By Eliot M. Harris, Sedgwick Seattle
On January 28, 2014, the Washington Court of Appeals held that an insurer had no duty to defend a motorist under either his homeowners or auto insurance policies when the unambiguous allegations made against the insured motorist established that the claim was not an “accident” as defined under the policies.
The case is United States Auto. Assoc. v. Speed, No 43728-7-II, arises from a deliberate assault at a traffic stop during a road rage incident. The claimant, aptly named Robert Speed, and the insured motorist were involved in an altercation at a stop light after they had been driving aggressively towards each other for a period of time. According to witnesses, the insured motorist got out of his vehicle, opened the door of claimant’s car and beat him with his fists and a metal thermos, pulling the claimant from his vehicle before driving away leaving the claimant bleeding and unconscious in the street. The State later charged the insured motorist with second degree assault with a deadly weapon. The insured motorist was convicted of third degree assault after he testified at his criminal trial that he intentionally hit the claimant, but claimed self-defense.
The claimant’s attorney later sent a demand letter to the insured motorist seeking compensation for injuries caused by the “intentional conduct.” The attorney pointed out that, “were this a case of negligence that was covered by insurance,” the settlement demand would be much higher. The insured motorist tendered the claim to his homeowners and auto insurer, USAA, which investigated the claim but later denied coverage because the claimant’s injuries were not caused by an accident or an auto accident, and the policies excluded coverage for an intentional or purposeful act. Subsequently, the claimant and insured motorist agreed to a stipulated judgment of $1.4 million and an assignment of rights and covenant not to execute.
USAA filed a complaint for declaratory judgment and moved for summary judgment on coverage under both policies, as well as the claimant’s extra-contractual claims for bad faith. The Court granted USAA’s summary judgment motion.
On appeal, the Washington Court of Appeals affirmed the trial court’s finding that USAA did not owe a duty to defend as a matter of law. Despite recent rulings from Washington courts finding a broad duty to defend even if it appears that the claim may not be covered the court in Speed found that USAA owed no duty to defend under the circumstances. The Speed court noted that, “insurers do not have an unlimited duty to defend” under Washington law, and the duty to defend “is not triggered by claims that clearly fall outside the policy.” The court went on to note that, because Washington courts repeatedly have held that an insured’s deliberate conduct does not constitute an accident, and the demand letter unambiguously described the insured’s motorists’ actions as “deliberate,” there could be no coverage for the claim even after interpreting the allegations liberally and resolving all doubts in favor of a duty to defend.
This is a significant ruling out of Washington, whose courts rarely find no duty to defend as a matter of law. Although this case does not signal a dramatic shift by Washington courts to narrow the scope of the duty to defend, it does indicate a willingness to set limits on this duty.