Allstate Insurance Co. v. Sparks

⁷⁴⁰ WEANT, Judge. The controversy in this appeal is whether two insurance policies issued by appellant Allstate Insurance Company (Allstate) provide coverage for certain fire losses. In particular, we must address policy language which excludes coverage for “intended damages.” This language has not previously been interpreted by the appellate courts of Maryland. The parties agree that the losses occurred in the following manner.

On the night of 4 October 1981, Frances Sparks, who held a homeowner’s policy and an automobile policy issued by Allstate, permitted her son James to use her car. That night James, with two friends, Greg Bostion and John Schroyer, drove to the premises of Farmers Supply Co., Inc. (Farmers Supply). The youths went to a Farmers Supply feed truck that was parked in or near a mill building, intending to siphon gas from that vehicle into a container. After they began this operation, James, with an extraordinary lack of good judgment, chose to provide illumination with a cigarette lighter.

Gas fumes in the area of the truck ignited. Not surprisingly, the resultant fire destroyed the Farmers Supply mill and substantially all of its contents. Amazingly, the boys were not harmed. The parties concur that the boys intended to steal gas but did not intend to burn Farmers Supply’s property.

To settle the question of whether it might be liable under the automobile and homeowner’s policies, Allstate brought an action for declaratory judgment in the Circuit Court for Frederick County. Allstate named as defendants Ms. Sparks, her son James, Bostion and Schroyer. Other defendants were Farmers Supply, Paul J. Green (owner of Farmers Supply), the insurer of Bostion, and the insurer of Schroyer. The circuit court granted a motion to intervene by yet another insurance company, Pennsylvania Millers Mutual Insurance Company, which under a policy issued to Farmers Supply had covered a small part of the loss.

The ⁷⁴¹ four insurers each filed cross-motions for summary judgment. Following a hearing on the motions the circuit court judge issued a memorandum opinion. After concluding that there was no genuine dispute as to any material fact, Md.Rule 2-501(e), the judge indicated that he would grant the motion of Pennsylvania Millers. In so ruling the judge held, in part, that Allstate was obligated to provide coverage.

The judge also entered an order reflecting this disposition and further stating that Allstate was obligated under both the automobile and homeowner’s policies issued to Ms. Sparks. Allstate now presents the following question for our review: [Did] the trial court [err] in ruling that the appellant was obligated to provide insurance coverage to Frances Sparks and James Sparks as a result of the occurrence at issue under both the automobile insurance policy and the homeowner’s insurance policy issued to Frances Sparks by Allstate? Allstate first argues that the fire in this case was an “intentional act” which was excluded under the terms of both policies. The homeowner’s policy, under a “Family Liability” clause, provided coverage for “all sums which the Insured shall become legally obligated to pay as damages ... caused by an occurrence.” In the applicable definitions section, the homeowner’s policy defines an “Insured” to include members of the “Named Insured’s household,” and defines an “occurrence” as an “accident ... which results, during the policy period, in bodily injury or property damage.” The policy excludes, however, coverage of “property damage which is either expected or intended from the standpoint of the Insured.” Under the automobile policy, coverage includes “destruction of property, arising out of the ownership, maintenance or use, including loading and unloading of the owned automobile,” but excludes “property damage caused intentionally by, or at the direction of, the insured.” We need address only the specific language of the homeowner’s policy, because, as we shall explain ⁷⁴² below,' the automobile policy contains other language precluding coverage for the fire losses.

Allstate asserts that our interpretation of the exclusion is governed by four decisions of the Court of Appeals, each involving policies covering losses “caused by accident.” See State Farm Mutual Auto Insurance Co. v. Treas, 254 Md. 615 , 255 A.2d 296 (1969); Glens Falls Insurance Co. v. American Oil Co., 254 Md. 120 , 254 A.2d 658 (1969); Harleysville Mutual Casualty Co. v. Harris & Brooks, Inc., 248 Md. 148 , 235 A.2d 556 (1967); Haynes v. American Casualty Co., 228 Md. 394 , 179 A.2d 900 (1962). The trial judge concluded that the language “caused by accident” was sufficiently dissimilar from that contained in the Allstate policies to render the above cases inapposite. We agree that these cases are not controlling. Of the four decisions, Treas and Harris & Brooks denied coverage based on the “caused by accident” language.

The Harris & Brooks court grounded its interpretation