CNA Insurance Co. v. McGinnis

James R. Cooper, Judge.

The appellant, CNA Insurance Company, filed a declaratory judgment action against the appellees, James Ralph McGinnis and Vicky Lynn Hills, seeking an adjudication that it had neither the duty to defend a federal court action pending between the appellees, nor the duty to pay any judgment which might be entered in that case. This appeal follows a decision by the trial court that the appellant was not entitled to the declaratory relief sought; that the appellee McGinnis was entitled to declaratory relief on his counterclaim; and therefore he was entitled to a defense by appellant, as well as payment of any judgment up to the policy limits, plus a 12% penalty and attorney’s fees. We affirm.

The appellee Hills had filed suit against McGinnis, her step-father, in federal court, seeking $150,000.00 in damages for injuries allegedly received as a result of sexual assaults and abuse by the appellee McGinnis. The appellant refused to defend McGinnis, and then filed this action for declaratory judgment.

The appellant issued a homeowners policy to McGin-nis which covered the Fort Smith residence where the alleged sexual assaults took place. The policy period was from June 29, 1978 to June 29, 1979, during which time Hills was 16 years old. The appellant contended that there was no insurance coverage under its policy of insurance for the conduct alleged by Hills and that it had no duty to defend McGinnis or to pay any judgment which might be entered by reason of both a lack of coverage and the exclusionary provisions of the policy. The pertinent exclusionary clause in the policy states as follows:

Exclusions. There are certain instances which we do not intend to cover for liability. Under this policy, liability to others and medical expenses do not apply to personal injury or property damage:

1. Which is expected or intended by an insured.

The appellant had the burden of establishing that the acts which allegedly caused damage or injury fall within this .exclusionary clause. Riverside Insurance Co. of America v. McGlothin, 231 Ark. 764, 332 S.W.2d 486 (1960). Insurance policies must be construed liberally so as to resolve doubts in favor of the insured, both as to coverage and exclusions. First Heritage Life Assur. Co. v. Butler, 248 Ark. 1164, 455 S.W.2d 135 (1970).

On appeal, the appellant argues that the trial court erred in finding that it had a duty to defend McGinnis as well as pay any judgment entered in the federal court action pending between the appellees.

The chancellor, in a well-reasoned opinion, analyzed the law relative to an insurance carrier’s duty to defend and to pay damages, as well as the law concerning the interpretation of exclusionary clauses. He then found that, regarding the exclusion from coverage of damages resulting from intentional acts, the rule in Arkansas was that recovery was not precluded where the results of intentional acts were accidental or unintended. The trial court found that while McGinnis intended to commit the acts complained of, the appellant had not met its burden of proof in establishing that he either intended or expected any injury or damage to his step-daughter. We think the chancellor correctly analyzed the evidence and the law, and that his decision was correct.

Talley v. MFA Mutual Ins. Co., 273 Ark. 269, 620 S.W.2d 260 (1981) is controlling. There the Arkansas Supreme Court stated:

We see no violation of public policy in allowing recovery in circumstances in which it is shown the results were accidental or unintended. Nor do we adopt the tort concept that cne intends the natural and foreseeable consequences of his acts so as to bar recovery from unintended results.

In the case at bar, there was no direct evidence presented which tended to prove that McGinnis intended to inflict harm or damage upon Hills. In fact, the evidence was to the contrary. Therefore, the only way to find that he intended harm to result would be to find that harm was a natural and foreseeable consequence of his acts, and that approach was specifically rejected in Talley.

We find no error.

Affirmed.

Mayfield, C.J., and Glaze, J., agree. Corbin, Cloninger, and Cracraft, JJ., dissent.