Injured by Someone's Intentional Act? Why the Insurance Company May Still Have to Pay (Granger v. Auto-Owners)

Published September 2, 2015 · Ohio Supreme Court

A bar fight in the Oregon District. A "prank" at a graduation party that puts a teenager in the hospital. A neighbor who shoves someone off a porch. When the person who hurt you acted on purpose, the first thing their homeowner's or umbrella insurer says is: we do not cover intentional acts. Two weeks ago, the Supreme Court of Ohio reminded insurers that this answer is not nearly as automatic as they like to pretend. The case is Granger v. Auto-Owners Ins., 2015-Ohio-3279, decided August 18.

The case was not a personal-injury case, but the rule is

I want to be precise about the facts, because the lawsuit that produced this decision was about housing discrimination, not a physical injury. An Akron landlord told a prospective tenant he did not rent to people with children. She and a fair-housing group sued him in federal court, alleging emotional distress. He settled for $32,500 and then sued his own insurers for refusing to defend him.

The landlord's umbrella policy defined "personal injury" to include "humiliation." It also excluded injury "expected or intended by the insured." Auto-Owners argued that discrimination is intentional, so the exclusion applied and it owed nothing, not even a defense.

The Supreme Court disagreed, 5-2. Its reasoning is what matters for anyone hurt by another person's deliberate conduct.

Two rules that help injured people

First: the duty to defend is broad. The Court repeated a long-standing principle: an insurer must defend its policyholder whenever the complaint contains any allegation that could arguably be covered. The insurer escapes only if every claim is clearly and indisputably outside the policy. As the Court put it, "The duty to defend is broad and is not dependent on magic words." A broad allegation of emotional distress was enough to arguably include humiliation, so the insurer had to step in.

Why does this matter to you, the injured person, rather than to the landlord? Because once an insurer is defending a case, it has its own money at risk and its own lawyers in the room. Cases settle when an insurance company is at the table. A defendant with no insurer behind him often has nothing to pay a judgment with. The duty to defend keeps the insurer engaged, and that is frequently the difference between a recovery and a worthless piece of paper.

Second: intent to harm is not "inferred" unless the harm is inherent in the act. Insurers rely on a doctrine called inferred intent. When a policyholder says "I never meant to hurt anyone," the insurer asks the court to infer intent anyway from the nature of the act. Ohio courts have done that in extreme cases, such as the murder or sexual molestation of a child, where the harm is inseparable from the act.

Five years ago, in Allstate Ins. Co. v. Campbell, 2010-Ohio-6312, the Court drew the line. In that case, a group of young people placed a Styrofoam target deer on a dark, hilly country road to watch drivers react. One driver lost control, crashed, and he and his passenger were seriously injured. The insurers argued the boys acted intentionally, so there was no coverage. The Supreme Court refused to infer intent to injure, because putting a fake deer in the road does not necessarily result in a crash. The doctrine applies only when the intentional act and the harm are so intrinsically tied that the act necessarily produces the harm. Otherwise, whether the policyholder actually intended injury is a question of fact for a jury, and the insurer carries the burden of proving it.

Granger reaffirms Campbell and applies it firmly. Discrimination is intentional, but humiliation is not the inevitable result of it, so intent to cause that harm cannot be inferred as a matter of law. The dissenting justices would have held that injury is inherent in discrimination; the majority rejected that view.

What this looks like in an injury case

Think about the ways people get hurt by someone else's deliberate conduct:

• A shove during an argument that sends someone down a flight of stairs
• A "joke" of pulling a chair away, tripping someone, or tossing something at them
• A teenager doing a dangerous stunt with friends, or a dare that goes wrong
• A homeowner who lets a known-aggressive dog loose on a visitor
• A driver who deliberately tailgates, brake-checks, or runs someone off the road in a fit of anger

In every one of those situations, the person who caused the harm will tell the insurer, truthfully or not, "I never meant for anyone to get hurt." Under Campbell and now Granger, that statement, combined with an act that does not necessarily produce injury, means the insurer cannot simply declare the claim excluded. It must defend the lawsuit, and unless it can convince a jury that injury was actually intended or expected, it must pay the judgment or settle.

Two cautions. The rule does not help when the act really is inherently harmful; nobody is going to get homeowner's coverage for a shooting. And the policy language controls, so the specific exclusion and definitions matter. That is why we obtain the full policy, not just the declarations page, at the start of a case against an individual defendant.

Finding the coverage

The practical lesson of Granger goes beyond the intentional-act question. The landlord had two policies. The basic dwelling policy defined "personal injury" narrowly and clearly did not apply. The umbrella policy defined it broadly, and it did. If his agent had not thought to submit the claim under the umbrella, no one would have.

The same is true from the injured person's side. When we evaluate a claim against an individual, we look for every policy that might respond: homeowner's, renter's, umbrella, the auto policy if a vehicle was involved in any way, a business policy if the conduct happened on the job, and the policies of anyone who may share responsibility, such as a property owner who failed to provide security or a parent who entrusted a car to a dangerous driver. Each policy has its own definitions and exclusions, and a claim excluded under one may be covered under another.

Punitive damages are a separate question

A caution on expectations. Ohio law generally does not let a wrongdoer insure against punitive damages, which are meant to punish deliberate misconduct, although as we discussed in an earlier post on drunk-driving verdicts, attorney fees awarded alongside punitive damages can be a covered loss. The compensatory damages for your injuries, your medical bills, your lost wages, your pain, are what Granger helps you reach.

What this means for you

If you were hurt by someone who acted on purpose, do not assume there is no insurance just because the adjuster said so, and do not accept a small payment from the individual in exchange for a release. An insurer's denial letter is an opening position, not a ruling. The duty to defend is decided by what the lawsuit alleges, and a properly drafted complaint that pleads negligence and recklessness alongside any intentional conduct keeps the insurer in the case. That is a drafting decision that needs to be made at the very beginning, which is one more reason to involve a lawyer early rather than after the first denial.