Insurance companies may not deny coverage to victims of domestic abuse under their policies’ "intentional acts" provisions, the state Superior Court has ruled in a case of first impression.
The unanimous three-judge panel’s ruling in Lynn v. Nationwide Insurance reflects the first application of legislation from 2006 in which the Pennsylvania General Assembly amended anti-abuse provisions of the Unfair Insurance Practices Act, barring the denial of coverage to domestic-abuse victims. It also reverses a judge the panel said misapplied the law.
The statute currently prohibits carriers from refusing to pay an insured for losses that stem from abuse to them under an insurance policy if the abuse is committed by a co-insured.
The May 1 ruling overturns that of an Allegheny County judge who ruled that Nationwide Insurance Co. properly denied the claim of plaintiff Brian Lynn after Lynn’s wife attempted to drug their children and burn their house in an attempted murder-suicide. Two days earlier, Lynn’s wife, Terra Lynn, had attempted to cancel the couple’s homeowners policy with Nationwide.
The trial judge granted summary judgment in favor of Nationwide, prompting Lynn’s appeal along with an eventual amicus brief signed by 26 domestic-abuse victims’ rights groups.
According to Judge Christine L. Donohue, who wrote for the court, the trial judge reasoned that language from a subsection of the law stating that an insurance company may not deny a claim "because the insured … is a victim of abuse" only prohibited discrimination against abuse victims. However, because Lynn did not allege discrimination, the judge granted Nationwide’s bid for summary judgment.
The judge, according to Donohue’s opinion, took the word "because" to mean "’for the reason that.’"
In other words, insurers may deny coverage to abuse victims for other reasons as long as they do not intentionally do so for that reason.
But Donohue and the panel agreed the lower court had disregarded the rest of the legislation and ruled in "stark contrast" to its intent.
If left to stand, Donohue added in her 25-page opinion, the trial court’s ruling "essentially guarantees that the claims of innocent co-insureds will never be paid — as the insurance company’s denials of such claims will merely involve the application of the company’s intentional acts exclusion (as it would with any other policyholder), rather than an attempt to engage in discrimination against a victim of abuse."
The statute at issue is found at 40 P.S. Section 1171.5(a)(14).
The trial court, according to Donohue, had examined only Subsection (i), which, though it survives in the current law, was amended significantly in 2006. Namely, the language tacked onto Subsection (D), prohibits insurers from "refusing to pay an insured for losses arising out of abuse to that insured … if the loss is caused by the intentional act of another insured."
Previous versions of the law included subsections barring specific discriminatory acts toward victims of abuse, such as refusing to issue or renew a policy, adding surcharges or excluding or limiting benefits of a policy.
"The introductory language to these subsections makes clear that the prohibitions are in place to protect victims of abuse from acts of discrimination by the insurance company in its general treatment of such insureds, e.g., in connection with a policy’s issuance, its costs, and/or its available terms of coverage," Donohue said. "Subsection (D), in significant contrast, governs the insurance company’s acts during its processing of a specific claim on an existing policy — providing that the insurance company may not deny the claim of an innocent co-insured who is the victim of an intentional act of abuse by another insured."
"Read in context and taking legislative intent in proper consideration, the prohibitions in Subsection (D), unlike those of Subsections (A) to (C), stand on their own and are not limited or further defined by the introductory language to the section," the judge added.
According to Donohue, Nationwide did not contest the "sufficient evidence" Lynn had introduced supporting the notion that his wife had abused him. Accordingly, the law would block Nationwide from denying Lynn’s claim on that ground, as well.
According to the opinion, on October 27, 2009, Terra Lynn (whom Donohue described as Lynn’s estranged wife) called the Warren Carr Insurance Agency indicating that she wanted to cancel the homeowners policy on the couple’s marital property.
The office manager informed Lynn she would need to confirm her request in writing.
So, Lynn wrote an email to the Carr Agency from the email address firstname.lastname@example.org, in which she said, simply: "I want my homeowners policy cancelled. Sincerely, Brian Lynn."
Days later, according to Donohue, she drugged the couple’s children and tried to burn the house down with the kids inside. She left a suicide note stating: "Have a great fucking life knowing the kids will always be with me now. I leave you absolutely nothing."
Her plan was foiled — according to reporting from the Pittsburgh Post-Gazette, Terra Lynn told a tenant living in the couple’s basement that she couldn’t go through with it — and she subsequently pled guilty to arson and other charges.
According to the opinion, when Brian Lynn inquired about insurance coverage for damages to his property with the Carr Agency, he was informed the policy had been canceled. The mortgagee of the property filed a claim for damages with Nationwide and Lynn followed with his own such claim.
Nationwide denied Lynn’s claim, based on the alleged cancellation of the policy, and Lynn filed suit alleging breach of policy and bad faith.
Nationwide moved for summary judgment, arguing the policy was canceled. Even if it weren’t, the insurer said, the intentional acts provision of the policy barred coverage. Nationwide also contested that Lynn’s inventory violated the fraud and concealment.
Donohue rejected Nationwide’s arguments, reasoning that summary judgment was precluded because Terra Lynn’s acts were intentional and because Nationwide had not fulfilled its burden of proof that the cancellation was effective at the time of Brian Lynn’s loss.
Additionally, Terra Lynn’s brief email did not express the clear and unambiguous intent of either Brian or Terra Lynn. Brian Lynn argued, without opposition from Nationwide, that he neither knew of nor authorized the email. Likewise, the email did not sufficiently express Terra Lynn’s intention to cancel the policy, considering the woman forged her husband’s electronic signature.
The court further rejected Nationwide’s argument that Terra Lynn’s call to the Carr Agency effectively canceled the policy, if the email had not.
Lastly, the court agreed with Brian Lynn that there remained material issues of fact barring summary judgment in favor of Nationwide regarding the insurance company’s allegations that Lynn violated the concealment and fraud provisions of his policy.
Lynn’s attorney, Pittsburgh solo practitioner Gary M. Davis, could not be reached for comment.
Daniel L. Rivetti of Robb Leonard Mulvihill in Pittsburgh represented Nationwide and did not return a call.
Terry L. Fromson, of the Women’s Law Project, represented the amicus filers, which included the Women’s Law Project and women’s advocacy groups from around the state.
In a statement, Fromson said: "The Pennsylvania Superior Court has affirmed that the General Assembly meant what it clearly stated when it adopted a law in 2006 requiring insurers to pay claims to innocent victims whose homes and automobiles are damaged by the intentional acts of their abusive spouses."
Fromson noted in the statement that the court issued its opinion less than a month after oral argument, "vindicating the advocacy of the many organizations who had worked for many years to rectify the injustice resulting from insurance practices which victimized the victim."
(Copies of the 25-page opinion in Lynn v. Nationwide Insurance, PICS No. 13-1046, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •