Accident Resulting from Criminal Conduct Excluded

Accident Resulting While Fleeing From Police is Criminal Conduct

A motor vehicle crash that occurs during a high speed chase while an unlicensed driver attempted to avoid contact with police is not the type of incident that an automobile liability insurer expects to be covered by a policy of insurance. That is why most auto policies exclude criminal conduct as did the policy issued by Safeway Insurance.

In a case that should have been summarily disposed of it needed to go to the Louisiana Court of Appeal to be resolved because some courts so dislike insurers that they will stretch the language to find coverage for an insured, even a criminal insured.

In King Charles, et al. v. Safeway Ins. Co. Of Louisiana, et al., 18-740, State of Louisiana Court of Appeal, Third Circuit (May 15, 2019) Safeway Insurance Company of Louisiana, Inc. (Safeway) was forced to appeal a judgment rendered in favor of Plaintiffs finding that a policy of insurance issued by Safeway afforded coverage for the Plaintiffs’ damages up to the policy limits because, the trial court concluded that a felony escape from police was a traffic violation and was not criminal.

FACTUAL BACKGROUND

This case arises out of an automobile crash between vehicles operated Plaintiff, King Charles, and Defendant, Curtis Bernard, that occurred on October 2, 2014, in Iberia Parish, Louisiana. Mr. Bernard came in contact with Iberia Parish Sherriff’s deputy, Philipp Early who attempted to pull Mr. Bernard over for a broken taillight. However, Mr. Bernard fled from the officer, and a high-speed chase ensued. Mr. Bernard’s vehicle ultimately jumped over the railroad tracks and collided with the rear of Mr. Charles’ vehicle, which was stopped at a stop sign at an intersection. The two vehicles then crossed the intersection and spun into a third vehicle, which caught fire. Mr. Bernard was arrested and charged with various crimes and traffic violations, and he ultimately pled guilty to aggravated obstruction of a public highway and possession of marijuana.

Mr. Charles sued for damages including Safeway. Safeway asserted as a defense to coverage because of material misrepresentations made by the owner on his insurance application including his failure to list or disclose Mr. Bernard as a resident of his household and an unlicensed driver, and the intentional and criminal acts exclusions found in the policy.

Ultimately, the trial court found Mr. Bernard solely at fault for the subject accident and awarded Mr. Charles $35,000 in damages, plus judicial interest. It further awarded Mrs. Charles $7,000 for loss of consortium, as well as $1,000 in damages for loss of consortium to each of the parties’ two children. It ruled that Safeway was liable for these damages up to the coverage limits.

ANALYSIS

An insurance policy is a contract between the parties and should be construed by using the general rules of interpretation of contracts set forth in the Louisiana Civil Code. The judiciary’s role in interpreting insurance contracts is to ascertain the common intent of the parties to the contract. If the policy wording at issue is clear and unambiguously expresses the parties’ intent, the insurance contract must be enforced as written.

The policy provisions Safeway relies upon state that the policy does not apply to “(b) to bodily injury or property damage intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions of, any insured person.”

Safeway argued that the trial court was manifestly erroneous in failing to conclude the intentional and criminal acts exclusion in paragraph (b) above did not preclude coverage because Mr. Bernard intentionally chose to flee from the officer, was charged with related crimes, and the damages caused were reasonably expected to result from his intentional and criminal actions. Safeway also argues that coverage is precluded under paragraph (n) above because the damages at issue were incurred while Mr. Bernard was committing a crime other than a traffic violation. It challenges the trial court’s finding that Mr. Bernard “committed a traffic violation which led to the flight from an officer” and therefore the exclusion was not applicable.

In the court’s view, “crime,” the key term in this exclusion, has a generally prevailing meaning that does not warrant a searching interpretive inquiry. Although coverage exclusions generally do not comport with the policy of granting protection for injured persons, the exclusions here serve a separate public policy interest of prohibiting persons from insuring themselves against their own intentional or criminal acts. Withholding insurance coverage for intentional or criminal acts helps to disincentivize such conduct, which in turn serves the purpose of eliminating reckless and irresponsible drivers from the highways. The purpose of the exclusion is a recognition of a long-standing public policy against insuring illegal activities and thus, promoting their commission. For these reasons the crime exclusion does not violate public policy.

The trial court’s reasoning neglected to address the salient fact: the cause of the damages. It is clear from the record that the damages were caused by Mr. Gardner’s flight from the police, not traffic violations. Because the damages were caused by Mr. Gardner’s operation of an automobile in the commission of a crime, coverage under Safeway’s liability policy is excluded.

Mr. Bernard was subsequently arrested and charged with violating various criminal statutes and Mr. Bernard also pled guilty. The undisputed facts show that Mr. Bernard ran into Mr. Charles’s vehicle while intentionally fleeing from an officer which is a crime. Because the Court of Appeal found that exclusion (n) under the policy is applicable and therefore coverage is not available.

The trial court’s judgment against Safeway was, therefore, reversed and the Court of Appeal dismissed Plaintiffs’ claims against it.

ZALMA OPINION

Trial judges often try to do what they believe is justice rather than apply restrictive insurance policy conditions as the law requires. In this case the trial court erred because the criminal conduct exclusion was clear and unambiguous and the evidence – reinforced by guilty pleas – was obviously the result of the criminal conduct of the driver seeking insurance coverage.


© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

“The Insurance Examination Under Oath”

Product DetailsThe insurance Examination Under Oath (“EUO”) is a formal type of interview authorized by an insurance contract. It is taken under the authority provided by a condition of the insurance contract that compels the insured to appear and give sworn testimony on the demand of the insurer or find his, her or it claim rejected for breach of a condition. A notary and a certified shorthand reporter are always present to give the oath to the person interviewed and record the entire conversation.

Available as a Kindle book.

Available as a paperback.

Excellence in Claims Handling Courses

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
This entry was posted in Zalma on Insurance. Bookmark the permalink.