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Garden State Fire & Casualty Co. v. Keefe

Decided: January 22, 1980.

GARDEN STATE FIRE & CASUALTY CO., A CORPORATION, PLAINTIFF-RESPONDENT,
v.
RONALD KEEFE AND JOHN F. KELLEY, DEFENDANTS-APPELLANTS



On appeal from the Superior Court, Law Division, Monmouth County.

Lora, Antell and Pressler. The opinion of the court was delivered by Pressler, J.A.D.

Pressler

This appeal requires us once again to consider that provision of a homeowner's comprehensive insurance policy which excludes intentional acts of the insured from his personal liability coverage. More particularly, we must here determine the extent to which the conviction of the insured of a criminal offense based on conduct which has resulted in injury to an innocent victim requires application of the doctrine of collateral estoppel, thus foreclosing the victim from relitigating in a subsequent negligence action the question of the intentional nature of the harmful conduct. We are satisfied that application of the doctrine of collateral estoppel in these circumstances is not automatic, that the innocent victim here did have a right to litigate the intent question in his pending civil action against the insured, and hence that the trial judge erred in granting the insurer summary judgment in its declaratory judgment action by which it sought avoidance of its policy obligations to defend and indemnify its insured.

John F. Kelley, plaintiff in the negligence action, was struck in the arm by pellets fired from a shotgun by defendant Ronald

Keefe. Kelley sued Keefe to recover for the personal injury he sustained in that incident. That incident was also the basis of an indictment returned against Keefe charging him with atrocious assault and battery. Keefe eventually pleaded guilty to that charge. Keefe resided with his parents and was, therefore, an additional insured under their homeowners comprehensive policy issued by Garden State Fire & Casualty Co. (Garden State). The policy excluded from personal liability coverage "bodily injury or property damage which is either expected or intended from the standpoint of the Insured." Garden State, relying on this exclusion, disclaimed and ultimately contended that the intentional nature of Keefe's act was conclusively determined by the conviction. It accordingly brought this declaratory judgment action against Kelley and Keefe seeking an adjudication of the applicability of the exclusion. The trial judge granted its motion for summary judgment, reasoning that the criminal conviction on its face established the fact of Keefe's intent to have harmed Kelley, thereby precluding both Kelley and Keefe from "looking behind" the guilty plea in order to relitigate the intent question. We are satisfied that the trial judge erred in so holding.

The basic question here raised was first considered by the New Jersey Supreme Court in Burd v. Sussex Mutual Ins. Co. , 56 N.J. 383, 396-399 (1970). There the insurance company relied on a similar policy exclusion in contending that as a matter of law the conviction of its insured of atrocious assault and battery conclusively established his intent to harm his victim. The court in Burd , while recognizing the evidential status of the conviction in the subsequent negligence action, nevertheless declined to accord it preclusionary effect as against either the insured or the victim. As to the victim, it reasoned that an injured claimant has an interest in a liability policy sufficient to entitle him to be heard on questions of coverage and that while his derivative status vis-a-vis the insured justifies the admission of the conviction as evidence on the coverage question, the conviction nevertheless

cannot be regarded as conclusive evidence since "the claimant may not be estopped by a judgment entered in a proceeding begun after he was injured if he was not a party to it." Id. at 397. Nor, the court reasoned further, is the insured himself necessarily collaterally estopped from relitigating the intent question in seeking a defense and indemnification from the insurer. That opportunity must be accorded to him where there is some underlying and residual ambiguity or equivocation in respect of the intent issue vis-a-vis the negligence claim despite the fact of the conviction. For example, in Burd the defendant was convicted of atrocious assault despite his claim of voluntary intoxication. While voluntary intoxication may well not negate the nature and quantum of intent required to support a criminal conviction, it may nevertheless negate intent within the meaning of the policy. At stake, the court noted,

These public policy considerations have been recently reaffirmed in Ambassador Ins. Co. v. Montes , 76 N.J. 477 (1978).

In summary, the court's holding in Burd was that the victim is not precluded by the insured's conviction from relitigating the intent issue both because of public policy considerations and because of the lack of mutuality necessary to support application of the doctrine of collateral estoppel. Neither is the insured himself estopped where, as a factual matter, the question of intent for purposes of the policy may fairly be deemed not to have been fully litigated and established in the criminal action. That factual determination, moreover, requires some reference to the record supporting the conviction.

The civil-criminal intent dichotomy as it implicates a policy exclusion such as that here involved was further explicated by this court in Lyons v. Hartford Ins. Group , 125 N.J. Super. 239 (App.Div.1973), certif. den. 64 N.J. 322 (1974). In Lyons , which also dealt with a shooting incident, we construed exclusionary language identical to that contained in the policy here. We there pointed out the distinction which must be drawn between intentional acts and intended results, and we held that coverage would obtain if the injurious result of an intentional act was unintended, such as the infliction of personal injury by an act intended only to frighten the victim. Thus, we concluded in Lyons that the carrier there would be liable to defend and indemnify its insured if the jury found, as it might have done on the proofs before it, that its insured "drew his gun with an intent to fire a warning shot over their heads and without an intent to kill or inflict bodily harm." 125 N.J. Super. at 244. ...


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