929 F.3d 195
5th Cir.2019Background
- Frederking was injured when Carlos Sanchez, driving intoxicated while employed by Advantage Plumbing, failed to yield and collided with Frederking’s car.
- A Texas jury found Sanchez grossly negligent and Advantage negligently entrusted the vehicle; compensatory damages of $137,025 and exemplary damages of $207,550 were awarded.
- Cincinnati Insurance (Advantage’s insurer) paid compensatory damages but refused to pay the exemplary damages, prompting Frederking (a third-party beneficiary) to sue Cincinnati for breach of contract and declaratory relief.
- Cincinnati removed to federal court and moved for summary judgment, arguing (inter alia) that the collision was not an “accident” under the policies because Sanchez intentionally decided to drink and drive.
- The district court granted summary judgment for Cincinnati; the Fifth Circuit reversed, holding that a drunk-driving collision is an “accident” under ordinary meaning and Texas law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a collision caused by a drunk driver is an “accident” under the policy | Frederking: collision was unintended and thus an accident; policy term should receive ordinary meaning | Cincinnati: driver’s intentional decision to drink and drive makes resulting collision intentional, not an accident | Reversed district court: collision is an “accident” in common parlance and under Texas law |
| Whether foreseeability/intent to engage in risky conduct converts accident into intentional act | Frederking: foreseeability of risk does not equal intent to cause the specific injury; policies cover foreseeable risks | Cincinnati: subjective awareness of extreme risk (gross negligence) means collision was intentional or highly probable | Court: mere intent to engage in conduct (or foreseeability) does not eliminate accident characterization; Texas precedent rejects that boundary |
| Whether Texas precedent ("natural and expected" or "highly probable") requires no coverage for drunk-driving collisions | Frederking: prior caselaw limits exception to cases where injury was the natural and expected result; drunk-driving collisions are not inevitably "highly probable" | Cincinnati: Lamar Homes and related decisions show exclusion when injury was highly probable/result intended | Court: collision here was not "highly probable" or the natural and expected result; precedents do not mandate exclusion |
| Broader policy/coverage expectations (practical consequences of Cincinnati’s theory) | Frederking: insureds reasonably expect coverage for collisions caused by distracted/impaired driving | Cincinnati: (implicit) narrowing avoids covering intentional wrongdoing/exemplary damages | Court: Cincinnati’s rule would unreasonably exclude common collisions (texting, eating, makeup) and defeat insureds’ expectations |
Key Cases Cited
- Performance Autoplex II Ltd. v. Mid-Continent Cas. Co., 322 F.3d 847 (5th Cir.) (de novo review of insurance policy interpretation)
- Am. States Ins. Co. v. Bailey, 133 F.3d 363 (5th Cir.) (insurance interpretation precedent cited for review standard)
- Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1 (Tex. 2007) (defines when injury is not an "accident" if the damage was the natural and expected result)
- Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819 (Tex. 1997) (rejects rule that intent to engage in conduct alone precludes "accident")
- Nat’l Union Fire Ins. Co. v. Puget Plastics Corp., 532 F.3d 398 (5th Cir.) (discusses Texas standard for "highly probable" exclusion)
- New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) (use of judicial opinions to confirm ordinary meaning)
- Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653 (Tex. 2008) (addresses insurability of exemplary damages)