Damage Deemed Intentional Bars Liability Claims

The co-owner of a clothing store set fire to both his store and its contents. Besides his own property, the fire caused substantial damage to a shopping center and surrounding stores. The issue in litigation that followed was whether a coverage obligation existed for the store owner’s general liability insurer. Specifically, did the insurer have a duty to reimburse the losses experienced by the property insurers of other tenants and the shopping center?

The general liability insurer denied liability based on the policy definition of a covered occurrence as "an accident.... which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured...." Both the trial court and the appeal court concluded that the insured did not intend to destroy the property of others and that the exclusion did not apply. The matter was then reviewed by the Louisiana Supreme Court.

It was estimated that the insured used four to five gallons of gasoline in a 25 x 82-foot space to start a fire that would have destroyed the shopping center, experts testified, without the fast response of firefighters. The court found the amount of fluid excessive for intent to only destroy the man's merchandise. Secondly, the court said, "....no reasonable person would believe that his insurance policy would provide coverage for his criminal act of arson."

The court concluded that the insured "....either intended to cause damage to the building and property of others surrounding him or knew that such damage was substantially certain to follow. Such damage was, therefore, expected or intended from the standpoint of the insured."

The judgment of the trial court, affirmed by the appeal court, was reversed in favor of the liability insurer and against the parties seeking reimbursement.

Great American Ins. Co., Appellant v. Gaspard Et Al., Appellee. Louisiana Supreme Court. No. 92-C-0702. November 30, 1992. CCH 1993 Fire and Casualty Cases, Paragraph 3999.

Editor’s Note: Strictly speaking, the litigated issue may have been in error. The situation appears to involve a policy definition rather than a specific exclusion. It may have been more accurate and definitive to have been denied on the basis that the act did not qualify as an accident. In that case, the store owner’s intent would have been irrelevant.