Criminal Defense Costs Not Covered by Insurance, Court Rules

A pawnbroker, awaiting trial for the attempted murder of his estranged wife and her divorce lawyer, cannot force his homeowner’s insurance company to pay for his criminal defense, an appellate court ruled Thursday.

Victor Lawrence Pahl, who has entered not guilty and insanity pleas, faces trial May 18 for the 1985 shootings. A court-appointed psychiatrist has found Pahl to have been insane at the time of the incident, according to defense attorney William Yacobozzi Jr.

Pahl’s State Farm Fire and Casualty Co. policy excluded coverage for intentional acts or criminal action, but if a jury accepts Pahl’s insanity defense, Yacobozzi has argued, then State Farm would be obligated under the policy to pay for the defense.

“Insurance companies always argue its an intentional act and there’s no coverage,” Yacobozzi said. “But if there’s a state of mind issue, no one knows if it’s an intentional act until after a jury has decided.”

A Superior Court judge had accepted that argument and ordered State Farm to pay, but the 4th District Court of Appeal, in an opinion written by Presiding Justice John K. Trotter Jr., rejected the claim Thursday. Trotter found that an insurer is not obligated to defend a client unless damages are sought. The possibility of restitution being ordered as part of the criminal case is too remote to require State Farm to pay, the court ruled.

State Farm is providing a defense in several civil lawsuits against Pahl, including those filed by his ex-wife, Deanna, and the lawyer, William Swain of Orange.

But, Trotter wrote, in the murder case, there exists “no conceivable justification . . . for allowing an individual to pass on such liability to an insurance carrier.”

To emphasize the decision, the court ordered that its opinion be published, making it the rule governing all similar cases in the district, which includes Orange County.

The shootings occurred May 6, 1985, when, acting under a court order, Deanna Pahl and Swain appeared at Pahl’s pawnshop on South Harbor Boulevard in Fullerton to inventory assets for the divorce case.

Deanna Pahl was shot once and has claimed permanent disabilities in her civil lawsuit.

Swain, now 30, was shot three times--in the arm, leg and abdomen--and spent most of a year in a hospital recovering. He lost a spleen and suffered severe nerve damage, which has left him with limited use of his left arm and hand, Swain said.