Ohio Casualty Insurance Company sought review of a court of appeals’ opinion holding the “expected or intended” injury exclusion in a homeowner’s insurance policy did not apply when the insured, Joel Henderson, committed an armed robbery that resulted in the death of Padriac Hill. Ohio Casualty Ins. Co. v. Henderson,
FACTS AND PROCEDURAL HISTORY
On April 11, 1993, Henderson and Damon Kerl, armed with guns, entered a Piccadilly Restaurant, while Noel Jackson waited outside in the getaway car. Once inside the office area, either Henderson or Kerl pointed a gun at an employee’s head and ordered him to open the safe. After the employee complied and handed over the cash contents of the safe, one of the assailants, probably Kerl, shot the employee in the head and killed him. The trio then fled the area in the car.
Nine days later, Henderson, Kerl, and Jackson, again armed, entered a movie theater. With guns drawn, they ordered Padri-ae Hill and some fellow employees, who were working at the concession counter, to the floor. They instructed Hill to open the safe; he did not know the combination and offered to call a manager who could open it. Rather than wait, one of the robbers shot Hill in the head. He died at the scene.
Alleging Henderson was acting in concert with Kerl and Jackson, Hill’s parents asserted a wrongful death claim and sought recovery from an Ohio Casualty homeowner’s insurance policy. Henderson is an insured under the liability coverage section of the policy. The “expected or intended” injury exclusion of the policy states:
1. Coverage E — Personal Liability and Coverage F — Medical Payments to Others
do not apply to bodily iivjury or property damage:
a. which is expected or intended by the insured;
Ohio Casualty brought a declaratory judgment action against Henderson and the Hills to determine whether the exclusion negated coverage. Ohio Casualty moved for summary judgment and the Hills filed a cross-motion for summary judgment. For purposes of the motions, the parties stipulated to several facts. First, they agreed that Henderson, Jackson, and Kerl “specifically discussed not harming anyone at the theater with any of the weapons. However, prior to the [robbery in which Hill was killed, Henderson and Kerl] committed a robbery at the Piccadilly Restaurant in which another victim was shot and killed.” The parties further agreed that Henderson “gave his gun to [Kerl], a minor, during the robbery, and the bullet from that gun killed Hill,” and that “Henderson did not pull the trigger of the gun that killed [Hill].”
The trial court granted summary judgment in favor of Ohio Casualty. The court of appeals reversed, a majority finding that the exclusion did not apply because there was no evidence that Henderson expected or intended the injury that caused Hill’s death.
The dissenting judge found that Arizona law did not compel the majority’s result. He argued that coverage should not be extended because Henderson actively participated in the armed robbery and even furnished the
We disagree with the majority of the court of appeals and vacate the opinion.
DISCUSSION
As one commentator aptly remarked, “[i]t is unrealistic to hope that the courts will ever reach anything approaching unanimity in interpreting the ‘intended or expected’ injury exclusion clause in liability insurance policies.” See John Dwight Ingram, The “Expected or Intended” Exclusion Clause in Liability Insurance Policies: What Should it Exclude?, 13 Whittier L.Rev. 713, 721 (1992). The same commentator called the current state of the law surrounding the exclusion a “hodgepodge of judicial interpretation.” Id. at 722. To alleviate the hodgepodge, another commentator has recommended that “[c]ourts that face this issue ... should do what the majority of courts have done — honor the drafting intent and the plain meaning of the policy language.” Kirk A. Pasich, Commentary, The “Expected or Intended” Exclusion and California Insurance Code Section 533, 10 No. 21 Mealey’s Litig Rep.: Insurance 20, 31 (Apr. 2, 1996). We attempt to do so today.
A. Is the “expected or intended” clause ambiguous?
In addressing the question of coverage in similar eases, many courts have relied on the contra proferentum doctrine: if there is an ambiguity in the language of the insurance contract, the ambiguity will be construed against the insurer that writes the contract and in favor of the insured. Applying this doctrine to the language of “expected or intended” injury exclusions, some courts have held such clauses are inherently ambiguous, while others have found no ambiguity whatsoever. See Annotation, Construction and Application of Provision of Liability Insurance Policy Expressly Excluding Injuries Intended or Expected by Insured,
Of course, a finding of ambiguity is the easy way out since it permits the court to create its own version of the contract and to find, or fail to find, ambiguity in order to justify an almost predetermined result. This is an approach we have abandoned. See Darner Motor Sales v. Universal Underwriters Insurance Co.,140 Ariz. 383 ,682 P.2d 388 (1984). We believe the proper methodology is to determine the meaning of the clause — where it is susceptible to different constructions — by examining the purpose of the exclusion in question, the public policy considerations involved and the transaction as a whole.
B. Construing the “expected or intended” exclusion
1. History of the clause
The original exclusion applied to injuries “intended” by the insured. Around 1960, however, insurance companies redrafted the standard liability policy, adding to the exclusion those injuries and damage “expected” by the insured. At the time, the industry was aware that courts had been almost universally unsympathetic to insurers in construing
Since this change, courts have grappled with the proper interpretation. The primary areas of disagreement have been: (1) whether the terms “expected” and “intended” are synonymous; (2) whether “expected” connoted an element of conscious awareness by the insured; and (3) what degree of foreseeability is required to exclude an injury as “expected.” See id.;
Several courts have held that there is no difference between the terms “expected” and “intended,” while others have held that the two are not synonymous. See
In Bay State Insurance Co. v. Wilson, the court took a contrary view, concluding that the words “expected” and “intended” are not synonymous. It reasoned that were the terms synonymous, no purpose would have been served by amending the form to include both terms within the exclusion. The court held the two words apply to situations that differ from each other because a different degree of proof is necessary for each — a greater degree of proof being required to establish intent than to establish expectation.
Insurance carriers often argue that all damage is excluded from coverage if an insured intended the act or if the consequences of the act reasonably were foreseeable to someone, even if not foreseen by the insured. However, this argument is not supported by the intent of the drafters. It also is an argument to which courts have not been receptive.
Pasich, supra, 10 No. 21 Mealey’s Litig.Rep.: Insurance at 21. Pasich’s view of the clause’s origin is revealing and sheds considerable light on a reasonable interpretive approach.
The “occurrence” definition with its “expected or intended” exclusion was added to the standard form CGL policy in 1966 when the basis of coverage was changed from an “accident” to an “occurrence.”
*188 The “expected or intended” exclusion in the definition of “occurrence” replaced the intentional injury exclusions that were contained in the “accident” policies issued before 1966.
At the time the “expected or intended” exclusion was being considered by the drafters of the standard form CGL policy, they considered alternative language as well. This alternative language focused on an objective test of coverage, rather than the subjective test of the “expected or intended” exclusion. It was suggested as part of an exclusion stating:
This policy does not apply to bodily injury or property damage resulting from deliberate acts or omissions of the insured which with reasonable certainty may be expected to produce injury or damage.
Minutes of the Joint Forms Committee (May 2-4, 1961), Trial Exhibit No. 977, at 9, In re Asbestos Ins. Coverage Cases, Cal. Judicial Council Coord. Proceed. No. 1072 (Cal.S.F.Super.Ct.) (emphasis added), judgment entered (Jan. 24, 1990), appeals pending. This language was rejected in favor of the “expected or intended” exclusion. As Herbert Schoen, one of the key drafters of the policy language, has testified, this “reasonable certainty” language was rejected because it “was too rough to inflict upon our insureds and would lead to the demand of its deletion.” Trial Transcript, Mar. 4, 1986, at 15901, In re Asbestos Ins. Coverage Cases. As Mr. Schoen further explained, the only thing that the drafters sought to exclude from coverage was the intentional results of intentional act[s], such as murder. We didn’t want to cover that. That is an intentional act with an intentional result.
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After the 1966 standard form CGL policy was introduced, insurance carriers were surveyed to seek their explanation of various policy provisions, including the “expected or intended” language. In response, Travelers Insurance Company stated:
We do not anticipate any problems with the phrase “neither expected nor intended from the standpoint of the insured.” Certainly, we will never use the language to deny coverage where the foreseeability of the injury was no more than an element of proof of negligence as this would mean that the liability policy would not cover liability for negligence. The language obliges us to judge coverage from the standpoint of the insured claiming coverage....
Letter from R.J. Fisher to Robert F. Bauer (Aug. 19, 1966), Trial Exhibit No. 2216, In re Asbestos Ins. Coverage Cases.
The Hartford Insurance Group also responded, offering its understanding of the meaning of the term “expected.” As Hartford explained, the term “expected” means “expected for a certainty.” Letter from Harold Schaffher to Robert F. Bauer (Aug. 25, 1966), Trial Ex. No. 2219, In re Asbestos Ins. Coverage Cases.
Pasich, supra, 10 No. 21 Mealey’s Litig.Rep.: Insurance at 23-24; see generally Kirk A. Pasich, The Breadth of Insurance Coverage for Environmental Claims, 52 Ohio St. L.J. 1131 (1991).
Although many other sections could be quoted, we have confined ourselves to a few excerpts from the Pasich article. Suffice it to say that reviewing the entire history of the clause and the expressed intent of its drafters in the insurance industry, the comment concludes:
Given this history, insurance carriers should not be permitted to distort the meaning of the language of the “expected or intended” exclusion. The insurance industry specifically considered, and rejected, the “objective” foreseeability test recognizing that that test would eliminate coverage for even simple acts of negligence. Courts also should reject any “objective” foreseeability test.
Pasich, supra, 10 No. 21 Mealey’s Litig.Rep.: Insurance at 25.
Not all commentators share Pasich’s view. Some argue that the insurance industry’s intent in drafting the clause was broader and meant to incorporate an objective element. For instance, the clause in the policy before
We are unwilling to interpret the clause in question according to so arcane a standard. We do not believe that among the few consumers who actually read a homeowner’s policy, even the most sophisticated would be able to draw a distinction by differentiating the two phrases — “from the standpoint of the insured” and “by the insured.”
Nor do we believe that application of a foreseeability test is consistent with the purposes for which insurance is purchased. See Alabama Farm Bureau Mut. Cos. Ins. Co. v. Dyer,
There is no difference in the substance between the language of an exclusionary provision in a homeowners policy which excludes bodily injury which is either “expected or intended” and the language in accident policies which limit the exclusion to “intentional” injuries. Obviously, an “expected injury,” as that term is used in an insurance exclusionary clause excluding from the coverage bodily injury expected from the standpoint of the insured, cannot be equated with the foreseeable injury---It should be noted that results “neither expected nor intended” deal with intent. While outrageous behavior may supply the necessary intent, ordinarily, willful and wanton conduct or severe intoxication do not produce the necessary intent to cause harm. In other situations, the nature of the behavior itself clearly indicates that not only was the initial act intentional but the consequences as well as in the case of a shooting, robbery, and assault, regardless of whether the injuries turned out greater than anticipated.
7A John A. Appleman, Insurance Law and Practice § 4501.09 (Berdal ed.1979) (emphasis added).
2. Case authority
Generally speaking, there are three different lines of authority construing the “expected or intended” exclusion. Two minority approaches have emerged: the first follows the classic tort doctrine of foreseeability, looking to the natural and probable consequences of the insured’s act. The second argues that the insured must have had the specific intent to cause the type of injury
These two approaches demonstrate both the extremes and the advantages and disadvantages of each view. On the one hand, if we construe the exclusion clause broadly, coverage would be denied if serious or substantial harm resulted when the insured might have intended only slight or no harm. This construction, however, might further the strong interest in deterring those who knowingly engage in wrongful conduct and fosters the public policy that forbids indemnifying a person for his own willful wrongdoing. See Meere,
That interpretation is more or less expressed by the majority approach, which views the injury as “expected” if the insured intended both the act and to cause some kind of injury. This approach has been described as well-established, well-reasoned, consistent with the parties’ reasonable expectations, and consistent with public policy. See Iowa Kemper Ins. Co. v. Stone,
In Arizona, our middle ground approach regarding “expected” injury has been expressed by the two-prong test set forth in Phoenix Control Systems v. Insurance Co. of North America, in which we interpreted the clause in the following words:
A two-prong inquiry is applied in Arizona to determine an insured’s intent. First, intent is determined by looking at the insured’s subjective desire to cause harm. [Citing Farmers Ins. Co. v. Vagnozzi,138 Ariz. 443 ,675 P.2d 703 (1983), and Meere,143 Ariz. 351 ,694 P.2d 181 (1984) ]. An act, even though intentional, must be committed for the purpose of inflicting injury or harm[.]
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Second, if the nature and circumstances of the insured’s intentional act were such that harm was substantially certain to result, intent may be inferred as a matter of law. See Continental Ins. Co. v. McDaniel,160 Ariz. 183 ,772 P.2d 6 (App.1988); Steinmetz v. National American Ins. Co.,121 Ariz. 268 ,589 P.2d 911 (App.1978); Clark v. Allstate Ins. Co., 22 Ariz.App. 601,529 P.2d 1195 (1975).
Thus, if the act was intentional and there was either a subjective desire to cause some specific harm (intent) or substantial certainty (expectation) some significant harm would occur, then the insured will not be heard to say that the exclusion does not apply because the injury was more severe or different from what was intended. Meere,
Therefore, we continue to follow what we deem to be the middle ground, one that meets both the reasonable expectations of consumers and the needs of the insurance industry, and additionally serves the interests of public policy. If and to the extent Vanguard v. Cantrell,
C. Application of the law to the facts of this case
The circumstances of this robbery made it substantially certain that someone in or around the theater would suffer bodily injury. All three men were carrying loaded guns when they entered the theater during business hours. Henderson armed himself, helped plan the robbery, and actively and willingly participated in it; he even furnished the gun Kerl used to murder Hill. Nine days earlier, the same three men robbed a Piccadilly Restaurant and killed an employee. Given these facts and applying the above two-pronged analysis, common sense and reason tell us some type of bodily injury was so substantially certain to occur when the three armed men entered a presumably crowded theater during business hours that we must infer an intent to injure without regard to Henderson’s claimed lack of specific intent. If the “nature and circumstances of [the] intentional act were such that harm was substantially certain to result, intent may be inferred as a matter of law.” Phoenix Control Systems,
In Continental Western Insurance Co. v. Tool, also involving an armed robbery, the Minnesota Supreme Court stated:
It is clear from the testimony that while Ross and Toal did not specifically intend to shoot anyone during the robbery, they did intend to threaten people with the guns and to use them if it became necessary to accomplish the robbery. Ross knew that at least four of the participants were carrying guns. He claimed that it never entered his mind that anyone would be shot, although he admitted that it was no “great surprise” or “shock” when the robbers discovered that someone had been shot.
[T]he facts of the instant case compel the conclusion that the insureds followed through with the armed robbery with knowledge that someone might well be injured or killed in the process. The robbery was a well planned operation. The*192 insureds knew that several of the participants would be carrying loaded guns. Ross had supplied two of these loaded guns and even instructed Toal that “all you got to do is pull the trigger.” ... In short, the insureds intentionally prepared themselves to inflict serious injury in order to facilitate the armed robbery. Thus, we find the insureds’ acts to be of such a calculated and remorseless character that we infer an “intention to inflict an injury” as a matter of law.
Id. at 177-78,
In Toal, as in the present case, the injury was expected or intended because the insured intentionally engaged in an armed robbery under circumstances that made it not only foreseeable but substantially certain that some significant harm would result. See Phoenix Control Systems,
It is therefore of no consequence that Henderson may not have intended the result — murder. Meere,
CONCLUSION
Adopting an interpretation of the “expected or intended” exclusion that comports best with both consumer expectation and insurance industry intent, we find, under the facts of this case, that coverage is excluded by the “expected or intended” clause in the Ohio Casualty policy. We vacate the court of appeals’ opinion and affirm the trial court’s grant of summary judgment in favor of Ohio Casualty.
Notes
. The majority stated that "[t]he parties stipulated that Henderson was not the killer and that he did not intend that Hill be shot.” Id. at 155,
. Courts had generally held that injury or damage was caused "intentionally” within an "intentional injury exclusion clause" only when the insured had acted with a specific intent to cause harm. Under this view, it was not sufficient that the insured’s intentional, albeit wrongful, act re-suited in unintended harm; it was the harm itself that must have been intended before the exclusion would apply. See Annotation, Liability Insurance: Specific Exclusion of Liability for Injury Intentionally Caused by Insured,
. We believe, however, that when the factors involving public policy and the purpose of the contractual exclusion are considered, the proper interpretation of the clause in question is that it excludes indemnification or coverage when the insured intentionally acts wrongfully with a purpose to injure. When he acts wrongfully, he commits an intentional tort by performing an act designed to inflict injury. He will not be allowed under such circumstances to deny a basic intent demonstrated by his acts____ Nor will he be allowed to escape from the exclusionary clause by claiming that he did not intend the precise injury — in character or magnitude — that in fact occurred.
Meere,