New York Appellate Court Holds that Assault Did Not Relieve Insurer of Duty to Defend under Homeowners' Policy

In general, liability insurance policies provide coverage for a defense and indemnification as to claims and lawsuits against the insured arising from accidental (and not intentional) occurrences. In addition, standard liability policies contain an exclusion for bodily injury that is "expected or intended" by the insured (Intentional Acts Exclusion). Recently, the Appellate Division, Third Department, held that a shooting incident resulting in assault charges being filed against the defendant did not relieve the insurer of its defense obligation, even though the defendant's homeowners' insurance policy contained an "intentional acts" exclusion . See Guzy v. New York Cent. Mut. Fire Ins. Co., __ A.D.3d __, 2017 N.Y. Slip Op 00233 (3d Dep't, January 12, 2017).

In Guzy, a shooting victim, Derek Prindle, commenced a personal injury action against John Guzy after Guzy shot him in the abdomen. Prindle alleged that Guzy had been arrested and criminally charged with assault as a result of the incident. Guzy tendered the defense of the lawsuit to his homeowners' liability insurer, New York Central Mutual Fire Insurance Company, which disclaimed coverage on the basis that Guzy's act of shooting Prindle was an intentional act and thus outside the scope of coverage of the policy and/or within the Intentional Acts Exclusion. New York Central Mutual decided not to defend its insured in the underlying action.

Guzy sued New York Central Mutual, seeking a declaration that the insurer owed a duty to defend him in the lawsuit by Prindle. The trial court granted Guzy summary judgment, concluding that Prindle's complaint was sufficient to trigger a duty to defend under the policy. New York Central Mutual appealed, and the Appellate Division, Third Department affirmed.

The Court observed that an "assault may derive from an individual's reckless or criminal negligence," and as such, a "reasonable possibility" existed that Guzy's actions were not intentional, but rather, accidental. Likewise, the Court held that Prindle's allegations of "intentional and criminal" conduct were merely "conclusory" and should not be the focal point of the coverage action. Citing a liability insurer's broad duty to defend, the Court noted that ""¦[b]ecause the shooting can be reasonably interpreted as having stemmed from plaintiff's unintentional conduct, we conclude that defendant's duty to defend was triggered under the insurance policy." Accordingly, the Court determined, New York Central Mutual had a duty to defend Guzy in the underlying action.

The Court's decision in Guzy is a reminder that a liability insurer's duty to defend, unlike the duty to indemnify, is triggered even where "facts outside the four corners of the pleadings indicate that the claim may be meritless or not covered." See Fitzpatrick v. American Honda Motor Co., 78 N.Y.2d 61, 63 (1991). Thus, even with respect to a claim which appears to arise from an apparently intentional act (such as the shooting in Guzy), an insurer may be required to defend under the policy even though it ultimately may not be required to indemnify its insured for a judgment or settlement. In addition, the Court in Guzy reiterated the longstanding principle that an insurer seeking to disclaim coverage on the basis of an exclusion will be required to provide a defense unless it can demonstrate that the underlying allegations against the insured unequivocally fall within the subject exclusion(s).