An insured's criminal conviction does not collaterally estop the victim from litigating in a civil action the issue of the insured's intent and whether the insured's homeowner's insurance policy provides coverage for the incident.
The opinion of the court was delivered by: Gilbert, Justice
Heard, considered, and decided by the court en banc.
This case presents the issue of whether an insured's criminal conviction can be used by the insurance company to collaterally estop the victim of the crime from litigating in a subsequent civil action the issue of the insured's intent to determine whether the insured's homeowner's insurance policy provides coverage for the incident. Richard and Kimberly Peschong, individually and as parents and natural guardians of Jordan Peschong, and Jordan Peschong, a minor child, (appellants) brought suit against Janet Reed for the injuries Jordan incurred on May 25, 1999, while in Reed's care. Illinois Farmers Insurance Company (respondent), Reed's homeowner insurance provider, denied coverage and filed a complaint for declaratory relief with the Anoka County District Court naming Janet and James Reed, the Peschongs and First Health as defendants. The district court denied respondent's motion for summary judgment and pursuant to Minn. R. Civ. App. P. 103.03(i), certified a legal question as important and doubtful. The court of appeals held that: (1) the collateral-estoppel effect of a conviction is not limited to situations in which a criminal defendant seeks to profit from the crime, and (2) Reed's conviction collaterally estopped relitigation of the issue of intent with respect to the intentional acts exclusion. Ill. Farmers Ins. Co. v. Reed, 647 N.W.2d 553, 568 (Minn. App. 2002). The Peschongs petitioned this court for review, which was granted on October 15, 2002. We reverse and remand.
One-year-old Jordan Peschong was seriously injured on May 25, 1999, while being cared for by Janet Reed in the daycare that Reed operated in her home. As a result of the incident, Reed was charged with assault in the first degree (great bodily harm), Minn. Stat. § 609.221, subd. 1 (2002), and malicious punishment of a child (resulting in great bodily harm), Minn. Stat. § 609.377, subd. 6 (2002). The state alleged that Reed had shaken Jordan and that the shaking led to the severe, life-threatening injuries Jordan incurred. Reed claimed that the state could not meet its burden of proof to show the injuries were the result of "shaken baby syndrome" and that Jordan's injuries were the result of his falling backwards from a standing position onto the hard ceramic floor of her kitchen. Reed waived the right to a jury trial and agreed to a bench trial with the court acting as finder of fact. Following the bench trial, the district court issued a 90-page order including findings of fact, conclusions of law, and a guilty verdict on both charged counts.
Appellants filed a civil suit against Reed arising from the same incident that resulted in Reed's criminal convictions. Respondent, Reed's homeowner insurance provider, filed a complaint for declaratory relief naming Janet and James Reed, the Peschongs and First Health as defendants and claiming that it had no obligation to defend, indemnify or otherwise provide benefits to Reed for the injuries suffered by Jordan Peschong. In that complaint, respondent provided the following rationale for denying coverage:
16. The Farmers Policy provides coverage for "bodily injury. . . resulting from an occurrence." The term "occurrence" is defined in the Farmers Policy as "an accident including exposure to conditions which results during the policy period in bodily injury."
17. The Farmers Policy excludes coverage for bodily injury, which is either:
a. Caused intentionally by or at the direction of the insured; or
b. Results from any occurrence caused by an intentional act of any insured where the results are reasonably foreseeable.
18. Janet Dawn Reed intentionally caused Jordan D. Peschong's injuries, those injuries were reasonably foreseeable and those injuries are not the result of an "occurrence" ...