Policyholders, insurers, and courts continuously tackle the issue of whether a policy’s intentional-acts exclusion bars coverage for third-party claims. For the intentional-acts exclusion to apply, the insurer must prove that the injury itself, and not the act, was intended or expected. However, the issue that arises is whether the intent to cause harm can be inferred from the insured’s intentional act. In an attempt to respond to this issue, the Ohio Supreme Court developed the inferred-intent doctrine.
Under the inferred-intent doctrine, when the case involves no evidence of direct intent or an admission of intent, the insured’s intent to cause harm will be inferred as a matter of law in certain instances. The issue that has perplexed the courts is what are those “certain instances.” Initially, Ohio courts limited the inferred-intent doctrine to sexual molestation and murder cases. However, carriers have sought to expand the inferred-intent doctrine to other cases. In Allstate Ins. Co. v. Campbell, 128 Ohio St. 3d 186 (2010), the Ohio Supreme Court attempted to broaden the doctrine. The Campbell Court initially determined that the doctrine should not be limited to just molestation and murder cases; it may apply in felonious-assault and rape cases. The Court then developed the “necessarily resulted” test in which the inferred-intent doctrine applies only in cases in which the insured’s intentional act and the harm caused are so intrinsically tied that the insured’s act has necessarily resulted in the harm. In other words, the action necessitates the harm.
In Granger v. Auto-Owners Ins., 2015-Ohio-3279, the Ohio Supreme Court had its first opportunity to apply and clarify its “necessarily resulted” test. In Granger, the Court analyzed whether the intended-acts exclusion through the inferred-intent doctrine applies to a housing discrimination case seeking damages for emotional distress. In a split 5-2 decision, the majority concluded that the inferred-intent doctrine does not apply.
The Granger case involved the Fair Housing Contact Service, Inc. and Valerie Kozera’s lawsuit against Steve Granger and Paul Steigerwald for allegedly discriminating against Kozera in refusing to lease her an apartment. Kozera contended that she suffered emotional distress as a result of the discrimination. Granger and Steigerwald tendered the housing discrimination case to Auto-Owners Insurance under its primary dwelling policy and its umbrella policy. Auto-Owners denied coverage under the dwelling policy and never responded under the umbrella policy. As a result, Granger and Steigerwald filed a complaint against Auto-Owners for defense and indemnity under both policies. The trial court granted summary judgment for the carrier, which the appellate court reversed. The Ohio Supreme Court affirmed the appellate court’s reversal.
In affirming the appellate court’s decision, the Court’s majority concluded that the inferred-intent doctrine does not apply. As support for its conclusion, the majority cited to federal court cases that held emotional distress cannot be presumed, but rather must be proved, in housing discrimination cases. However, the dissent disagreed, citing to other federal court decisions that held that emotional distress is inherent in housing discrimination cases. Because of the split decision, the Granger opinion does not add much clarity to when the inferred-intent doctrine should apply. Therefore, lower courts and parties will continue to wrestle with the application of the inferred-intent doctrine.
A copy of the opinion can be found here.