Discussion
In Gray, the insured brought an action against its insurer for
failure to defend an action stemming from a complaint alleging that
he committed a sexual assault. According to the allegations of the
complaint against him, the insured, Dr. Gray, “willfully,
maliciously, brutally, and intentionally assaulted” the plaintiff,
Mr. Jones.
The insured provided notice of the lawsuit to Zurich and
requested a defense, but Zurich refused to defend him because the
allegations of the complaint alleged an intentional tort that fell
outside the scope of the policy.
Dr. Gray was the named insured under an insurance policy
issued by Zurich. The policy contained a “Comprehensive Personal
Liability Endorsement,” which provided that the insurer
would:
“pay on behalf of the insured all sums which the insured shall
become legally obligated to pay as damages because of bodily injury
or property damage, and the company shall defend any suit against
the insured alleging such bodily injury or property damage and
seeking damages which are payable under the terms of this
endorsement, even if any of the allegations are groundless, false
or fraudulent; but the company may make such investigation and
settlement of any claim or suit as it deems expedient”.
The policy excluded coverage for bodily injury or property
damage caused intentionally by or at the direction of the
insured.
The policyholder claimed, however, that he acted in
self-defense. The insurance company denied a defense of the
lawsuit, reasoning that liability for intentional torts was not
covered by the policy. The court held, however, there was a
potential that the policyholder might be found liable not for
assault and battery, but merely for the negligent use of
unreasonable force in the altercation. That potential liability
thus created the possibility of a judgment for a negligent tort,
not an intentional one, and if the judgment came down that way, the
insurance company would have to pay for it. And, because the
insurance company might have to pay for such a judgment, it
definitely had an obligation to defend.
The court made its pronouncement in words that have been cited
probably thousands of time since:
DEFENDANT CANNOT CONSTRUCT A FORMAL FORTRESS OF THE
THIRD-PARTY’S PLEADINGS AND RETREAT BEHIND ITS WALLS. THE PLEADINGS
ARE MALLEABLE, CHANGEABLE, AND AMENDABLE. TO RESTRICT THE DEFENSE
OBLIGATION OF THE INSURER TO THE PRECISE LANGUAGE OF THE PLEADING
WOULD NOT ONLY IGNORE THE THRUST OF THE CASES BUT WOULD CREATE AN
ANOMALY FOR THE INSURED.
Further:
… the complainant in the third-party action drafts his
complaint in the broadest terms; he may very well stretch the
action which lies in only nonintentional conduct to the dramatic
complaint that alleges intentional misconduct. In light of the
likely overstatement of the complaint and of the plasticity of
modern pleading, we should hardly designate the third party as the
arbiter of the policy’s coverage. An insurer, therefore, bears a
duty to defend its insured whenever it ascertains facts which give
rise to the potential of liability under the policy.
Discuss how this case could impact the achievement of
insurers’ goals.