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Travelers Indemnity Co. v. Children's Friend and Service12/1/2005
e part of the insured may still be an "accident" for purposes of insurance coverage analysis if the result of that act was unexpected from the point of view of the insured. See Liberty Mutual, 754 A.2d at 781; Dias, 727 A.2d at 200; Gen. Accident, 574 A.2d at 1240.
This Court agrees with the court's rationale in Sheets; negligent misrepresentation is a tort closer to negligence than to fraud, especially within the context of this case. The primary act that makes the actor's conduct actionable is the misrepresentation, not the intent to induce reliance. Negligent misrepresentation, therefore, is notably unlike fraud because the actor does not intend to make a false statement upon which he or she intends another to rely. It follows that the actor does not expect injury to result.
This Court is satisfied that, by stating a cause of action against CFS for negligent misrepresentation, plaintiffs do not suggest that CFS made intentional false statements to the Roweys or that CFS either expected or intended that damage of any sort would result from those representations. As a result, this Court concludes that such claim of negligent misrepresentation falls within the definition of "accident" and is an "occurrence" as defined by the National Union insurance policies.
3. The Timing Issue
Typically, coverage under occurrence-based liability insurance policies, such as those issued by National Union to CFS, depends on whether the "occurrence" falls within the policy period. See generally Textron, Inc. v. Liberty Mut. Ins. Co., 639 A.2d 1358, 1361 n.1-2 (R.I. 1994) (distinguishing "occurrence-based" insurance policies, which base coverage on the timing of the "occurrence," from "claims-made" insurance policies, which base coverage on the timing of the claim). In determining whether an insurer owes its insured a duty to defend under an occurrence-based liability policy, therefore, a court ordinarily must decide whether there has been an "occurrence" and, if so, when.
Travelers argues, however, that the timing of the "occurrence," for the purpose of determining whether National Union owes CFS a duty to defend, is irrelevant. Travelers asserts that the policies here require only that the "bodily injury " or "property damage" caused by an "occurrence," not the "occurrence" itself, occur during the period of coverage. As the Rowey plaintiffs alleged in their complaint that they sustained "property damage" and "bodily injury" as a proximate result of CFS's negligent misrepresentation, and as it is possible that they sustained such claimed injury during the periods in which National Union's policies covered CFS, Travelers maintains that National Union owes CFS a duty to defend.
In support of its argument, Travelers relies on an opinion from the Supreme Court of New York: National Casualty Ins. Co. v. City of Mount Vernon, 515 N.Y.S.2d 267 (N.Y. App. Div. 1987). In that case, the question before the court was whether the defendant insurance company was obligated to defend and indemnify the City of Mount Vernon in an action for false arrest and false imprisonment even though the arrest and initial restraint predated the inception of coverage. Id. at 268-69. The policy in National Casualty covered personal injury, including " alse arrest, detention or imprisonment or malicious prosecution," as well as bodily injury and property damage "caused by an occurrence." The policy defined "occurrence" as follows: "occurrence-means an event, including continuous or repeated exposure to conditions, which results in personal injury, bodily injury or property damage sustained, during the policy period, by any person or organization and arising out of the performance of the insu
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