Home Page The Publication The Editor Contact Information Insurance Key issues Book Subscribe


Vol. 9 - Issue 7
October 30, 2020


Perhaps The Most Blatant Example Of A Plaintiff “Pleading Into Coverage” That I’ve Ever Seen


Courts tasked with addressing whether an insurer has a duty to defend are often required to consider only the allegations in the plaintiff’s complaint.  Whatever the complaint says goes, the rule often dictates.    

Knowing that the insurer must wear blinders when examining the complaint can give plaintiffs’ attorneys a powerful tool.  Hoping to tap a liability insurance policy for any settlement or judgment, plaintiff’s attorneys have the opportunity to draft their complaint in a manner that is more likely to trigger an insurer-provided defense.  Triggering a defense, even if under a reservation of rights, is the first step to reaching an insurer’s potential indemnity obligation -- or sometimes desire to settle.  The fact is that, in most cases, the path of least resistance, for a plaintiff to recover money, runs through an insurance company.

There are times when a plaintiff’s effort to draft a complaint designed to trigger a defense – sometimes referred to as “pleading into coverage” – is so fantastical that courts do not let it stand.  This is so, no matter what the law says about the duty to defend being tied solely to the allegations in the complaint. 

For example, despite the plaintiff saying that the defendant negligently or accidently stabbed him 17 times, does not make it so.  Therefore, the court will conclude that the bodily injury was not really caused by an “occurrence” to trigger a defense.  In essence, the court is saying to the plaintiff: Look, we see what you are up to, but you can’t fool us.  We’re not going to let you get away with it.

But that is not always the case.  In fact, sometimes the court says to the plaintiff: “Look, we see what you are up to, but have no choice but to let you get away with it.  That’s what happened in Liberty Mutual Fire Ins. Co. v. Lyons, No. 19-1053 (D.N.M. Sept. 25, 2020).
In January 2019, Lindsay Lyons filed a complaint against her father, Michael Lyons, in New Mexico state court.  Lindsay alleged that she was “‘repeatedly sexually abused by [Mr. Lyons] at his home in Albuquerque and at his vacation home in Pagosa Springs, Colorado’ from the time she was five years old until her teenage years and that she suffered ‘severe emotional distress and serious mental and economic injuries and damages’ as a result of Mr. Lyons’ actions.”

Michael Lyons sought coverage under a Liberty Mutual homeowner’s policy.  There is no specific discussion of what happened but coverage was seemingly denied.

Then, in August 2019, Lindsay filed an amended complaint against Michael, alleging that she was repeatedly sexually molested at his homes.  HOWEVER, in the amended complaint, she removed the allegations that it was Michael, specifically, who molested her.  Let me say that again.  Lindsay’s objective was to sue her father, for alleging molesting her from age five until her teenage years, but she did not specifically mention that he molested her. 

Instead, Lindsey alleged that Michael breached a duty of ordinary care, as a homeowner and parent, to keep the premises safe for her use.  In other words, she alleged that Michael breached a duty of care to keep the premises safe -- from himself.
Liberty Mutual disclaimed a defense based on several grounds, including no “occurrence.” 

The court concluded that this was not a basis to deny a defense.  In essence, the court faulted the insurer for reading the two complaints together and treating Michael as the perpetrator for purposes of the amended complaint.  However, the court observed:

“[W]hile true that the Original Complaint alleged that Lindsay was ‘sexually abused by [Mr. Lyons]’, the Amended Complaint does not allege that Mr. Lyons was the perpetrator of the sexual abuse.  Rather, the Amended Complaint generally and passively alleges that Lindsay “was sexually molested” but identifies no specific perpetrator.  Liberty Mutual fails to acknowledge this obvious and material difference between the Original and Amended Complaints. It incorrectly insists that ‘[t]he only acts described in the Complaints are acts of sexual abuse and/or molestation,’ and impermissibly reads into the Amended Complaint a fact that simply is not alleged: that Mr. Lyons sexually molested Lindsay.”

Most importantly, the court noted that, in reaching this duty to defend decision, its hands were tied by the allegations in the complaint.  The court even acknowledged the obvious: “[I]t appears to the Court that the Amended Complaint may have been revised as it was ‘for the sole purpose of reaching the insurance policy proceeds[,],’” which the court called “an approach to drafting that [it] has previously found questionable.” 

Nonetheless, “taking as true only the facts as pleaded,” the court concluded that “it is possible to read the Amended Complaint as claiming that Mr. Lyons breached a duty he owed to Lindsay by unintentionally and unknowingly—i.e., negligently, or accidentally—allowing her to be molested by a third party in his home.”  (emphasis mine).  The court concluded that the insurer “wrongly relies on facts not pleaded to support its contention that the Amended Complaint failed to state a claim for an ‘occurrence’ within the Policy’s coverage.”

In the end, the court went on to conclude that the insurer had no duty to defend Michael based on a sexual abuse exclusion.

However, the court’s willingness to allow a plaintiff to so blatantly plead into one aspect of coverage, and even admit that it knew what the plaintiff was doing, is breathtaking.


Website by Balderrama Design Copyright Randy Maniloff All Rights Reserved