Discussion
In Gray, the insured brought an action against its insurer for failure to defend an action stemming from a complaint alleging that he committed a sexual assault. According to the allegations of the complaint against him, the insured, Dr. Gray, “willfully, maliciously, brutally, and intentionally assaulted” the plaintiff, Mr. Jones.
The insured provided notice of the lawsuit to Zurich and requested a defense, but Zurich refused to defend him because the allegations of the complaint alleged an intentional tort that fell outside the scope of the policy.
Dr. Gray was the named insured under an insurance policy issued by Zurich. The policy contained a “Comprehensive Personal Liability Endorsement,” which provided that the insurer would:
“pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage, and the company shall defend any suit against the insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this endorsement, even if any of the allegations are groundless, false or fraudulent; but the company may make such investigation and settlement of any claim or suit as it deems expedient”.
The policy excluded coverage for bodily injury or property damage caused intentionally by or at the direction of the insured.
The policyholder claimed, however, that he acted in self-defense. The insurance company denied a defense of the lawsuit, reasoning that liability for intentional torts was not covered by the policy. The court held, however, there was a potential that the policyholder might be found liable not for assault and battery, but merely for the negligent use of unreasonable force in the altercation. That potential liability thus created the possibility of a judgment for a negligent tort, not an intentional one, and if the judgment came down that way, the insurance company would have to pay for it. And, because the insurance company might have to pay for such a judgment, it definitely had an obligation to defend.
The court made its pronouncement in words that have been citedprobably thousands of time since:
DEFENDANT CANNOT CONSTRUCT A FORMAL FORTRESS OF THE THIRD-PARTY’S PLEADINGS AND RETREAT BEHIND ITS WALLS. THE PLEADINGS ARE MALLEABLE, CHANGEABLE, AND AMENDABLE. TO RESTRICT THE DEFENSE OBLIGATION OF THE INSURER TO THE PRECISE LANGUAGE OF THE PLEADING WOULD NOT ONLY IGNORE THE THRUST OF THE CASES BUT WOULD CREATE AN ANOMALY FOR THE INSURED.
Further:
… the complainant in the third-party action drafts his complaint in the broadest terms; he may very well stretch the action which lies in only nonintentional conduct to the dramatic complaint that alleges intentional misconduct. In light of the likely overstatement of the complaint and of the plasticity of modern pleading, we should hardly designate the third party as the arbiter of the policy’s coverage. An insurer, therefore, bears a duty to defend its insured whenever it ascertains facts whichgive rise to the potential of liability under the policy.
1. Discuss how this case could impact the achievement of insurers’ goals.