N.H. Court Finds Illegal Drug Activity Inherently Dangerous, Harmful Thus Liability Can’t Constitute a Covered Occurrence

New Hampshire courts have developed two tests to determine whether an insured’s act was an accidental cause of injury. One test is subjectively based while the other test is objectively based. See Energynorth Natural Gas v. Continental Ins. Co., 146 N.H. 156, 162, 781 A.2d 969 (2001). Under the subjective test, “an insured’s act is not an accidental contributing cause of injury when the insured actually intended to cause the injury that results.” Under the objective test, “an insured’s intentional act cannot be accidental when it is so inherently injurious that ‘it cannot be performed without a certainty that some injury will result.’” Under the second test, inherently injurious conduct need only be “certain to result in some injury, although not necessarily the particular alleged injury.” Providence Mutual Fire Ins. Co. v. Scanlon, 138 N.H. 301, 306, 638 A.2d 1246 (1994). Under the inherently injurious test, the insured’s actual intent is irrelevant because the analysis is objective and is conducted from “the standpoint of a reasonable person in the position of the insured.” Energynorth Natural Gas, 146 N.H. at 162, 781 A.2d 969.

In a recent case, the New Hampshire Supreme Court held that the insured’s alleged conduct of permitting her son to engage in criminal activity on her property was inherently injurious and, therefore, the insured’s alleged conduct was not accidental and did not constitute a qualifying “occurrence” under the homeowner policy.

In Amica Mutual Ins. Co. v. Mutrie, 2014 WL 5859665 (N.H. Nov. 13, 2014), the allegations were that Beverly Mutrie knew that her son was involved in dangerous drug activity at a property owned by a Trust of which Beverly Mutrie’s son lived. Four police officers serving on a drug task force executed a search warrant at the property. The warrant was issued because there was probable cause that Mutrie’s son was engaged in criminal activity. During the execution of the search warrant, Mutrie’s son opened fire, wounding the police officers. Mutrie’s son then turned the gun on himself. The injured police officers alleged that Beverly Mutrie knew of her son’s involvement in dangerous drug activity, and that she directly and indirectly and wantonly and recklessly supported and facilitated it.

The question before the Court was whether a reasonable person in Beverly Mutrie’s position would know that permitting her son to engage in illegal drug activity on her property would result in some injury, although not necessarily the injury that, in fact, had occurred. Citing Energynorth Natural Gas, 146 N.H. at 162, 781 A.2d 969; Providence Mutual Fire Ins. Co. v. Scanlon, 138 N.H. 301, 306, 638 A.2d 1246 (1994).

In rendering its decision, the New Hampshire Supreme Court acknowledged that courts in other jurisdictions had recognized that the sale and distribution of drugs was intrinsically dangerous and harmful. Citing by way of example, United States v. Bullock, 632 F.3d 1004, 1016 (7th Cir. 2011) (“drug crimes are associated with dangerous and violent behavior”); United States v. Kenerson, 585 F.3d 389, 392 (7th Cir. 2009) (“[I]t is an unfortunate fact of life that trade in controlled substances is dangerous for all involved”); United States v. Garcia, Criminal Action No. 07-CR-00529, 2007 WL 2825724 at *4 (E.D. Pa. Sept. 20, 2007) (drug possession with the intent to distribute is “an inherently dangerous activity.”)

Based upon this case law, the New Hampshire Supreme Court concluded that a reasonable person in Mutrie’s position would know that some harm would result from her alleged knowing, reckless, and wanton support and facilitation of her son’s criminal drug activity. Therefore, Mutrie’s conduct was inherently dangerous and could not be considered accidental. Mutrie’s alleged “wanton” and “reckless” support and facilitation of her son’s criminal activity was found by the New Hampshire Supreme Court to be inherently injurious conduct which did not constitute an accidental “occurrence” for purposes of coverage.