Safeco Insurance Company of Illinois v. Burton

Background

Safeco filed a declaratory-judgment action concerning its homeowners policy issued to Levi Richard Burton. The dispute arose from a December 14, 2019 incident at The Armory, where Burton punched Morgan McClurg during an altercation at a concert. McClurg alleged in an underlying state-court lawsuit that Burton negligently injured her. Burton pleaded guilty to disorderly conduct based on conduct at the concert and stated in his plea petition that, while engaging in boisterous and noisy conduct, he swung at an attacker and accidentally struck McClurg. He was ordered to pay McClurg $2,386.50 in restitution.

The policy provided personal-liability coverage for bodily injury caused by an “occurrence” and required Safeco to defend an insured against covered claims. It excluded coverage for bodily injury that resulted from “violation of criminal law committed by, or with the knowledge or consent of any insured.” It separately excluded bodily injury that was expected or intended or was the foreseeable result of an insured’s act or omission.

Safeco sought declarations concerning three policy issues: the criminal-acts exclusion in Count I, the intentional-acts exclusion in Count II, and whether McClurg’s injuries resulted from an occurrence in Count III. Safeco’s motion for judgment on the pleadings addressed only Count I. Burton and McClurg opposed the motion.

Legal standard

Under Federal Rule of Civil Procedure 12(c), judgment on the pleadings is appropriate when, after accepting the nonmoving party’s pleaded facts as true and drawing reasonable inferences in that party’s favor, no material factual issue remains and the moving party is entitled to judgment as a matter of law. The court may consider the pleadings, materials incorporated into them, attached exhibits, and public records.

Minnesota law governed interpretation of the policy. The court treated policy interpretation and the existence of a duty to defend or indemnify as legal questions. The insurer bears the burden of proving that an exclusion applies, and exclusions are construed narrowly. The duty to defend is generally broader than the duty to indemnify, but where an exclusion eliminates coverage, the insurer has no duty to defend.

Analysis

Criminal conduct. The court held that Burton’s guilty plea conclusively established that he committed a crime for purposes of the exclusion. It distinguished a prior Minnesota Court of Appeals decision involving an equivocal plea in which the insured denied harming the victim. The court found that Burton did not maintain his innocence or deny punching McClurg.

The court rejected the argument that the exclusion required proof that Burton intended to injure McClurg. The exclusion referred to injuries resulting from a violation of criminal law and did not mention intent. The policy separately addressed intentional acts, so the court concluded that an intent-to-injure requirement did not carry over to the criminal-acts exclusion.

The court also found the exclusion unambiguous. Although the policy did not define “criminal acts,” it used the phrase “violation of criminal law,” which the court found readily understandable by reference to statutory law.

Causation. The policy excluded injuries that “result[] from” a criminal-law violation. The court interpreted that language broadly, requiring a causal connection rather than proof that the criminal conduct was the injury’s proximate cause. Burton’s plea statement connected his disorderly conduct and his punch by stating that he struck McClurg while engaging in the disorderly conduct. The court therefore found the required temporal, geographic, and causal connection.

The court further ruled that the exclusion would apply even if negligence or an attempt at self-defense also contributed to the injuries, because the exclusion applies when the excluded conduct is causally connected to the injuries.

Public policy. The court rejected the argument that the exclusion should not apply because disorderly conduct was less severe than criminal conduct involved in other insurance cases. It found that neither the policy’s language nor Minnesota case law required courts to assess the severity of the crime.

The court also rejected the argument that the exclusion made coverage illusory, meaning functionally nonexistent. The policy still provided coverage for accidental third-party bodily injuries in other circumstances, so denying coverage for injuries resulting from Burton’s criminal conduct did not eliminate the policy’s coverage.

Disposition

Judge Susan Richard Nelson granted Safeco’s Motion for Judgment on the Pleadings as to Count I. The court ruled that the criminal-acts exclusion barred coverage for McClurg’s injuries and that Safeco had no duty to defend or indemnify Burton against McClurg’s underlying action. The order addressed the motion only as to Count I.