Haisten v. Audubon Indem. Co.

Citations: 642 So. 2d 404; 1994 WL 169985Docket: 1921326, 1921378

Court: Supreme Court of Alabama; May 6, 1994; Alabama; State Supreme Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The Supreme Court of Alabama addressed two appeals concerning a judgment that denied coverage under an insurance policy for acts alleged in a tort action. The first appeal questioned the trial court's application of a policy exclusion for injuries "expected or intended from the standpoint of the insured." The second appeal assessed whether a party with an indemnity contract was entitled to coverage as an additional insured, given that indemnity contracts of this nature are deemed void.

The case arose from the death of James Larry Haisten, an employee of Bunt Construction Company, who died due to a trench collapse during a sewer project for the City of Cullman. Haisten's widow, as administratrix of his estate, filed a lawsuit against James H. Bunt, alleging willful misconduct for removing a safety device and violating safety rules, which she contended caused her husband's death. She also sought recovery from J.E. O'Toole Engineering Company for its alleged wrongful conduct.

Audubon Indemnity Company, Bunt Construction's insurer, sought a declaration that its policy did not cover the claims against Bunt or O'Toole Engineering. The insurer argued that since Haisten's widow had to prove "willful conduct" to recover, such conduct fell under the policy exclusion for injuries expected or intended by the insured. The circuit court agreed, interpreting the claims as aligning with the statutory definition of willful conduct, which involves intent to injure, thus affirming the lack of coverage under the insurance policy.

Section 25-5-11(c)(4) defines "willful conduct" as the intentional violation of a specific written safety rule by an employee, after they have been notified of the violation, which leads to injury, death, or permanent total disability within six months. The trial court determined that for Elizabeth Haisten to succeed in her claims against James H. Bunt, she must prove Bunt's intent to inflict harm; otherwise, he is immune from her claims under this section. The court noted that Haisten cannot simultaneously claim Bunt intended to cause harm while also claiming the resulting injuries were unexpected from his perspective. Recovery against Bunt requires proof of willful conduct, which would negate insurance coverage by Audubon. However, the court's interpretation conflates the distinct provisions of subsections (c)(1), (c)(2), and (c)(4), as neither (c)(2) nor (c)(4) necessitates an intent to injure. Subsection (c)(2) addresses the willful removal of a safety device with knowledge of probable injury. The court highlighted that the interpretation of insurance exclusions requires assessing the insured's subjective expectations and intentions regarding injury. While the circuit court's interpretation might be valid for subsection (c)(1), it does not apply here since Haisten is not pursuing recovery under that subsection. Subsection (c)(2) potentially allows recovery if it can be shown that a reasonable person would have known injury was likely, irrespective of the defendant's subjective intent.

Subsection (c)(4) establishes that liability does not depend on the offending employee's intent or expectation of injury but rather on whether a violation poses a risk of significant injury or death to the notifying employee. Even if the employee believes a safety device or rule to be ineffective, liability can still arise based on an objective standard. Consequently, the trial court's determination that the exclusion of injuries 'expected or intended from the standpoint of the insured' barred coverage was incorrect if Mrs. Haisten substantiates her claims. The court refrains from commenting on the merits of these claims, which are not currently before it. 

The judgment regarding the indemnity agreement between O'Toole Engineering and Bunt Construction was based on previous case law, which has since been overridden by Goodyear Tire & Rubber Co. v. J.M. Tull Metals Co., establishing that the indemnity contract is valid. The argument from Audubon Indemnity questioning O'Toole Engineering’s status as an additional insured under the policy is not addressed because the trial court did not rule on this issue. However, even if O'Toole Engineering is not an additional insured, it would still likely have a claim against Bunt Construction as the named insured. Therefore, the enforceability of the indemnity contract implies coverage for O'Toole Engineering, either directly or indirectly. The previous judgment is reversed and the case is remanded for further proceedings.