1. Intent and expectations of one insured are not automatically attributed to another insured in the absence of a provision in the policy requiring such attribution.
2. General corporate legal principles imputing knowledge of corporate officer or agent to the corporation cannot create an exclusion from coverage not found in the insurance policy itself.
3. Questions of material fact exist regarding whether the corporate officer was acting in the course of his employment and within the scope of his authority when he committed previous acts of violence. As a result, questions of material fact exist regarding whether the corporate insured is deemed to have had knowledge of the officer's history of violence.
The opinion of the court was delivered by: Page, Justice
Heard, considered, and decided by the court en banc.
This case presents the issue of whether, and under what circumstances, the intent or knowledge of an agent of a corporation may be imputed to the corporation for purposes of determining whether bodily injury inflicted by the agent upon a third party was expected or intended from the standpoint of the corporate insured.
On October 18, 2000, Cecil Reiners struck Jose Padilla on the head, causing Padilla serious injury. Padilla sued Reiners for assault and battery and sued Bloomington Steel and Supply Company (Bloomington Steel), a corporation of which Reiners was the sole shareholder, officer, and director, for respondeat superior, negligent hiring,*fn1 negligent retention, and negligent supervision. Bloomington Steel's insurers, the Travelers Indemnity Company and the Charter Oak Fire Insurance Company (collectively, Travelers), denied any obligation to defend or indemnify Reiners in the underlying action. Travelers did defend Bloomington Steel in the underlying action, but reserved the "right to withdraw from the defense if there is a determination that there is no coverage for any claims under the policy."
After the district court denied Bloomington Steel's motion for summary judgment in the underlying action, Travelers brought this action seeking a declaratory judgment that it had no duty under its policies with Bloomington Steel to indemnify Bloomington Steel in the underlying action. Travelers, Bloomington Steel, and Padilla then all brought motions for summary judgment in this coverage dispute. The district court denied Bloomington Steel's and Padilla's motions and granted Travelers' motion for summary judgment. The district court found that coverage for Padilla's injuries was barred by the expected or intended injury exclusion of the insurance policies. Padilla appealed,*fn2 and the court of appeals affirmed. Travelers Indem. Co. v. Bloomington Steel & Supply Co., 695 N.W.2d 408, 409, 411 (Minn. App. 2005). The court of appeals held that, given Reiners' history of violent behavior, Bloomington Steel must be held to have "expected" the damages resulting from the injury to Padilla. Id.
This court granted Padilla's petition for further review and instructed the parties to address whether the intent or knowledge of an agent of a corporation may be imputed to the corporation for purposes of determining whether bodily injury was expected or intended from the standpoint of the corporation. Because we conclude that nothing in the policies issued by Travelers to Bloomington Steel requires that Reiners' knowledge of his own history of violence be imputed to Bloomington Steel, we reverse the court of appeals and remand for further proceedings.
Reiners began working for Bloomington Steel, a corporation, in 1968. In 1991, he became the sole shareholder, director, and officer of Bloomington Steel. From May 31, 2000, through May 31, 2001, a period spanning Reiners' assault of Padilla, Travelers provided both commercial general liability insurance coverage and umbrella liability insurance coverage to Bloomington Steel. The terms of the two policies relevant to our disposition in this case are essentially the same. Under the policies, Travelers is obligated to "pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." The policies "appl[y] to 'bodily injury' and 'property damage' only if: * * * [t]he 'bodily injury' or 'property damage' is caused by an 'occurrence.'" "Occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The policies exclude "'[b]odily injury' or 'property damage' expected or intended from the standpoint of the insured" from coverage. In addition, the policies contain a "separation of insureds" clause which, in relevant part, reads: "[T]his insurance applies: [(1)] As if each Named Insured were the only Named Insured; and [(2)] Separately to each insured against whom claim is made or 'suit' is brought."*fn3
On October 18, 2000, Padilla was working as an employee of Key Star, a company that at the time shared a common work area with Bloomington Steel. In the underlying lawsuit, Padilla alleged that Reiners approached Padilla and told Padilla to speak in English, not in Spanish. Later that day, when Reiners discovered Padilla speaking Spanish, Reiners hit Padilla in the head with a piece of wood, fracturing Padilla's skull. Padilla alleges that he suffered a severe brain injury ...