(CN) – Drunken driving collisions are indeed accidents, the Fifth Circuit ruled Tuesday, rejecting an insurer’s claims that coverage is not warranted because such wrecks are an expected result of driving while intoxicated.
Carlos Sanchez failed to yield at a San Antonio intersection in September 2014 and crashed his company vehicle into Richard Frederking’s car after drinking at a bar. Police arrested Sanchez for driving under the influence and he pleaded guilty.
Frederking sued Sanchez and his employer Advantage Plumbing Services. A jury ordered them to pay him $137,000 in compensatory damages, and for Sanchez to pay an additional $207,000 in punitive damages because it determined he had acted with gross negligence.
Cincinnati Insurance Company covered the compensatory damages for Advantage, but refused to pay the punitive damages.
The insurer claimed there is no coverage because Sanchez’s actions were not accidental, but instead were a “natural and expected result” of him driving while intoxicated.
U.S. District Judge Xavier Rodriguez agreed. In March 2018, the San Antonio federal judge dismissed with prejudice Frederick’s breach of contract claim against Cincinnati for failure to pay the punitive damages.
“Even if the collision and injury were unexpected and unintended, the results of Sanchez driving while intoxicated are not caused by an ‘accident,’” Rodriguez wrote.
Frederking appealed to the Fifth Circuit, and a three-judge panel of the appellate court heard arguments in April.
U.S. Circuit Judge Edith Jones, a Ronald Reagan appointee, said at the hearing there is no precedent for Cincinnati’s position.
“Don’t you think that demonstrates that this is a novel approach by an insurer to deny coverage for punitive damages caused by a drunk driver?” Jones asked Cincinnati’s attorney George Lankford with the Dallas firm Fanning Harper.
Probed by the judges about what other kinds of wrecks would be deemed intentional and excluded from coverage, Lankford said it would not be an accident if someone was texting and caused a wreck, nor if they were eating and driving, or putting on makeup while driving.
U.S. Circuit Judge James Ho, a Donald Trump appointee, made short work of Cincinnati’s arguments in a nine-page order Tuesday.
“Only an insurance company could come up with the policy interpretation advanced here,” he wrote for the unanimous panel. “Not surprisingly, no court has, to our knowledge, endorsed the policy interpretation advanced here, and Cincinnati cites none (other than the district court in this case).” (Parentheses in original.)
Ho held “drunk driving accident” is a common term accepted at face value by federal and state courts across the country, so Cincinnati’s arguments are illogical.
Furthermore, the judge wrote, siding with Cincinnati would fly in the face of “the understanding and expectation of everyone who drives a car” that their insurance covers them against wrecks caused by drunken drivers.
The panel, rounded out by U.S. Circuit Judge Andrew Oldham, reversed Judge Rodriguez’s order dismissing Frederking’s claims and remanded for further deliberations.
Frederking is represented by Kyle Schnitzer of the Houston firm Jim Adler & Associates.
Schnitzer said in an email: “This was an important issue and we’re glad the court of appeals understood how novel Cincinnati’s position was.”
He said there are still lots of legal issues to work through with Judge Rodriguez, and declined to say if he thinks Cincinnati will be ordered to cover Sanchez and pay Frederking $207,000 in punitive damages.
Cincinnati’s attorney, Lankford, did not immediately respond Tuesday afternoon to a request for comment on the order.