Opinion
No. 37370-0-II.
November 12, 2008.
Appeal from a judgment of the Superior Court for Clark County, No. 07-2-04699-6, John F. Nichols, J., entered February 8, 2008.
Affirmed by unpublished opinion per Hunt, J., concurred in by Van Deren, C.J.; Quinn-Brintnall, J., concurring separately.
UNPUBLISHED OPINION.
John Petty appeals the trial court's order granting summary judgment to Allstate Insurance Company in Allstate's declaratory judgment action based on a mobile home insurance policy's criminal acts exclusion. Allstate had sought a declaratory judgment ruling that it had no duty to defend its insureds' son, Nicholas Wayne Thornton, against Petty's lawsuit for damages for his criminal act in burning down Petty's barn. Young Thornton pleaded guilty to first degree reckless burning, a class C felony offense, for having knowingly started the fire when his cigarette ashes fell into some hay in the barn; Thornton had left the barn without extinguishing the embers and fire. RCW 9A.48.040(2). The Thorntons' insurance policy expressly excluded coverage for damages caused by the insured's criminal acts.
Petty argues that the trial court erred in granting summary judgment to Allstate because (1) there was no proof that Thornton intended the damage that occurred, namely the burning of Petty's barn; (2) there was no proof that Thornton reasonably expected such damage to result from his reckless acts; and (3) under Van Riper v. Constitutional Gov't League, 1 Wn.2d 635, 96 P.2d 588 (1939), and Allstate Ins. Co. v. Raynor, 143 Wn.2d 469, 21 P.3d 707 (2001), even if an intentional act is not required to trigger the policy's exclusion, Thornton's reckless act was not the type of "serious" criminal act that triggers such a criminal acts exclusionary clause.
Disagreeing with Petty, we hold that an average insurance purchaser would understand that the policy's exclusion of coverage for "criminal acts" would include a felony offense involving criminally reckless behavior resulting in property damage. Accordingly, we affirm the trial court's grant of summary judgment to Allstate.
Facts
On June 6, 2003, 17-year-old Nicholas Wayne Thornton recklessly started a fire that destroyed John Petty's Ridgefield barn and its contents. On September 22, 2004, the State charged Thornton with second degree arson, a class B felony, asserting that he had knowingly and maliciously caused this fire. Thornton subsequently pleaded guilty to a reduced charge of reckless burning, a class C felony. In his statement of defendant on plea of guilty, Thornton stated that he had "[r]ecklessly damaged a barn by knowingly causing a fire in Ridgefield, Washington." Clerk's Papers (CP) at 123.
See Clerk's Papers at 100 (d.o.b. 6/26/1986).
Petty sued Thornton and his parents, Dale and Tammy Thornton. In his complaint, Petty alleged that Thornton had entered his barn without permission; allowed cigarette ashes to fall into the hay stored in the barn; and then failed to extinguish the embers, which caused the barn to burn down. The Thorntons apparently assigned to Petty their claims against Allstate, their mobile home insurance carrier.
Under a separate cause number, Allstate filed a declaratory judgment action to establish that there was no coverage under Section II, Part 1, Coverage X, Exclusion 1 of the Thorntons' mobile home insurance policy. This exclusion stated, in pertinent part:
We do not cover any . . . property damage which may reasonably be expected to result from the . . . criminal acts of an insured person. . . .
CP at 63. Allstate moved for summary judgment. Petty filed a cross motion for summary judgment. The trial court granted Allstate's motion for summary judgment and denied Petty's cross-motion.
Petty appeals.
ANALYSIS
Petty first argues that the trial court erred in granting summary judgment to Allstate because (1) there was no proof that Thornton intended the damage that occurred as a result of his reckless act; and (2) there was no proof that the damages were reasonably expected as a result of his reckless act. These arguments fail.
I. Standard of Review
We review an order of summary judgment de novo, taking all facts and reasonable inferences in the light most favorable to the nonmoving party. Clements v. Travelers Indem. Co., 121 Wn.2d 243, 249, 850 P.2d 1298 (1993) (citation omitted). A trial court may grant summary judgment only when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. CR 56(c). Such is 3 the case here with respect to the trial court's grant of summary judgment to Allstate.
We interpret the terms of an insurance policy as a matter of law. Raynor, 143 Wn.2d at 476 (citing Allstate Ins. Co. v. Peasley, 131 Wn.2d 420, 423-24, 932 P.2d 1244 (1997) (plurality opinion)). We read the terms of the policy "as an average insurance purchaser would understand them and give undefined terms in these contracts their `plain, ordinary, and popular' meaning." Kish v. Ins. Co. of N. Am., 125 Wn.2d 164, 170, 883 P.2d 308 (1994) (quoting Boeing Co. v. Aetna Cas. Sur. Co., 113 Wn.2d 869, 877, 881, 784 P.2d 507 (1990)). If the policy language is clear and unambiguous, we must enforce it as written; we do not create ambiguity where none exists. McDonald v. State Farm Fire Cas. Co., 119 Wn.2d 724, 733, 837 P.2d 1000 (1992).
Because exclusionary clauses are contrary to the fundamental protective purpose of insurance, we construe them strictly against the insurer and will not extend them beyond their clear an unequivocal meaning. Stuart v. Am. States Ins. Co., 134 Wn.2d 814, 818-19, 953 P.2d 462 (1998) (citation omitted). Nevertheless, application of this principle here results in no coverage, under his parents home-owners' insurance, for Thornton's having started the fire that burned Petty's barn.
II. Policy's Exclusion of Coverage For "Criminal Acts"
Section II, Part 1, Coverage X, Exclusion 1 of the Thorntons' mobile home insurance policy stated:
We do not cover any bodily injury or property damage which may reasonably be expected to result from the intentional or criminal acts of an insured person or which is in fact intended by an insured person.
CP 63 (emphasis added). The issue the trial court resolved and that we now review is whether Thornton's criminally reckless acts — allowing his cigarette ashes to ignite the hay in Petty's barn and his failure to extinguish the embers before he left — fell under this exclusionary clause in his parents' insurance policy with Allstate. We hold that Thornton's admitted reckless burning, a class C felony, constituted such "criminal acts" under the policy's exclusionary clause because he should have reasonably expected that damage to Petty's barn would result.
A. Exclusion not Limited to Intentional Acts In Peasley, a majority of our Supreme Court rejected the same argument that Petty makes here. The substantially similar exclusionary clause in Peasley provided:
The "majority" in Peasley comprised the plurality and the concurrence.
Losses We Do Not Cover:
1. We do not cover any bodily injury which may reasonably be expected to result from the intentional or criminal acts of an insured person or which are in fact intended by an insured person.
Peasley, 131 Wn.2d at 424-25 (citing CP at 23). Peasley, the insured shooter, was involved a shooting incident that he and the shooting victim maintained was accidental. Peasley, 131 Wn.2d at 423. Peasley pleaded guilty to reckless endangerment. Allstate sought a declaratory judgment that the criminal acts exclusionary clause of Peasley's homeowner's insurance policy applied and, therefore, Allstate owed no duty to pay damages to Peasley's accidental shooting victim. Peasley, 131 Wn.2d at 423. The trial court granted Allstate's motion for summary judgment. Peasley, 131 Wn.2d at 423.
On appeal, Peasley argued that the phrase "criminal acts" was ambiguous and, therefore, a reasonable person could construe the policy's exclusionary clause as applying only to intentional crimes. Peasley, 131 Wn.2d at 425. A majority of the Supreme Court rejected this argument, reasoning that: (1) Peasley's interpretation of the term "criminal acts" would render redundant the exclusionary clause's reference to "intentional acts"; (2) no dictionary definition of the term "criminal" "include[ed] intent as part of the adjective's meaning," Peasley, 131 Wn.2d at 426; and (3) although definitions of the term "crime" were arguably more restrictive, these definitions did not "include intent as a necessary element." Peasley, 131 Wn.2d at 428 (emphasis added). The majority then held that the term "criminal acts" did not "denot[e] only intentional criminal acts" for purposes of the insurance policy's exclusionary clause. Peasley, 131 Wn.2d at 426-27, 433.
The portions of the Allstate policy's "criminal acts" exclusionary clause at issue here are like those at issue in Peasley. Thus, the Peasley court's analysis compels our similar holding here that the Thorntons' insurance policy's exclusion of "criminal acts" from coverage was not limited to criminal acts that were "intentional."
B. "Criminal Acts" Exclusion Includes Criminally "Reckless" Acts Where Damage is
"Reasonably Expected"
Thornton pleaded guilty to reckless burning, a class C felony. In his statement of defendant on plea of guilty, he admitted that he had "[r]ecklessly damaged a barn by knowingly causing a fire in Ridgefield, Washington." CP at 123. This felonious reckless conduct brought his actions within the criminal acts exclusion in his parents' insurance policy.
1. "Reckless Conduct"
RCW 9A.08.010(1)(c) defines "recklessness" as follows:
A person is reckless or acts recklessly when he knows of and disregards a substantial risk that a wrongful act may occur and his disregard of such substantial risk is a gross deviation from conduct that a reasonable man would exercise in the same situation.
(Emphasis added). Under this statutory definition, by admitting that he had "recklessly" caused the fire that burned Petty's barn, Thornton acknowledged that (1) he knew he had created a "substantial risk that a wrongful act [might] occur," (2) he disregarded this risk, and (3) his disregard of this risk was a "gross deviation from conduct that a reasonable man would exercise in the same situation." RCW 9A.08.010(1)(c).
See Raynor, 143 Wn.2d at 478 (citing Van Riper, 1 Wn.2d at 642).
2. "Reasonably Expected Damage"
Petty also appears to argue that (1) the policy's exclusionary clause required that Thornton "knew the damage would occur," Br. of Appellant at 1-2, and (2) Thornton's guilty plea to reckless burning was insufficient to establish such knowledge because this crime did not require any "reasonable expectation of specific damage." Br. of Appellant at 3. This argument fails. Contrary to Petty's assertion, the policy's exclusionary clause requires only that the non-covered damage must be "reasonably expected to result" from the criminal act.
A plurality of the Peasley court rejected a similar argument that an exclusionary clause phrase — "injury which may reasonably be expected to result" — required the insured to have had a subjective expectation that the injury would result from his reckless actions. Peasley, 131 Wn.2d at 424, 430, 433. Contrary to Peasley's argument, the plurality concluded that this phrase imposed an objective standard and that "the elements of reckless endangerment" necessarily met the objective standard. Peasley, 131 Wn.2d at 431. We find this analysis persuasive here.
Neither the concurrence nor the dissent discussed this issue.
Thornton's guilty plea to reckless burning established that he "recklessly" damaged Petty's barn. RCW 9A.48.040(1). As we earlier discuss in this opinion, conduct is "reckless" when a person,
knows of and disregards a substantial risk that a wrongful act may occur and his disregard of such substantial risk is a gross deviation from conduct that a reasonable man would exercise in the same situation.
9A.08.010(1)(c). As in Peasley, the recklessness of Thornton's acts establishes that he knew about and yet disregarded a substantial risk that damage would occur to Petty's barn when he dropped his cigarette ashes into the hay in the barn and failed to extinguish them. Under these admitted circumstances, the resultant property damage to Petty's barn and its contents was "reasonably expected" within the meaning of the policy's exclusionary clause.
C. Plain Language of Exclusionary Clause
First degree reckless burning, to which young Thornton pleaded guilty, clearly falls under the plain language of his parents' insurance policy's criminal acts exclusion. We reiterate that "reckless conduct" occurs when someone " knows of and disregards a substantial risk that a wrongful act may occur and his disregard of such substantial risk is a gross deviation from conduct that a reasonable man would exercise in the same situation." RCW 9A.08.010(1)(c) (emphasis added). Thus, by admitting in his statement of defendant on plea of guilty that he recklessly burned Petty's barn, Thornton acknowledged that (1) he knew he had created a substantial risk that a wrongful act would occur, (2) he disregarded this risk, and (3) his disregard of this risk was a gross deviation from reasonable conduct. RCW 9A.08.010(1)(c).
An average insurance purchaser would understand the phrase "criminal acts," in the policy's exclusionary clause, to include a felony offense involving criminally reckless behavior that resulted in "reasonably expected" property damage. We hold that first degree reckless burning, to which young Thornton pleaded guilty, clearly falls under the plain language of his parents' insurance policy's "criminal acts" exclusion, thus precluding coverage for Thornton's damage to Petty's barn and it contents. Accordingly, we need not address Petty's additional arguments. We affirm the superior court's grant of summary judgment to Allstate.
We do not, therefore, address Thornton's argument that under Van Riper, 1 Wn.2d at 635, and Raynor, 143 Wn.2d at 469, his merely reckless conduct was not the type of "serious" criminal act that triggers an insurance policy's criminal act exclusionary clause. Similarly, we do not address Petty's Reply Brief objection to Allstate's reliance on the "facts" in the complaint: Petty asserts that Allstate can rely on only the facts established in the affidavits submitted in support of or in opposition to the parties' summary judgment motions. In resolving this appeal, we do not go beyond the elements of the reckless burning offense or Thornton's admission in his statement of defendant on plea of guilty; thus, we do not address this objection.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
VAN DEREN, C.J., concur.
I agree with the majority that the analysis in Allstate Insurance Co. v. Peasley, 131 Wn.2d 420, 423-24, 932 P.2d 1244 (1997), dictates this result. I write separately for two reasons.
First, the term "criminal acts" in this exclusionary clause does not clearly include the unintentional act that Nicholas Thornton committed. I agree with the majority that the term "criminal acts" technically includes unintentional criminal conduct, particularly from the perspective of lawyers. But we read the policy's terms "as an average insurance purchaser would understand them and give undefined terms in these contracts their `plain, ordinary, and popular' meaning." Kish v. Ins. Co. of N. Am., 125 Wn.2d 164, 170, 883 P.2d 308 (1994) (quoting Boeing Co. v. Aetna Cas. Sur. Co., 113 Wn.2d 869, 877, 881, 784 P.2d 507 (1990)). And we construe exclusionary clauses strictly against the insurer because they are contrary to the fundamental protective purpose of insurance. Stuart v. Am. States Ins. Co., 134 Wn.2d 814, 818-19, 953 P.2d 462 (1998).
In my experience, average insurance purchasers would not understand that the term "criminal acts" includes unintentional conduct. It is not common knowledge that criminal law may punish those who act with negligence or recklessness. And few people consider that unintentional acts are crimes. As our review focuses on the understanding of the average insurance purchaser, not a person trained in the law, I believe that the term "criminal acts" in this exclusionary clause does not encompass unintentional acts.
Second, I note that application of the Peasley analysis is problematic. In light of the Peasley decision, policy holders who suffered a loss from an unintentional, but nevertheless criminal, act are discouraged from reporting their loss to law enforcement for prosecution. In turn, the failure to report such crimes erodes the rehabilitative purpose of the criminal justice system, particularly the juvenile justice system, which can, for instance, order that a juvenile pyromaniac receive treatment. As the law stands after Peasley, the pyromaniac's parents are discouraged from seeking criminal or medical intervention for fear that a criminal disposition will result in their insurance provider withholding insurance proceeds.
Additionally, I note that the facts are not sufficiently developed here. Thornton's true "crime" may have been underage smoking in the barn. When the ashes from Thornton's cigarette fell and quickly ignited the hay beyond his ability to control it, he may have panicked and run away without sounding an alarm. Because Thornton pleaded guilty to reckless burning and this case was decided on summary judgment, the facts surrounding the barn's burning have never been explored and we will never know what happened. For these reasons, I question the continued application and viability of the reasoning of the Peasley plurality but, as it remains the law, I concur in the result.
See RCW 26.28.080 (restricting juvenile's right to purchase or possess tobacco products but not strictly prohibiting juvenile's possession of tobacco); RCW 70.155.080(1) (declaring it a civil infraction for a juvenile to possess tobacco).