Country Mutual Insurance Company V. Charles Dahms, 12 CH 43692

September 2016

The Appellate Court for the First District in the above captioned matter held Country Mutual Insurance Company ("Country Mutual") had a duty to defend its insured, Charles Dahms, ("Dahms") in a civil suit filed by Terry Enadeghe, ("Enadeghe") wherein Enadeghe pleaded causes of action for negligence and battery stemming from an altercation which occurred on October 10, 2011. Enadeghe pulled his taxi up to a crosswalk near Dahms. Dahms' briefcase made contact with the windshield of the taxi. Enadeghe left his taxi and pursued Dahms on foot, a scuffle ensued, and Dahms struck Enadeghe with his briefcase.

The trial court found Country Mutual had a duty to defend Dahms because Dahms had filed an affirmative defense of self defense in the civil case. The trial court found the duty to defend arose the day Dahms filed his answer and affirmative defenses.

The Appellate Court held Country Mutual owed a duty to defend Dahms in the tort action and that duty arose the moment the tort lawsuit was filed and not on the date Dahms filed his affirmative defenses. The Appellate Court further held Country Mutual's duty to defend terminated on the date Dahms was convicted of aggravated battery as his conduct fit within the policy's criminal acts exclusion.

Dahms had a homeowner's insurance policy with Country Mutual. In the liability coverage section, it provided Country Mutual will provide a defense, "if a claim is made or a suit is brought against an insured for damages because of bodily injury caused by an occurrence". The policy contained an exclusion to its liability coverage for expected or intended injury via the intentional act exclusion. The policy also contained an exclusion for criminal acts. It excluded bodily injury which arose from any criminal act. Criminal act was defined as, "Any act or omission which is criminal in nature or for which a penal statute or ordinance permits or requires any term of imprisonment or sentence or public service duties." The exclusion applied regardless of whether any insured is actually charged with or convicted of a crime and regardless of whether any insured subjectively intended the bodily injury.

The Appellate Court held the duty to defend is greater than the duty to indemnify and you need to look within the four corners of the complaint and the four corners of the insurance policy to see if there is potential coverage. The Appellate Court found in Count I, pleading negligence, there was a potential for coverage, but then examined the criminal acts exclusion and determined, based upon that exclusion, did not exclude coverage until Dahms was convicted of aggravated battery. Once the conviction was entered, Country Mutual's duty to defend was extinguished.

This again is another reminder that in the instance where there is potential coverage, the Appellate Court will look to find coverage whenever possible.