Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions


Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.

 

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. United Services Automobile Association v. Neary (8/16/2013) sp-6810

United Services Automobile Association v. Neary (8/16/2013) sp-6810

         Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER .  

         Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

                                                                     

         303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, e-mail  

               

         corrections@appellate.courts.state.ak.us.  



                   THE SUPREME COURT OF THE STATE OF ALASKA  



UNITED SERVICES AUTOMOBILE                               )  

ASSOCIATION,                                              )  

                                                          )    Supreme Court Nos. S-14580/14600  

                           Appellant and                  )  

                           Cross-Appellee,                )    Superior Court No. 1JU-09-00821 CI  

         v.                                               )  

                                                          )    O P I N I O N  

MARY E. NEARY and PATRICK T.                              )  

NEARY, individually, and on behalf of                     )   No. 6810 - August 16, 2013  

their deceased son, AIDAN NEARY, and )
  

CHARLES J. SCHNEIDER, II, and                             )
  

DAREEN PUHLICK, both individually                         )
  

and on behalf of their minor son,                         )
  

CHARLES J. SCHNEIDER, III,                               )
  

                                                          )
  

                           Appellees and                  )
  

                           Cross-Appellants.              )
  

                                                          )
  



                  Appeal from the Superior Court of the State of Alaska, First  

                                                                  

                  Judicial District, Juneau, David V. George, Judge.  



                  Appearances:    Marc  G.  Wilhelm  and  Paul  W.  Waggoner,  

                                                                 

                  Richmond   &   Quinn,   Anchorage,   for   Appellant/Cross- 

                  Appellee United Services Automobile Association.  Deborah  

                  A. Holbrook, Law Offices of Deborah A. Holbrook, Juneau,  

                  for Appellees/Cross-Appellants Neary.  Daniel G. Bruce and  

                                                                        

                  Megan       A.    Wallace,      Baxter      Bruce      &    Sullivan      P.C.,  

                  Anchorage, for Appellees/Cross-Appellants Schneider and  

                  Puhlick.  


----------------------- Page 2-----------------------

                    Before:  Fabe, Chief Justice, Stowers, Maassen, and Bolger,  

                                                               

                    Justices. [Winfree, Justice, not participating.]  



                    MAASSEN, Justice.                                                                

                                              

I.        INTRODUCTION  



                    Fifteen-year-old  Kevin  Michaud  fired  a  single  shot  from  a  revolver  



belonging to his parents, killing one friend and seriously wounding another.  The parents  

                                                     



of the two victims sued Kevin, his parents, and their insurance company, United Services  

                                             



Automobile Association (USAA).  The Michauds’ liability policy provided a $300,000  

                                                     



limit for “Each Occurrence” of “Personal Liability.”  The superior court ruled that the  



policy afforded $900,000 of coverage because there had been a single occurrence and  



Kevin  and  his  parents  were  each  entitled  to  a  separate  per-occurrence  policy  limit.  

                        



USAA appeals, arguing that the policy affords a single per-occurrence policy limit of  

                                                                          



$300,000 regardless of the number of insureds.  The victims’ parents also appeal; they  

                                    



contend that not only were there three individual coverage limits, one each for Kevin and  

                                                                                                     



his  parents,  but  there  were  also  multiple  occurrences.    We  conclude  that  USAA’s  



position  is  most  in  accord  with  the  express  language  of  the  policy,  the  reasonable  



expectations of an insured, and case law, and we therefore reverse the superior court’s  

                                                              



decision.  



II.       FACTS AND PROCEEDINGS  



                    On December 10, 2008, Kevin Michaud was visiting with some friends in  



his home after school.  He took a revolver from his father’s gun cabinet, handled it for  

                                                                                                            



awhile, then put a bullet in one  chamber of the cylinder.  He aimed the revolver at  



himself and pulled the trigger, then aimed at his friend, 14-year-old Aidan Neary, and  



pulled the trigger again. The gun fired on the second pull of the trigger.  The shot passed  

                                     



                                                             -2-                                                        6810
  


----------------------- Page 3-----------------------

through  Aidan’s  body,  fatally  wounding  him,  then  struck  14-year-old  Charles  J.  



Schneider III (Chase) in the spine, where the bullet still remains.  



                    Chase and his parents, Charles J. Schneider II and Dareen Puhlick, sued  



Kevin and his parents, Michael K. and Michele M. Michaud.  They alleged several  



theories of liability, including negligence and negligent infliction of emotional distress  



(NIED).  Aidan’s estate and Aidan’s parents, Mary E. and Patrick T. Neary, also sued  



the three Michauds on theories including negligence and NIED.  The NIED claims were  

                                                             



based on the emotional trauma the parents experienced upon witnessing the harm caused  

                                   



to  their  children.    Both  the  Neary  and  the  Schneider/Puhlick  families  also  sued  the  



Michauds’ insurer, USAA, seeking a declaratory judgment as to USAA’s liability under  

                                         



its policy.  USAA counterclaimed for a declaratory judgment limiting coverage.1  



                   For ease of reference we refer to the parents of Aidan and Chase as “the  

                                                                                           



parents” and to Kevin’s parents as “the Michauds.”  



                   The  Declarations  Page  of  the  Michauds’  insurance  policy,  under  the  

                                                             



heading “COVERAGES AND LIMITS OF LIABILITY,” provides: “SECTION II.  E.  

                                                            



Personal Liability — Each Occurrence  $300,000.”  The definitions section of the policy  

               



defines the word “occurrence” as meaning “an accident, including continuous or repeated  



exposure to substantially the same general harmful conditions, which results, during the  

                                                               



policy period, in:  a. bodily injury; or b. property damage.”   



          1        The victims’ parents also sued First Student, a transportation company that   



provided school bus services, alleging that it had acted negligently by dropping the  

victims off at a place other than their designated pick-up locations.  First Student is not  

                                                                                                    

a party to this appeal.  



                                                             -3-                                                       6810
  


----------------------- Page 4-----------------------

                    Section II, Coverage E, to which the Declarations Page refers, describes  



more specifically the grant of coverage for “Personal Liability” and provides, in pertinent  



part:   



                   If a claim is made or a suit is brought against an insured for  

                    damages because of bodily injury or property damage caused  

                   by an occurrence to which this coverage applies, we will:  



                    1.	      pay  up  to  our  limit  of  liability  for  the  damages  for  

                             which the insured is legally liable . . . .  



Section II also contains several pages of “Conditions,” two of which are relevant to our  

                                                                                                                       



discussion here:  



                    1. 	     Limit of Liability.  Our total liability under Coverage  

                                                                                              

                             E for all damages resulting from any one occurrence  

                                                                               

                             will not be more than the limit of liability for Coverage  

                                                                             

                             E as shown in the Declarations.  This limit is the same  

                                                                            

                             regardless of the number of insureds, claims made or  

                                              

                             persons  injured.            All  bodily  injury  and  property  

                                                                                       

                             damage  resulting  from  any  one  accident  or  from  

                             continuous or repeated exposure to substantially the  

                             same general harmful conditions shall be considered to  

                             be the result of one occurrence.    



                   2.	       Severability  of  Insurance.    This  insurance  applies  

                             separately  to  each  insured.    This  condition  will  not  

                             increase our limit of liability for any one occurrence.  



                   USAA moved for summary judgment in the superior court, arguing that it  

                                                                                                                       



could be liable under its policy for no more than  $300,000, a single per-occurrence  

                                                                            



policy limit, for all claims against its three insureds.  The parents opposed the motion,  

                                                                               



arguing that there was a genuine issue of material fact as to the number of occurrences  

                                                                                     



and thus as to the amount of USAA’s possible liability. The Michauds opposed USAA’s  

                                                                                 



motion as well and cross-moved for summary judgment themselves, arguing that they  



                                                             -4-	                                                      6810
  


----------------------- Page 5-----------------------

                                                               

were each entitled to a separate coverage limit of $300,000 and that there were multiple  



occurrences.  



                                                         

                    The superior court held that (1) each of the three Michauds was entitled to  



                                                                                                      

a separate coverage limit of $300,000 per occurrence, and (2) there was one occurrence,  



meaning that the available limits under the policy were $900,000.  USAA appeals the  



first ruling, arguing that the policy’s per-occurrence limit of $300,000 does not vary  



                                                                                       

depending on the number of insureds. The parents appeal the second ruling, arguing that  



the facts of this case gave rise to multiple occurrences:  the bodily injury to the two  



                                                                                     

shooting victims and the emotional distress suffered by the victims’ four parents.  They  



                                                                                             

argue in the alternative that each negligent act or omission by Kevin and his parents that  



led up to the shooting was a separate occurrence.  



III.       STANDARD OF REVIEW  



                                                                                            

                    “We review the grant of a summary judgment motion de novo, affirming  



                                                                                                                    

if the record presents no genuine issue of material fact and if the movant is entitled to  



                                               2  

judgment  as  a  matter  of  law.”      In  making  this  assessment,  we  draw  all  reasonable  



                                                                       3  

inferences  in  favor  of  the  non-moving  party.     A  superior  court’s  interpretation  of  



                                                                                             4  

                                                                                                    

insurance policy language is a matter of law reviewed de novo.                                 In this case, the victims’  



parents and USAA all moved for summary judgment.  We will make all reasonable  



          2         Beegan   v. State, Dep’t of Transp. & Pub. Facilities, 195 P.3d 134, 138  



(Alaska 2008) (citing Matanuska Elec. Ass’n v. Chugach Elec. Ass’n , 152 P.3d 460, 465   

(Alaska 2007)).  



          3         Id . (citing Matanuska Elec. Ass’n , 152 P.3d at 465).  



          4  

                                                                                   

                    State Farm Mut. Auto. Ins. Co. v. Dowdy, 192 P.3d 994, 998 (Alaska 2008)  

(citing Simmons v. Ins. Co. of N. Am., 17 P.3d 56, 59 (Alaska 2001)).  



                                                                -5-                                                        6810
  


----------------------- Page 6-----------------------

                                                                                                

inferences in favor of the opposing party when evaluating each party’s arguments in  



support of summary judgment.  



IV.	      DISCUSSION  



          A.	      The  Michauds’  Liability  Insurance  Policy  Provided  A  Single  Per- 

                    Occurrence Limit Of $300,000.  



                   When  interpreting  insurance  policies,  we  look  to  the  language  of  the  



                                                                              

disputed provisions, other provisions in the policy, extrinsic evidence, and case law  



                                              5  

interpreting similar provisions.   Insurance policies are construed in such a way as to  



                                                                                                  6  

                                                                                                      Ambiguities will  

honor the reasonable expectations of a layperson seeking coverage. 



                                                                7  

be construed most favorably to the insured.   Policy language is ambiguous when it is  



                                                                              8  

                                                                                 Absent ambiguity, we will still  

susceptible to two or more reasonable interpretations. 



rule in favor of coverage if that is the only way to effectuate the insureds’ objectively  



                                                                                                      

reasonable expectations, even though “painstaking study of the policy provisions would  



                                                  9  

have negated those expectations.”   



                           

                   The  provisions  at  issue  here  regarding  the  limits  of  the  Michauds’  



                                                                    

homeowners’ policy are not ambiguous.  The policy’s Declarations page states that the  



“Personal Liability” limit of $300,000 applies to “Each Occurrence.”  Nothing on the  



          5        Allstate Ins. Co. v. Teel , 100 P.3d 2, 4 (Alaska 2004) (citing Bering Strait  



Sch. Dist. v. RLI Ins. Co., 873 P.2d 1292, 1295 (Alaska 1994)).  



          6        Dowdy , 192 P.3d at 998 (citing Allstate Ins. Co. v. Falgoust , 160 P.3d 134,  



138 (Alaska 2007)).   



          7        Id . (citing Falgoust , 160 P.3d at 138).  



          8        Id . (citing Falgoust , 160 P.3d at 138).  



          9         Teel, 100 P.3d at 4 (quoting  C.P. ex rel. M.L. v. Allstate Ins. Co.                        , 996 P.2d  



1216, 1222 (Alaska 2000)) (internal quotation marks omitted).  



                                                             -6-                                                          6810  


----------------------- Page 7-----------------------

                                                                                                            

Declarations page suggests that this number will be increased depending on the number  



                                                                                                           

of insureds; indeed, such a construction is expressly prohibited by other language in the  



policy.  Section II addresses the Michauds’ “Liability Coverages.”  It commits USAA  



                                                   

to “pay up to [its] limit of liability for the damages for which the insured is legally liable”  



for  covered  liability  claims.    (Emphasis  added.)    A  portion  of  Section  II  labeled  



                                                         

“Conditions” further explains what is meant by “Limit of Liability”:  “Our total liability  



                                                                                 

under Coverage E for all damages resulting from any one occurrence will not be more  



than the limit of liability for Coverage E as shown in the Declarations.”  Adding further  



to the clarity, the provision then states, “This limit is the same regardless of the number  



of insureds, claims made or persons injured.”  



                    This unambiguous language plainly precludes the result the parents seek  



                                       

here:  a multiplication of the limit of liability by “the number of insureds.”  We have  



found no case in which a court faced with the same policy language applied a separate  



                                                                                                                            

per-occurrence policy limit to each insured, though courts have declined to do so.  In a  



                                                                                                                   

case  involving  an  automobile  policy,  Folkman  v.  Quamme,  the  Supreme  Court  of  



                                                                  

Wisconsin  rejected  the  argument  that  an  “each  occurrence”  limit  applied  to  each  



            10  

                                                                                                      

insured.         It observed that the liability provision at issue was not ambiguous — the  



insureds “must add the words ‘for each insured’ to the endorsement for it to acquire the  



                                                                                               

meaning they offer” — and that under the insureds’ analysis the insurer “could never be  



                                                                                 

certain what its total liability would be,” giving as an example an automobile accident  



                                                                                                             11  

in which a number of insureds in the same vehicle were arguably at fault.                                        



          10        655 N.W.2d 857, 870-72 (Wis. 2003).  



          11        Id. at 870-72 (emphasis in original).  See also Murbach v. Noel, 798 N.E.2d  



810, 812 (Ill. App. 2003) (holding that the limits of liability provisions in an automobile   

policy were unambiguous).  

                                                              -7-                                                           6810  


----------------------- Page 8-----------------------

                                                                                       

                     The parents argue that USAA’s reading of the policy is contradicted, or at  



                                       

 least  made  ambiguous,  by  three  of  the  policy’s  provisions.    First,  they  rely  on  the  



                                                    

 “Personal Liability” provision of the Liability Coverages section, arguing that the word  



                                                                  

 “personal” implies that the coverage limit applies separately to each individual insured  



 rather  than  to  the  insureds  as  a  group.    But  the  phrase  “Personal  Liability”  simply  



                                                                                      

 describes the type of coverage that the liability section provides — for damages in tort  

 for which an insured can be held personally liable;12 it does not purport to expand that  



 coverage or to define its dollar limits.  



                                                                                      

                     Second, the parents rely on the sentence in the coverage provision that  



 commits USAA to “pay up to [its] limit of liability for the damages for which the insured  



                                                

 is legally liable.”  The parents contend that this sentence, with its use of “the insured” in  



 the singular, again implies that the full limit of liability is available for the damages  



                                                                 

 assessed against each individual insured. We find this argument unconvincing given that  



                                                                     

 the commitment to “pay” in this sentence is expressly qualified by the limit of liability,  



 plainly stated elsewhere in the policy to be a single, per-occurrence limit.   



                                                                                                        

                     Finally, the parents argue that the policy’s severability clause supports their  



 reading.  Captioned “Severability of Insurance,” the clause provides:  “This insurance  



                                                                                                              

 applies separately to each insured.  This condition will not increase our limit of liability  



for  any  one  occurrence. ”    (Emphasis  added.)    Severability  clauses  are  generally  



 interpreted to mean that a policy’s exclusions and conditions apply separately to each  



             13  

                                                                                                                        

 insured;        for  example,  the  activity  of  one  insured  that  brings  him  within  a  policy  



           12        In law generally, “personal liability” simply means “[l]iability for which  



 one is personally accountable and for which a wronged party can seek satisfaction out  

 of the wrongdoer’s personal assets.”  BLACK ’S LAW DICTIONARY 998 (9th ed. 2009).  



           13        See Marwell Constr., Inc. v. Underwriters at Lloyd’s, London                                    , 465 P.2d  



                                                                                                                (continued...)  

                                                                 -8-                                                             6810  


----------------------- Page 9-----------------------

                                                            

exclusion will not be imputed to other insureds when they seek coverage under the same  



           14  

policy.        Severability clauses are not coverage provisions; they do not increase policy  



          15  

limits.       The USAA policy makes this very clear by stipulating that the clause “will not  



           13        (...continued)  



298, 305 (Alaska 1970) (quoting Shelby Mut. Ins. Co. v. Schuitema, 183 So. 2d 571, 573  

                                                                                                                     

(Fla. Dist. App. 1966)); Nat’l Ins. Underwriters v. Lexington Flying Club, Inc. , 603  

                                                 

S.W.2d 490, 492 (Ky. App. 1979) (“The purpose of severability clauses is to spread  

                                                                                                        

protection,  to  the  limits  of  coverage,  among  all  of  the  named  insureds.”  (emphasis  

                              

added)).  See also C.P. ex rel. M.L., 996 P.2d at 1225 (noting trial court’s recognition of  

                                                                                                      

the fact that the policy under review “contains no ‘severability of interest’ clause that  

would clearly limit the effect of an exclusion to the person claiming coverage”); State,  

Dep’t of Transp. & Pub. Facil. v. Houston Cas. Co. , 797 P.2d 1200, 1205 (Alaska 1990)  

                                                                                                         

(Matthews, C.J., concurring) (“[I]n the absence of a severability of interests clause, an  

                                                                                

insurance policy is ambiguous as to whether or not the use of the term ‘the insured’ in  

                                                     

an exclusion refers merely to the insured seeking coverage or to the insured seeking  

coverage and to the named insured.”).  



           14  

                                                                                                                 

                     We recognize that some exclusions are specifically worded such that their  

                                                         

application to any insured excludes coverage for all insureds.  Courts disagree on the  

effect of severability clauses in such circumstances, although “[t]he majority of courts  

                                                                                                            

hold . . . that the existence of a severability clause does not affect a clearly worded  

                                                                                                

exclusion.”   Argent  v.  Brady ,  901  A.2d  419,  423-28  (N.J.  Super.  App.  Div.  2006)  

                                                                                              

(collecting cases and holding that exclusion of coverage for liability resulting from the  

                                  

business  pursuits  of  “any  insured”  excluded  coverage  for  all  insureds  regardless  of  

severability clause).  We do not need to decide this issue here.  



           15  

                                                                                                                                

                     See, e.g., Am. Family Mut. Ins. Co. v. Bower, 752 F. Supp. 2d 957,  963  

                                                                                                

(N.D. Ind. 2010) (“Severability clauses are commonly used to provide each insured with  

               

separate coverage, as if each were separately insured with a distinct policy, subject of  

                                                                                                                     

course to the policy’s liability limits.” (emphasis added)); Baker v. DePew , 860 S.W.2d  

                                                                              

318,  320  (Mo.  1993)  (“The  severability  clause  applies  to  the  meaning  of  the  term  

                                                                                                      

‘insured’  anywhere  in  the  policy  except  in  the  provisions  that  specify  the  limits  of  

liability;  i.e.,  the  severability  clause  does  not  operate  to  increase  the  limits  of  the  

policy.”); Argent, 901 A.2d at 426-27 (“A severability clause . . . is designed solely to  

                                                                

render the coverage actually provided by the insuring provisions of the policy applicable  

                                                                                                                 (continued...)  

                                                                 -9-                                                              6810  


----------------------- Page 10-----------------------

                                                                    

increase  our  limit  of  liability  for  any  one  occurrence.”    The  parents  argue  that  this  



                                           

qualification can be read as capping each individual insured’s coverage at $300,000 per  



                                                                                

occurrence regardless of the number of claims or injured  persons.    Such  a  reading,  



                                                                                          

however, even if otherwise reasonable, would still require the insured to look elsewhere  



                                                                                                                         

to determine the limit of liability, as the severability clause merely states that it “will not  



                                                                       

increase” that limit whatever it may be.  As described above, the limit of liability is  



                                                                                                                 

plainly stated in the policy to be a per-occurrence limit of $300,000 that does not vary  



                                                                                                             

“regardless of the number of insureds, claims made or persons injured.”  The severability  



                                                                                                                    

clause, in short, cannot be read to supply a per-insured limit of liability that is not found  



elsewhere in the policy.  



                                                                                                                 

                    As for extrinsic evidence, the parents do not point to any that could support  



                              

a  finding  that  the  Michauds,  despite  the  plain  language  of  their  policy,  reasonably  



                                                                                  

expected separate, individual per-occurrence limits.  We have looked in the past to such  



evidence as statements by the insurer’s sales representatives and the insurer’s printed  



                                                                                  

flyers or brochures for an indication of the reasonable expectations of the insured seeking  



               16  

                     No  such  evidence  exists  in  this  case.    The  Michauds  asserted  in  their  

coverage.                                                    



pleadings  below  that  they  never  discussed  the  relevant  coverage  provisions  with  

                                                                                            



representatives   of   their   insurance   company   and   never   developed   any   relevant  



expectations with regard to coverage.  These assertions do not appear to have been  



          15         (...continued)  



to all insureds equally, up to coverage limits.  The severability clause is not denominated  

                                            

a  ‘coverage  provision,’  and  it  would   be   unreasonable  to  find  that  it  operated  

                                                                 

independently in that capacity to increase the insurance afforded under the insuring  

provisions of the policy . . . .” (emphasis added)).  



          16        See INA Life Ins. Co. v. Brundin, 533 P.2d 236, 242 (Alaska 1975).  



                                                               -10-                                                              6810  


----------------------- Page 11-----------------------

                                                                                                   

disputed.  We enforce the unambiguous policy language and hold that the policy’s single  



per-occurrence limit applied regardless of the number of insureds.  



          B.        There Was A Single Occurrence.  



                    The parties also disagree on the number of occurrences:  USAA claims  



                                                                             

there was one because there was a single gunshot, and the parents assert that there were  



at  least  six  because  there  were  six  injured  victims  (the  two  children  and  their  four  



parents).    The  Michauds’  insurance  policy  defines  “occurrence”  as  “an  accident,  



including continuous or repeated exposure to substantially the same general harmful  



                                                                         

conditions,  which  results  .  .  .  in  .  .  .  bodily  injury.”    The  policy  does  not  define  



                                                                                       

“accident,” but our case law defines the term as “anything that begins to be, that happens,  

or that is a result which is not anticipated and is unforeseen and unexpected.”17                                             We  



                                                                                    

conclude that there was a single “accident” in this case that “result[ed] . . . in . . . bodily  



injury” and therefore a single occurrence for purposes of the limits of liability.  This  



                                                                                                                       

conclusion is consistent with our precedent interpreting similar policy language and with  



the reasonable expectations of an insured.  



                                        

                    The parents present two separate theories in support of a finding of multiple  



                                                                                      

occurrences.  First they argue that each act of negligence that enabled Kevin to shoot his  



                                                                               

friends should be counted as a separate occurrence; this would include not only his own  



negligent handling of the gun but also each negligent act of his parents in failing to  



                                                                                       

secure their firearms and supervise their son’s activities. But under our case law it is the  



                                                                                                                  

unforeseen event, not every act of negligence preceding it, that constitutes the accident  



                                                              

or occurrence for purposes of insurance coverage.  In Fejes v. Alaska Insurance Co. , a  



                                                                                                    

contractor sought indemnity from his general liability insurer for damages caused by a  



          17  

                                                                                                     

                    See,  e.g.,  Fejes  v.  Alaska  Ins.  Co.,  984  P.2d  519,  523  (Alaska  1999)  

(quoting Brundin, 533 P.2d at 242 n.23) (internal quotation marks omitted).  

                                                              -11-                                                             6810  


----------------------- Page 12-----------------------

                                                                                        18  

subcontractor’s negligent installation of a septic system.    The insurer argued that there   

had been no “occurrence” because the negligent installation was not an accident.                                               19   The  



contractor focused instead on the results, arguing that there was an “occurrence” when  

                                                                                                       



                                                     20  

the septic system was destroyed.                         We found that the contractor had the better of the  

                             



argument and held that the accident was the unexpected failure of the system, not the  

                                                                                                            

negligent installation that preceded it.21  

                                                                



                     In Makarka ex rel. Makarka v. Great American Insurance Co. , a driver ran  

                                                                                

a  red  light  and  struck  another  car,  killing  three  passengers  and  injuring  two.22                                       The  



victims and their survivors sued the mechanic who had earlier worked on the driver’s  

brakes and allegedly failed to repair them.23  The mechanic’s insurer contended that there  

                                                                      



was no coverage because its policy had been cancelled before the driver ran the red light  

                                                                                                                             



and killed the victims; the plaintiffs countered that coverage was triggered when the  

                                      

mechanic performed his negligent work, which was during the policy period.24  

                                                                                                                                



                     Noting that the policy at issue was an “occurrence” policy, we observed that  



“[s]uch policies provide coverage that is based on accidents or events that happen while  

                                                                                                   



           18        Id . at 521.  



           19        Id . at 523.  



           20        Id.  



           21        Id .  



           22         14 P.3d 964, 965 (Alaska 2000).  



           23        Id. at 956-66.  



           24        Id. at 967.  



                                                                 -12­                                                                6810  


----------------------- Page 13-----------------------

                                 25  

the policy is in force.”             We referred approvingly to a statement of the California Court  



of Appeal that “the time of the occurrence of an accident within the meaning of an  



                                                                                  

indemnity policy is not the time the wrongful act was committed, but the time when the  



                                                                 26  

complaining party was actually damaged.”                              While this is sometimes referred to as a  



                                                                 

“general rule,” we noted in Makarka that it is actually “a restatement of the terms of most  



occurrence-based liability insurance policies,” which are “triggered by bodily injury or  



                                                                               27  

property damage for which legal damages are due.”                                   We concluded that “the proper  



moment to measure  whether coverage is in force is the moment the person seeking  



                                   28  

damages  was  injured.”                   The  USAA  policy  at  issue  here,  while  worded  somewhat  



                                                                         

differently than the policy at issue in Makarka , is also an occurrence-based policy that  



                                                                                                                    

is triggered by injury occurring during the policy period; an “occurrence to which this  



coverage applies” is defined as “an accident . . . which results, during the policy period,  



                                          

in . . . bodily injury; or . . . property damage.”  This language reflects the “general rule”  



                                                                                                                  

noted above:   that “the time of the occurrence of an accident” is not the time of the  



                                                                                             29  

negligent act, but the time the plaintiff was actually damaged.                                        



                    In accord is an insurance treatise we have cited before for its definition of  



                               30  

the term “accident”:                “The word ‘accident’ implies a misfortune with concomitant  



          25        Id.  



          26        Id. (quoting Remmer v. Glens Falls Indem. Co. , 295 P.2d 19, 21 (Cal. App.   



1956)).  



          27        Id.  

                          



          28        Id.  



          29        See id. (quoting Remmer , 295 P.2d at 21).  



          30  

                                                                                          

                    See, e.g., C.P. ex rel. M.L. v. Allstate Ins. Co., 996 P.2d 1216, 1223 nn.41­ 

                                                                                                               (continued...)  

                                                              -13-                                                             6810  


----------------------- Page 14-----------------------

damage to a victim, and not the negligence which eventually results in that misfortune.”31  

                                    



The rule was applied by the Florida Supreme Court in a gunshot case with similarities  



                                                                                              

to this one.  In Koikos v. Travelers Insurance Co ., two shooting victims sued the owner  



                                                                                          32  

                                                                                              The gunman had fired  

of a restaurant, Koikos, alleging a negligent failure of security. 

                                                                    33  Although a single negligent omission  

two bullets, each one hitting a different victim.  

                                                                                          



was alleged on the part of the restaurant — the failure to maintain adequate security —  

                                                            

the court ruled that there were two occurrences, one for each gunshot causing injury.34  

                                                                              



The court explained:  



                    It is the act that causes the damage, which is neither expected  

                                                                       

                   nor   intended   from   the   standpoint   of   the   insured,   that  

                    constitutes       the    “occurrence.”             The      insured’s       alleged  

                   negligence  is  not  the  “occurrence”;  the  insured’s  alleged  

                   negligence is the basis upon which the insured is being sued  

                   by the injured party. . . .   



                    . . . The accident — the event that was neither expected nor  

                    intended  from  Koikos’s  standpoint  —  was  the  shooting  

                    incident and not Koikos’s own failure to provide security.  

                   Although Koikos’s alleged negligence in failing to provide  

                    security  is  the  basis  for  which  liability  is  sought  to  be  

                    imposed, it was the shooting that gave rise to the injuries that  



          30        (...continued)  



42 (Alaska 2000) (quoting LEE R. RUSS , COUCH ON INSURANCE § 126:26 (3d ed. 1999));  

INA Life Ins. Co. v. Brundin , 533 P.2d 236, 242 n.23 (Alaska 1975) (quoting LEE  R.  

RUSS , COUCH ON INSURANCE § 41:6 (2d ed. 1962)).  

           



          31  

                                          

                    LEE  R.  RUSS , COUCH  ON  INSURANCE  §  126:26   (3d  ed.  rev.  vol.  2008)  

(citations omitted).  



          32        849 So. 2d 263, 265 (Fla. 2003).  



          33       Id.  



          34       Id. at 271.  



                                                            -14-                                                       6810  


----------------------- Page 15-----------------------

                    were  neither  expected  nor  intended  from  the  insured’s  

                                    [35] 

                    standpoint.  



Here, similarly, it was not the Michauds’ alleged failure to secure their firearms, nor their  

                                                                                                       



alleged failure to supervise their son, that constituted the event that was “ unforeseen and  

                                         

unexpected”36 from their standpoint as insureds; rather, it was “the shooting that gave  



rise to the injuries” that was “unforeseen and unexpected”  and therefore, from their  

                                                                                           



perspective, was the accident.  The analysis is the same as it was in Koikos , though the  

                                              



mathematics are different.  Here there may have been multiple acts of negligence, but it  

                                                                                                    



was a single gunshot that caused the plaintiffs’ damages.  The single gunshot was the one  

                                                      



occurrence for purposes of liability coverage.  



                                                                                                             

                    The parents argue separately that there were six occurrences because there  



were six discrete injuries:  the single bullet struck both Chase and Aidan, which in turn  



caused  emotional  distress  to  all  four  parents.    The  parents  urge  us  to  adopt  what  is  



sometimes called the “effects” test, under which the number of occurrences is determined  



                                                              

by the number of injuries caused.  This  test, however, is inconsistent with the plain  



                                   

language of the USAA policy, which, as discussed above, states that the limit of liability  



                      

“as shown in the Declarations . . . is the same regardless of the number of insureds,  



claims made or persons injured.”   



                                                                                                     

                    In any event, a majority of courts that have considered the effects test as a  



way to determine the number of occurrences have rejected it as unworkable for that  



             37  

                 Courts have correctly observed that the test renders insurers’ liability both  

purpose.                                                                                                      



          35        Id.  



          36        See INA Life Ins. Co. v. Brundin, 533 P.2d 236, 242 n.23 (Alaska 1975)  



(quoting RUSS , supra n.30, § 41:6) (internal quotation marks omitted).  



          37        See generally   Michael P. Sullivan, Annotation,  What Constitutes Single  



                                                                                                            (continued...)  

                                                             -15-                                                           6810  


----------------------- Page 16-----------------------

                                              

unpredictable  and  limitless,  since  any  one  event  can  cause  many  injuries  to  many  



           38  

people.         A negligently caused explosion, for example, can injure one person or kill a  



hundred; it can damage one home or devastate a city block.  The insurer attempting to  



                                                                                                                           

underwrite the risk posed by the many potential effects of a single negligent act has no  



                              

way to estimate its exposure and responsibly calculate its premiums.  In Koikos , the court  



                                                                                                  

rejected the effects test under facts similar to those here, holding that the proper measure  



                                                                                                            39  

                                                                                                                We reject the  

of occurrences was the number of gunshots, not the number of victims.  



                                                                                   

effects test here as a basis for calculating the number of occurrences, and we therefore  



                                                                                                                   

reject the parents’ argument that this single gunshot constitutes as many as six different  



occurrences.  



                                                                                                            

                    Finally, we believe that the rules we apply above conform to the reasonable  



                                                                                                    

expectations of an insured who is reading an occurrence-based policy like the one at  



                                                                       

issue here, in which “occurrence” is defined as an “accident” resulting in “bodily injury.”  



          37         (...continued)  



Accident or Occurrence Within Liability Policy Limiting Insurer’s Liability to a Specified  

Amount Per Accident or Insurance , 64 A.L.R. 4TH  668, § 2[a] (1988).  Courts sometimes  

use the effects test simply to determine when and where an accident occurred, using other  

tests  —  e.g.,  the  “cause”  test  —  to  calculate  the  number  of  occurrences.    See,  e.g.,  

                                                     

Appalachian Ins. Co. v. Liberty Mut. Ins. Co. , 676 F.2d 56, 61-63 (3d Cir. 1982).  



          38        See, e.g., Saint Paul-Mercury Indem. Co. v. Rutland, 225 F.2d 689, 692 (5th  



Cir. 1955) (noting that the usual “system of computing rates” for liability insurance “is  

                                          

simply incompatible with the idea of virtually limitless liability depending solely upon  

                                                      

the number of claimants”).  



          39        Koikos , 849 So. 2d at 273.  Justice Wells, dissenting in Koikos, questioned  

                                                                                    

the wisdom of a formula that equates the number of occurrences with the number of  

                                                

shots fired, positing a hypothetical in which a gunman “used an automatic weapon and  

                                                                       

merely kept squeezing the trigger, injuring 100 people,” an incident which he asserted  

                                                                   

should “plainly” constitute “but one occurrence.”  Id. at 274.  We need not address the  

                                                                                                                    

issue in this case, since a single gunshot caused all the injuries.  

                                                               -16-                                                             6810  


----------------------- Page 17-----------------------

                                          

We consider it unlikely that the ordinary insured who hears of an accident in the home,  



                                                                                            

in the workplace, or on the highway will mentally convert that single event into some  



other number of accidents depending on the number of negligent acts and omissions that  



                                          

led up to it, or on the number of persons who were injured as a result.  There was a single  



                                                                                             

accident in this case — the unforeseen and unexpected firing of the single gunshot that  



                                                                               

caused all of the plaintiffs’ injuries — and therefore a single occurrence for purposes of  



liability coverage under the USAA policy.  



V.        CONCLUSION  



                   We   REVERSE   the   superior   court’s   summary   judgment   order   and  



REMAND for proceedings consistent with this opinion.  



                                                           -17-                                                      6810
  

Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC