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Case Bulletin – The United States District Court for the Eastern District of Pennsylvania Examines Definition of “Occurrence” Contained in Homeowners Policy for Actions Constituting Criminal Assault

In September of 2018, the United States District Court for the Eastern District of Pennsylvania addressed the issue of whether an insurer’s actions constituting criminal assault could be considered an “occurrence” under a homeowner’s insurance policy affording coverage and indemnity. The declaratory judgment action in the Eastern District of Pennsylvania stemmed from an underlying civil complaint filed in Montgomery County, Waris v. Neary, No. 2014-04102 (Mont. County. C.C.P. Feb. 25, 2014). In that complaint, Plaintiff John Waris filed a lawsuit against his roommate Michael P. Neary for an assault that Neary committed on Waris. On the night of the assault, Waris and Neary attended a party where Neary consumed alcohol. At the party, Neary began to orally and physically assault Waris. Waris then made his way back home to his apartment that he shared with Neary. Later, Neary came home and physically assaulted Waris. Waris sustained serious injury from the assault, some of which were permanent in nature.

Waris filed a civil complaint against Neary seeking compensation for the injuries he sustained in assault. The complaint alleged negligence and recklessness, negligent infliction of emotional distress, and negligent failure to rescue. The Complaint additionally alleged that Neary suffered from mental health issues that were “severely exacerbated upon consumption of alcohol.”

Following the filing of the complaint, Neary sought to put his parent’s homeowner’s insurance, Homesite Insurance Co., on notice of the lawsuit seeking defense and coverage. Homesite then filed an action in declaratory judgment submitting that it had not duty to defend or indemnify Neary in the civil action brought by Waris. Homesite argued that Neary’s actions were clearly intentional, and thus, not an “occurrence” under the homeowner’s policy.

Under the Homesite policy, coverage extended to “claims or suits brought against an insured for damages because of ‘bodily injury’ or ‘property damage’ caused by an ‘occurrence.’’ The policy defined “occurrence” as “an accident including continuous or repeated exposure to substantially the same general harmful conditions which results during the policy period. . .” Further, the policy contained an exclusion section prohibiting coverage for bodily injury or property damages which is “expected or intended by the insured.”

While the Homesite policy excluded coverage for intentional acts, it did not define “accident.” Therefore, in the declaratory judgment action, the Court for the Eastern District turned to precedent set by the Pennsylvania Supreme Court to define “accident.” The Pennsylvania Supreme Court defined “accident” as “an unexpected or undesirable event occurring unintentionally. The Pennsylvania Supreme Court held that the key term in the definition of ‘accident’ is ‘unexpected’ and implies a degree of fortuity.” The Pennsylvania Supreme Court additionally held that an injury is not accidental if the injury was a natural and expected result of an insured’s actions.

The United States District Court of the Eastern District of Pennsylvania noted that the underlying complaint stated that Neary committed a “violent and criminal assault” against Waris. Following, it held that the assault referenced in the underlying complaint could not be characterized as an accident because the actions alleged by Waris do not present the degree of fortuity. Although the complaint claims that Neary’s actions consisted of negligence, recklessness, and negligent infliction of emotional distress, the characterization of Neary’s actions as such will not trigger a carrier’s duty to defend. As a result, Neary’s actions could not be considered an “occurrence,” and Homesite owed no duty to defend.

To avoid this result, Waris argued that the assault in the underlying complaint was fueled by Neary’s consumption of alcohol. Waris argued that the consumption of alcohol prevented Neary from formulating intent. In response to this argument, the court analyzed precedent from the Pennsylvania Supreme Court stating that the mere fact that a person was intoxicated will not prevent a court from finding that he intended the results of his actions. Additionally, the Pennsylvania Supreme Court has held that voluntary intoxication will negate a finding of intent only when the consumer was in the midst of an alcoholic blackout and completely lost awareness for his actions. Waris’s complaint only stated that Neary consumed alcohol on the night of the assault. It did not present any allegations that Neary’s consumed sufficient alcohol to cause him to enter an alcoholic blackout, losing control of his actions.

Waris additionally argued that Neary’s mental health condition caused Neary to commit the assault. The United States District Court for the Eastern District of Pennsylvania held that the underlying complaint did not contain sufficient facts to support the allegation that Neary’s mental health condition negated his ability to formulate intent. Therefore, the court ultimately held that Neary’s actions consisting of violent criminal assault were not accidental and not included as an “occurrence” under Homesite’s insurance policy.