Opinion
CIVIL ACTION NUMBER 02C-07-065-JOH
Submitted: October 3, 2002 Argued: November 21, 2002
Decided: February 4, 2003
Upon Motion of Defendant Ronald Dooley to Dismiss — GRANTED
Appearances: Sean A. Dolan, Esquire, of Marshall Dennehey Warner Coleman Goggin, Wilmington, Delaware, attorney for plaintiff
Gary F. Traynor, Esquire, of Prickett Jones Elliott, Wilmington, Delaware, attorney for defendant
MEMORANDUM OPINION
Plaintiff Continental Insurance asks this Court to declare that it is not required to provide coverage to its insured, defendant Ronald Dooley. He has an auto insurance policy with Continental. In a separate action, Samuel and Eva Ramos have sued him for injuries arising out of an auto accident.
Continental's policy contains an exclusion from coverage for criminal acts even if its insured is not charged or convicted. In the incident involving Samuel Ramos, Dooley was charged with assault in the first degree. He later pled nolo contendere to a reduced charge of assault in the third degree. The Ramos' complaint against him, however, neither cites nor involves a violation of any criminal law, but only cites provisions in the Motor Vehicle Code, either claiming negligence per se or reckless driving.
But the exclusion from coverage contains an exception which allows for coverage where the criminal conduct is a violation of a motor vehicle traffice law. The issue presented is whether these exclusion and exception provisions mean coverage exists where an act is both a crime and a violation of the Motor Vehicle Code or only where the criminal act is solely a motor vehicle violation. Even though the Ramos' complaint cites only Motor Vehicle Code violations, the issue is whether coverage is still to be denied as Dooley's underlying conduct caused him to be charged with a criminal offense.
The Court holds that the exclusion/exception clause is ambiguous. As an insurance clause, it must be interpreted against Continental. As such, Continental is required to provide coverage. In addition, if it were not, there would be a violation of Delaware's firmly rooted public policy to provide coverage to protect innocent parties.
Dooley's motion to dismiss Continental's declaratory judgment action is GRANTED.
Factual Background
The exclusion at issue was added by amendment. Dooley does not dispute the validity of the amendment process or that it forms a part of his contract with Continental. The amendment reads:
I. PERSONAL LIABILITY — MOTOR VEHICLE WE DO NOT COVER is amended as follows:
B. The following exclusion, 14., is added:
14. Resulting from criminal acts or omissions of or at the direction of one or more covered persons. This exclusion applies even if:
a. Such covered person lacks the mental capacity to govern his or her conduct;
b. Such covered person is not actually charged with or convicted of a crime.
However, this exclusion does not apply to a criminal act or omission that is a violation of a traffic law or motor vehicle law. (emphasis in original)
Exclusion 14.
The Ramos' complaint alleges that on February 15, 2000, Dooley pulled out from parked position on a shoulder into the path of Samuel Ramos' vehicle, striking it and causing him serious physical injury. Mrs. Ramos' claim is for loss of consortium. Their complaint asserts that Dooley's conduct was negligent and reckless. They allege that Dooley violated various sections of the Motor Vehicle Code, such as careless and inattentive driving, exceeding a reasonable speed, failure to yield right of way, and other provisions. They also accuse him of reckless driving in violation of the Motor Vehicle Code.
Continental's declaratory judgment complaint states that Dooley was charged with the felony of assault in the first degree in connection with this incident. Dooley represents that he pled nolo contendere to a reduced misdemeanor charge of assault in the third degree. The Ramos' complaint alleges no criminal conduct or any violation of a criminal statute, such as the one with which he was originally charged or to which he entered his nolo plea.
Parties' Contentions
Continental argues that the coverage exclusion applies. It says the Court need not look to the exception as Dooley was charged with a crime, the serious felony of assault in the first degree. As coverage is excluded even if not charged, but even if charged but not convicted, Dooley's conduct falls within the exclusion. Under these circumstances there is no issue of ambiguity in the policy language. The Court, therefore, Continental contends, need not reach the exception language. While Dooley invokes public policy in favor of coverage, Continental contends public policy supports the proposition that people should not receive insurance coverage for criminal acts.
Dooley's contention, on the other hand, is that the provision at issue is ambiguous. First, what coverage does it exclude? Second, the exception can be interpreted two ways. It can be interpreted to provide coverage 1) where a criminal act is also a violation of the Motor Vehicle Code or 2) where the act is only a violation of the Motor Vehicle Code. He also asserts that Delaware's strong public policy means that this exclusion exception must be read to require coverage. He points out his plea of nolo contendere is inadmissable against him in any proceeding and results in no record of criminal conduct or conviction. On this score, Continental seeks time for more discovery about his conduct.
Applicable Standards
The motion before the Court is to dismiss Continental's action. The Court notes that Dooley has offered additional material which could implicate different standards, namely those applicable to summary judgment motions. Further, despite Continental's request to take additional discovery, the Court views the issues in this case as resolvable on the record presented, discounting those matters Dooley has offered in addition to Continental's complaint.
In considering a motion to dismiss, the Court accepts all well-pled allegations as true. All reasonable inferences will be viewed favorably to the non-moving party.
Ianire v. University of Delaware, 255 A.2d 687, 691 (Del.Super.Ct. 1969).
Ramunno v. Cawley, 705 A.2d 1029, 1034 (Del. 1998).
Discussion
There is essentially no factual dispute present in this case. Dooley does not deny that he was charged with assault in the first degree as cited in Continental's complaint. He seeks to supplement the record, however, to show there was no criminal conduct by noting his plea of nolo contendere to the charge of assault in the third degree. Insofar as such a plea cannot be used as an admission in a civil proceeding, his purpose is correct. But Dooley misses the thrust of a nolo plea in a criminal context. For a court, such a plea is treated the same as a guilty plea. A court taking such a plea sentences a defendant entering it in the same manner as if a guilty plea had been entered.To a degree, Dooley's argument misses another point and one which is more central to the issues in this case. The exclusionary language around which all issues revolve disclaims coverage for any criminal act, even if the insured is not charged, or, in so many words, charged but not convicted. It is undisputed that Dooley was charged with a serious felony. This means it is unnecessary for this motion to consider the disposition of that charge and expand the record beyond Continental's complaint.
The focus, therefore, is on the language of the exclusion itself. Interpretation of a contract is purely a question of law. This being an insurance provision, additional interpretive tools are used. The scope of coverage is determined by the policy's language. Where the policy's language is clear and unequivocal, the parties are bound by that clear meaning. An insurance contract is ambiguous when the provisions in controversy are reasonably or fairly susceptible to two different interpretations or may have two or more different meanings. To the extent an ambiguity exists, the Court will utilize the doctrine of contra proferentum, which dictates that the policy language be construed most strongly against the insurer which drafted it.
Universal Underwriter's Ins. Co. v. Travelers Ins. Co., 669 A.2d 45, 47 (Del. 1995).
Woodward v. Family Farm Cas. Ins. Co., 796 A.2d 638, 641 (Del. 2002).
Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742, 745 (Del. 1997).
O'Brien v. Progressive N. Ins. Co., 785 A.2d 281, 288 (Del. 2001).
Rhone-Poulenc Basic Chem. Co. v. American Motorists Ins., 616 A.2d 1192, 1196 (Del. 1992).
In isolation from the rest of the policy, the exclusion reads:
14. Resulting from criminal acts or omissions of or at the direction of one or more covered persons. This exclusion applies even if:
a. Such covered person lacks the mental capacity to govern his or her conduct;
b. Such covered person is not actually charged with or convicted of a crime.
However, this exclusion does not apply to a criminal act or omission that is a violation of a traffic law or motor vehicle law. (Emphasis Omitted)
Exclusion 14.
Dooley's first argument about ambiguity is that this provision does not say excluded from what coverage — medical expenses, wages, property damages or what. But while it was not artfully drafted for inclusion with the rest of the policy, another principle of contract interpretation applies. Insurance contracts should be read as a whole to give effect to the parties' intentions. This exclusion, when read in context with the 13 others in the same section of the policy, is not ambiguous on this basis. The heading for the long list of exclusions is:
Northwestern Nat'l Ins. Co. v. Esmark, Inc., 672 A.2d 41, 43 (Del. 1996).
LOSSES WE DO NOT COVER
We do not provide Personal Liability — Motor Vehicle Coverage for:
"Personal Liability — Motor Vehicle" is defined elsewhere in the policy sufficiently to indicate what coverage is excluded. Dooley's ambiguity argument on this point is unavailing.
But Dooley's argument does not end there. He points to the exclusion again and says the exclusionary language and the exception to it are ambiguous. On the one hand, there is a coverage exclusion for acts resulting from criminal acts and that exclusion applies even if the person is not charged or, if charged, but not convicted.
Continental, of course, asserts that this is as far as the Court need go in interpreting this exclusion. Its reason is that Dooley was charged with a crime, namely assault in the first degree. While that is factually undisputed, the same principle of interpretation just employed to remove Dooley's earlier ambiguity argument, when, in turn, applied to Continental's argument, means that the exclusion has to be read as a whole. When that is done, the exception must be included.
It is the exception which renders this provision ambiguous. Two reasonable but contradictory interpretations of that exception are:
However, this exclusion does not apply to a criminal act or omission that is also a violation of a traffic law or motor vehicle law.
However, this exclusion does not apply to a criminal act or omission that is only a violation of a traffic law or motor vehicle law.
The difference between these two interpretations is profound. Either has a basis, but this case highlights the difficulty of reconciling the exclusion language with the exception language.
To start with, it is undisputed that Dooley was charged with a serious criminal offense, assault in the first degree. Of the various way one can commit that offense, the most likely applicable is:
The person recklessly or intentionally causes serious physical injury to another person.
The current record is sparse concerning the circumstances of the collision between Dooley's vehicle and Samuel Ramos' vehicle. One gleans from the original charge and the one to which he pled nolo, that this may have been more than a "fender bender" or an intersectional accident. In short, the suspicion exists that more than mere negligence existed. But, the Court need not speculate further, nor is it necessary to authorize discovery into Dooley's conduct to aid in deciding Continental's action.
The reasons are several-fold. One is that the Ramos' complaint alleges negligent conduct. In that way, it is their complaint which creates or highlights the ambiguity of the exclusion/exception. Circumstances can do that.
Phillips Home Builders, Inc. v. Travelers Ins. Co., 700 A.2d 127 (Del. 1997).
The Ramos`s complaint alleges mere negligence. But it does so in the context where there was a criminal charge. The exclusion is initially triggered by that charge. Dooley's alleged misconduct is measured in the Ramos' complaint by a mens rea much less serious than that of assault in the first degree. Their allegation is negligence per se arising from alleged violations of the Motor Vehicle Code. On that basis, the exception to the exclusion is triggered.
Dooley's conduct may have been criminal and certainly he was charged with a crime. His conduct, however, may also have been a violation of one or more of the Motor Vehicle Code provisions the Ramoses allege. Does the original criminal charge, however, override that? Or, does the existence of the charge mean that since the exclusion was triggered, the motor vehicle exception is inoperative even though violations of Motor Vehicle Code provisions are cited?
The exception, however, does state that it applies, that is, the exclusion provision is overidden, where the criminal conduct is a traffic law or motor vehicle code violation. The Ramos' complaint in effect, does that by alleging conduct in violation of the Motor Vehicle Code. That fact, too, is a reason why the Ramos' complaint creates an ambiguity. Its allegations ignore the original charge and the offense to which Dooley entered his nolo plea. They do not even seek civil redress for violations of a criminal law. In a way, their complaint has superseded Continental's exclusion and implicated the exception.
As for their allegations of negligent conduct, therefore, it is unnecessary to know whether there was a criminal charge or even the nature of any possible criminal conduct.
Continental's policy language contains the seeds of more ambiguity and a fundamental inability to reconcile the exclusion with the exception. An examination of the Ramos' complaint, which is typical of many auto accident personal injury actions citing various provisions in the Motor Vehicle Code, illustrates why.
As noted, the Ramoses charge Dooley with negligent conduct. They also charge him with reckless driving. Further, as noted, the degree of negligence alleged is ordinary negligence, which is defined as:
[T]he lack of ordinary care; that is the absence of the kind of care a reasonably prudent and careful person would exercise in similar circumstances.
Delaware Civil Pattern Jury Instructions § 5.1 (2000).
The definition of negligence in the Criminal Code is virtually the same. While it is unnecessary to know the reason behind or the factual basis for Dooley's nolo plea, the offense to which that plea was entered is violated when:
11 Del. C. § 231(e) states, "A person acts with negligence with respect to an element of an offense when the person fails to exercise the standard of care which a reasonable person would observe in the situation."
A person is guilty of assault in the third degree when:
(1) The person intentionally or recklessly causes physical injury to another person; or
(2) With criminal negligence the person causes physical injury to another person by means of a deadly weapon or dangerous instrument.
Criminal negligence is a more serious type of conduct than negligence and the Criminal Code defines it as:
A person acts with criminal negligence with respect to an element of an offense when the person fails to perceive a risk that the element exists or will result from the conduct. The risk must be of such a nature and degree that failure to perceive it constitutes a gross deviation from the standard of conduct that a reasonable person would observe in the situation.
In some personal injury actions, it is conceivable that the defendant's conduct meets that definition but that the civil action alleges simple negligence. Yet the exclusion and exception are simultaneously implicated. Should that possibility, however, mean that only the exception-from-coverage applies?
There are more examples. One can drive a motor vehicle negligently — not with criminal negligence — and cause injury to another and be culpable under the Criminal Code. There is a catch, however, that the negligent driving must be accompanied by being under the influence of alcohol or drugs:
While in the course of driving or operating a motor vehicle and under the influence of alcohol or drugs, as defined by § 4177 of Title 21, the person's negligent driving or operation of said vehicle causes physical injury to another person.
This Court sees a number of civil actions alleging both negligent driving and driving while under the influence. How would Continental's exclusion/exception be applied in such a co-terminous situation? Under the doctrine of contra proferentum, it must be applied to give precedence to the exception and require coverage.
The same conclusion applies to the Ramos' allegation that Dooley drove his vehicle in violation of the statute prohibiting reckless driving. For example, Dooley's plea of nolo may have been under the provision making it criminal conduct to recklessly cause another physical injury. The Criminal Code defines recklessly as:
A person acts recklessly with respect to an element of an offense when the person is aware of and consciously disregards a substantial and unjustifiable risk that the element exists or will result from the conduct. The risk must be of such a nature and degree that disregard thereof constitutes a gross deviation from the standard of conduct that a reason able person would observe in the situation.
As a motor vehicle violation, reckless driving is defined as:
No person shall drive any vehicle in wilful or wanton disregard for the safety of persons or property, and this offense shall be known as reckless driving.
The definition of reckless conduct in civil law is virtually the same:
Reckless conduct reflects a knowing disregard of a substantial and unjustifiable risk. It amounts to an "I don't care" attitude.
Recklessness occurs when a person, with no intent to cause harm, performs an act so unreasonable and so dangerous that he or she knows, or should know, that harm will probably result.
Delaware Civil Pattern Jury Instructions § 5.9 (2000).
If Dooley's driving was reckless and caused physical injury to Samuel Ramos, a criminal offense, but also satisfied the elements of civil reckless driving, the ambiguity, if not irreconcilable conflict of policy language, is manifested once more. Again, that ambiguity and lack of reconciliation result in Continental, with this policy language, being required to provide coverage to Dooley. There are simply too many occasions under Delaware law where a violation of the Motor Vehicle Code can also meet the elements of one or more crimes in the Criminal Code.
This conclusion also receives support from Delaware's firmly rooted policy favoring coverage for innocent persons injured as a result of motor vehicle accidents. That policy has been enunciated in various decisions. The Supreme Court, for instance, has found that an insurance policy exclusion which denied personal injury protection to the insured based on his conviction for driving under the influence was incompatible with Delaware's "no fault" law.
Bass v. Horizon Assurance Co., 562 A.2d 1194 (Del. 1989).
But, the most instructive Supreme Court decision is Hudson v. State Farm. In that case, the Court was called upon to interpret a policy provision containing the phrase "caused by accident." The issue was whether the automobile insurer had to defend and indemnify its insured, who intentionally or recklessly caused a collision that injured an innocent passenger riding in the vehicle with the insured. The insurer denied coverage on the basis that when viewed from the insured's perspective, the collision was not, in fact, an accident. The Supreme Court decided the case as a matter of public policy based on Delaware's enactment of motor vehicle financial responsibility laws. The Court refused to enforce the implied exclusion for reckless or intentional misconduct while operating a motor vehicle, finding that public policy remains the same whether the exclusions are express or implied. After interpreting the phrase "caused by accident" in terms of the injured party's viewpoint, the Court concluded:
Hudson v. State Farm Mut. Ins. Co., 569 A.2d 1168 (Del. 1990).
Id. at 1169.
Id.
Id. at 1171.
Id.
The issues of unlawful conduct, versus the protection afforded injured person under our financial responsibility law, are separate and distinct. Those who violate the law remain subject to criminal prosecution, while those who are injured may look to financial responsibility law for economic protection.
Id. at 1172.
Continental, however, points to what it contends is a more countervailing public policy. That is a policy that people cannot and should not be permitted to obtain insurance coverage for criminal acts. To be able to obtain such coverage removes a deterrent to crime. This argument has validity and appeal, but it cannot be used to overcome the strong public policy in auto accident injury cases to provide coverage for innocent injured persons. That same public policy does not, however, carry over to other types of insurance. Events and insurance outside the auto insurance area lack the ringing statutory and decisional policy pronouncements.
See, e.g., Nationwide Mut. Ins. Co. v. Flagg, 789 A.2d 586 (Del.Super.Ct. 2001).
The clash between these two public policies, coverage in auto insurance cases but not for criminal conduct, is one, however, fraught with a myriad of difficulties. In one sense, the courts have to choose one over the other, such as here. Drafters of policy language face similar problems and have probably met with only partial success, as this case demonstrates. The Court recognizes, too, that to give precedence to the exception in this case is illustrative of the expression of an exception swallowing the rule.
The clash of these two public policies is further illustrated by examining several criminal statutes in addition to the ones cited earlier.
One illustration is where the plaintiff suffers a serious physical injury and the tortfeasor was driving negligently and while under the influence. Title 11 Del. C. § 629 states:
A person is guilty of vehicular assault in the first degree when while in the course of driving or operating a motor vehicle and under the influence of alcohol or drugs, as defined by § 4177 of Title 21, the person's negligent driving or operation of said vehicle causes serious physical injury to another person.
Such conduct converted to a civil action is for negligence. It may even involve a claim for punitive damages. But coverage cannot be disclaimed under this policy.
All of the above discussion applies with equal force to a civil wrongful death action asserting reckless driving or negligent driving and/or driving while under the influence. 11 Del. C. § 630(a) states:
A person is guilty of vehicular homicide in the second degree when:
(1) While in the course of driving or operating a motor vehicle, the person's criminally negligent driving or operation of said vehicle causes the death of another person; or
(2) While in the course of driving or operating a motor vehicle, under the influence of alcohol or drugs, as defined by § 4177 of Title 21, the person's negligent driving or operation of said vehicle causes the death of another person.
These are the obvious statutes since an element in each is driving or operating a motor vehicle. In addition, none require intentional criminal conduct, and subsection (2) only requires simple negligence, not criminal negligence.
The policy clash becomes harder to resolve when the statutes without this express element of driving become the basis of a criminal charge or prosecution for a motor vehicle fatality. Neither again contains the element of intentional conduct. Those statutes are 11 Del. C. § 632(1) and § 635(1).
11 Del. C. § 632(1) states:
(1) The person recklessly causes the death of another person.
11 Del. C. § 635(1) states:
(1) The person recklessly causes the death of another person under circumstances which manifest a cruel, wicked and depraved indifference to human life.
These statutes are used to prosecute, but they also form the basis for civil actions involving allegations of violations of the Motor Vehicle Code.
See, e.g., Moorhead v. State, 638 A.2d 52 (Del. 1994).
The Court must point out that its holding on this policy language applies to just the circumstances of this case and the language at issue. While the discussion above reviews some of the pitfalls of exclusionary language in this areas of insurance, the discussion cannot be used to invalidate all such clauses or the invocation of such clauses in all circumstances.
There is another underlying policy at work here, too. It is that the duty to defend is broader than the duty to provide coverage. There is also a distaste to resolve coverage issues prior to the trial of the underlying substantive issues.
Charles E. Brohawn Bros., Inc. v. Employers Commercial Union Ins. Co., 409 A.2d 1055, 1058 (Del. 1979).
St. Anthony's Club v. Scottsdale Ins. Co., Del. Super., C.A. No. 97C-07-112, Herlihy, J. (July 15, 1998).
In summary, the Court finds Continental exclusion/exception language to be ambiguous. It must be interpreted against Continental to require it to provide coverage to Dooley in the Ramos' action. Further, it must give way to the strong Delaware public policy favoring providing coverage to innocent injured persons in auto accident/auto insurance cases.
Conclusion
For the reasons stated herein defendant Ronald Dooley's motion to dismiss is GRANTED.
IT IS SO ORDERED.