I love coverage cases involving disputes between neighbors. There is a voyeuristic aspect to seeing the various tactics that people take to cause annoyance to each other. Not Hatfield and McCoy-type stuff. More like getting under each other’s skin. That’s what’s at issue in American Reliable Ins. Co. v. Vlieland, No. 17-100 (D. Mont. Mar. 30, 2018), although there are some serious allegations here as well.
Randy Self and Tina Roberts live in Hungry Horse, Montana. They sued their neighbors, the Vlielands, alleging that they intentionally harassed, disrupted, and interfered with their enjoyment of life. Self and Roberts asserted claims for nuisance, intentional infliction of emotional distress and assault, alleging that “(1) the Vlielands played loud music and directed noise at [Self and Roberts’s] residence; (2) the Vlielands poisoned [Self and Roberts’s] dog; (3) Jeff Vlieland pointed a pistol at Randy Self; (4) Jeff Vlieland tried to run Tina Roberts off the road; (5) the Vlielands threw rocks at [Self and Roberts’s] residence; and (6) the Vlielands increased the height of their fence to block [Self and Roberts’s] view.”
The Vlielands turned to their homeowner’s insurer, American Reliance, for defense and indemnity. American Reliable defended under a reservation of rights and filed a coverage action. American Reliable argued that the policy precluded coverage because the conduct alleged does not qualify as an “occurrence,” i.e., accident. And, the insurer argued, if it does qualify as an “occurrence,” five policy exclusions further preclude coverage: 1. “Intentional Acts Exclusion”; 2. “Illegal Activities Exclusion”; 3. “Expected or Intended Acts Exclusion”; 4. “Assault and Emotional Abuse Exclusion”; and 5. “Punitive Damages Exclusion.”
Following a review of Montana law, the court stated that an “accident” “may include intentional acts if such acts resulted in unintended or unexpected consequences. Here, there are factual disputes to be resolved at trial regarding whether the Vlielands’ actions constituted negligent or intentional conduct. Though the acts are alleged as claims of intentional infliction of emotional distress and assault, they are also alleged in a claim of nuisance, which may be premised on negligent conduct. Additionally, it’s not plain from the face of the pleadings that the consequences of the Vlielands’ alleged acts were objectively intended or expected. Therefore, an issue of fact remains regarding whether the acts in the Underlying Complaint trigger an ‘occurrence’ under the Policy, which precludes summary judgment at this time.”
The court also held, for similar reasons, that summary judgment was not appropriate with respect to the various intentional-based exclusions, including the Intentional Acts exclusion, which precludes coverage for “bodily injury or property damage: a. Which is intended by, or which may reasonably be expected to result from any intentional act, or omission, of any person insured by this policy. . . . This exclusion applies even if: . . . (2) Such bodily injury or property damage is of a different kind or degree than intended or reasonably expected by any insured.”
Here the court explained that “the ‘Intentional Acts Exclusion’ and ‘Expected or Intended Exclusion’ do not preclude coverage if there is a possibility that the conduct had unintended and unexpected consequences to the victim. The parties dispute whether the Vlielands’ actions were negligent or intentional, which present factual issues to be resolved at trial in the Underlying Litigation. Because questions of fact exist regarding whether the Vlielands’ conduct was intentional or negligent, and if found intentional, whether the Vlielands’ could have expected or intended the consequences of that conduct, summary judgment is not proper on the ‘Intentional Acts Exclusion’ and ‘Expected or Intended Exclusion.’”
The take-away: The court here made it no easy task for an insurer, to disclaim coverage to an insured, for conduct – see above -- that could not have had anything other than expected or intended consequences.
