457 P.3d 1258
Wash. Ct. App.2020Background
- Neighbors Hogg and Ladley sued John and Krista Webb alleging that target shooting on the Webb property carelessly/recklessly sent bullets, fragments, or ricochets onto plaintiffs’ land, asserting claims including trespass, nuisance, assault, and requesting actual damages, punitive damages, and injunctive relief.
- The Webbs held a USAA homeowners policy with a paid "Personal Injury Endorsement" (replacing standard liability) that: defines "personal injury" to include "wrongful entry" and limits coverage to conduct "not malicious or criminal in nature"; defines "occurrence" via two alternate definitions (one requiring an "accident," the other requiring personal injury "neither expected nor intended" from insured’s standpoint); and excludes personal injury "expected or intended by the insured."
- USAA denied a duty to defend in two letters, citing lack of an "occurrence," intentional acts, exclusion of punitive damages, and alleged criminal conduct, providing minimal explanation.
- The trial court granted USAA summary judgment, concluding the underlying claims arose from intentional acts and thus were not conceivably covered; the Webbs appealed.
- The Court of Appeals reversed: it held trespass and nuisance conceivably constitute "personal injury" (as wrongful entry), the complaint conceivably sought damages for nuisance, the allegations conceivably alleged an "occurrence," the expected/intended exclusion and criminal-conduct language did not clearly preclude coverage, and USAA’s denial was unreasonable—so USAA had a duty to defend and acted in bad faith, violating IFCA and the CPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trespass and nuisance allegations constitute “personal injury” under the endorsement | Trespass/nuisance are equivalent to "wrongful entry," an enumerated personal injury | Policy’s enumerated list limits "personal injury" to only the specific words listed; trespass/nuisance not covered | Court: Trespass and nuisance conceivably equal "wrongful entry"; duty to defend triggered |
| Whether nuisance claim was brought "for damages" as required by the endorsement | Complaint requested actual damages generally, so nuisance could be for damages | Nuisance sought "abatement" (equitable relief), so not a damages claim | Court: Ambiguity resolves for insured; nuisance conceivably sought damages |
| Whether the allegations constituted an "occurrence" (and whether expected/intended exclusion applies) | Although shooting was deliberate, the complaint alleged carelessness/recklessness and did not allege the insured subjectively expected/intended the resulting trespass/nuisance, so an occurrence exists under the endorsement’s second definition | Deliberate shooting is not an "accident," so no occurrence; exclusion for expected/intended precludes coverage | Court: Second definition of "occurrence" applies; the complaint did not allege insured subjectively expected/intended the injury—coverage conceivably exists; expected/intended exclusion therefore not clearly applicable |
| Whether the endorsement’s criminal/malicious-conduct language defeats the duty to defend | Criminal-conduct exclusion applies only to serious criminal acts done with malicious intent; the complaint alleges carelessness/recklessness and lacks allegations of malicious criminal conduct | Under local ordinance and statute, shooting could be criminal, so criminal-conduct language bars coverage | Court: Complaint does not clearly allege serious malicious criminal conduct; criminal-conduct provision does not clearly preclude the duty to defend |
| Whether USAA’s denial of defense was bad faith and violated IFCA and the CPA | USAA unreasonably and frivolously refused to evaluate coverage and relied on untenable interpretations and omitted controlling authority, so denial was bad faith and violated IFCA and the CPA | USAA had arguable bases to deny defense (intentional acts, no occurrence, criminal act) | Court: USAA’s positions were unreasonable/frivolous as matter of law; denial constituted bad faith and violated IFCA and CPA; remand for partial summary judgment for Webbs on these claims |
Key Cases Cited
- Kitsap County v. Allstate Ins. Co., 136 Wn.2d 567 (1998) (trespass and nuisance are equivalent to wrongful entry for personal-injury coverage)
- Woo v. Fireman’s Fund Ins. Co., 161 Wn.2d 43 (2007) (insurer must defend unless complaint clearly precludes coverage; expected/intended inquiry focuses on injury from insured’s standpoint)
- Queen City Farms, Inc. v. Cent. Nat’l Ins. Co. of Omaha, 126 Wn.2d 50 (1994) (subjective standard for whether insured expected or intended resulting injury)
- Xia v. ProBuilders Specialty Ins. Co., 188 Wn.2d 171 (2017) (duty to defend arises when policy could conceivably cover allegations)
- Am. Best Food, Inc. v. Alea London, Ltd., 168 Wn.2d 398 (2010) (bad-faith liability where insurer’s denial is unreasonable or frivolous)
- Allstate Ins. Co. v. Raynor, 143 Wn.2d 469 (2001) (criminal-act exclusions apply only to serious criminal conduct done with malicious intent)
- Safeco Ins. Co. of Am. v. Butler, 118 Wn.2d 383 (1992) (cases addressing accident requirement and deliberate acts)