§ 4.15 "Occurrence" - Intentional Torts
In general, intentional torts do not meet a CGL policy's definition of "occurrence" because they are not accidental in nature. For example, the South Carolina Supreme Court determined that the allegations of the underlying lawsuit were premised on intentional acts that did not meet the policy's definition of "occurrence" in Collins Holding Corporation v. Wausau Underwriters Insurance Company92 The insured was the owner, operator, and distributor of gambling machines and amusement devices. The underlying plaintiffs filed suit against the insurer and others alleging harm by the illegal gambling machines. The insurer issued a CGL and umbrella insurance policy to the insured. The insurer determined that it did not have a duty to defend or indemnify the insured under the policy and denied the claim. The insured hired counsel on its own behalf and a settlement was negotiated in the underlying lawsuit in the amount of $500,000 and the insured filed a declaratory judgment regarding whether the insurer breached its duty to defend it in the underlying lawsuit.93
The Court determined that the allegations of the complaint did not allege an "occurrence" as defined by the policy, explaining:
The facts of the complaint asserted that Collins systematically violated South Carolina laws specifically enacted to protect the public from excessive gambling losses. For example, the Plaintiffs asserted [the insured] exceeded the maximum daily payout limit of $125 and engaged in advertising schemes which fraudulently induced the Plaintiffs to believe that they could win "jackpots" in excess of the $125 limit. Additionally, the Plaintiffs employed words and phrases such as: "unlawfully and fraudulently seek to induce and entice;" "engaged in advertising about and offering inducements . . . that are clearly and expressly prohibited by South Carolina law;" "racketeering activity;" "conspiring;" "knowingly engaging;" and "knowingly conducting." These allegations constitute intentional, deliberate, and illegal acts executed with the purpose of addicting patrons to gambling machines, and in our view, such alleged conduct cannot be construed as accidental in nature....94
Ultimately, the Court determined that there was no possibility of coverage under the policy.95
While in the context of a homeowner's policy, the Court of Appeals' decision in State Farm Fire and Casualty Company v. Barrett96 is instructive. The court explained that the policy at issue defined "'occurrence' as an 'accident' which results in a covered bodily injury."97 The court noted that the underlying plaintiff included causes of action for (1) outrage/intentional infliction of emotional distress, (2) false imprisonment, (3) assault, (4) battery, and (5) invasion of privacy. The court noted that "[a]ll five alleged causes of action are generally considered intentional torts and therefore the complaint does not allege an accident occurrence."98
The South Carolina federal district court also addressed whether the underlying complaint alleged conducted that met the policy's definition of "occurrence" in a homeowner's policy and rental policies. The homeowner's policy defined "occurrence" to mean "'an accident, including exposure to conditions, which results in: a. bodily injury; or b. property damage; during the policy period. Repeated or continuous exposure to the same general conditions is considered to be one occurrence.'"99 The rental policies' definition of "occurrence" stated "[a]n occurrence is defined as 'an accident, including exposure to conditions, which results in: a. bodily injury; b. property damage; or c. personal injury."100 The underlying complaint alleged the insured "'negligently, willfully, recklessly and/or maliciously arranged for, assisted with, and financed the creation and publication'" of a report that "was 'replete with defamatory statements about the Plaintiff"' and that the insured "and others assisted with the creation and publication of the report 'with the knowledge and intent that said report would thereafter be provided free of charge to others'" and that she had difficulty securing employment as a private Guardian Ad Litem as a result of these actions.101
In determining that the allegations for defamation did not constitute an "occurrence" under the homeowner's policy, the court explained the policy "does not purport to provide coverage for intentional torts."102 The court explained its reasoning as follows:
The court finds the defamation action at issue in the case sub judice does not meet the policy's definition of an occurrence. This case is unlike [South Carolina State Budget & Control Board v.] Prince103 in that the policy at issue here does not purport to cover defamation. Further, [the plaintiff]'s Amended Complaint alleges that [the insured] and other defendants "recruited others to join the Domestic Court Reform Movement by misrepresenting to them its true purpose." [] The Amended Complaint also alleges that "the true purpose and activities" of the defendants, including [the insured], "was to destroy the Plaintiff, cause her financial ruin, drive her out of business, physically and/or mentally harm her and have her imprisoned under false pretenses." [] [The plaintiff] alleged that [the insured] and others "negligently, willfully, recklessly and/or maliciously arranged for, assisted with, and financed the creation and publication of a report that was replete with defamatory statements about her. [] Under the defamation cause of action, [the plaintiff] alleges [the insured] published false and defamatory statements about her, including that she "was a criminal, belonged in jail, sold babies, engaged in an extramarital affair, was incompetent,...
