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Progressive Northern Insurance Co. v. McDonough

June 28, 2010

PROGRESSIVE NORTHERN INSURANCE COMPANY, PLAINTIFF - APPELLEE,
v.
SEAN DAVID MCDONOUGH, DEFENDANT - APPELLANT,
NICOLAUS JOHN MORELLI; MATHEW JOHN MORELLI, DEFENDANTS.



Appeal from the United States District Court for the District of Minnesota.

The opinion of the court was delivered by: Melloy, Circuit Judge.

Submitted: May 11, 2010

Before BYE, MELLOY, and SHEPHERD, Circuit Judges.

Nicolaus Morelli ("Morelli") injured Appellant Sean David McDonough while driving a car that Appellee Progressive Northern Insurance Company insured. Morelli subsequently pleaded guilty to attempted assault for the incident. Progressive filed this declaratory judgment action seeking a declaration that a criminal-act exclusion and an intentional-act exclusion precluded coverage. The district court*fn1 found that the criminal-act exclusion applied and granted summary judgment in Progressive's favor without ruling on the intentional-act exclusion. McDonough appeals the application of the criminal-act exclusion. We affirm.

I. Background

After a night of drinking in August 2007, Morelli drove off the road and struck McDonough, severely injuring him. Morelli was driving a Dodge Colt insured to his father, Mathew Morelli, by Progressive. During initial interviews with police and Progressive, Morelli stated he was bent down looking for a ringing cell phone on the floorboard when the car ran off the road and injured McDonough. However, in February 2008, Morelli pleaded guilty to attempted assault in the first degree for the incident. In both his Petition to Enter a Plea of Guilty ("Petition") and at his plea hearing, Morelli stated that he intentionally drove off the roadway and into a group of people.

After Morelli entered his guilty plea, McDonough filed a lawsuit against Nicolaus and Mathew Morelli in Minnesota state court for negligence and vicarious liability. Progressive then filed a declaratory judgment action seeking a declaration that the policy issued to Mathew Morelli did not cover any liability Morelli incurred when he injured McDonough. Progressive claimed an intentional-act exclusion and a criminal-act exclusion in the policy barred recovery. The policy states:

Coverage under this part I, including our duty to defend will not apply to any insured person for:

***

8. bodily injury or property damage caused by an intentional act of that insured person, or at the direction of that insured person, even if the actual injury or damage is different than that which was intended or expected.

***

15. bodily injury or property damage caused by, or reasonably expected to result from, a criminal act or omission of that insured person. This exclusion applies regardless of whether that insured person is actually charged with, or convicted of, a crime. For purposes of this exclusion, criminal acts or omissions do not include traffic violations.

In February 2009, Morelli gave deposition testimony in the declaratory judgment action and stated that he did not intentionally hit McDonough with his car, as he had admitted in his criminal case. Instead, Morelli returned to his initial story and testified that he was looking for a ringing cell phone on the floor of his car when he hit McDonough. Morelli explained this discrepancy by stating that his attorney told him to lie in the Petition and during his plea hearing and state that he hit McDonough intentionally.

Progressive then filed a motion for summary judgment on the declaratory judgment action. The district court granted Progressive's motion, finding Morelli's guilty plea triggered the criminal-act exclusion and rejecting McDonough's claim that Progressive must prove Morelli acted with intent for the criminal-act exclusion to apply. The court ...


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