On December 30, 2010, the Ohio Supreme Court ended its calendar year with a decision which, on its face, appeared to have limited application to insurance coverage when pranks are committed which result in serious injuries. At stake in Allstate Ins. Co. v. Campbell, 2010-Ohio-6312, was the evaluation of “inferred intent” where the insureds claimed the insurance companies were not entitled to rely on the policy’s intentional act exclusion. Several teenage boys stole a Styrofoam deer target used for archery, set the target on the crest of a hill on a road at night, and then waited to watch the reactions of motorists. One car swerved to miss the decoy, an accident resulted, and two occupants of the vehicle were seriously injured. The occupants sued the teenage boys who placed the decoy on the road. The defendant teenage boys and their parents submitted a claim to their insurance companies, which in turn filed a declaratory action seeking an order of no coverage because of the policy’s intentional act exclusion. The trial court granted summary judgment to the insurance companies, the Tenth District Court of Appeals reversed and found a genuine issue of material fact, and the Ohio Supreme Court accepted review.
The insurance companies contended that the doctrine of inferred intent as applied to the intentional act exclusion in an insurance policy is not limited to cases of sexual molestation or homicide, but may be applied where the harm was “substantially certain to occur” as a result of the insured’s conduct. The insurance companies submitted that an objective standard, and not the insured’s subjective intent, controlled the analysis.
The Ohio Supreme Court disagreed with the insurance companies and held that the doctrine of inferred intent as part of the intentional act exclusion applies only in cases in which the insured’s intentional act and the harm caused are “intrinsically tied so that the act has necessarily resulted in the harm.” Thus, the court reasoned, an insured’s intent to cause injury or damage may be inferred only when “the action necessitates the harm.” The Court noted that some cars passed and avoided the decoy deer in this case, further evidence that the harm was not intrinsically tied to the act.
The Campbell Court also considered the argument of the insurance companies that an act was “expected or intended” [see, definition of “occurrence” in General Liability Policies] where an intentional act is “substantially certain” to cause injury. The Court held that the correct test is whether the act has necessarily resulted in the harm, and not whether the act is substantially certain to result in harm. Therefore, the case was remanded to the trial court to determine whether the teenage boys “intended or expected harm.”
The Campbell decision may signal a change of view of the Ohio Supreme Court whether insurance companies may lawfully decline coverage in environmental contamination cases where the insurers contend that the act of land disposal of wastes, such as in landfills, was substantially certain to result in environmental harm. The definition of “occurrence” relied upon by insurers to deny coverage is at the heart of this analysis: did the company expect or intend the harm caused by its land disposal of wastes? The insurers have argued, not only in Ohio cases, but in other state and federal courts, that when the pollution is substantially certain to occur, there is no occurrence and therefore no coverage.
While the Ohio Supreme Court has not spoken directly to this question in the context of claims for insurance coverage for underlying pollution, the Court previously declined coverage but relied instead on its finding that the “sudden and accidental” exception to the pollution exclusion clause had a temporal meaning, and only “abrupt” releases of chemicals triggered insurance coverage. Hybud Equip. Corp. v. Sphere Drake Ins. Co., (1992) 64 Ohio St.3d 647.
While the temporal interpretation of the “sudden and accidental” exception is not likely to be revisited by the Ohio Supreme Court, the Campbell decision may pose a coverage dilemma not contemplated by insurers: not all insurance policies carry the sudden and accidental language. Instead, insurers frequently rely upon the definition of “occurrence” and whether the pollution damage was expected or intended from the standpoint of the insured. In those cases, insurers have asserted the doctrine of inferred intent…a doctrine now thrown in the ash heap of other defenses previously raised by insurance companies. With no current Ohio Supreme Court justice having served on the Court which rendered the Hybud decision, there could be a resurgence of claims by insureds in environmental pollution cases, and an Ohio Supreme Court inclined to return to insured friendly reasoning expressed in Buckeye Union Ins. Co. v. Liberty Solvents & Chemicals, Inc., (1984) 17 Ohio App.3d 127.
For more information on challenging insurance company coverage determinations, contact Kim Burke or any member of Taft’s environmental practice group.