<p style="text-align: justify;">The Superior Court of Pennsylvania recently affirmed a trial court’s decision surrounding a municipal insurance policy denying coverage to a police officer involved in a high-speed car chase. In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2019/11/Pennsylvania-Integrated-Risk-Management-Association-v.-Borough-of-Nesquehoning-et-al.pdf">Pennsylvania Integrated Risk Management Association v. Borough of Nesquehoning, et al</a>,</em> the insurance company moved for judgment on the pleadings claiming that its policy excludes coverage for criminal acts.</p>
<p style="text-align: justify;">The underlying incident involved a deadly car accident in which a police officer was acting within the scope of his employment for the Borough of Nesquehoning. At the time of the accident, the officer was traveling in excess of one hundred miles per hour in pursuit of another vehicle he observed committing a summary traffic offense. The officer’s vehicle eventually collided with the vehicle of a Plaintiff Husband and Wife passenger. The accident resulted in the unfortunate death of the Wife as well as multiple injuries to the Plaintiff Husband. As a result, the officer was charged criminally and pleaded guilty to homicide by vehicle, recklessly endangering another person, and other lesser traffic offenses. The Plaintiff Husband, both individually and as administrator of the estate of the Wife, sued the officer as well as the Borough of Nesquehoning.</p>
<p style="text-align: justify;">Prior to the accident, the Borough of Nesquehoning executed a “Legal Defense and Claim Payment Agreement” with Pennsylvania Integrated Risk Management Association (PIRMA). The agreement required PIRMA to defend and indemnity the Borough of Nesquehoning’s employees, who are acting within the scope of their employment, against lawsuits seeking damages unless an act is not covered by the agreement. Specifically, the agreement explicitly excludes criminal acts, which include any injury arising out of any criminal act or violation of a penal statute. The exclusion is not effective until it is judicially determined that an employee committed such a criminal act.</p>
<p style="text-align: justify;">PIRMA filed a declaratory judgment action against the Plaintiff Husband asserting that the underlying action is not covered under the agreement between PIRMA and the Borough of Nesquehoning. Therefore, PIRMA had no obligation to defend or indemnify the officer in the action. The trial court granted PIRMA’s Motion for Judgment on the Pleadings and the Plaintiff Husband proceeded to appeal the decision.</p>
<p style="text-align: justify;">In relying on the trial court’s opinion, the Superior Court of Pennsylvania affirmed the order of the trial court. Specifically, the appeal surrounding three issues included: (1) whether the subject insurance policy violates public policy set forth in the Pennsylvania Motor Vehicle Financial Responsibility Law; (2) whether the subject insurance policy’s blanket “criminal acts” exclusion is overly broad; and (3) whether the subject insurance policy is internally inconsistent since it provides coverage for conduct which constitutes criminal acts and later excludes coverage for criminal acts upon conviction.</p>
<p style="text-align: justify;">Addressing the first issue, the trial court determined that it would be against Pennsylvania public policy to require PIRMA to defend the officer for what has already been deemed criminal conduct by virtue of the officer’s guilty plea. The trial court relied on state precedent that had previously refused to require an insurer to defend an insured for his own intentional torts and/or criminal acts.</p>
<p style="text-align: justify;">Surrounding the second issue, the trial court was not persuaded by the officer’s argument that the term “criminal acts" was not defined in the policy and, thus, makes it unclear whether the exclusion includes guilty pleas or just guilty verdicts. The Court stated that the criminal acts exclusion is not overly broad because it limits the exclusion to only those instances where the criminal act results in the injury for which the actor has been sued. Additionally, the Court relied on the plain meaning of the language “until it has been judicially determined that the member did commit such criminal act or violation” such that the actor must have been convicted of the criminal act, which further limits the scope of the exclusion. As such, a plea of guilty and a verdict of guilty are both judicial determinations that a person has committed a crime. Ultimately, the Court determined the insurance policy is consistent, unambiguous, and neither illusory nor overly broad.</p>
<p style="text-align: justify;">Finally, the Court concluded that the policy was not internally inconsistent. Specifically, the Court determined that the criminal acts exclusion only applied when an insured has been convicted of a crime and that crime resulted in the injury for which a third party is seeking damages. Furthermore, there is policy coverage only if an allegation of a crime is listed under the injury definition, if an insured has been found not guilty, or if the crime was unrelated to the injury.</p>
Thanks to Zhanna Dubinsky for her contribution to this post. Please e-mail <a href="mailto:vterrasi@wcmlaw.com">Vincent Terrasi</a> with any inquiries or feedback.