL 1932642 (Pa. April 22, 2020). The court found that there was a duty to defend an insured where the acts complained of by the plaintiff were deemed potentially unintended, despite the insured’s several prior and subsequent acts of intentional violence.
The facts of the case arose from the murder of Terry McCutcheon by her ex-husband Harold E. McCutcheon, Jr. and his subsequent suicide. Prior to these events, McCutcheon had left a note to his adult children explaining his intention to murder his ex-wife and commit suicide. In accordance with his stated plan, McCutcheon intentionally shot and killed his ex-wife at her home. Before he could shoot himself, however, he was interrupted by the arrival of his ex-wife’s current boyfriend, Richard A. Carly. Carly began knocking on the door and eventually tried to enter when there was no answer. At this point, McCutcheon suddenly opened the door and pulled Carly inside. The two then engaged in fight, during which altercation, McCutcheon, who was still holding the gun used to kill his ex-wife, fired multiple shots. Carly was hit in the face by one shot and several other shots went through the walls of the house. After shooting Carly, McCutcheon completed his plan and killed himself. Carly survived.
Carly sued the estate of McCutcheon for his injuries sustained during the shooting. A claim was submitted to McCutcheon’s home and personal catastrophe insurer. The insurance company declined to defend or indemnify the Estate on the ground that the shooting of Carly was intentional and did not constitute a covered “occurrence” as a result.
The homeowner’s policy defined an “occurrence” as “an accident, including the continuous or repeated exposure to the same general harmful conditions.” The personal catastrophe policy similarly defined an “occurrence” as “an accident, including continuous or repeated exposure to conditions, which results in personal injury or property damages which is neither expected nor intended.” Each policy specifically excluded from coverage “bodily injury, property damage or personal injury expected or intended by anyone we protect.” The homeowner’s policy also specifically excluded intended injuries even if “the degree, kind or quality of the injury or damage is different than what was expected or intended” or “a different person, entity, real or personal property sustained the injury or damage than was expected or intended.”
The insurance company filed a declaratory judgment action seeking a declaration that it need not defend the Estate. Summary judgment was eventually granted in the insurance company’s favor. The Estate appealed the trial court’s ruling to the Pennsylvania Superior Court.
The Superior Court reversed the trial court’s ruling and ordered the insurance company to provide a defense to the Estate on the ground that the complaint fairly presented “a situation in which the injury may have been inflicted unintentionally.”
The insurance company timely sought, and was granted, review by the Pennsylvania Supreme Court.
On appeal to the Supreme Court, the insurance company argued that it had no duty to defend the Estate against Carly’s claims because the factual allegations of the complaint did not constitute an insurable “occurrence” under the policy – i.e. an accident. Rather, the facts described “a shooting during the commission of multiple felonies.” In particular, the insurance company argued that injuries sustained during a physical altercation are not “unexpected” and, instead, arose from the commission of an intentional tort that does not trigger the duty to defend.
The Estate countered that the duty to defend exists unless it is “clear from an examination of the allegations in the complaint and the language in the policy that the claim does not potentially come within the coverage of the policy.” Indeed, any doubt or ambiguity concerning whether the claim potentially falls within the policy’s coverage must be resolved in favor of coverage. With respect to the injury-causing incident, Carly argued that he was not seeking to recover any damages resulting from McCutcheon’s intentional killings of himself or his ex-wife. Nor was Carly seeking to recover damages for injuries sustained when McCutcheon intentionally pulled him inside the home and intentionally engaged in a physical fight. Carly claimed he was merely seeking to recover damages for his injuries arising from what he characterized as “negligence” in discharging the gun.
The Supreme Court emphasized that it must look to the four corners of plaintiff’s complaint to determine whether “the factual allegations of the complaint on its face encompass an injury that is actually or potentially within the scope of the policy.” The Supreme Court reasoned that although the complaint included several intentional acts by McCutcheon, including that (1) he intentionally shot his ex-wife, (2) he intentionally pulled Carly into the home and fought with him while wielding a firearm, and (3) he intentionally shot himself, the factual allegations of Carly’s complaint “taken as true and liberally construed – make out an accidental shooting” of Carly. The Supreme Court insisted that only the factual averments related to the act that caused the injuries for which Carly sought damages were relevant to its analysis. “Carly does not seek damages for a fistfight or shoving match. Carly’s lawsuit seeks damages for being shot by the insured.”
The Court then went on to state its view of the pertinent factual averments in the complaint concerning the altercation between Carly and McCutcheon. Carly had arrived at the victim’s home after she was shot, but before McCutcheon turned his gun on himself. Carly knocked on the door and tried the door handle. McCutcheon suddenly pulled Carly into the house by grabbing him by the shirt. Inside, McCutcheon was allegedly “screaming, swearing, incoherent and acting ‘crazy’” when a fight ensued between Carly and McCutcheon. McCutcheon was still holding the gun during the fight as the two men struggled, knocking things around when McCutcheon “negligently, carelessly and recklessly caused the weapon to be fired” hitting Carly and “various parts of the interior of the residence.”
Despite the insurance company’s arguments that plaintiff’s characterization of the shooting of Carly as negligent, careless or reckless was merely “artful pleading,” the Supreme Court disagreed. Rather, the Court opined that the factual scenario “potentially comes within the definition of a covered “occurrence” under the policy and that the exclusion for bodily injury that was “expected or intended” does not apply. Central to the Court’s ruling was its view that “the allegations in the present complaint are not clear about McCutcheon’s intentions with respect to Carly.” The Court specifically stated that the allegations of the complaint did not establish that McCutcheon “intended to shoot Carly.”
As a result of the Court’s analysis, it was determined that the insurance company owed a duty to defend the Estate. The Court added that had the insurance company wished, it could have expressly excluded all “incidents involving firearms, or during the commission of crime.” Because the insurance company only excluded “expected and intended” conduct by the insured that caused bodily injury, the policy was ambiguous with respect to its application to the facts averred in the complaint. Under Pennsylvania law, all ambiguities are resolved in favor of coverage.
The Supreme Court did not specifically address the homeowner’s policy language that specifically excluded intended injuries even if “the degree, kind or quality of the injury or damage is different than what was expected or intended” or “a different person, entity, real or personal property sustained the injury or damage than was expected or intended.” It would have been interesting to see how the Court would have interpreted the averments of the complaint in the face of that language. Ultimately, however, only one of the two policies implicated contained this language, so the outcome would still be a finding of a duty to defend.
The lesson for insurers is to be as specific as possible in crafting exclusions because Pennsylvania courts will parse complaints very finely when tasked with determining whether a duty to defend is owed. A single unintended act in the midst of a chain of intentionally violent acts will still trigger a duty to defend under policies that exclude coverage for intentional acts, if the unintended act caused the harm complained of in the complaint.