Gorzen v. Westfield Insurance , 207 Mich. App. 575 ( 1994 )

207 Mich. App. 575 (1994) 526 N.W.2d 43

GORZEN
v.
THE WESTFIELD INSURANCE COMPANY

Docket No. 162922.

Michigan Court of Appeals.

Submitted October 5, 1994, at Detroit. Decided November 21, 1994, at 9:45 A.M.

Kelman, Loria, Downing, Schneider & Simpson (by Charles H. Chomet), for Laurel A. Gorzen.

Mazur, Matyjaszek & Brandt, P.C. (by R. Darryl Mazur), for the defendant.

Before: MICHAEL J. KELLY, P.J., and W.P. CYNAR,^[*] and P.D. SCHAEFER,^[**] JJ.

W.P. CYNAR, J.

Plaintiffs appeal as of right from a March 12, 1993, order of the Jackson Circuit Court granting summary disposition to defendants, The Westfield Insurance Company and Davis Insurance Agency, Inc., in a declaratory action brought to determine whether Westfield has a duty to defend and indemnify the Hubbards in an underlying action brought by plaintiffs Laurel and Edward Gorzen. Determining that exclusions in the Hubbards' homeowner's insurance policy applied to preclude coverage, notwithstanding the existence of a "severability clause," we affirm.

Tim Hubbard, a minor, was driving a car on November 14, 1991, when he was involved in an accident in which his passengers, Aaron and Nathan Gorzen, were killed. Laurel and Edward Gorzen, as personal representatives of the estates of Nathan and Aaron, brought a tort action against Tim Hubbard's parents, alleging that the Hubbards negligently exercised parental control and supervision of Tim and that they were liable under MCL 600.2913; MSA 27A.2913 for the wilful or malicious manner in which Tim operated his car.

The Hubbards turned the case over to Westfield, with which they had a homeowner's policy. Westfield declined to defend or indemnify the Hubbards in the tort action, claiming that the policy precluded coverage for injuries arising out of: (1) the use of a motor vehicle owned or operated by an insured; (2) negligent entrustment by an insured of a motor vehicle; and (3) statutorily imposed vicarious parental liability for actions of a child using a motor vehicle.

The Gorzens and the Hubbards then filed the instant action against Westfield and the Davis Insurance Agency, which sold the Hubbards the policy. On February 26, 1993, the trial court granted defendants' motion for summary disposition, brought pursuant to MCR 2.116(C)(10), on the grounds that the policy exclusions precluded coverage.

Plaintiff Laurel Gorzen appealed, arguing that the exclusions in the homeowner's policy do not preclude coverage where there is also a "severability of insurance" clause. Specifically, plaintiff argues that the severability clause^[1] states that each insured under a policy is separately insured, which means that each exclusion applies only to the particular insured seeking coverage. Therefore, plaintiff argues that because the Hubbards, and not Tim, are seeking coverage in this suit, and because the Hubbards did not own or operate the car in which Aaron and Nathan Gorzen were passengers, the exclusions do not apply to the Hubbards and they are entitled to coverage. We disagree.

We review de novo a trial court's decision on a motion for summary disposition to determine whether the party was entitled to judgment as a matter of law. Borman v State Farm Fire & Casualty Co, 198 Mich App 675, 678; 499 NW2d 419 (1993).

The motor vehicle exclusion in the Hubbards' policy precludes coverage for bodily injury arising out of the use of a motor vehicle owned by an insured. It is undisputed that Tim Hubbard, an insured under the policy, would not be covered for injuries resulting from the car accident under this exclusion. Because the Hubbards' claim for coverage is wholly derivative of Tim's claim, which is excluded under the policy, the Hubbards are not entitled to coverage. Allstate Ins Co v Freeman, 432 Mich 656; 443 NW2d 734 (1989); Allstate Ins Co v Castanier, 195 Mich App 630, 633; 491 NW2d 238 (1992). The injuries resulting from the car accident are excluded from coverage regardless of the label the allegations were given in the complaint. We must look to the underlying cause of the injury to determine coverage and not the theory of liability. Freeman, supra at 690; Castanier, supra at 633-634.

Plaintiff's attempt to distinguish Freeman from the instant case by pointing to the fact that the policy in Freeman did not contain a severability clause is unsuccessful. While the opinion in Freeman did not mention expressly whether there was a severability clause in the policy, the Supreme Court explicitly recognized the insurance company's separate and distinct duty under the policy to cover each of the insureds before concluding that the derivative nature of the Freemans' suit precluded coverage. Therefore, the substance of a severability of insurance provision was considered by the Supreme Court and was found not to affect the operation of the exclusionary clause.

We also reject plaintiff's argument that the severability clause renders the exclusionary clause ambiguous. Freeman makes it very clear that regardless of whether there is a severability clause, if an exclusion operates to preclude coverage for one insured's actions, the exclusion also operates to preclude coverage for any claims deriving from that one insured's same actions.

Finally, plaintiff raises an issue regarding the Gorzens' standing to bring this declaratory action as third-party beneficiaries of the homeowner's policy issued to the Hubbards. Because we find the foregoing issue dispositive, we find it unnecessary to address the standing issue.

Affirmed.

NOTES

[*] Former Court of Appeals judge, sitting on the Court of Appeals by assignment pursuant to Administrative Order No. 1994-7.

[**] Circuit judge, sitting on the Court of Appeals by assignment.

[1] Severability of Insurance. This insurance applies separately to each insured. This condition will not increase our liability for any one occurrence.