78 N.Y.2d 41, *; 574 N.E.2d 1035, **;
571 N.Y.S.2d 429, ***; 1991 N.Y. LEXIS 820
Allstate Insurance Company, Respondent, v. William R. Zuk et al.,
Appellants
No. 106
Court of Appeals of
78 N.Y.2d 41; 574 N.E.2d 1035; 571 N.Y.S.2d 429; 1991 N.Y. LEXIS 820
April 25, 1991, Argued June 6, 1991, Decided
PRIOR HISTORY:
Appeal, by permission of the Court of Appeals, from an order of the
Appellate Division of the Supreme Court in the Second Judicial Department,
entered April 30, 1990, which (1) reversed, on the law, an order of the Supreme
Court (Joseph J. Saladino, J.), entered in Nassau County, denying a motion by
plaintiff for summary judgment in an action for a judgment declaring that
plaintiff has no duty to defend or indemnify defendants William R. Zuk,
Benedict Zuk and/or Margaret Zuk in an underlying wrongful death action, (2)
granted plaintiff's motion for summary judgment, and (3) remitted the matter to
Supreme Court, Nassau County, for entry of a judgment declaring that plaintiff
has no duty to defend or indemnify defendant William R. Zuk in the underlying
action.
Allstate Ins. Co. v Zuk, 160 AD2d 971.
DISPOSITION: Order reversed, etc.
CASE SUMMARY
PROCEDURAL POSTURE: Appellant insured sought review of the order of the
Appellate Division of the Supreme Court in the Second Judicial Department (
OVERVIEW: The insured was convicted on a guilty plea of recklessly causing
his friend's death as a result of an accidental discharge while the insured was
cleaning and loading a shotgun. The insurer sought a declaratory judgment that
it had no duty to defend or indemnify its insured in the wrongful death action
that arose from the friend's death. The insurer argued that the death was not
covered under the homeowner's liability policy because the policy excluded
injuries that could reasonably be expected to result from criminal acts. The
court held that the elements of the conviction were different than the terms of
the exclusion clause. The court held that that the insured's criminal
conviction did not collaterally block the civil litigation of the issue whether
the death could reasonably be expected to result from the insured's acts. The
court held that the complaint alleged a potential basis for coverage and,
consequently, gave rise to a duty to defend. The court held that the issue of
whether the death could reasonably be expected to result from the insured's
acts was not necessarily determined in the criminal proceeding and was not
identical to the issues that were determined there.
OUTCOME: The order of the lower court was reversed, with costs, and the
insurer's motion for summary judgment was denied.
CORE TERMS: insured, reasonably expected, matter of law, criminal
conviction, duty to defend, wrongful death action, criminal act, recklessly,
shotgun, criminal acts, Penal Law, second degree manslaughter, criminal
proceeding, coverage, insurer, necessarily decided, insurance coverage, rearg,
collateral estoppel, exclusion clause, liability policy, summary judgment,
insured person, civil action, homeowner's, indemnify, expecting, cleaning,
shot, criminal responsibility
LexisNexis(R) Headnotes Hide
Headnotes
Insurance Law > Claims & Contracts
Insurance Law > General Liability Insurance > Defense Obligations
HN1 An insurer has a duty to defend its insured in a pending lawsuit
when the complaint alleges a covered loss or when the insurer has actual
knowledge of facts establishing the reasonable possibility of coverage. More Like This Headnote | Shepardize:
Restrict By Headnote
Insurance Law > General Liability Insurance > Defense Obligations
HN2 An insurer can be relieved of its duty to defend if it establishes
as a matter of law that there is no possible factual or legal basis on which it
might eventually be obligated to indemnify its insured under any policy
provision. More Like This Headnote |
Shepardize: Restrict By Headnote
Insurance Law > General Liability Insurance > Defense Obligations
HN3 In limited circumstances, a particular issue expressly or
necessarily decided in a criminal proceeding may be given preclusive effect in
a subsequent affected civil action. Parties may avail themselves of collateral
estoppel if the issue is identical in both actions, necessarily decided in the
prior criminal action and decisive in the civil action, provided, however, that
the party ousted from a day in court by application of collateral estoppel had
a full and fair opportunity in the prior action to litigate the now-foreclosed
issue. More Like This Headnote |
Shepardize: Restrict By Headnote
Criminal Law & Procedure > Scienter > Recklessness
HN4 A person acts recklessly, in a criminal context, when that person
is aware of and consciously disregards a substantial and unjustifiable risk of
a result, where the risk is of such a nature and degree that to disregard it
constitutes a gross deviation from the standard of conduct of a reasonable
person N.Y. Penal Law § 15.05 (3). More
Like This Headnote | Shepardize: Restrict By Headnote
Criminal Law & Procedure > Scienter > Recklessness
HN5 A person may engage in behavior that involves a calculated risk
without expecting, no less reasonably, that an accident will occur. Such
behavior, which may be reckless for criminal responsibility purposes, does not
necessarily mean that the actor reasonably expected the accident to result. More Like This Headnote | Shepardize:
Restrict By Headnote
Hide Headnotes / Syllabus
HEADNOTES:
Insurance -- Exclusions -- Exclusion for Injuries Reasonably Expected
to Result from Criminal Acts -- Conviction for Reckless Manslaughter --
Collateral Estoppel
In an action seeking a declaration with respect to plaintiff insurer's
duty to defend or indemnify its insured in a wrongful death action arising out
of the death of decedent, whom the insured shot and killed when a shotgun he
was cleaning and loading accidentally discharged, the insured's criminal
conviction of second degree manslaughter for recklessly causing the decedent's
death does not collaterally block the civil litigation of the issue whether
decedent's death could "reasonably be expected to result" from the
insured's criminal acts within the meaning of an exclusionary clause of the
homeowner's liability policy issued by plaintiff. A person may engage in
behavior that involves a calculated risk without expecting that an accident
will occur. Such behavior, which may be reckless for criminal responsibility
purposes, does not necessarily mean that the actor reasonably expected the
accident to result. Under the terms of the exclusion clause at issue, whether a
result is reasonably expected should be gauged as of the time and circumstances
of the conduct engaged in by the particular actors, not attributed in hindsight
based on an eventual criminal conviction, if any.
COUNSEL: Joel Martin Aurnou for William R. Zuk and others, appellants.
I. The granting of Allstate's motion for summary judgment was error. ( Miller v
Continental Ins. Co., 40 NY2d 675; Messersmith v American Fid.
Michael E. Tockman for Patricia Smith, appellant. I. The court below
improperly awarded Allstate summary judgment and a declaratory judgment
declaring that Allstate Insurance Company has no duty to defend or indemnify
defendant William R. Zuk in the underlying action brought by Patricia Smith. (
Schwartz v Public Adm'r of County of Bronx, 24 NY2d 65; Ryan v New York Tel.
Co., 62 NY2d 494; Gilberg v Barbieri, 53 NY2d 285; Dier v City of New York , 79
AD2d 596; Brereton v McEvoy, 44 AD2d 594; General Acc. Ins. Co. v Manchester,
116 AD2d 790; Bershaw v Altman, 100 AD2d 642; Barry v Romanosky, 147 AD2d 605;
Matter of Town of Huntington v Hartford Ins. Group, 69 AD2d 906; Burr v
Commercial Travelers Mut. Acc. Assn., 295 NY 294.) II. Appellants are entitled
to summary judgment as a matter of law. ( Freidus v Todem Homes, 80 AD2d 575,
56 NY2d 526; Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106; Barry
v Romanosky, 147 AD2d 605.)
Gail M. Lolis and Richard J. Inzerillo for respondent. I. Allstate
Insurance Company is not obligated to defend and/or indemnify its insured,
William R. Zuk, for injuries resulting from the commission of the criminal act
of manslaughter. ( Gramatan Home Investors Corp. v Lopez, 46 NY2d 481; Kaufman
v Lilly & Co., 65 NY2d 449; D'Arata v New York Cent Mut. Fire Ins. Co., 76
NY2d 659; S. T. Grand, Inc. v City of
JUDGES: Bellacosa, J. Chief Judge Wachtler and Judges Simons, Kaye,
Alexander, Titone, and Hancock, Jr., concur.
OPINIONBY: BELLACOSA
OPINION: [*43] [**1036]
[***430] OPINION OF THE COURT
Allstate Insurance Company seeks a declaratory judgment that it has no
duty to defend or indemnify its insured, William Zuk, in a wrongful death
action arising out of the death of Zuk's friend, Michael Smith, whom Zuk shot
and killed. On November 2, 1985, Zuk was cleaning and loading a shotgun in a
hunting lodge owned by his parents, Benedict and Margaret Zuk. The gun
accidentally discharged and Smith, who was sitting a few feet away from Zuk,
was shot in the thigh, severing his femoral artery. He subsequently bled to
death. Zuk was charged with second degree manslaughter and was convicted on his
guilty plea of recklessly causing Smith's death (Penal Law § 125.15 [1]).
Allstate argues that Smith's death is not covered under the homeowner's
liability policy at issue because the policy excludes injuries that could
"reasonably be expected to result" from criminal acts. Allstate
contends that Zuk's conviction conclusively establishes this exclusionary
element.
We hold that Zuk's criminal conviction does not collaterally block the
civil litigation of the issue whether Smith's death could "reasonably be
expected to result" from Zuk's acts. Under this policy provision, in the
factual context of this dispute and its procedural framework, that issue cannot
be resolved as a matter of law. We therefore reverse the order of the Appellate
Division granting summary judgment to Allstate.
Respondent Patricia Smith, individually and as administratrix [*44]
of the estate of Michael Smith, commenced a wrongful death action
against Zuk alleging that he "carelessly, recklessly and negligently
operate[d] [a] shotgun" causing Michael Smith's death. Zuk sought defense
and indemnification from Allstate under a homeowners' liability policy issued
to his parents, the owners of the premises where the accident occurred. The
policy covered Zuk as a resident of his parents' household. Under the policy,
Allstate agreed to "pay all sums arising from an accidental loss which an
insured person becomes legally obligated to pay as damages because of bodily
injury [or resulting death] or property damage covered by this part of the
policy" (emphasis supplied). Excluded from coverage was "bodily
injury or property damage 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" (emphasis supplied).
Allstate initially agreed to defend but not indemnify Zuk, based on the
interplay of the policy exclusion and Zuk's criminal conviction. Allstate then
commenced this action seeking a judgment against Zuk, his parents, and Patricia
Smith, relieving it of its defense and indemnification obligations and
declaring the rights, duties and obligations of the parties. Supreme Court
denied Allstate's motion for summary judgment, concluding that a material issue
of fact existed -- namely, whether Smith's death could, as referenced to the
insurance policy clause, "reasonably be expected to result" from
Zuk's mishandling of the shotgun. The Appellate Division reversed and granted
Allstate summary judgment. That court held that Zuk's guilty plea in the
criminal proceeding established as a matter of law that Smith's death was
caused by a criminal act and therefore Zuk was collaterally estopped from
contesting that conclusively determined issue in this civil action. This Court
granted leave to appeal and we now reverse.
HN1An insurer has a duty to defend its insured in a pending lawsuit
when the complaint alleges a covered loss or when the insurer has actual
knowledge of facts establishing the reasonable possibility of coverage (see,
Fitzpatrick v American Honda Motor Co., 78 NY2d 61; Technicon Elecs. Corp. v
American Home Assur.
However, HN2an insurer can be relieved of its duty to defend if it
establishes as a matter of law that there is no possible factual or legal basis
on which it might eventually be obligated to indemnify its insured under any
policy provision (see, Villa Charlotte Bronte v Commercial Union Ins. Co., 64
NY2d 846, 848; Spoor-Lasher Co. v Aetna Cas. & Sur. Co., 39 NY2d 875, 876).
The policy clause germane to the resolution of this case covered accidental
losses unless they could "reasonably be expected to result" from a
criminal act. Therefore, Allstate would be entitled to summary judgment
declaring that it has no duty to indemnify Zuk, and consequently no duty to
defend him in the pending wrongful death action, only if it established as a
matter of law that Smith's death was, in the legal sense intended by the policy
clause, reasonably expected to result from Zuk's actions which eventuated into
a criminal charge and conviction.
Allstate argues that Zuk's second degree manslaughter conviction
establishes as a matter of law that Zuk reasonably expected that his acts would
cause Smith's death. HN3In limited circumstances, a particular issue expressly
or necessarily decided in a criminal proceeding may be given preclusive effect
in a subsequent affected civil action (see, Matter of Nassau Ins. Co. [Bergen
-- Superintendent of Ins.], 78 NY2d 888 [decided today]; D'Arata v New York
Cent. Mut. Fire Ins. Co., 76 NY2d 659, 664; Vavolizza v Krieger, 33 NY2d 351;
S. T. Grand, Inc. v City of
As the Appellate Division recognized, Zuk's criminal conviction
established that Smith's death was caused by a criminal act. Under the terms of
Allstate's exclusionary clause, however, the inquiry does not stop with the
determination that the loss resulted from a criminal act. In order for the
exclusion to contradict coverage, the loss must be one that could [*46]
"reasonably be expected to result" from the criminal act, a
phrase subject to a variety of different meanings in a civil versus criminal
elision.
Zuk's conviction of second degree manslaughter was necessarily based on
a finding that he recklessly caused Smith's death (Penal Law § 125.15 [1]).
HN4A person acts recklessly, in a criminal context, when that person is aware
of and consciously disregards a substantial and unjustifiable risk of a result,
where the risk is of such a nature and degree that to disregard it constitutes
a gross deviation from the standard of conduct of a reasonable person (Penal
Law § 15.05 [3]).
While an almost metaphysical argument can be mounted that disregarding
a known risk of death -- the criminal standard -- is equivalent to reasonably
expecting that death will occur as a result of the action taken -- the standard
expressed in the policy -- the particular matrix of this policy clause and
factual context allow at least one other reasonable, and therefore
disqualifying, syllogism. HN5A person may engage in behavior that involves a
calculated risk without expecting -- no less reasonably -- that an accident
will occur. Such behavior, which may be reckless for criminal responsibility
purposes, does not necessarily mean that the actor reasonably expected the
accident to result (see, McGroarty v Great Am. Ins. Co., 36 NY2d 358, 363,
rearg denied 36 NY2d 874; General Acc. Ins. Co. v
In sum, the issue whether Smith's death could "reasonably be
expected to result" from Zuk's acts was not necessarily determined in the
criminal proceeding and was not identical to the issues that were determined
there. Thus, Allstate should not be permitted to use collateral estoppel to
deprive the Zuks of their only opportunity to determine the effect, if [*47]
any, of the conviction with its distinctively defined elements on the
applicability of the exclusion clause.
Under these facts, this policy and this analysis, the issues in the
criminal and civil actions are not identical, a core feature which
distinguishes this case from the cases in which we held that an insured, or a
subrogee, was collaterally estopped by the insured's conviction of an intent
crime from relitigating the identical issue of intent in an insurance coverage
dispute where the policy at issue excluded coverage for intentional acts (see,
D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659, supra; Matter of
Nassau Ins. Co. [
Accordingly, the order of the Appellate Division should be reversed,
with costs, and the plaintiff's motion for summary judgment denied.
Order reversed, etc.