This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Plaintiff-Appellant held a personal umbrella insurance policy issued by the Defendant-Appellee, which provided coverage for liability, including wrongful eviction, but excluded coverage for injuries "expected or intended" by the insured. During the policy term, a third party filed a lawsuit against the Plaintiff-Appellant, alleging interference with an easement due to the placement of a locked gate. The Defendant-Appellee refused to defend the Plaintiff-Appellant in the lawsuit, leading to the Plaintiff-Appellant incurring defense costs and subsequently filing this action to recover those costs (paras 2-3).
Procedural History
- District Court of Santa Fe County: Granted summary judgment in favor of the Defendant-Appellee, holding that the insurance policy excluded coverage for the alleged acts (para 3).
Parties' Submissions
- Plaintiff-Appellant: Argued that the allegations in the third party's complaint fell within the policy's coverage for wrongful eviction and were not excluded by the "expected or intended" injury clause. Additionally, the Plaintiff-Appellant contended that the exclusionary clause created ambiguity when read alongside the coverage for wrongful eviction, which should be resolved in favor of the insured (paras 3, 6-7).
- Defendant-Appellee: Asserted that the policy excluded coverage for injuries resulting from intentional acts and that the Plaintiff-Appellant's actions were intentional, making the exclusion applicable. The Defendant-Appellee also argued that the exclusionary clause was clear and unambiguous, and that the harm alleged was the natural and probable consequence of the Plaintiff-Appellant's intentional conduct (paras 3, 8-9).
Legal Issues
- Did the Defendant-Appellee have a duty to defend the Plaintiff-Appellant in the lawsuit brought by the third party? (para 4)
- Does the exclusionary clause in the insurance policy conflict with the insuring clause, rendering it ineffective? (para 15)
Disposition
- The Supreme Court of New Mexico reversed the trial court's decision and held that the Defendant-Appellee had a duty to defend the Plaintiff-Appellant (para 16).
Reasons
Per Baca J. (Montgomery and Frost JJ. concurring):
- The court emphasized that the duty to defend arises when the allegations in a third party's complaint fall within the coverage of the policy, regardless of whether the claims are ultimately proven (para 4).
- The policy's exclusionary clause, which excluded coverage for injuries "expected or intended" by the insured, was interpreted to exclude harm of the same general type as intended by the insured. The court found that the Plaintiff-Appellant's actions in placing and locking the gate were intentional and that the harm alleged in the third party's complaint was of the same general type as intended by the Plaintiff-Appellant (paras 12-13).
- However, the court determined that the exclusionary clause was repugnant to the insuring clause, which promised broad coverage for wrongful eviction and other intentional torts. The exclusionary clause effectively nullified the coverage promised in the policy, violating the reasonable expectations of the insured (paras 15-16).
- The court concluded that the exclusionary clause was ineffective in this case, and the Defendant-Appellee had a duty to defend the Plaintiff-Appellant (para 16).