U.S. Court Of Appeals Holds In Favor Of Insurer; An Insured May Not "Drink Himself Into Insurance Coverage"
January, 2010
Thomas W. Mehlman ("Mehlman") was insured under two separate State Farm Fire & Casualty Co. ("State Farm") policies, a Homeowners policy and an Umbrella policy. On March 5, 2005, Mehlman was intoxicated with a blood alcohol content of 0.21 percent. Despite his intoxication, Mehlman traveled one and one half miles from the bar to his girlfriend's residence, carrying a backpack with a loaded .45 caliber handgun. Upon learning that his girlfriend was not home, Mehlman became enraged and refused to leave the premises. The premises' lone occupant then attempted to leave and drive away in her vehicle, but Mehlman gave chase with his pistol and made repeated attempts to shoot her as she drove off, crashed into a tree, and drove off again. Unsuccessful in his attempts to cause physical injury, Mehlman returned to the premises and later died of a self-inflicted gunshot wound.
Mehlman's victim filed a suit against his Estate in the Court of Common Pleas, alleging, inter alia, intentional and negligent infliction of emotional distress. The Estate demanded defense and indemnification under both policies, and State Farm filed a declaratory judgment action in another Pennsylvania court to determine its rights. Both matters were removed and consolidated in the U.S. District Court for the Eastern District of Pennsylvania, where the parties filed cross-motions for summary judgment.
The Eastern District court granted State Farm dismissal with regard to the Homeowners policy, whose language provided that mental distress is covered only if it stems from physical injury. State Farm Fire & Cas. Co. v. Estate of Mehlman, 2008 WL 863969 (E.D. Pa., Mar. 28, 2008). However, the District Court also held that State Farm had a duty to defend and indemnify under the Umbrella policy, whose exclusion for harm expected or intended by the insured did not include a bodily injury requirement. Id. ("the allegations of negligence ... trigger a duty to defend under the umbrella policy at least until such time as the factual record can show that ... Mehlman's purported state of intoxication did not negate any intent on his part"). Both parties then cross-appealed the respectively adverse rulings to the Court of Appeals for the Third Circuit.
The Court noted that although it is widely accepted that an insured's intentional acts of violence are not "accidents" and therefore not covered under contracts of insurance for fortuitous losses, Pennsylvania law holds that, "imbibed intoxicants must be considered in determining if the actor has the ability to formulate an intent." State Farm Fire & Casualty Co. v. Estate of Thomas W. Mehlman, Nos. 08-2220, 80-2261 & 08-2262 (3d Cir. [Pa.], Dec. 16, 2009), citing Gene's Restaurant, Inc. v. Nationwide Ins. Co., 548 A.2d 246, 247 (Pa. 1988); Stidham v. Millvale Sportsmen's Club, 618 A.2d 945, 953 (Pa. Super. Ct. 1993); Nationwide Mut. Ins. Co. v. Hassinger, 473 A.2d 171, 176 (Pa. Super. Ct. 1984). In other words, "if the actor lacks the ability to formulate an intent, the resulting act cannot be intentional." Id. "An actor is presumed to intend the natural and expected results of his actions." Id., citing Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286, 292 (Pa. 2007).
While the Court recognized that "alcoholic beverages certainly can contribute to the loosening of a person's inhibitions," and that, "situations may arise in which an insured's intoxication ... may call the insured's intent into question," the Court nonetheless found that there was no evidence to support that Mehlman had lost awareness or been in the midst of an alcoholic blackout. Id. To the contrary, Mehlman's actions in navigating one and one half miles to the premises, handling his pistol and repeatedly attempting to shoot his victim during a prolonged chase supported the conclusion that Mehlman knew what he was doing and that his intoxication had a limited impact on the use of his faculties.
Accordingly, the Court of Appeals opined that "Pennsylvania courts will not lightly allow an insured to avoid the financial repercussions of an act of violence by drinking himself into insurance coverage." Id.; see also, Erie Rwy. Co. v. Tompkins, 304 U.S. 64 (1938); Guaranty Trust Co. of N.Y. v. York, 326 U.S. 99, 109 (1945) (holding that a court sitting in diversity jurisdiction must apply state substantive law). Therefore, the Court held that neither the Homeowners or Umbrella Policy owed any coverage obligations.
Learning Point: Despite its favorable ruling for insurers, the Court of Appeals also recognized that situations may arise in which an insured's intoxication may call his or her intent into question. Thus, seemingly intentional acts by intoxicated persons must still be evaluated on a case-by-case basis. Had the insured not been so persistent in his attack, or had he survived and simply testified that he did not intend to harm anyone, the insurer may have been responsible to defend and indemnify under Pennsylvania precedents addressing those particular circumstances.
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