(Article from Insurance Law Alert, May 2024)
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Holding
An Ohio appellate court ruled that insurers had no duty to indemnify an underlying suit alleging injuries under the Anti-Terrorism Act, finding that the claims did not allege unintentional conduct. Travelers Prop. Cas. Corp. v. Chiquita Brands International, Inc., 2024 Ohio 1775 (Ohio Ct. App. May 10, 2024).
Background
In the underlying litigation, claimants alleged that Chiquita illegally financed Columbian terrorist groups from 1989-2004, resulting in injury to American citizens. The suit ultimately settled and Chiquita sought coverage from its insurers. In a prior ruling in this case, an appellate court ruled that National Union, one of Chiquita’s primary insurers, had no duty to defend because the underlying claims did not allege a covered “occurrence,” but rather only intentional conduct.
In the present case, Travelers and Federal sought a declaration that they had no duty to indemnify the underlying settlement payment. A trial court granted the insurers’ summary judgment motion and the appellate court affirmed.
Decision
The appellate court rejected Chiquita’s assertions that the trial court improperly shifted the burden of proof and that the insurers failed to establish as a matter of law that Chiquita expected or intended to cause injury to the underlying claimants. The court ruled that Chiquita’s assertion that it did not intend injury was insufficient to raise a triable issue of fact because under the doctrine of inferred intent, intent may be inferred when an act “necessarily results” in harm, notwithstanding the absence of a specific intent to injure. In applying the inferred intent doctrine, the court noted that it was undisputed that Chiquita intentionally made regular payments to a terrorist group and that during that time frame, the terrorist group kidnapped and killed Americans. Additionally, the court emphasized that the basis for liability in the underlying litigation was whether Chiquita financially supported the terrorist organization “knowing and intending” it would be used in acts of terrorism.
Notably, the court deemed it irrelevant Chiquita did not seek to have acts of terrorism committed on its behalf and that it made payments to the terrorist organization solely for the purpose of protecting its employees. The court stated: “The natural and expected consequences of sending protection money to a terrorist group engaged in a campaign of violence is that the group would use the money to continue that violent campaign but select different targets.”
Comments
The decision highlights several important issues in the “inferred intent” context. First, under Ohio law, an insured need not have a specific intent to injure particular plaintiffs in order for the doctrine to apply. Second, a court may infer intent to a policyholder even where, as here, the injury-causing actions were done by a third party rather than the policyholder itself.