Recently, in the context of an alleged “shaken baby” claim, the Supreme Court of British Columbia considered whether an insurer had a duty to defend a claim against its insured arising from allegations framed in both negligence and assault. The insurer denied coverage on the basis of a policy exclusion for expected or intended bodily injury or, alternatively, on the basis of an abuse exclusion. The court upheld the insurer’s denial of coverage. This decision is significant for underwriters in that it confirms that the “artful pleading” of negligence, in an attempt to frame an assault as negligence, will not preclude the application of an intentional act exclusion.
Nature of the Claim
The insurer issued a commercial general liability policy to the petitioner, Theressa Lee Henderson, who owned and operated a daycare. Ms. Henderson provided daycare services to the infant plaintiff. The Notice of Civil Claim alleged, among other things, that Ms. Henderson was negligent in (i) shaking the infant plaintiff to such a degree that a brain injury resulted, or (ii) permitting other employees of the daycare to shake the infant plaintiff. Alternatively, the Notice of Civil Claim alleged that Ms. Henderson’s actions constituted an assault. The alleged negligence and/or assault resulted in a catastrophic injury to the infant’s brain causing permanent cognitive and physical disability.
The action alleged only a single shaking of the infant plaintiff. The insurer argued that this could only be considered an intentional tort and that the allegations of intentional tort and negligence were “one and the same” as they arose from the same actions and caused the same harm.
The policy contained two exclusions which the insurer relied upon to deny coverage. They were: (1) an exclusion for “Bodily injury … expected or intended form the standpoint of the insured” (the “Expected or Intended Exclusion”); and (2) an exclusion for “abuse” which was defined in the policy as “any act or threat involving molestation, harassment, corporal punishment or any other form of physical sexual or mental abuse” (the “Abuse Exclusion”).
To support her argument that the insurer had a duty to defend the action, Ms. Henderson drew a distinction between “intent to injure” and “intent to act,” arguing that coverage for the former was ousted by the exclusion clauses while the latter was not. Ms. Henderson argued that the alleged bodily injury of the infant plaintiff which arose from negligence on her part was covered but bodily injury intended by her when handling the infant plaintiff was not covered. Ms. Henderson argued that the Expected or Intended Exclusion must be interpreted keeping in mind that the clause’s purpose is to maintain the principle of fortuity. If Ms. Henderson, by negligence, gross negligence, recklessness or stupidity handled the infant plaintiff and caused damage, coverage cannot be denied under the Expected or Intended Exclusion.
In making this argument, Ms. Henderson relied upon the Supreme Court of Canada’s decision Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24 (“Scalera”). In that decision Justice Iacabucci discussed how almost every negligent action can be traced back to a intentional act or a failure to act. If insurance clauses were interpreted to exclude all intentional actions, virtually all negligence would no longer be covered.
Ms. Henderson also argued that it is possible for someone to assault an infant without intending harm and that, as a result, the exclusion did not apply. Further, Ms. Henderson argued that the Abuse Exclusion did not apply because the pleadings did not allege “molestation, harassment, corporal punishment or any other form of physical sexual or mental abuse.” Due to the missing comma, the exception covered “physical sexual abuse” but not “physical abuse.”
Conversely, the insurer argued that both exclusions applied, and that this was an intentional tort “dressed up as negligence.” Further, the insurer argued that the court in Scalera confirmed that the duty to defend will not be triggered simply because a claim can be cast in terms of both negligence and intentional tort. If the alleged negligence is based on the same harm as the intentional tort, the law will not allow the insured to avoid the exclusion clause for intentionally caused injuries.
The British Columbia Supreme Court concluded that the negligence claim was derivative from the assault claim and, as such, subsumed by the assault claim. Both claims arose from the same actions and caused the same harm. The actions of Ms. Henderson fell within the Expected or Intended Exclusion and the insurer did not have a duty to defend the action.
This decision confirms that the courts are not bound by the “legal labels” chosen by the plaintiff and that a choice of words cannot change an intentional tort into a negligent one. The duty to defend will not be triggered simply because a claim can be cast in terms of both negligence and intentional tort. If the alleged negligence is based on the same harm as the intentional tort, the law will not allow the insured to avoid the application of an exclusion clause for intentionally caused injuries. Underwriters presented with a claim for negligence based upon an intentional act should carefully consider these issues to determine if the claim is ousted from coverage by reason of an intentional acts exclusion clause.