Conduct Criminal in Nature Excluded

Alford Plead Is Guilty Plea

Insurance companies write policies to explain to the insured the risks they are willing to take and those they are not willing to take. When the policy excludes coverage for a serious loss court are invariably called upon to interpret the wording of the policy to provide coverages for risks that the insurer never intended to take.

In Eberle v. Nationwide Mutual Insurance Co., Court of Appeals of Kentucky, — S.W.3d —-, 2016 WL 2609311 (MAY 6, 2016) the Court of Appeals was called upon to determine whether coverage was available to Michael Bishop the under a homeowner’s insurance policy issued by Nationwide Insurance Company (“Nationwide”).


In 2011 Jacob Eberle, who was twelve years old at the time, was playing in Bishop’s neighborhood with a group of friends. Bishop, who was in his fifties, was at his home. The boys had been playing a game where they would ring the doorbells on houses and then run away before the occupants answered their doors.

Eberle was struck with shotgun pellets in his back, neck and right arm while he was on the sidewalk in front of Bishop’s home. It is undisputed that the shotgun pellets were fired by Bishop while he was standing on his porch. It is unclear, however, whether Bishop actually intended to fire his gun at Eberle.

Bishop was indicted on charges of assault in the first degree, wanton endangerment, and tampering with physical evidence. On July 26, 2012, Bishop pleaded guilty to class D felonies pursuant. Bishop’s plea agreement states: “Pursuant to North Carolina v. Alford, 400 U.S. 25 (1970), I wish to plead “GUILTY” in reliance on the attached ‘Commonwealth’s Offer on a Plea of Guilty.’ In so pleading, I do not admit guilt, but I believe the evidence against me strongly indicates guilt and my interests are best served by a guilty plea.”

The circuit court ultimately accepted Bishop’s plea and sentenced him to ten years’ imprisonment on the Alford plea.

At the time of the incident, Bishop held a homeowner’s insurance policy through Nationwide. Bishop subsequently sought coverage for the June 2011 incident, under that homeowner’s insurance. Specifically the policy excluded coverage for “bodily injury” when: “(a) caused intentionally by or at the direction of an insured, including willful acts the result of which the insured knows or ought to know will follow from the insured’s conduct. (b) caused by or resulting from an act or omission which is criminal in nature and committed by the insured.”


An insurance policy is a contract. Generally speaking, two parties of equal bargaining power are free to contract to any terms and conditions they negotiate with one another; with few exceptions, courts will not endeavor to rewrite such contracts for the benefit of one party or the other. Kentucky has adopted “four basic principles of insurance policy.” They are as follows: 1) all exclusions are to be narrowly interpreted and all questions resolved in favor of the insured; 2) exceptions and exclusions are to be strictly construed so as to render the insurance effective; 3) any doubt as to the terms of the policy should be resolved in favor of the insured; and, 4) because the policy is drafted in all details by the insurance company, it must be held strictly accountable for the language employed.

Criminal Acts Exclusion

The exclusion provides bodily injury is excluded from coverage if it is “caused by or resulting from an act or omission which is criminal in nature and committed by the insured.” Eberle argues that the term “criminal in nature” is ambiguous because it excludes unintentional and criminal conduct reasonable persons expect to be covered under homeowner’s insurance policies.  Kentucky’s Penal Code provided the most logical, reasonable, and consistent definition of the term “crime.” Kentucky Revised Statutes (“KRS”) 500.080(2), defines a crime as “a misdemeanor or a felony.”

For the purposes of this appeal, Nationwide’s exclusion would apply to an “act or omission which is criminal in nature” such that it constitutes a felony or misdemeanor under Kentucky’s Penal Code.

Eberle argues that allowing the criminal act exclusion to apply to all misdemeanors would unjustly deny insureds, like Bishop, coverage because it would exempt conduct most people do not necessarily consider to be criminally reprehensible.

Bishop was accused of and pled guilty to wanton endangerment in the first degree, a Class D felony. While Bishop has denied that he intended to harm Eberle, he admits that he intentionally brandished his shotgun while in striking distance of Eberle and his companion.

While standing on his porch, Bishop brandished a shotgun he knew or should have known to be loaded and pointed it in the direction of two young, unarmed boys located on the sidewalk. Such conduct is unquestionably unlawful and felonious. Intentionally pointing a gun at an unarmed child is the type of conduct every citizen should know is wanton and criminal. Bishop could not reasonably expect such core criminal conduct to fall outside of Nationwide’s criminal acts exclusion.

Alford Plea

Next, we must determine whether the circuit court erroneously relied on Bishop’s Alford plea in granting summary judgment. On appeal, Eberle argues that the circuit court erred in elevating his Alford plea to the position of a regular criminal plea for the purposes of collateral estoppel.

Nationwide chose to make an actual conviction, or lack thereof, of no consequence by the wording of the exclusion. The policy explicitly states that the criminal acts exclusion applies “regardless of whether the insured is actually charged with, or convicted of a crime.” Nationwide, by its own terms, has rendered the actual fact of a prior conviction a nullity. Under the policy, the focus is on whether the conduct causing the injury for which recovery is being sought under the policy, is criminal in nature.

An Alford plea is merely a type of guilty plea in which an individual accused of a crime may voluntarily, knowingly, and understandingly consent to the imposition of a prison sentence even if he is unwilling or unable to admit his participation in the acts constituting the crime.  Most important to the court’s analysis, Alford cautions “that pleas coupled with claims of innocence should not be accepted unless there is a factual basis for the plea.”

Although Bishop’s plea is labeled as an Alford plea, the fact remains that it resulted in his conviction. The entry of a guilty plea under the Alford doctrine carries the same consequences as a standard plea of guilty.

In pleading guilty, Bishop acknowledged that the evidence against him was sufficient to support the charges to which he pled guilty. The trial court reviewed that evidence and agreed that it was sufficient to establish Bishop’s guilt.  Bishop’s Alford plea was admissible in the civil proceeding brought by Nationwide to prove that Bishop committed the crimes he pleaded guilty to in the criminal case. The reasons for Bishop’s guilty plea cannot undermine or erase the fact of his conviction.


Nationwide’s exclusion was brilliantly broad by eliminating the need for conviction and simply excluding any conduct that was “criminal in nature”. There was no need to prove that Bishop was convicted for the exclusion to apply. In this case it did not matter since Bishop was convicted regardless of his use of the Alford plea. Jail was proper and he had no right to be protected by insurance for his criminal conduct.

ZALMA-INS-CONSULT                      © 2016 – Barry Zalma

Barry Zalma, Esq., CFE, practiced law in California for more than 49 years as an insurance coverage and claims handling lawyer.  He now limits his practice to service as an insurance consultant and expert witness 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 founded Zalma Insurance Consultants in 2001 and serves as its only consultant.

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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.
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