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Atlantic Lloyds Ins. Co. of Tex. v. Scott Wetzel Services, Inc.
April 30, 1997
Unpublished Opinion

Atlantic Lloyds Ins. Co. of Tex. v. Scott Wetzel Services, Inc.

Court of Appeals of Texas, Dallas.



SCOTT WETZEL SERVICES, INC. and Sharon Roberts, Appellees.

No. 05-95-01894-CV.


April 30, 1997.

On Appeal from the 44th Judicial District Court Dallas County, Texas Trial Court Cause No. 95-811-B.

Before Justices MORRIS, and HANKINSON.


MORRIS, Justice.

*1 In this case, we address the meaning of the term “accident” as used in an insurance policy providing general liability insurance. Specifically, we determine whether a petition filed in a suit against an insured under that policy sufficiently alleged a covered “accident” so that the insurer’s duty to defend the insured was invoked. Because we conclude the petition at issue did not include factual allegations of a covered “accident,” we reverse the trial court’s judgment and render judgment in favor of Atlantic Lloyd’s Insurance Company of Texas.

Factual Background

Scott Wetzel Services, Inc. was the named insured of a commercial insurance policy issued by Atlantic Lloyd’s Insurance Company of Texas. Sharon Roberts, an employee of Wetzel, was also insured under the policy. The commercial general liability portion of the policy stated that Atlantic agreed to “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” Atlantic also had the right and duty to defend any “suit” seeking those damages. For coverage to be invoked, the “bodily injury” or “property damage” must have been caused by an “occurrence.” The policy defined an “occurrence” as “an accident, including continuous or repeated exposure to substantially the same harmful conditions.”

Wetzel was in the business of adjusting insurance claims, including claims for worker’s compensation. In October 1990, Wetzel began adjusting a claim made by James B. Knight, an employee of Chief Auto Parts, Inc. Roberts was involved in adjusting Knight’s claim.

On April 29, 1994, Knight and his family filed a lawsuit against Wetzel, Roberts, Chief, and National Union Fire Insurance Company, which was Chief’s workers’ compensation insurance carrier. The suit included claims of violations of the Texas Workers’ Compensation Act and Texas Insurance Code, breach of contract, breach of the duty of good faith and fair dealing, and intentional infliction of emotional distress.

The Knights’ petition alleged that James Knight suffered an injury while in the course and scope of his employment with Chief. While in the hospital, Knight “made inquiries” to one of Wetzel’s claims examiners about compensation for lost wages from a part-time job Knight held in addition to his employment with Chief. The examiner informed Knight that Chief’s workers’ compensation insurance did not cover lost wages from his second job. Knight repeated his request for compensation for lost wages from his part-time job on two other occasions and, both times, was told these lost wages would not be compensated.

According to Knight, Chief attempted to force him to return to work despite medical evidence that he was not ready to do so. When Knight returned to his job, he continued to suffer from pain and his work schedule was reduced to four hours per day. Knight ceased working entirely in late 1991 and underwent surgery a few weeks afterward. Following his surgery, Knight suffered from depression.

*2 A pre-hearing conference concerning Knight’s workers’ compensation claim was held on June 17, 1992. At this conference, Chief and National Union argued that Knight was able to return to work. Chief additionally requested that Knight return recent compensation payments made to him on the ground that he should have been working during that time. On June 18, 1992, Chief sent Knight a letter instructing him to return to work by June 22. When Knight did not do so, Chief sent him a second letter “administratively terminating” his employment.

Following the pre-hearing conference, Wetzel refused to authorize payment for a series of treatments prescribed by Knight’s physician. Knight became despondent and attempted suicide. Knight’s doctors contacted Roberts for approval to admit Knight to a “facility” in response to his suicide attempt. Roberts initially denied the request, but one of Roberts’s supervisors eventually gave authorization to admit Knight for treatment.

Based on these factual allegations, the Knights claimed they suffered damages due to delays in payment of insurance benefits. The Knights further claimed that the denial of treatment and the delay and failure to pay medical bills caused Knight to suffer from physical pain, medical problems, and extreme mental anguish to such a degree that he attempted suicide. The Knights severally claimed the conduct of all the defendants was the proximate cause of injury to their psyches. Their petition characterized the defendants’ actions as, among other things, negligence and gross negligence.

Sometime after the Knights filed their suit, Wetzel and Roberts demanded that Atlantic defend and indemnify them under the insurance policy in question here. Atlantic then filed this declaratory judgment action seeking a declaration that it owed no duty to defend or indemnify Wetzel and Roberts. The parties filed cross-motions for summary judgment. One of the grounds for summary judgment urged by Atlantic was that it owed no duty to defend Wetzel or Roberts against the allegations in the Knights’ petition because they did not involve a covered “accident.” In response, Wetzel and Roberts argued that the allegations of negligence and gross negligence in the Knights’ petition were sufficient to invoke the duty to defend. The trial court denied Atlantic’s motion for summary judgment and granted summary judgment in favor of Wetzel and Roberts. This appeal ensued.


In two points of error, Atlantic generally contends the trial court erred in granting Wetzel and Roberts’s motion for summary judgment and denying Atlantic’s motion for summary judgment. Atlantic makes several arguments for reversal, among which is the contention that the Knights’ petition did not sufficiently allege a covered “occurrence” or “accident” giving rise to the duty to defend.1

In determining whether Atlantic had a duty to defend, we look solely to the allegations in the petition and the terms of the insurance policy. Maayeh, 850 S.W.2d at 195.

*3 For Atlantic to have a duty to defend, the Knights’ petition must allege “bodily injury” or “property damage” caused by an “occurrence.” An “occurrence” under the policy is defined as an “accident.” The policy, however, does not define the term “accident.”

What constitutes an “accident” for purposes of insurance coverage has been determined on a case-by-case basis. In Argonaut Southwest Insurance Co. v. Maupin, the Texas Supreme Court adopted the general rule that “[w]here acts are voluntary and intentional and the injury is the natural result of the act, the result was not caused by accident even though that result may have been unexpected, unforseen and unintended.” Argonaut, 500 S.W.2d at 635. Because of the rule’s breadth, both sides in this case have attempted to interpret the rule in their favor. Atlantic focuses on the “voluntary and intentional” language and urges essentially that volitional acts resulting in injuries within the realm of possibility are excluded from coverage. Wetzel and Roberts, on the other hand, argue that allegedly “negligent” acts are, by their very nature, unintentional and are, therefore, accidental. A careful application of the rule in its entirety, however, shows that neither interpretation is correct.

To decide whether a petition alleges an “accident” under the general definition set forth in Argonaut, we perform a two-step analysis. First, we determine the specific “acts” alleged to be the cause of the plaintiff’s damages. Such a determination is crucial because it is only through this determination that we can decide whether the acts were “voluntary and intentional.” On some level, all volitional acts are voluntary and intentional. Nonetheless, a person’s acts may change from voluntary and intentional to involuntary and unintentional because of circumstances or facts of which the person is unaware. For example, if a man drives into an intersection, unaware that he has passed a stop sign requiring him to stop, and collides with another car, the collision is an accident. This is true regardless of the fact that the man voluntarily and intentionally drove into the intersection. The “act” that is the legal cause of the injuries is not the act of driving into the intersection, but the failure to stop at the stop sign. Because the driver was unaware of the stop sign, his failure to stop was not voluntary or intentional.

If we determine that the acts producing the alleged injuries were committed involuntarily and unintentionally, our inquiry stops there because the result of the acts would be accidental. If, however, we determine the acts were committed voluntarily and intentionally, we must then decide under the Argonaut definition whether the injuries were a “natural result” of the acts.

Where a result is not the natural and probable consequence of an act or course of action, it is produced by accidental means. Republic Nat’l Life Ins. Co. v. Heyward, 536 S.W.2d 549, 555 (Tex.1976). The natural result of an act is the result that ordinarily follows, may be reasonably anticipated, and ought to be expected. See id. This is an objective standard. A person is held to intend the natural and probable results of his acts even if he did not subjectively intend or anticipate those consequences. Id.

*4 With these guidelines in mind, we examine the factual allegations in the Knights’ petition. According to the petition, Wetzel or Roberts committed the following acts: refusal to pay compensation for lost wages from a part-time job; refusal to pay for a series of treatments authorized by Knight’s doctor; and delay in authorizing Knight’s admission to a “facility” in response to his attempted suicide. The Knights also generally alleged that all defendants delayed or failed to investigate or evaluate Knight’s claims for benefits, deliberately avoided payment of medical and hospitalization expenses, delayed paying benefits, denied treatment, and delayed or failed to pay medical bills. Each of the acts attributed to Wetzel or Roberts represents an affirmative and deliberate decision either to pay or not to pay insurance benefits. There are no alleged circumstances or factors that change the nature of these decisions from voluntary and intentional to either involuntary or unintentional. Wetzel and Roberts did exactly what they intended to do. To the extent their decisions may have been “wrongful,” as the Knights claim, based on the facts alleged this would mean only that Wetzel and Roberts decided incorrectly, not that their decisions were involuntary or unintentional. See Argonaut, 500 S.W.2d at 635.

Wetzel and Roberts argue that because the Knights’ petition characterizes their actions as negligent and grossly negligent, the petition sufficiently alleges accidental conduct. The characterization of Wetzel’s and Roberts’s actions as negligent, however, is simply the assertion of a legal theory. As stated above, coverage is determined by the alleged facts rather than the legal theories involved. Terra Int’l., 829 S.W.2d at 272. Where there is no factual contention of involuntary or unintentional conduct, an allegation of negligence does not invoke coverage. See Farmers Tex. County Mut. Ins. Co. v. Griffin, 40 Tex. Sup.Ct. J. 362, 363 (February 21, 1997) (although plaintiff sought relief on theories of negligence and gross negligence, alleged facts indicated intentional behavior).

Because we conclude the petition alleges only voluntary and intentional conduct, we must determine under Argonaut whether the alleged damages are a natural result of that conduct. For there to be coverage under the terms of the policy, the petition must allege damages in the form of either “property damage” or “bodily injury.” Wetzel and Roberts concede the petition does not contain allegations of property damage. The policy defines “bodily injury” as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” The damages alleged in the petition include physical pain and suffering, medical problems, extreme mental anguish, and damage to the psyche. We assume, without deciding the issue, that these allegations fall within the policy’s definition of “bodily injury.”

*5 In urging that their acts are covered by the policy, Wetzel and Roberts argue that the alleged bodily injuries suffered by the Knights were not the natural result of their delay or denial of insurance benefits and, thus, were produced by accidental means. We conclude otherwise. Where a person is refused compensation for lost income it ought to be expected that he, and those dependent on him, may suffer mental anguish. Furthermore, where payment for allegedly needed medical treatment is delayed or refused, it ordinarily follows that the insured may suffer mental anguish, pain and medical problems due to lack of care. Although refusal to pay for medical treatment is not a denial of medical care per se, it may reasonably be anticipated in most cases that an insured may not be able to pay for medical care without the assistance of insurance benefits.

Additionally, Wetzel and Roberts argue that, even if the physical pain and mental anguish alleged in the Knights’ petition were a natural result of the delay and denial of insurance benefits, Knight’s alleged suicide attempt cannot be considered a natural result of their actions. Essentially, Wetzel and Roberts contend that Knight’s extreme reaction to their alleged conduct was not foreseeable and the suicide attempt, therefore, was produced by accident. Again, we conclude otherwise.

As alleged in the petition, Knight’s suicide attempt was a manifestation of his mental anguish. We have already concluded that Knight’s mental anguish was a natural result of Wetzel’s and Roberts’s actions. Simply because the degree of injury alleged may have been great does not make the specific type of injury alleged any less a natural result of the act. See Argonaut. Argonaut, 500 S.W.2d at 635.

Finally, Wetzel and Roberts argue that the supreme court’s holding in Argonaut was limited by its later holding in State Farm Fire & Casualty Co. v. S.S. & G.W., 858 S.W.2d 374 (Tex.1993). Wetzel and Roberts contend that, under S.S. & G.W., unintended effects and results are accidents. Even if we were to conclude that S.S. & G.W. stands for that proposition, the supreme court’s holding in that case is inapposite.

In S.S. & G.W., the supreme court addressed an insurance policy exclusion excluding coverage for injuries “caused intentionally by, or at the direction of, the insured.” Id. at 377. The court specifically stated it was not determining whether the insured’s acts were intentional or an “accident.” Id. at 377-78 n. 2. The sole issue before the court was whether the insured intended to cause the alleged injury. Id. Intent to cause injury is irrelevant when determining whether the injury was caused by accident. See S.S. & G.W., 858 S.W.2d at 377-78 n. 2.

*6 Based on the foregoing, we conclude the Knights’ petition does not contain factual allegations of a covered accident. Atlantic had no duty to defend Wetzel and Roberts in the suit. We sustain Atlantic’s first and second points of error. We reverse the trial court’s summary judgment in favor of Scott Wetzel Services, Inc. and Sharon Roberts and render judgment in favor of Atlantic Lloyd’s Insurance Company of Texas.



The other arguments raised by Atlantic are that the petition did not sufficiently allege “bodily injury” or “property damage” and did not allege “bodily injury” or “property damage” occurring during the time periods the insurance was in effect.

End of Document