(Article from Insurance Law Alert, February 2021)
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A Texas appellate court ruled that an insurer had no duty to defend or indemnify claims against a policyholder that arose out of intentional conduct, even where that conduct was based on mistaken beliefs. Latray v. Colony Ins. Co., 2021 WL 97204 (Tex. Ct. App. Jan. 11, 2021).
The insurance dispute arose after the policyholder dumped debris on property that he believed to be owned by a friend, but in actuality was owned by the friend’s neighbor. The neighbor sued and obtained judgment against the policyholder. Colony denied coverage on the basis that there was no covered “occurrence” under the policy. A Texas trial court agreed and granted Colony’s summary judgment motion. The appellate court affirmed.
The appellate court rejected the policyholder’s contention that even though the act of dumping the debris was intentional, his conduct was accidental because he was acting under the misconception that he had permission to dump the debris on the property in question. The court ruled that there was no occurrence because the damage was “reasonably foreseeable” and the type that would “ordinarily follow” from the policyholder’s conduct. In so ruling, the court distinguished cases in which the policyholder engaged in intentional conduct, but performed that conduct in a negligent manner, thereby giving rise to a covered “occurrence.”