As coverage issues go, none wins more trophies than “what is an accident?” to trigger a liability policy. It is the oldest; most frequently litigated; most fact intensive; least predictable; and has the least amount of clarity.
As the Pennsylvania Supreme Court put it nearly 60 years ago: “Everyone knows what an accident is until the word comes up in court. Then it becomes a mysterious phenomenon, and, in order to resolve the enigma, witnesses are summoned, experts testify, lawyers argue, treatises are consulted and even when a conclave of twelve world-knowledgeable individuals agree as to whether a certain set of facts made out an accident, the question may not yet be settled and it must be reheard in an appellate court.” Brenneman v. St. Paul F. & M. Ins. Co. (1963).
My favorite ancient accident case is Schneider v. The Provident Life Insurance Company (Wis. Sup. Ct. 1869). The court addressed whether a gentlemen died by accident when, while running for a train, he slipped and fell underneath it. Yes it was an accident, the court concluded. The language of the decision, trying to figure it out, reads like it was written last week. Not much progress has been made in 150 years.
That the “accident issue” has been around for so long, is so frequently litigated and wins all these other awards, makes sense. The existence of an accident is the gateway to general liability coverage for every claim – no matter the facts -- and there is no limit in nature to what could possibly be an accident causing injury. So the question arises frequently and under all manner of circumstances – sometimes quite unusual and never before seen.
Last week, in Estate of Michael Wells v. State Farm, No. 348135 (Ct. App. Mich. July 16, 2020), the Court of Appeals of Michigan issued a split decision in a case that does a very good job of demonstrating the competing arguments surrounding this age-old and challenging issue.
In May 2015, Gregory Bobchick, Jr. and his friends Emanuel Malaj, Michael Wells, Jon Manolios and Joseph Narra, were drinking at Gregory’s house. Gregory Jr.’s parents, Gregory and Dawn Bobchick, owned a 2008 Jaguar. Gregory Jr. had unrestricted access to the Jaguar, which his parents considered his car. That night, he and his friends left his house in the Jaguar after consuming alcohol. Tragically, a car crash ensued and Malaj, Wells and Manolios were all killed.
Plaintiff, Gregory Wells, acting as the personal representative of his son Michael’s estate, brought suit. He alleged that either Manolios or Narra was driving the Jaguar under the influence of alcohol or drugs, knowingly provided and furnished to them by the Bobchicks. Plaintiff’s automobile negligence suit resulted in a $100,000 settlement with the Bobchicks’ auto insurer. Plaintiff also reached a settlement with the Bobchicks for $475,000 on a social host liability claim (including an assignment and covenant not to execute).
The Bobchicks had a homeowners policy with State Farm providing coverage for damages arising from injuries that result from an “occurrence,” defined as an accident. Plaintiff filed a declaratory judgment action, seeking to find State Farm obligated to pay the social host liability damages. State Farm followed with a motion for summary disposition, claiming the incident not to be the type of “accident” that is an “occurrence” as defined by the policy. Furnishing alcohol to minors, according to State Farm, is a deliberate act for which the risk of harm is foreseeable.
The trial court granted State Farm’s motion, rejecting the argument that the incident was an “accident” because the Bobchicks had no reason to believe that someone aside from Gregory Jr. would be operating the vehicle. The court stated that the furnishing of alcohol to minors impairs the ability of whoever may drive, deeming that the incident was not an “occurrence” invoking coverage. Accordingly, plaintiff appealed to the Court of Appeals of Michigan.
Similarly focusing the analysis on the foreseeability of intentionally furnishing alcohol to minors, the Court of Appeals affirmed the granting of summary disposition to State Farm. As the court saw it, the act of providing alcohol was enough to make the injuries that followed not accidental, but the result of an intentional act for which such consequences were foreseeable.
That the Bobchicks indeed did so intentionally was established by both plaintiff’s pleadings and the consent judgment entered by the trial court. The court emphasized that, having no dispute about the intentional act and that the intentional act was a proximate cause of the crash, the question of who Dawn Bobchick thought would be driving the car was irrelevant. If the act but not the consequences were intended, the court clarified that it can be deemed an accident, but not if the consequences resulted from a direct risk of harm that should reasonably have been expected by the insured. Without an accident, there is no “occurrence” in terms of homeowners coverage.
The dissent viewed the central issue of an “occurrence” from a different angle, arguing that the insured’s beliefs and perceptions are very much relevant to evaluating the consequences of an intentional act. In the dissent’s view, the act being intentional does not eliminate coverage if the injuries were not intended. Further, the injury-causing event, in this case the car crash, should be the issue of focus.
In addition, even under the focus on intentionality that the court emphasized, the dissent did not view the incident as surely intentional, stating that “knowingly” providing alcohol is not the same as intentionally crashing a car. The dissent also argued that even the intentional providing of alcohol was not established, as Dawn Bobchick had denied providing alcohol or allowing the kids to drink in her home. Such inquiries required much more consideration of her subjective perceptions, and the dissent therefore disagreed with the majority’s insistence against taking them into consideration. According to the dissent, the proper thing for the court to do would have been to focus the “occurrence” question on the car accident, and to remand for further proceedings as to whether Dawn Bobchick expected or intended for that incident to happen.
Takeaway
The issue at the heart of many accident cases is whether, for there to be no accident, it is enough if only the act causing the injury was intentional? Or, even if the act was intentional, can it still be an accident if the consequences/injury were not intended? On that question, courts can be all over the place on whether the consequences were intended or should have been foreseen. Then that can get into questions of whether the test for foreseeability is objective or subjective.
Another aspect of these cases that makes then challenging is this -- they seem to have an element of “a court knows an accident when it sees one.” Indeed, as the Pennsylvania Supreme Court noted: “Everyone knows what an accident is.” Wait, that is, “until the word comes up in court.”
