H. BROWN, J.
In this case, we must decide whether public policy prohibits an employer from insuring against tort claims by employees in cases where the employer did not intend to injure the employee but knew that injury was substantially certain to occur. For the reasons which follow, we find that it does not.
We begin our discussion with an analysis of the nature of employer intentional torts. In Van Fossen v. Babcock & Wilcox Co. (1988), 36 Ohio St.3d 100, 522 N.E.2d 489, paragraphs five and six of the syllabus, we adopted, in effect, the definition of an "intentional tort" contained in 1 Restatement of the Law 2d, Torts (1965) as the law of Ohio. Under this standard, an intentional tort occurs when "* * * the actor desires to cause consequences of his act, or * * * he believes that the consequences are substantially certain to result from it." 1 Restatement of the Law 2d, Torts (1965) 15, Section 8A. This definition encompasses two different levels of intent. The first level, which we will refer to as "direct intent," is where the actor does something which brings about the exact result desired. In the second, the actor does something which he believes is substantially certain to cause a particular result, even if the actor does not desire that result.
It appears that most employer intentional torts, including the claim pled in the instant case, fall into the latter category.
All liability insurance protects the tortfeasor from economic loss resulting from legal liability. Prosser & Keeton, The Law of Torts (5 Ed. 1984) 585, Section 82 ("Prosser"); Keeton & Widiss, Insurance Law (1988) 517, Section 5.4(c)(5) ("Keeton"). At one time, liability insurance was attacked on public policy grounds "as an encouragement to antisocial conduct and a relaxation of vigilance toward the rights of others, by relieving the actual wrongdoer of liability. * * *" Prosser, supra, at 585, Section 82. As tort law evolved toward an emphasis on victim compensation, id. at 7, Section 2, and "it became apparent that no dire consequences in fact resulted," id. at 586, Section 82, public policy came to favor liability insurance for negligent acts as a means of assuring that innocent persons are made whole. This policy of assuring victim compensation has been extended to "wanton" and "reckless" torts. Keeton, supra, at 524-525, Section 5.4(d)(3).
It is often said that public policy prohibits liability insurance for intentional torts. Keeton, supra, at 519, Section 5.4(d)(1). This statement is based on "the assumption that such conduct would be encouraged if insurance were available to shift the financial cost of the loss from the wrongdoer to his insurer. * * *" Farbstein & Stillman, Insurance for the Commission of Intentional Torts (1969), 20 Hastings L.J. 1219, 1245-1246. However, this blanket prohibition "makes no distinctions as to the various forms of intentional wrongdoing and does not admit the possibility that some torts might not be particularly encouraged if insurance were available for them." Id. at 1251. The better view is to prohibit insurance only for those intentional torts where "the fact of insurance coverage can be related in some substantial way to the commission of wrongful acts of that character. * * *" Isenhart v. General Cas. Co. (1962), 233 Or. 49, 52-53, 377 P.2d 26, 28; Farbstein & Stillman, supra, at 1251-1253. In the case of a "direct intent" tort, the presence of insurance would encourage those who deliberately harm another. In torts where intent is inferred from "substantial certainty" of injury, the presence of insurance has less effect on the tortfeasor's actions because it was not the tortfeasor's purpose to cause the harm for which liability is imposed. See Indiana Lumbermens Mut. Ins. Co. v. Brandum (Ind. App. 1981), 419 N.E.2d 246, 248. In the latter situation, the policy of assuring victim compensation should prevail.
In other states, legislative enactments fund an employer's exposure to intentional torts at the "substantially certain" level. Such torts are covered by statutory workers' compensation, leaving the employee free to sue the employer at common law only for "direct intent" torts. See, e.g., Mingachos v. CBS, Inc. (1985), 196 Conn. 91, 491 A.2d 368; Sullivan v. Liberty Mut. Ins. Co. (Fla. App. 1979), 367 So.2d 658, certiorari denied (Fla. 1979), 378 So.2d 350; Provo v. Bunker Hill Co. (D. Idaho 1975), 393 F.Supp. 778; Collier v. Wagner Castings Co. (1980), 81 Ill.2d 229, 408 N.E.2d 198; Hildebrandt v. Whirlpool Corp. (Minn. 1985), 364 N.W.2d 394; Noonan v. Spring Creek Forest Products, Inc. (Mont. 1985), 700 P.2d 623; Crespi v. Ihrig (1984), 99 App. Div. 2d 717, 472 N.Y. Supp. 2d 324, affirmed (1984), 63 N.Y.2d 716, 480 N.Y. Supp. 2d 205, 469 N.E.2d 526; Kittell v. Vermont Weatherboard, Inc. (1980), 138 Vt. 439, 417 A.2d 926.
Accordingly, we hold that public policy does not prohibit an employer from securing insurance against compensatory damages sought by an employee in tort where the employer's tortious act was one performed with the knowledge that injury was substantially certain to occur.
Fireman's argues that the Endorsement does not provide coverage for employer intentional tort claims against Normandy.
We are not persuaded. The Endorsement appears to have been written specifically for Ohio employers. By its terms, it extends coverage to "damages because of bodily injury * * * sustained by any employee of the Insured arising out of and in the course of his employment by the Insured * * *" and deletes the exclusions in the Policy. On its face, that coverage reaches the claim in this case. The Endorsement specifically excludes damages covered by statutory compensation systems such as workers' compensation, damages "on account of bodily injury to * * * any employee employed in violation of law," and assault and battery "committed by or at the direction of the Insured." Nowhere in this extensive list of detailed
This case is distinguishable from Wedge Products, Inc. v. Hartford Equity Sales Co. (1987), 31 Ohio St.3d 65, 31 OBR 180, 509 N.E.2d 74. Wedge concerned a general liability policy which limited coverage to injuries "neither expected nor intended" by the employer, and specifically excluded coverage for claims by employees arising out of the course of their employment. Id. at 67, 31 OBR at 181-182, 509 N.E. 2d at 75-76. We held that this policy did not provide coverage for employer intentional torts. Id. at 67, 31 OBR at 182, 509 N.E. 2d at 76. The policy in Wedge did not contain the supplemental endorsement at issue in the instant case.
For the foregoing reasons, we reverse the judgment of the court below and reinstate the judgment of the trial court ordering Fireman's to satisfy the consent judgment between Harasyn and Normandy.
MOYER, C.J., SWEENEY, DOUGLAS, WRIGHT and RESNICK, JJ., concur.
HOLMES, J., dissents from the syllabus and Part I of opinion, and concurs in Part II and the judgment.
HOLMES, J., dissenting from the syllabus and Part I of opinion, and concurring in Part II and the judgment.
I must dissent from both the syllabus law of this majority opinion, and some of the commentary within the opinion. However, in light of the analysis that follows, I concur in the conclusion that there was lawful insurance coverage here, and concur in the judgment.
The majority begins its discussion of the major issue presented by setting forth, in part, the controlling definition of an "intentional tort" as contained within Van Fossen v. Babcock & Wilcox Co. (1988), 36 Ohio St.3d 100, 522 N.E.2d 489. This quoted portion of the Van Fossen definition merely restated the 1 Restatement of the Law 2d, Torts (1965) 15, Section 8A, definition, i.e., that "* * * the actor desires to cause consequences of his act or * * * He believes that the consequences are substantially certain to result from it." The majority opinion did not further elucidate that in Van Fossen we had additionally defined and limited such court-pronounced intentional torts within the workplace as follows:
"We now interpret Jones [v. VIP Development Co. (1984), 15 Ohio St.3d 90, 15 OBR 246, 472 N.E.2d 1046] to require knowledge on the part of the employer as a vital element of the requisite intent. Thus, under this interpretation of Jones, within the purview of the Restatement of Torts 2d, and the commentary of Prosser & Keeton
"We recognize that pursuant to this interpretation of `intent' as set forth above, proof of the actual or subjective intent of the actor to accomplish the consequences is not required. Our discussion herein is directed toward significantly limiting the areas within which `intent' on the part of the actor may be circumstantially inferred. [Emphasis sic.]
"To establish an intentional tort of an employer, proof beyond that required to prove negligence and beyond that to prove recklessness must be established. Where the employer acts despite his knowledge of some risk, his conduct may be negligence. Where the risk is great and the probability increases that particular consequences may follow, then the employer's conduct may be characterized as recklessness. As the probability that the consequences will follow further increases, and the employer knows that injuries to employees are certain or substantially certain to result from the process, procedure or condition and he still proceeds, he is treated by the law as if he had in fact desired to produce the result. However, the mere knowledge and appreciation of a risk — something short of substantial certainty — is not intent." Van Fossen, supra, at 116-117, 522 N.E. 2d at 504.
Under such definition of an "intentional tort" occurring within the workplace, the employer's knowledge of the offending conditions within which the employee is mandated to continue his work functions must be shown by the evidence. In such a situation, may it be said that the employer is only chargeable with a passive position of oversight, and that public policy would countenance such continuance of this type of activity, and his insuring against such a risk? I prefer to think not.
I believe that the majority holding implies that a Van Fossen type of "intentional tort" would not violate the public policy prohibition of private insurance coverage for this type of employer activity involving his employee. The majority states that to legally authorize insurance coverage to the employer for this type of tort is acceptable from a public policy stand-point because "the policy of assuring victim compensation should prevail." The majority very questionably differentiates the coverage for this type of claim from the "direct intent" tort by stating: "[i]n the case of a `direct intent' tort, the presence of insurance would encourage those who deliberately harm another. In torts where intent is inferred from `substantial certainty' of injury, the presence of insurance has less effect on the tortfeasor's actions because it was not the tortfeasor's purpose to cause the harm for which liability is imposed."
With this statement of public policy I cannot agree. In allowing an Ohio employer to continue to commit
Therefore, I am unable to accept the general pronouncement of syllabus law herein that "[p]ublic policy does not prohibit an employer from securing insurance against compensatory damages sought by an employee in tort where the employer's tortious act was one performed with the knowledge that injury was substantially certain to occur."
Further, such general pronouncement of public policy in this regard was not bolstered by the legislative enactment of R.C. 4121.80 in 1986. It is true that division (E) of such statute does establish a fund to be administered by the Industrial Commission from which it may pay amounts determined by it to be warranted after a claim of intentional tort is found in favor of a claimant by a common pleas court. Such legislative enactment provides for funding of such court determinations on a statewide basis by the participating employer under workers' compensation, or the self-insured employer, and payments into such fund are based upon analysis of the employer's risk-liability history. Such fund is technically not an insurance fund and most definitely is not insurance provided by a private carrier, as we deal with here. In any event, to rely upon this legislative enactment to portray what is or is not within lawful public policy for purposes of this discussion offers little or no support for the majority's determination. This is particularly so in light of the fact that pursuant to R.C. 4121.80, in division (D), the employer must act with actual intent to occasion the injury to the employee. Such intentional tort under this definition would require conduct that is even more blameworthy and more purposeful than the conduct that Van Fossen has held could give rise to a common-law "intentional tort" claim. However, the lawfulness or the wisdom of R.C. 4121.80 is not before us, and I make no comment directed thereto; I only repeat that such enactment lends no valid support to the public policy question discussed herein.
Therefore, I cannot accept the majority's general endorsement of this public policy allowance for private insurance company coverage of an employer's tortious act, where the act "was one performed with the knowledge that injury was substantially certain to occur" within the meaning of "substantially certain to occur" as is set forth within Van Fossen. However, I am able to concur in the judgment of this case based upon the following reasoning.
In Blankenship v. Cincinnati Milacron Chemicals, Inc. (1982), 69 Ohio St.2d 608, 23 O.O. 3d 504, 433 N.E.2d 572, as further confused by Jones v. VIP Development Co. (1984), 15 Ohio St.3d 90, 15 OBR 246, 472 N.E.2d 1046, and its progeny, this court espoused the so-called "intentional tort" theory of acts committed by the employer against the employee within the workplace. Jones only defined such a tort by adoption of the definition found within 1 Restatement of the Law 2d, Torts (1965). One such definition was of course that involving "direct intent"; the other was the inferred intent arising out of the "substantially certain to occur" language of the Restatement. The outgrowth of cases within our courts was a confusing status of the law, as noted in Van Fossen. Courts were construing the intentional tort, upon basic
Acts of the employer affecting the employee that may be classified as negligent, careless, or reckless do not rise to the level in the law, nor does the law infer that the employer actually desired to produce the result. However, trial courts, pursuant to Blankenship and Jones, were quite extensively applying the lesser standards of an inference of intent to the cases before them prior to our pronouncement in Van Fossen. Such state of affairs presented defendant employers throughout Ohio with a multitude of monumental judgment problems, and left them hanging at the end of the limb in a bare state.
During the period between this court's pronouncements in Blankenship and Van Fossen, many of these judgments were based upon lesser standards of negligence which would be within the legally acceptable area for possible private insurance coverage against such liability sounding in negligence. Insuring against one's negligence has of course been acceptable for many years to cover the liabilities of employers for negligently injuring others, including those injuries received by employees that may have been occasioned outside the employment.
I conclude that for this limited period during which the law of intentional torts was being equated and interpreted in the sense and standard of negligent acts, public policy did not prohibit an employer from securing insurance against compensatory damages sought by an employee for the court-established intentional tort.
Here, during the period prior to our clarifying law in Van Fossen, there was specific coverage offered by Fireman's Fund, accepted by Normandy Metals, and premiums paid therefor. The endorsement to the policy considered here was written and offered to Ohio industrial employers as "stop gap" coverage for these court-espoused "intentional torts" and specifically excludes assault and battery-type torts committed by the employer against the employee, and also specifically excepts injuries covered by workers' compensation.
These policies were actively promoted to Normandy and other employers, and Fireman's Fund having held out such coverage should not now be heard to deny liability upon such insurance policies sold during this period of time.
Concluding, I dissent from the syllabus law and Part I of the opinion, and I concur in Part II of the opinion and in the judgment herein.