Summary
holding that an exclusion for intentional injury did not preclude coverage, even though complaint alleged intentional trespass, because under Virginia law a claim for intentional trespass could also “support a judgment of unintentional trespass” without amendment
Summary of this case from Liberty Univ., Inc. v. Citizens Ins. Co. of Am.Opinion
44127 Record No. 791471.
June 12, 1981
Present: Carrico, C.J., Cochran, Compton, Stephenson, JJ., and Harman, S.J.
Liability insurer fails to defend claims for trespass and property damage at its own risk when it is unclear that the allegations fall within the exclusion clause of the policy; Insurer has duty to defend except when clearly not liable under the policy terms.
(1) Insurance — Liability — Insurer's Duty to Defend — Duty Arises Whenever Circumstances Might Fall Within Policy Coverage — When Allegations of Complaint Leave Coverage in Doubt Insurer Fails to Defend at Own Risk.
(2) Insurance — Liability — Insurer's Duty to Defend — Exclusion Clause ("Property Damage Caused Intentionally by or at the Direction of the Insured") — Insurer Relieved of Duty to Defend Only When Clearly Not Liable Under Contract Terms.
A liability insurer failed to defend insured against a claim of property damage and in a suit to enjoin trespass. The policy contained an exclusion clause providing that the duty to defend did not apply to "bodily injury or property damage caused intentionally by or at the direction of the Insured." Since the bill of complaint alleged an intentional trespass and desecration of property the insurer maintained it had no duty to defend. The insured instituted an action against the insurer for breach of contract. The Trial Court held that the cause of action was within the policy's exclusion clause and the insurer had no duty to defend. The insured appeals.
1. An insurer has a duty to defend its insured when an initial pleading alleges circumstances, some of which would, if proved, fall within the risk covered by the policy. The insurer's failure to defend is at its own risk.
2. The insurer has no duty to defend only when it is clear that the insurer would not be liable under its contract for any judgment based upon the allegations. Since the pleadings can support both a judgment for intentional and unintentional trespass, the trial court erred in ruling that the policy's exclusion clause relieved the insurer of its duty to defend.
Appeal from a judgment of the Circuit Court of Bedford County. Hon. William W. Sweeney, judge presiding.
Reversed and final judgment.
Wm. Rosenberger, Jr., for appellants.
Richard S. Tilley for appellee.
George R. Parker and Rachel H. Parker, the appellants, instituted this action against Hartford Fire Insurance Co. (Hartford), the insurer of the Parkers, alleging that Hartford had breached the terms of its insurance contract by failing to defend the Parkers in two suits instituted by Loyd Turpin. The trial court ruled that the insurance contract did not obligate Hartford to defend the Parkers, and this appeal followed.
The Parkers seek to recover the $4,530.96 they paid as attorney's fees in defending these suits. The amount involved is not in dispute.
The insurance contract issued to the Parkers obligated Hartford to "defend any suit against the Insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent." The policy provided, however, that this duty to defend did not apply to "bodily injury or property damage caused intentionally by or at the direction of the Insured."
Turpin filed an action at law against the Parkers and Virginia Harvestore, Inc., alleging the desecration of the Turpin family burial ground located on the Parker farm. Turpin conveyed the property to the Parkers' predecessor in interest in 1921, reserving the burial lot. This reservation was not in the 1968 deed to Mr. Parker. The Parkers contracted with Virginia Harvestore to build a silo on the burial lot. The trial judge sustained the demurrers of the defendants.
Subsequently, Turpin filed a bill of complaint asking that the Parkers be enjoined from trespassing on the burial ground, and that they pay damages for the desecration already done to the cemetery. The complaint alleged that Parker "knew or should have known" of the burial lot in 1968 and that subsequent to that time, he obtained "actual knowledge of the existence of the burial lot." The Parkers were enjoined from digging, excavating or littering the lot, but Turpin was not awarded any damages.
The trial court ruled that Hartford had no duty to defend the Parkers in the suit brought by Turpin. Concluding that the bill of complaint filed by Turpin alleged an intentional trespass, the court held that the cause of action fell within the insurance policy's exclusion clause relieving Hartford of its duty to defend if the "property damage [was] caused intentionally by or at the direction of the insured."
The trial court also held that Hartford had no duty to defend suits for injunctive relief. Since, however, Turpin asked for both an injunction and damages, Hartford was obligated to defend the Parkers if the underlying action otherwise fell within the policy.
[1-2] When an initial pleading "alleges facts and circumstances, some of which would, if proved, fall within the risk covered by the policy," the insurance company is obliged to defend its insured. Lerner v. Safeco, 219 Va. 101, 104, 245 S.E.2d 249, 251 (1978). Moreover, where the allegations "leave it in doubt whether the case alleged is covered by the policy," the insurer's failure to defend is at its own risk. London Guar. Co. v. White Bros., 188 Va. 195, 199-200, 49 S.E.2d 254, 256 (1948). Only when "it appears clearly [the insurer] would not be liable under its contract for any judgment based upon the allegations," does the company have no duty to defend. Travelers v. Obenshain, 219 Va. 44, 46, 245 S.E.2d 247, 249 (1978). (Emphasis added.)
We cannot say that Turpin's pleadings clearly show that any recovery against the Parkers would not have been covered by the insurance policy. While some of the language of the pleadings is couched in terms of intentional trespass, the pleadings, without amendment, could have supported a judgment of unintentional trespass. "[W]hen the owner [of land] brings [an] action [for trespass on realty], alleging only that it was done wilfully and oppressively and the proof fails to sustain this allegation, the owner is still entitled to recover actual damages on proof of the unintentional trespass." Chesapeake O. R. Co. v. Greaver, 110 Va. 350, 355, 66 S.E. 59, 60 (1909). Hartford, therefore, was obligated to defend the Parkers in Turpin's suits.
For the reasons stated, the judgment of the trial court will be reversed and final judgment entered here for the Parkers in the amount of the attorney's fees expended in defending the claims in question.
Reversed and final judgment.