The Wisconsin Court of Appeals recently had occasion to address the issue of whether “subjective” and/or “objective” intent to cause injury must be found in the context of an intentional act exclusion. In Fetherstone v. Parks, 2014 WI App. 2, the Court interpreted an American Family insurance policy to determine whether a showing of both “subjective” and “objective” intent to cause injury was required before the policy exclusion could be applied. The Court eventually concluded that the exclusion, on its face, required a finding of both subjective and objective intent and refused to apply the exclusion. This case, once again, shows the need for clear and unambiguous policy language before courts will find for no coverage.
The facts in Fetherstone were undisputed. Michael Parks (hereinafter “Parks”) was driving a motor vehicle at speeds of over 65 mph in a 25 mph zone when he passed a police officer. Parks saw the police vehicle turn towards him and accelerated up to 90 mph as he continued to speed along a two-lane road. Parks continued to weave in and out of traffic and eventually passed a semi truck and lost control of his vehicle. Parks’ vehicle then traveled onto a gravel shoulder and ultimately struck a vehicle being operated by the plaintiff.
The plaintiff brought this personal injury action against Parks and his insurer, American Family. American Family asserted that the intentional act exclusion as contained in the automobile policy issued to Parks applied to deny liability coverage to Parks for the plaintiff’s injuries. The exclusion relied upon by American Family provided as follows:
This coverage does not apply to: … 2. Bodily injury or property damage caused intentionally by, or at the direction of, and substantially certain to follow from the act of an insured person. 2014 WI App.2 ¶ 4.
At the circuit court level, the court initially held that the exclusion relied upon by American Family did not apply and thus denied American Family’s summary judgment motion. Specifically, the circuit court concluded that American Family had failed to show that the plaintiff’s injury was “substantially certain” to arise from the intentional acts of Parks. However, at a subsequent bench trial, a different judge found that the intentional acts exclusion precluded coverage, and the judge dismissed American Family from this lawsuit.
On appeal, the Wisconsin Court of Appeals first noted that counsel for American Family had argued at the bench trial that American Family was “not contending that Mr. Parks subjectively intended to harm anyone.” Rather, counsel argued at trial that Parks’ “reckless driving was substantially certain to cause injury”. ¶ 5.
Next, the Court in interpreting American Family’s policy exclusion held that the plain language of the exclusion “bars coverage only where both a person intentionally causes harm and the person’s conduct is substantially certain to result in harm”. ¶ 8. The Court noted that the former had been characterized in Wisconsin case law as “subjective intent” and the latter as “objective intent”. ¶ 8.
The Court next concluded that Wisconsin case law had previously found that “objective intent” existed “where an intentional act is substantially certain to produce injury, regardless whether the injured subjectively intended to cause harm or injury”. ¶ 9. Since case law had not yet provided for a definition of “subjective intent”, the Court referred to the dictionary definition of “intent” which provided as follows:
[T]o have in mind a fixed purpose to reach a desired objective, “to have as one’s purpose. ¶ 9.
Relying upon that definition, the Court concluded that the plain language of the American Family’s exclusion at issue excluded coverage only when an insured determined to cause injury and when the insured’s conduct was substantially certain to cause that injury. ¶ 9. Since the circuit court did not make any finding that Parks actually “had in mind” or “planned to” cause an injury and, in fact, American Family had conceded at trial that Parks did not have such intent, the Court concluded that “the first predicate of the exclusion did not exist” and, that, “the exclusion by its plain language does not apply to bar coverage”. ¶ 10. The Court of Appeals, therefore, reversed the decision of the trial court judge and held that the intentional act exclusion did not apply. ¶ 11.
It is important to note that the court in Fetherstone held in a footnote that prior Wisconsin case law had included cases that interpreted policy language providing that there was no coverage arising from harm which was expected or intended by the insurer. See Pachucki v. Republic Ins. Co., 89 Wis.2d 703, 705, 278 N.W.2d 898 (1979); Raby v. Moe, 153 Wis.2d 101, 104, 450 N.W.2d 452 (1990). The Court noted as follows in regard to those cases:
The exclusions in those policies require only one of the kinds of conduct included in the exclusion at issue here – either conduct from which harm is intended by the insured, or conduct from which harm is expected by the insured – not both. By using “or,” those exclusions do not require that both subjective and objective intent exist so as to bar coverage, unlike the exclusion at issue in this case. Footnote 2.
Given the holding of Fetherstone, it is important for all insurance carriers to review the plan language included in all intentional act exclusions to determine whether both objective intent and objective intent to cause injury must be shown. The plan language must, in a clear, concise and unambiguous manner, state that only one kind of conduct is required or else the court will conclude that both objective and subjective intent must be shown.
If you should have any questions regarding this article, please contact Doug Lehrer at [email protected].