Metropolitan Ins v. Daigle CV-96-293-SD 03/27/97

UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Metropolitan Property & Casualty Insurance Company; Allstate Insurance Company

v. Civil No. 96-293-SD

Richard Daigle; Irene Palmer; Donald Palmer; David Smith

O R D E R

In this action for declaratory judgment, Allstate Insurance

Company and Metropolitan Property and Casualty Insurance Company

seek declaration that they have no obligation under their

insurance contracts to indemnify and defend their respective

insureds, David Smith and Richard Daigle, for threatened legal

liability in a civil action brought by Irene Palmer. Palmer

instituted civil action against Smith and Daigle alleging

numerous egregious acts committed against her over a year's time.

Presently before this court are Allstate's and Metropolitan's

motions for summary judgment claiming no obligation, as a matter

of law, to indemnify and defend Smith and Daigle. Objections have been submittd by Smith, Daigle, and the Palmers.

Background

In March of 1994, when David Smith was first hired as the

administrator of the Pheasant Wood Nursing Home (the Home), he

placed a telephone call to B. Irene Palmer, a veteran employee of

seventeen years. After identifying himself, he breathed heavily

into the telephone. Complaint 5 21. When later confronted by

Palmer, he informed her that he "just wanted to give an old lady

a thrill." Id.

At a business meeting held at the corporate office of

Sowerby Healthcare, Inc., the next month, an employee (apparently

of the Home) displayed on the overhead projector a photograph of

Palmer holding a "vegetable penis." Id. 5 23. The photograph

had been taken at a December 1993 Christmas party for the Home at

which Palmer had been given a shoe box containing the item, which

consisted of a vegetable shaped like a penis that had been

decorated with whipped cream on one end and a hair net on the

other. Id. 5 17. Dwight Sowerby, owner of Sowerby Healthcare,

laughed at the picture and did not try to stop the display. Id.

5 24.

When Palmer returned to the Home, Smith asked her if

anything "unusual" had occurred at the meeting, and she replied

2 in the negative. Id. 5 26. He then responded that he was going

to post a blow-up of the photograph on his office wall, which he

in fact later did. Id. 55 27, 28. Smith also showed the

picture, mounted on the back of a piece of carpet, to other

individuals at the Home. Id. 5 29. In addition, in June of 1994

Palmer witnessed Smith showing a volunteer the photograph and

remarking, "Now we know what her mouth is full of." Id. 5 34.

Palmer asked Smith on numerous occasions to destroy the

photograph. He refused, telling her that he would continue

showing it to staff members. Id. 5 30. Furthermore, the senior

administrator told Smith to get rid of the photograph, but he did

not comply. Id. 55 32, 33.

On March 31, 1995, Smith paged Palmer over the intercom and

asked that she come to his office. Id. 5 35. When Palmer

arrived, Richard Daigle, a bailiff from the Jaffrey-Peterborough

District Court, and Bruce McCall, a Peterborough police officer,

were present. Id. 5 37. Palmer knew that Daigle's mother-in-law

was a resident of the Home, and assumed there was a billing

problem. Id. 5 38. Daigle, with his gun and badge showing,

moved toward Palmer and said, "I hate to do this but it is my

job. I have to take you out of here in handcuffs. I have been

ordered by the Court to take you downtown." Id. 5 39. When

Palmer asked Smith what was happening, he replied that he did not

know. Id. 5 40. Daigle said it had something to do with

3 Medicaid fraud. Id.

Daigle escorted Palmer and Smith to the front desk of the

Home, where he handcuffed Palmer to Smith. Id. 5 41. Palmer was

then taken by Daigle out the front door, past McCall, who was

standing at the door in an "authoritative" stance, to a police

cruiser. Id. 5 42. As Palmer was about to be placed in the car

by Daigle, other employees of the Home snapped photographs. Id.

5 43. Smith then informed Palmer that the whole incident had

been a "joke". Id. 5 44.

After the arrest incident. Palmer continued to come to work,

but she complained about the actions of those involved. Id. 5

47. Smith told her, "What goes around . . . comes around. If

you go to see the Police Chief, trouble could be made for you."

Id. Palmer resigned on June 30, 1995. Id. 5 48.

Discussion

Both Smith and Daigle seek indemnification from their

respective insurance companies, Allstate and Metropolitan, under

policy coverage for personal legal liability. Both insurance

contracts used similar language to define the scope of coverage.

Allstate's policy provides: "Allstate will pay damages which an

insured person becomes legally obligated to pay because of bodily

injury or property damage arising from an accident . . . ."

Exhibit C at 23 (attached to Allstate's motion for summary

4 judgment). Metropolitan's policy likewise reads: "We will pay

all sums for bodily injury and property damage to others for

which the law holds you responsible because of an occurrence."

Exhibit B at 16 (attached to Metropolitan's motion for summary

judgment). Metropolitan's policy defines "occurrence" as "an

accident . . . resulting in bodily injury or property damage."

Id.

Both Allstate and Metropolitan argue that any legal

liability for Palmer's injuries imposed on Smith and Daigle was

not the result of an "accident" and is therefore not covered

under the terms of the insurance policies. Both policies contain

explicit exclusions for liability from nonaccidents. Allstate's

policy reads: "We do not cover bodily injury or property damage

resulting from: a) an act or omission intended or expected to

cause bodily injury or property damage. ..." Allstate's

Exhibit C at 23. Metropolitan's analogous provision reads: "We

do not cover bodily injury or property damage which is reasonably

expected or intended by you or which is the result of your

intentional or criminal acts." Metropolitan's Exhibit B at 17.

The insurance companies argue that Palmer's injuries resulted

from Smith's and Daigle's intentional acts and are therefore not

covered accidents under the terms of the policy.

The New Hampshire Supreme Court has "construed the term

'accident' in the context of 'occurrence' coverage to mean an

5 '"undesigned contingency, ... a happening by chance, something

out of the usual course of things, unusual, fortuitous, not

anticipated, and not naturally to be expected."'" Mottolo v.

Fireman's Fund Ins. Co.,

(1st Cir. 1995)

(guoting Jesoersen v. U.S. Fidelity Guar. Co.,

(1988) (guoting Vermont Mutual Ins. Co. v. Malcolm,

(1986))). In Malcolm, the New Hampshire Supreme Court

announced the test for determining whether there is an accident:

If the insured did not intend to inflict the injury on the victim by his intentional act, and the act was not so inherently injurious that the injury was certain to follow from it, the act as a contributing cause of injury would be regarded as accidental and an "occurrence."

. Under the Malcolm test, there

are two categories of acts that are "nonaccidental" and excluded

from coverage: (1) those that are intended by the insured to

cause injury and (2) those that are "inherently injurious."

According to the New Hampshire Supreme Court, an act is

"inherently injurious" if "certain to result in some injury."

Providence Mut. Fire Ins. Co. v. Scanlon,

(1994). However, the term "injury" has gone undefined in the

caselaw. The R estatement (S e c o n d ) o f T o r t s § 7 cmt. a (1965) offers

the following definition: "The word 'injury1 is used . . . to

denote the fact that there has been an invasion of a legally

protected interest which, if it were the legal conseguence of a

6 tortious act, would entitle the person suffering the invasion to

maintain an action in tort." Injury is contrasted with harm,

which "denote[s] the existence of loss or detriment in fact of

any kind . . .Id. at § 7(2). The concept of harm, or loss

in fact, is not necessarily conterminous with injury, or invasion

of a legally protected interest. It is a fundamental axiom of

tort law that damnum absque injuria, or damage without injury, is

not legally redressable. Just as harm may be inflicted without

resulting in injury, so too "there may be an injury although no

harm is done." Restatement, supra, at 13. For instance, the

intrusion upon another's land is injurious and an invasion of the

owner's legally protected interests even though not one blade of

grass on the property is harmed.

In light of the distinction between injury and harm. Smith's

and Daigle's conduct was "inherently injurious" if it was certain

to invade Palmer's legally protected interests. First,

discussion will focus on Smith's and Daigle's conduct of staging

Palmer's arrest as a "practical joke." Next, discussion will

turn to Smith's course of conduct leading up to the staged

arrest.

Smith's and Daigle's conduct in executing the March 31

staged arrest of Palmer was "inherently injurious." Arresting

Palmer, even as a practical joke, was certain to invade her

legally protected interests. State tort law of false

7 imprisonment protects a personal interest in freedom from

restraint. The practical joke, as planned and executed, called

for Daigle to handcuff Palmer, take her into custody, and escort

her out of the nursing home to the waiting police cruiser.

Invasion of Palmer's legally protected interest in freedom from

restraint was the certain and inevitable result.

Smith and Daigle argue that it was possible that Palmer,

upon being informed that the arrest was a practical joke, would

have found it amusing. However, Palmer's post-confinement

reaction would not alter the initial fact of confinement, which

is a sufficient condition of legal injury, regardless of whether

Palmer subseguently found it amusing. Smith and Daigle confined

Palmer by handcuffing her and taking her into custody, and their

conduct was certain to cause legal injury by invasion of her

interest in freedom from unwanted restraint.

For that reason, the March 31 staged arrest was inherently

injurious, and the resulting injuries to Palmer fall outside

policy coverage under the insurance contract between Metropolitan

and defendant Daigle and the contract between Allstate and

defendant Smith. Metropolitan, as Daigle's insurance company, is

entitled to summary judgment on all counts, and has no

obligations under the insurance contract to indemnify or defend

Daigle. Allstate, likewise, has no obligation to indemnify and

defend Smith for any liability imposed upon him as a result of the March 31 arrest incident. However, Smith is also charged

with conduct that occurred prior to the March 31 arrest incident,

and discussion will now turn to whether that conduct is a covered

accident under the terms of Allstate's insurance policy.

Smith's course of conduct prior to the March 31 staged

arrest incident was not certain to invade Palmer's legally

protected interests, and therefore was not inherently injurious.

Palmer complains that Smith displayed the "penis photo" taken of

her at the Christmas party to other staff members at the nursing

home and that he breathed heavily over the phone to her.

Granted, Palmer was certain to suffer some degree of emotional

distress as a result of this conduct. However, this only

supports the conclusion that Smith's conduct was certain to cause

Palmer harm, not injury. Tort law only provides protection

against severe emotional distress. W. Pa g e K e e t o n et a l ., P r o s s e r a n d

K e e t o n on the La w of T orts § 12, at 60 (1984) . Under the

circumstances. Smith's conduct was not certain to cause Palmer

severe emotional distress.

In fact, the evidence indicates that Palmer was likely to

take Smith's conduct in good humor. Uncontroverted evidence

indicates that Palmer actually posed for the photo that she is

charging Smith for displaying. Affidavit of Mary Lilly,

Defendant's Exhibit C (attached to David Smith's Objection to

Allstate's Motion for Summary Judgment). According to uncontroverted evidence. Palmer displayed the photo to others

with an attitude of levity. Id. One of Palmer's co-workers

notes: "Ms. Palmer had a well known reputation for playing

practical jokes of a rather course nature and seemed to have an

appreciation for this type of humor." Id. On one occasion.

Palmer presented one of her co-workers with a chocolate penis,

stating, "Once you go black, you never go back." Affidavit of

Patricia Parks, Exhibit D (attached to Smith's Objection to

Allstate's Motion for Summary Judgment); Affidavit of Jennifer

Arsenault, Exhibit E (attached to Smith's Objection to Allstate's

Motion for Summary Judgment). Smith was familiar with this side

of Palmer's persona. He swears by affidavit.

During the time I knew and worked with Irene Palmer, she told me that she had participated in redecorating the office of Lillian Watkins by placing condoms and explicit photographs cut from Playgirl magazine in Lillian's desk drawers. I have personally observed a watering can with a spout shaped like a penis in Palmer's office. I have personally observed a pencil eraser shaped like a penis in Irene Palmer's office.

Affidavit of David Smith, Exhibit B at 2-3 (attached to David

Smith's Objection to Allstate's Motion for Summary Judgment).

While Smith's conduct may have been certain to cause severe

emotional distress to one with different sensibilities than

Palmer's, there was a distinct possibility that Palmer would

receive Smith's conduct in good humor. Smith's conduct was not,

therefore, inherently injurious.

10 Under the Malcolm test. Palmer's injuries were accidental

and within coverage of Allstate's policy, unless Smith intended

to injure Palmer by his conduct. "Under New Hampshire law, the

court determines an insurer's duty to indemnify the insured by

considering whether the allegations against the insured fall

within the express terms of the policy." Litteer v. Utica Mut.

Ins. C o .,

(D.N.H. 1995) . The Palmers'

complaint does not clarify whether Smith acted with the state of

mind of intent to invade her legally protected interests.

However, some of the intentional torts alleged in the complaint,

by definition, imply such an intention. Count IV's intentional

infliction of emotional distress, by definition, alleges conduct

that was intended to invade Palmer's legally protected interest

in freedom from severe emotional distress. One of the prima

facie elements of the tort is an intent to cause severe emotional

distress. Likewise, Count IX's battery claim is untenable unless

Smith intended to cause Palmer to suffer harmful or offensive

contact. The R estatement defines the element of intent as follows:

"An actor is subject to liability to another for battery if . . .

he acts intending to cause a harmful or offensive contact with

the person of the other." Restatement, supra, § 13(a) . Insureds

will not be heard to claim that a battery or an intentional

infliction of emotional distress was accidental.

The other counts in the Palmers' complaint do not likewise

11 allege by necessary implication conduct that was intended to

invade Irene Palmer's legally protected interests. The tort of

defamation alleged in Count VI protects an interest in reputation

and good name. However, the only intent reguirement for this

tort is the intention to publish the statement that is adjudged

defamatory. The publisher defendant may be liable, even though

he was without the intent to defame or otherwise invade the

plaintiff's interest in reputation and good name. For instance,

the publisher may have made a statement that was innocuous on its

face, but by virtue of extrinsic facts unknown to the publisher,

the statement actually carries a defamatory meaning. Count VI

defamation does not by necessary implication allege conduct that

was intended to invade Palmer's legally protected interests.

Since the factual allegations do not clarify whether Smith

intended to defame Palmer, there is insufficient evidence for the

court to rule on whether the Count VI defamation claim is within

the scope of insurance coverage. It is therefore a jury guestion

whether Palmer's injuries attributable to the alleged defamation

were accidental or were the product of conduct intended to invade

her interests.

Count V for negligent infliction of emotional distress on

its face alleges conduct that was not intended to invade Palmer's

interests. Allstate argues, however, that this case is

controlled by Green M t . Ins. Co. v. Foreman,

(1994).

12 In Foreman, the New Hampshire Supreme Court held that a

plaintiff's negligence count failed to allege facts constituting

an accident. It was undisputed that the plaintiff's injuries

were caused by an intentional punch in the face. The plaintiff

was merely attempting to recharacterize the defendant's

intentional act of punching as negligence in order to bring his

injuries within the scope of the defendant's insurance policy.

Courts "must compare the policy language with the facts pled in

the underlying suit to see if the claim falls within the express

terms of the policy; the legal nomenclature the plaintiff uses to

frame the suit is relatively unimportant." Titan Holdings

Syndicate, Inc. v. City of Keene,

(1st Cir.

1990) (citing United States Fidelity & Guar. Co. v. Johnson

Shoes, Inc.,

(1983)).

Allstate argues that here Palmer's complaint does not

distinguish which of Smith's acts constitute negligent infliction

of emotional distress (Count V) and which constitute intentional

infliction of emotional distress (Count IV) . According to

Allstate, this is a raw legal conclusion of negligence, and under

Foreman this claim is not an accident within policy coverage.

However, this court finds that this case is not controlled

by Foreman. In that case, the acts alleged were indisputably

intentional, and the plaintiff was merely recharacterizing them

as negligent. Here, the allegation could support either the

13 finding that Smith acted intentionally or the finding that he

acted negligently. It is unclear whether Smith intended to cause

Palmer severe emotional distress or merely disregarded a

forseeable risk of causing severe distress. Given such

uncertainty. Palmer's alternative pleading was not an attempt to

recharacterize an indisputably intentional act as negligent.

Rather, Palmer characterized Smith's acts as intentional and

negligent, leaving it to the jury to determine which

characterization is more appropriate.

Since the facts alleged in Count V may be construed as an

"accident," Allstate's motion for summary judgment is denied as

to Count V.

Lastly, Allstate claims entitlement to summary judgment for

Donald Palmer's loss of consortium claim (Count XVII). However,

there is no indication that Smith intended to injure Mr. Palmer

by depriving him of his right to the services, society, and

comfort of his wife, Irene Palmer. Even if Smith intended to

injure Irene Palmer, the injury to Donald Palmer was an

accidental by-product.

Conclusion

Metropolitan's motion for summary judgment (document 6) is

granted in its entirety. Allstate's motion for summary judgment

14 (document 18) is granted as to Counts IV and IX, but denied as to

Counts V, VI, and XVII.

SO ORDERED.

Shane Devine, Senior Judge United States District Court

March 27, 1997

cc: Gary M. Burt, Esg. Doreen F. Connor, Esg. Brackett L. Scheffy, Esg. Kevin E. Buchholz, Esg. Roy A. Duddy, Esg.

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