Olson v. Slattery

942 N.W.2d 263, 2020 S.D. 21

• Court: South Dakota Supreme Court
• Decided: April 8, 2020
• Docket: 28911
• Status: Published

Opinion

#28911-a-PJD 2020 S.D. 21

IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA

****

SHELBY M. OLSON, MARY JO OLSON and GARY S. OLSON, Plaintiffs and Appellants,

v.

JOHN P. SLATTERY, as Personal Representative of the Estate of Eric Michael Johnson, Defendant,

and

PROGRESSIVE NORTHERN INSURANCE COMPANY a/k/a PROGRESSIVE DRIVE INSURANCE, Defendant and Appellee.

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STATE FARM MUTUAL AUTOMOTIVE INSURANCE COMPANY, Plaintiff and Appellee,

JOHN P. SLATTERY, as Personal Representative of the Estate of Eric Michael Johnson, Defendant,

SHELBY M. OLSON, MARY JO OLSON and GARY S. OLSON, Defendants and Appellants.

APPEAL FROM THE CIRCUIT COURT OF THE FIRST JUDICIAL CIRCUIT UNION COUNTY, SOUTH DAKOTA

THE HONORABLE TAMI BERN Judge

CONSIDERED ON BRIEFS NOVEMBER 4, 2019 OPINION FILED 04/08/20 JAMES N. DAANE of Mayne, Hindman, Daane, Parry & Wingert Sioux City, Iowa Attorneys for appellants.

JASON W. SHANKS of May & Johnson, P.C. Sioux Falls, South Dakota Attorneys for appellee Progressive Northern Insurance Company.

HILARY L. WILLIAMSON of Fuller & Williamson, LLP Sioux Falls, South Dakota Attorneys for appellee State Farm Mutual Automobile Insurance Company. #28911

DEVANEY, Justice

[¶1.] In a tragic series of events, Shelby Olson, who was riding in the

backseat of her parents’ vehicle, was struck by a bullet when the driver of another

vehicle fired a handgun at the Olsons’ vehicle. This appeal concerns whether

coverage exists for Shelby’s injuries under the automobile insurance policy issued to

Shelby’s parents and whether coverage exists under the automobile policy issued to

the shooter. In a consolidated declaratory judgment action, the circuit court

considered the insurance companies’ motions for summary judgment and concluded

that coverage did not exist under either policy because the injuries did not arise out

of the use of a vehicle and, alternatively, were not caused by an accident. The

Olsons appeal. We affirm.

Factual and Procedural Background

[¶2.] On May 10, 2014, Eric Johnson met his wife Melonie in a parking lot

in North Sioux City, South Dakota. The meeting turned into an altercation, and

Melonie believed Johnson was going to kill her. She flagged down a vehicle, which

was being driven by Gary Olson. Melonie told Gary that her husband was going to

kill her, and while explaining this, Johnson drove his pickup toward Melonie and

tried to run her over. Gary told Melonie to get inside the Olson vehicle. Johnson

then drove his pickup next to the Olson vehicle and aimed a gun at Melonie. He

pulled the trigger, but the gun did not fire. Gary, an unarmed, off-duty transport

deputy with the Union County Sheriff’s Office, who by that time had gotten out of

his vehicle, positioned himself between Johnson and the vehicle and instructed his

wife Mary to drive the Olson vehicle away. Alone with Johnson, Gary showed him

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his badge. This did not deter Johnson. Instead, Johnson pointed a 9-millimeter

handgun at Gary and pulled the trigger, but the gun did not fire.

[¶3.] Johnson fled in his pickup and pursued the Olson vehicle, eventually

catching up with Mary on Interstate 29. While the two vehicles traveled at high

speeds, Johnson fired his handgun at the Olson vehicle at least five times. One

bullet entered the vehicle through the trunk and struck the Olsons’ daughter Shelby

who was sitting in the backseat. Shelby sustained a non-life-threatening injury.

Eventually law enforcement stopped Johnson’s vehicle at which time Johnson took

his own life.

[¶4.] Johnson’s vehicle was insured under an automobile liability policy

issued by State Farm Mutual Automobile Insurance Company. The Olsons

submitted a claim to State Farm seeking recovery for property damage and bodily

injury sustained as a result of the incident with Johnson. State Farm denied the

claim based on an exclusion within the policy for intentional acts. Thereafter, the

Olsons brought suit against the Estate of Johnson and his wife, Melonie, for

compensatory damages and against their own automobile insurer, Progressive

Northern Insurance Company, pursuant to the policy’s underinsured and uninsured

motorist coverage provision. Progressive denied that coverage existed and filed a

counterclaim seeking a declaratory judgment that it had no obligation to pay

underinsured or uninsured benefits to the Olsons. In response to the Olsons’ suit

against Johnson’s estate and Melonie, State Farm tendered a defense but with a

reservation of rights. State Farm also filed a separate action for declaratory relief,

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requesting that the circuit court determine it owed no duty to defend or indemnify

the Johnsons.

[¶5.] The parties agreed to consolidate State Farm’s and Progressive’s

respective declaratory judgment actions and stipulated to the dismissal of Melonie

as a party. State Farm and Progressive then filed motions for summary judgment.

State Farm argued it had no duty to defend or indemnify the Estate of Johnson as a

matter of law because Johnson’s acts were not accidental and because the damage

and injuries sustained were not the result of an accident involving the use of a

vehicle. Progressive similarly asserted that coverage was not implicated under its

policy because the Olsons’ damage and injuries did not result from an accident and

did not arise out of Johnson’s ownership, maintenance, or use of an underinsured or

uninsured vehicle.

[¶6.] The circuit court considered the motions for summary judgment at a

hearing and granted summary judgment to both State Farm and Progressive. The

court determined that Johnson’s act of shooting Shelby did not arise out of the use

of a motor vehicle. Alternatively, the court concluded that Johnson’s acts did not

constitute an accident for purposes of coverage under either policy. The Olsons

appeal, asserting that the circuit court erred in granting summary judgment to

State Farm and to Progressive.

Standard of Review

[¶7.] It is well established that we review a circuit court’s grant of summary

judgment to determine “whether genuine issues of material fact exist and whether

the law was correctly applied.” Swenson v. Auto Owners Ins. Co., 2013 S.D. 38, ¶

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12, 831 N.W.2d 402, 406. However, because the material facts are not in dispute

here, we review only whether the circuit court properly interpreted and applied the

policy language to the undisputed facts. See id. “The interpretation of an insurance

policy is a question of law, reviewed de novo.” Id. ¶ 13.

Analysis and Decision

Summary judgment as to State Farm’s liability policy

[¶8.] Johnson’s automobile insurance policy with State Farm provides in

part that:

1. We will pay: a. damages an insured becomes legally liable to pay because of: (1) bodily injury to others; and (2) damage to property caused by an accident that involves a vehicle for which that insured is provided Liability Coverage by this policy . . . .

The policy also contains the following exclusion: “THERE IS NO COVERAGE FOR

AN INSURED . . . WHO INTENTIONALLY CAUSES BODILY INJURY OR

DAMAGE TO PROPERTY.”

[¶9.] The phrase “caused by an accident” is not defined in State Farm’s

policy. This Court, however, has consistently defined the term “accident” in the

insurance context to mean “an undesigned, sudden and unexpected event, usually of

an afflictive or unfortunate character, and often accompanied by a manifestation of

force.” State Farm Mut. Auto. Ins. Co. v. Wertz, 540 N.W.2d 636, 639 (S.D. 1995)

(citation omitted); Geidel v. De Smet Farm Mutual Insurance Company of South

Dakota, 2019 S.D. 20, ¶ 18, 926 N.W.2d 478, 483. Applying this definition, we have

further said that an insured’s act is not an accident “when the insured actually

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intended to cause the injury that results.” Wertz, 540 N.W.2d at 639 (quoting

Vermont Mut. Ins. Co. v. Malcolm, 517 A.2d 800, 802–03 (N.H. 1986)). Moreover,

even if the insured did not intend to cause the resulting injury by the intentional

act, the insured’s act cannot “be an accidental cause of injury when it is so

inherently injurious that it cannot be performed without causing the resulting

injury.” Id. An intentional act is considered “so inherently injurious” when “the

injury was certain to follow from it[.]” Id. at 639–40.

[¶10.] The Olsons concede that Johnson (the insured) intentionally fired his

handgun at their vehicle and that he intended to injure Melonie, but they claim

such intentional act “is not the determining factor.” Rather, in their view, coverage

exists because Johnson did not intend to injure Shelby; Shelby was injured merely

by the happenstance of the Olsons coming upon the scene and acting as Good

Samaritans. They further contend that coverage exists because Johnson’s act of

intentionally firing a handgun at Melonie was not “certain” to cause injury to

Shelby. We disagree.

[¶11.] Contrary to the Olsons’ narrow view, Johnson need not harbor the

specific intent to injure Shelby. It is enough that Johnson acted intentionally to

cause injury when he discharged his handgun at the Olson vehicle. As one court

explained, “the applicable rule is that an act is inherently injurious if it is certain to

result in some injury, although not necessarily the particular alleged injury.”

Providence Mut. Fire Ins. Co. v. Scanlon, 638 A.2d 1246, 1249 (N.H. 1994) (cited in

Wertz, 540 N.W.2d at 640).

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[¶12.] Therefore, even if Johnson did not intend to injure Shelby, his

intentional act of firing a handgun multiple times from a moving vehicle, toward

another moving vehicle filled with occupants, was so inherently injurious that it

was certain to result in some injury. Moreover, State Farm’s policy excludes

coverage when an insured intentionally causes bodily injury or property damage.

There is no dispute here that Johnson fired his handgun multiple times at the

Olson vehicle with the intent to injure Melonie, and this intentional act caused

resulting damage and bodily injury.

[¶13.] We acknowledge the Olsons’ request that we place their status as Good

Samaritans over the express language of the automobile insurance policy, and we

commend the Olsons for saving Melonie from certain death at the hands of Johnson.

However, it is settled public policy in this State that insurance coverage cannot

extend “to an individual who intentionally harms others[,]” even when “the harm is

unforeseen by the victim.” Wertz, 540 N.W.2d at 640–41. To conclude otherwise

would allow one “to insure himself against economic consequences of his intentional

wrongdoing[.]” Id. at 640 (quoting City of Fort Pierre v. United Fire & Cas. Co., 463

N.W.2d 845, 849 (S.D. 1990)). Because Johnson’s intentional act caused the

resulting damage and bodily injury, the circuit court properly granted State Farm

summary judgment, concluding that State Farm had no duty to defend or indemnify

Johnson against the Olsons’ lawsuit.

[¶14.] Nevertheless, even if Shelby’s injuries were caused by an accident, the

Olsons must further establish that the injuries were “[c]aused by an accident that

involves a vehicle for which [the] insured is provided Liability Coverage by this

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policy.” (Emphasis added.) State Farm’s policy defines the “insured” as “you and

resident relatives for . . . the ownership, maintenance, or use of . . . your car.”

(Emphasis added.) According to State Farm, Shelby’s injuries were caused by

Johnson firing a handgun and not Johnson’s use of his vehicle. The Olsons respond

that Johnson’s use of the vehicle to facilitate the continuing assault on Melonie was

“an entirely foreseeable and inherent, causally connected and inextricably linked

use of that vehicle to then inadvertently injure” Shelby.

[¶15.] In North Star Mutual Insurance Company v. Peterson, we examined

whether the accidental discharge of a firearm in the backseat of a vehicle used to

transport hunters constitutes an “auto accident.” 2008 S.D. 36, ¶ 11, 749 N.W.2d

528, 531. The phrase “auto accident” was not defined in the policy; however, this

Court concluded that the phrase requires that the accident arise out of the use of the

vehicle. Id. ¶ 15. In so concluding, we considered South Dakota’s law of financial

responsibility, see SDCL 32-35-70, which mandates liability coverage for accidents

arising out of the insured’s ownership, maintenance, or use of a vehicle. We also

considered that the insurance policy at issue, like the one here, covered accidents

arising out of the ownership, maintenance, or use of a motor vehicle by virtue of its

definition of an “insured.” Peterson, 2008 S.D. 36, ¶¶ 6, 12, 749 N.W.2d at 530–32.

[¶16.] Ultimately, the Court adopted a causal connection test that focuses on

the foreseeable and inherent use of a vehicle. Under this test, while the “use”

clause is to be viewed broadly in the context of automobile insurance, there must be

a causal connection between the vehicle’s use and the injury-producing event. Id. ¶

15, 749 N.W.2d at 532. Further, the vehicle must be more than the mere situs from

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which the accident resulted. Id. ¶ 21, 749 N.W.2d at 534; accord Lyndoe v. Am.

Standard Ins. Co., 90 S.D. 644, 650, 245 N.W.2d 273, 276 (1976).

[¶17.] We conclude that the causal connection test similarly applies in this

case because State Farm’s policy, by virtue of the definition of an insured,

incorporates a “use” clause. More specifically, we conclude that the phrase

“accident that involves a vehicle” when read in context of the entire coverage

provision and the definition of insured, requires that the accident arise out of the

insured’s use of the vehicle. See Nat’l Sun Indus., Inc. v. S.D. Farm Bureau Ins.

Co., 1999 S.D. 63, ¶ 18, 596 N.W.2d 45, 48 (providing that we read the policy

provision and terms as a whole).

[¶18.] Applying the causal connection test here, even if we had concluded

that Shelby’s injuries were caused by an accident, the vehicle was the mere situs

from which the accident resulted. See Lyndoe, 90 S.D. at 650, 245 N.W.2d at 276

(concluding that the vehicle was not causally connected to the discharge of the

pistol). An insured’s firing of a gun out the window of a moving vehicle toward

occupants in another moving vehicle does not logically follow from the use of a

vehicle for transportation purposes. See Peterson, 2008 S.D. 36, ¶ 24, 749 N.W.2d at

536. Rather, Johnson’s act of discharging the handgun at the Olson vehicle was

independent of his act of using a vehicle. Therefore, the Olsons have not

established a causal connection between the use of Johnson’s vehicle and the injury-

producing event.

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Summary judgment as to Progressive’s underinsured and uninsured coverage provision

[¶19.] The Olsons contend that summary judgment was improperly granted

to Progressive for the same reasons they argue the circuit court erred in granting

summary judgment to State Farm. We, therefore, examine the Olsons’ claims

relating to the language contained in their policy with Progressive. The Olsons seek

to recover pursuant to their underinsured and uninsured motorist policy provision,

which provides in relevant part:

If you pay the premium for this coverage, we will pay for damages that an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle because of bodily injury:

1. sustained by an insured person; 2. caused by an accident, and 3. arising out of the ownership, maintenance, or use of an uninsured motor vehicle or an underinsured motor vehicle.

(Italics added.)

[¶20.] Consistent with our analysis of coverage under State Farm’s policy, to

recover under Progressive’s policy, the Olsons must establish that bodily injury

arose “out of the ownership, maintenance, or use of an uninsured motor vehicle or

an underinsured motor vehicle.” They contend that Shelby’s injuries arose out of

Johnson’s use of the vehicle because Johnson used the vehicle to attempt to run over

Melonie and continued to use the vehicle to pursue the Olson vehicle. The Olsons

further assert that “the misdirected bullet from a firearm discharged from that

vehicle, would be considered foreseeable and inherent, causally connected and

inextricably linked to the use of that vehicle[,]” especially considering that they

risked “injecting themselves into a dangerous situation . . . to rescue one in need[.]”

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[¶21.] The facts in Farm & City Insurance v. Estate of Davis, where a shooter

used a vehicle to place himself in a position to injure another person, are

indistinguishable from the facts in this case. 2001 S.D. 71, ¶ 9, 629 N.W.2d 586,

588. In Davis, the insured was not the intended victim; he was a passenger in the

vehicle the shooter was pursuing. The estate of the insured sought uninsured

motorist benefits, and the insurance company denied the claim because the

insured’s death did not result from the normal and proper use of a vehicle. We

agreed, concluding that the shooter’s “use of his vehicle for transportation purposes

did not cause [the insured’s] death.” Id. ¶ 14, 629 N.W.2d at 589. Rather, the

“illegal discharge of a firearm did.” Id.

[¶22.] Although the facts in Davis were tragic, we aligned ourselves with the

majority of courts that have refused “to find that the insurer and insured

contemplated that the conduct involved in a drive-by shooting would be covered

under the policy.” Id. ¶ 15. Compelling reasons support upholding this conclusion

today. Driving a vehicle and discharging a firearm at persons in another vehicle are

acts of independent significance. Id. ¶ 14 (The shooter’s use of a vehicle to position

himself to harm another “ignores his deliberate act of pointing a loaded shotgun out

his window and firing it into the passenger window[.]”). Shooting from a vehicle at

other persons is not an act inextricably linked to the use of a vehicle. Likewise, the

shooter’s use of a vehicle to chase down another person to inflict injury is not a

normal use of a vehicle for transportation purposes. See id. ¶ 16. The circuit court

properly granted summary judgment to Progressive on the determination that

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Shelby’s injuries did not arise out of Johnson’s ownership, maintenance, or use of an

underinsured or uninsured motor vehicle.

[¶23.] We affirm.

[¶24.] GILBERTSON, Chief Justice, and KERN, SALTER, Justices, and

KLINGER, Circuit Court Judge, concur.

[¶25.] KLINGER, Circuit Court Judge, sitting for JENSEN, Justice,

disqualified.

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