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In a case that drew strong amici curiae interest from the insurance industry, the Pennsylvania Supreme Court has ruled that an insurance carrier must defend its insured in a lawsuit by a man who was accidentally shot while intervening in a murder-suicide.

In Erie Insurance Exchange v. Moore, Erie sought a declaration that it did not have to defend or indemnify the estate of Harold McCutcheon Jr., who in September 2013 fatally shot his ex-wife Terry McCutcheon, before he shot her then-boyfriend, Richard Carly, in the face, and then fatally shot himself. According to a complaint Carly later filed against Harold McCutcheon's estate, Harold McCutcheon had pulled Carly into the house when Carly attempted to enter through the front door after becoming concerned about Terry McCutcheon. Carly's complaint alleged the shooting happened accidentally while the two were struggling over the gun.

In November 2017, a three-judge Superior Court panel, reversing a Washington County trial judge's decision, unanimously ruled that, because Carly alleged that the shooting was accidental, it fit the definition of "occurrence" in the homeowner's policy that Harold McCutcheon had through Erie, which defined an occurrence as "an accident including continuous or repeated exposure to the same general harmful conditions."

In an April 22 decision, a deeply divided Supreme Court ruled 4-3 to affirm that decision.

Justice Kevin Dougherty, writing for the majority, rejected Erie's contention that McCutcheon's conduct was deliberate and therefore not covered by the policy.

"Contrary to Erie's view, this surprise encounter with Carly was not part of the insured's other intentional conduct for purposes of insurance coverage, and in fact, Carly does not seek damages for a fistfight or shoving match," Dougherty said. "Carly's lawsuit seeks damages for being shot by the insured. Had the policy's exclusion expressly stated coverage would not apply to incidents involving firearms, or during the commission of a crime, then perhaps there would be no duty to defend the underlying claims by Carly. But the policy does not say this. Instead, it excludes from coverage bodily injury 'expected or intended' by the insured, and to the extent this language is ambiguous in the presently alleged factual context, it must be construed in favor of coverage."

Dougherty was joined by Justices Max Baer, Christine Donohue and David Wecht.

The majority also rejected the argument advanced by Erie and amici curiae American Insurance Association, Property Casualty Insurers Association of America, Insurance Federation of Pennsylvania, Pennsylvania Defense Institute and Philadelphia Association of Defense Counsel that a fundamental condition of insurance coverage is "fortuity" and that providing coverage for criminal conduct will incentivize insureds to engage in criminal activity.

"The argument is beside the point because, as we have seen, the complaint's allegations do not preclude the possibility McCutcheon accidentally shot Carly, despite the fact he intentionally shot Terry McCutcheon, or intentionally pulled Carly into the house before the shooting," Dougherty said. "Denying a duty to defend under such circumstances would not serve as a crime deterrent, and would unnecessarily withhold compensation to tort victims."

In a dissenting opinion, Justice Sallie Updyke Mundy, joined by Chief Justice Thomas Saylor and Justice Debra Todd, contended that "the discharge of a weapon during a physical altercation initiated by the insured, while the insured is holding a firearm, is the type of harm specifically excluded under the policy."

"In my view, artful pleadings cannot form the basis of imposing a duty to defend," Mundy said. "As the discharge of the firearm under the circumstances alleged in the Carly complaint does not carry with it the degree of fortuity or unexpectedness necessary to constitute an accidental occurrence, I cannot agree Erie is obligated to afford coverage under the terms of the insurance policies."

Allan Molotsky of Fowler Hirtzel McNulty & Spaulding, who is representing Erie, could not be reached for comment.

Meghan Finnerty of Offit Kurman, who is representing Carly, said in a statement, "This was an important win for Mr. Carly, and for all policyholders and tort victims. Although the fact scenario may sound unique to individual policyholders, the basic rules of insurance interpretation that were affirmed by the court—including the court's interpretation of 'occurrence,' the intentional acts exclusion, and the duty to defend mixed allegations of accidental and intentional conduct—will apply with equal force to benefit commercial policyholders across Pennsylvania in a variety of settings."