Criminal Act Exclusion Bars False Imprisonment Claim

Wilshire Ins. Co. v. S.A., __Az. Adv. Rep. __ 1 CA-CV-09-0170 (App., Div. I, March 23, 2010)(J. Johnsen)

CRIMINAL ACT EXCLUSION IN BUSINESS POLICY BARS CLAIM FOR FALSE IMPRISONMENT AS PART OF SEXUAL ASSAULT BY INSURED UNDER PUBLIC POLICY AGAINST INSURING FOR INTENTIONAL ACTS

The plaintiff was locked in the basement of the insured's business where the insured sexually assaulted her for two hours. He later pled guilty to sexual assault and went to prison. Plaintiff then brought a civil lawsuit for false imprisonment. The insured's carrier denied coverage based upon the criminal act exclusion. The plaintiff entered into a stipulated judgment and assignment with the insured and then defended this declaratory relief action brought by the carrier seeking an order of no coverage. The trial court ruled no coverage and the Court of Appeals affirmed.

The Court of Appeals found the criminal act exclusion to bar this claim despite the fact the policy expressly covered "false imprisonment" and despite the public policy in favor of compensating crime victims. The court found the public policy as announced in Transamerica v. Meere, 143 Ariz. 351, 694 P.2d 181 (1984) by our supreme court against allowing insureds to create the risk insured against to be controlling and overriding. The court stated that prior decisions in favor of compensating crime victims were on the books yet ignored by the Meere court in their determination that public policy does not allow an insured to insure against his own intentional and wrongful conduct. The court found that it was for the Supreme Court and not the Court of Appeals to reorder the priority of these two public policies.