Heart Mountain Irrigation District v. Argonaut Insurance

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS October 2, 2008
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
HEART MOUNTAIN IRRIGATION
DISTRICT,
Plaintiff-Appellant,
v. No. 08-8018
(D.C. No. 1:07-CV-00136-CAB)
ARGONAUT INSURANCE CO., (D. Wyo.)
Defendant-Appellee.
ORDER AND JUDGMENT *
Before TACHA, PORFILIO, and TYMKOVICH, Circuit Judges.
Heart Mountain Irrigation District (Heart Mountain) brought this diversity
suit claiming Argonaut Insurance Company (Argonaut) had a duty to defend Heart
Mountain employee James Flowers in a state tort action brought against him for
an assault he allegedly committed while on the job. Viewing Heart Mountain’s
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
pleadings in light of the Argonaut policy and the allegations in the underlying
complaint against Mr. Flowers, 1 the district court concluded that Heart Mountain
had not stated a claim upon which relief could be granted. Heart Mountain now
appeals the district court’s order of dismissal. We review that decision de novo,
Anderson v. State Farm Mut. Auto. Ins. Co., 416 F.3d 1143, 1147 (10th Cir.
2005); see Park Univ. Enters., Inc. v. Am. Cas. Co., 442 F.3d 1239, 1244
(10th Cir. 2006), and affirm for the reasons stated below.
The complaint in the underlying tort action alleged that, while acting within
the scope of his employment,
FLOWERS, without justification, attacked [the plaintiff], striking
him repeatedly with a shovel which Defendant FLOWERS ha[d]
retrieved from his vehicle. During the attack, [the plaintiff] was
knocked to the ground and his arm was broken when, as he lay on the
ground, he raised his arm to protect his head from the shovel being
wielded by defendant FLOWERS.
App. Vol. I at 38. Heart Mountain notified Argonaut about the suit and requested
that it defend Mr. Flowers under a general liability policy in which Argonaut had
agreed to “pay those sums that the insured [including employees acting in the
scope of employment] becomes legally obligated to pay as damages because of
‘bodily injury’ . . . to which this insurance applies . . . [and] to defend the insured
against any ‘suit’ seeking those damages.” Id. at 115.
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The district court properly considered these additional materials in
conjunction with the pleadings in this case. See Pace v. Swerdlow, 519 F.3d
1067, 1072 (10th Cir. 2008).
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Argonaut refused to defend Mr. Flowers, and later moved to dismiss this
action, arguing that its policy did not apply to the assault alleged in the tort suit,
for two distinct reasons. First, the policy “applies to ‘bodily injury’ . . . only if
. . . [it] is caused by an ‘occurrence,’” id., which “means an accident,” id. at 126,
and the assault was not an “accident” as that term is defined in the pertinent state
case law. Second, the policy also excludes from coverage “‘[b]odily injury’ . . .
expected or intended from the standpoint of the insured,” id. at 115, and the
injury inflicted by Mr. Flowers in the assault was clearly intended, or at least
expected, by him. In conjunction with both points Argonaut invoked the
established state-law principle that an insurer’s duty to defend is determined by
reference to the factual allegations of the complaint in the underlying suit. See
Lawrence v. State Farm Ins. Co., 133 P.3d 976, 980 (Wyo. 2006) (citing Matlack
v. Mtn. W. Farm Bureau Mut. Ins. Co., 44 P.3d 73, 80 (Wyo. 2002)); Reisig v.
Union Ins. Co., 870 P.2d 1066, 1068 (Wyo. 1994).
Heart Mountain challenged Argonaut on both points, arguing that the
underlying tort suit fell within the policy’s threshold coverage provision and did
not trigger the exclusion. As to the coverage provision, Heart Mountain noted
that any doubt must be resolved in favor of the insured in duty-to-defend cases,
see Lawrence, 133 P.3d at 980, and argued that the term “accident” was at least
potentially broad enough to include Mr. Flowers’ conduct. As to the exclusion,
which incorporated an exception for bodily injury “resulting from the use of
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reasonable force to protect persons,” App. Vol. I at 115, Heart Mountain argued
that the exception applied because Mr. Flowers raised self-defense in his response
to the claims in the tort suit. More broadly, Heart Mountain contended that the
district court should look not only to the underlying tort complaint but also to
Mr. Flowers’ answer in determining whether the policy obligated Argonaut to
defend him in the suit.
The district court agreed with Argonaut in all material respects. Looking
solely to the factual allegations of the underlying complaint, the court held that
Mr. Flowers’ conduct could not be characterized as an “accident” and hence was
not covered by the policy. Alternatively, the court held that the alleged incident
fell within the exclusion for expected or intended bodily injury and that the
exception to this exclusion was not triggered by Mr. Flowers’ claim of
self-defense because that did not appear in the complaint.
Heart Mountain argues at length that the court’s review of the underlying
suit in duty-to-defend cases should extend beyond the complaint to include the
responsive pleadings filed by the insured. But we are not at liberty to depart from
the rule established by the state case law, which repeatedly refers in exclusive
fashion to the facts alleged in the underlying complaint. Lawrence, 133 P.3d
at 980, 981; Matlack, 44 P.3d at 77, 78, 80; Reisig, 870 P.2d at 1068, 1069.
Heart Mountain does, however, note a potentially distinguishing aspect of
this case, regarding the exception to the intended/expected injury exclusion where
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the insured has used reasonable force to protect persons. Unlike typical coverage
provisions, which turn on the nature of the claims asserted against the insured
and hence are aptly judged by the allegations in the complaint, this exception
arguably turns on the substance of the insured’s defense to suit and hence may be
more aptly judged by the insured’s responsive pleadings than by the complaint.
There is no state authority directly on this point, as the cases restricting review to
the underlying complaint involve claim-related coverage provisions and do not
consider the question in regard to defense-related provisions like the exclusion
exception here.
Of course, this effort to distinguish the case law restricting review to the
underlying complaint concerns only the exception to the policy’s exclusion for
intended/expected bodily injury. The district court’s alternative rationale for
rejecting a duty to defend here, based on the unconditional threshold limitation of
the policy to accidental occurrences, involves a coverage provision to which the
established rule restricting review to the underlying complaint clearly applies.
Because (as we explain next) the duty-to-defend claim was properly dismissed on
this rationale, we affirm the district court’s decision without addressing the more
complicated issues surrounding the exclusion.
The Wyoming Supreme Court has made it clear that the term “accident” in
liability policies does not encompass an insured’s intentional tortious acts: “The
intentional act makes it impossible to define the conduct as an ‘accident,’ and it,
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therefore, is not an ‘occurrence’ covered by the policy.” Reisig, 870 P.2d at
1070; see Matlack, 44 P.3d at 77; First Wyo. Bank, N.A. v. Cont’l Ins. Co.,
860 P.2d 1094, 1100 (Wyo. 1993). And in this regard the “analysis must focus on
the facts alleged in the complaint . . . , not on the label . . . applied to a particular
cause of action.” Matlack, 44 P.3d at 78 (emphasis added). Hence, if the factual
allegations in the underlying complaint reflect intentional conduct by the insured,
the denomination of any of the claims for relief as “negligence” claims does not
“magically transform[] [the character of the action] and thereby create a duty to
defend.” Id. at 80; see First Wyo. Bank, 860 P.2d at 1099.
These principles lead to the inescapable conclusion that the suit against
Mr. Flowers did not involve an accident and hence did not require Argonaut to
defend under the policy. The key factual allegation, that “FLOWERS, without
justification, attacked [plaintiff], striking him repeatedly with a shovel,” App.
Vol. I at 38, involves patently intentional conduct. Although the victim
supplemented his claim for assault and battery with a nominal “negligence” claim
(by adding the conclusory legal incantation that Flowers “fail[ed] to comply with
the duties of care owed to the Plaintiff” by assaulting him, id. at 39), that did not
alter the non-accidental character of the conduct for which relief was sought.
Heart Mountain, of course, contends that Mr. Flowers acted in self-defense,
but that does not avail it on the threshold question of a covered occurrence. The
unconditional provision requiring an occurrence/accident does not include any
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exception for self defense. And, in any event, the allegations of the underlying
complaint—which under controlling state law govern the application of this
coverage provision—clearly do not provide any factual basis for attributing the
assault and battery by Flowers to self-defense.
In sum, there was no potential basis for coverage and hence no duty to
defend under the policy. Certification of these matters to the Wyoming Supreme
Court, as now requested by Heart Mountain, is unnecessary.
Heart Mountain’s motion to certify is DENIED and the judgment of the
district court is AFFIRMED.
Entered for the Court
Deanell Reece Tacha
Circuit Judge
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