A Criminal Plea Bargain is not a Basis for Collateral Estoppel, and Insurer Must Provide Defense Even if the Policy Does Not Cover Punitive Damages
The Arkansas Supreme Court denied summary judgment in an important insurance case. Bradley Ventures, Inc. v. Farm Bureau Mut. Ins. Co. of Arkansas, No. 06-1494 (10/4/07).
This case arose from a 2004 fire at AQ Chicken House in Bentonville. Joseph Trybulec was arrested for arson, and he pled guilty to the lesser charge of reckless burning. Trybulec lived with his parents, who had an insurance policy with Farm Bureau Insurance of Arkansas. The policy excluded any liability for injuries caused by intentional or criminal acts. It also excluded coverage for any award of punitive damages. The owners of AQ Chicken House filed suit against Trybulec, whose parents submitted a claim to Farm Bureau.
Farm Bureau moved for summary judgment on 2 grounds. First, Trybulec's guilty plea to reckless burning was collateral estoppel that he acted intentionally. Second, because the complaint sought punitive damages, Farm Bureau had no duty to defend the lawsuit. The trial court granted summary judgment.
The supreme court reversed on both grounds. The court observed that a criminal defendant is often highly motivated to plead guilty to a lesser crime rather than risk a trial for a more serious crime. It is unfair to use the plea bargain as collateral estoppel in a later civil case. As to punitive damages, the court noted that the duty to defend is broader than the duty to indemnify. Farm Bureau must provide a defense even if Farm Bureau does not have to satisfy the punitive damages portion of an adverse judgment.
