Intentional-Injury Exclusion Bars Coverage Where Insured Fled Police While Intoxicated.

A Minnesota federal court recently applied an intentional-act exclusion in a personal liability umbrella policy to an intoxicated driver attempting to flee. In American Family Mut. Ins. Co. v. Donaldson, CIV. 12-2855 PAM/FLN, 2013 WL 6842023 (D. Minn. Dec. 27, 2013), Jacob Patton was intoxicated and speeding through residential neighborhoods.  Patton led police on a high speed chase and ultimately crashed into a tree, leaving his 18-year old passenger severely injured.  Patton was charged with two counts of criminal vehicular operation.

The passenger entered into a Drake-Ryan release in which he received the primary policy limit of $100,000, and agreed to release the driver and owner from personal liability above the $1 million umbrella policy. After the driver plead guilty to the criminal charges, American Family moved to stay the underlying case and brought a declaratory judgment action to enforce its intentional injury exclusion.

U.S. District Judge Paul Magnuson ruled intent to injure could be inferred by the insured’s conduct and enforced the exclusion.  The court rejected plaintiff’s argument that Patton crashing into a tree was an “accident” as required by the policy for coverage.  The threat of serious injury, combined with Patton’s wanton disregard for safety, made the intentional injury exclusion applicable.  Patton’s decisions to drink heavily, drive at high speeds, and flee the police established the requisite intent as matter of law.  The issue was not whether the consequence was intentional, but whether the insured’s intentional, wanton and malicious acts caused the consequence.

Interestingly, the plaintiff argued that Patton was too intoxicated to form the necessary intent to injure.  The court reasoned that voluntary intoxication actually supported the enforcement of the exclusion, because to hold otherwise would make coverage more likely the more intoxicated the driver.  Thus, American Family had no duty to indemnify Patton or his father (the owner) for the arbitrator’s award.

Recent Minnesota case law treating “intentional injury” exclusions has focused on whether the insured acted with “specific intent to cause injury”.  This case is significant due to the doctrine of inferred intent providing the basis to apply the exclusion.    We will continue to monitor this and other decisions impacting insurance coverage.  If you have any questions about this, or any other matter, please contact us.