Third Circuit Addresses Duty to Defend and Indemnify in Homeowners and Umbrella Policy

In the recent case of State Farm v. Estate of Mehlman, 2009 WL 4827027 (3rd Cir. Dec. 16, 2009), the Third Circuit tackled the issue of whether a carrier, which issued both a homeowner's policy and an umbrella policy, had a duty to defend and/or indemnify the estate of a man who, in a drunken rage, had unsuccessfully attempted to kill the plaintiff before killing himself. This coverage action was related to an underlying negligence suit brought by the plaintiff against the estate of the decedent.

According to the opinion, the Homeowners Policy provided coverage for damages caused by an “occurrence,” and the Umbrella Policy limited coverage to damages caused by a “loss.” The policies defined “occurrence” and “loss” as "accidents." Neither policy defined the term "accident."

Therefore, the question became whether the decedent's drunkeness rendered his otherwise purposeful and repeated acts of trying to kill the plaintiff an "accident" within the meaning of that term in the policies.

The Third Circuit, applying Pennsylvania law, noted that an "accident" has been said to be an "unanticipated event." The Court found that the decendent's intoxication did not render his intentional acts of chasing and repeatedly shooting at the plaintiff an "accident." As such, the Court found that coverage was not triggered under the policy and ruled in favor of the carrier and found no duty to defend or indemnify.

Thanks to Attorney James Beck of the Philadelphia office of Dechert LLP, and writer of the Drug and Device Law Blog (http://druganddevicelaw.blogspot.com/), for bringing this case to my attention.