DocketNumber: No. 93-4127
Citation Numbers: 46 F.3d 1005
Judges: Daugherty, Logan, Seymour
Filed Date: 1/30/1995
Status: Precedential
Modified Date: 7/24/2022
Allstate Insurance Company filed this federal diversity action for a declaratory judgment, naming as defendants its insureds in a homeowner’s policy and the parties suing those insureds in a Utah state court, seeking a determination that it had no duty under a homeowner’s insurance policy to defend and indemnify Karen Worthington • Brown (Brown) and her ex-husband, Richard Wor-thington (husband). The suit arose out of Richard Worthington’s kidnapping of hostages and fatal shooting of a nurse. Brown had .been sued in state court by victims and their survivors on claims that she had negligently entrusted weapons to her husband and failed to warn the potential victims. On
I
Brown underwent a tubal ligation at Alta View Hospital in Sandy, Utah, in July 1989. Her husband did not approve of the procedure, and over the following two years exhibited growing resentment and hostility toward the doctor and the staff at Alta View Hospital. The allegations in the state court complaints were that, as a precaution, Brown removed all of her husband’s firearms from their residence; but, on the eventful day, when her husband demanded that she give him the guns, she did so. Brown allegedly knew her husband planned to go to the hospital and kill the doctor who had performed the tubal ligation, but she did not try to warn her doctor or the Alta View Hospital. Her husband did take firearms and a bomb he had constructed to the Alta View Hospital, where he took hostages and shot and killed a nurse, Karla Roth.
Karla Roth’s husband and her children brought suit in Utah state court against both Brown and her husband. The Roths alleged that Brown “negligently and/or recklessly” breached a duty to warn the potential victims or the proper authorities and the failure contributed to Karla Roth’s death.
Brown requested that Allstate defend her in the state negligence suits under a homeowner’s policy in effect at the time. Allstate then filed this declaratory judgment action in the federal district court, claiming that it had no duty to defend and indemnify either Brown or her husband against the state tort claims. In considering cross motions for summary judgment, the court held that the criminal act exclusion in the policy unambiguously excluded coverage for the husband’s acts. The district court held, however, that the term “an insured” as used in the intentional and criminal exclusion clauses was ambiguous as to whether the husband’s criminal and intentional acts excluded indemnification for the wife’s negligent acts. II Appellant’s App. 439-40. Alternatively, it found that even if the intentional and criminal exclusionary clauses were not ambiguous as to coverage for the wife’s alleged negligence, such preclusion would violate Utah substantive law that policies be interpreted based upon principles of individual responsibility. Id. at 440, 453. Thus, it granted summary judgment against the insurance company with respect to coverage for Brown, and only that determination is at issue in this appeal.
II
We review the grant of summary judgment de novo, applying the same standards as the district court. Utah Power and Light Co. v. Federal Ins. Co., 983 F.2d 1549, 1553 (10th Cir.1993). If, as here, there are no genuine issues of material fact, we determine whether the district court correctly applied the substantive law of Utah. See APC Operating Partnership v. Mackey, 841 F.2d 1031, 1033 (10th Cir.1988).
Allstate first argues that the district court erred in finding the insurance contract ambiguous. Allstate asserts that as a coinsured of her husband the contract
The liability section of the policy provides in part:
SECTION II — FAMILY LIABILITY AND GUEST MEDICAL PROTECTION
Coverage X
Family Liability Protection Losses We Cover:
Subject to the terms, limitations and conditions of this policy, Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an accident and covered by this part of the policy.
We may investigate or settle any claim or suit for covered damages against an insured person. If an insured person is sued for these damages, we will provide a defense with counsel of our choice, even if the allegations are groundless, false or fraudulent. We are not obligated to pay any claim or judgment after we have exhausted our limit of liability.
Losses We Do Not Cover:
1. We do not cover bodily injury or property damage resulting from:
a) An act or omission intended or expected to cause bodily injury or property damage. This exclusion applies even if the bodily injury or property damage is of a different kind or degree, or is sustained by a different person or property, than that intended or expected; or
b) An act or omission committed by an insured person while insane or while lacking the mental capacity to control his or her conduct or while unable to form any intent to cause bodily injury or property damage. This exclusion applies only if a reasonable person would expect some bodily injury or property damage to result from the act or omission.
2. We do not cover bodily injury or property damage resulting from:
a) A criminal act or omission; or
b) An act or omission which is criminal in nature and committed by an insured person who lacked the mental capacity to appreciate the criminal nature or wrongfulness of the act or omission or to conform his or her conduct to the requirements of the law or to form the necessary intent under the law.
This exclusion applies regardless of whether the insured person is actually charged with, or convicted of, a crime.
I Appellant’s App. 227-28 (bold type in original; other emphasis added).
The first paragraph of the liability section, by its terms, provides coverage to “an insured person.” The particular exclusionary clauses on which Allstate relies, however, do not include any reference to “an insured” or “any insured,” see id. ¶¶ 1(a) and 2(a), although the clauses excluding coverage of acts or omissions while insane or lacking capacity to control conduct do explicitly refer to “an insured person”. See id. ¶¶ 1(b) and 2(b). Finally, the criminal act clause refers to “the insured person” in its final sentence.
In reading these clauses as a whole, we cannot tell whether the intentional act and criminal act exclusions are intended to exclude coverage to all insureds based on intentional acts by an insured. The exclusions merely state that “we do not cover bodily
Limitations on insurance coverage must be effected through an exclusion clause with language that clearly identifies the scope of the limitation to the reasonable purchaser of insurance. Draughon v. CUNA Mut. Ins. Soc’y., 771 P.2d 1105, 1108 (Utah App.1989). Here, the exclusion clause does not clearly identify whether the intentional act or omission by one insured would preclude coverage for related negligence by another insured. In fact, the clause can be read as excluding coverage to any insured for injuries intentionally caused by a noninsured.
We also note that ¶¶ 1(b) and 2(b) refer to acts or omissions by “an insured,” and the final sentence of ¶ 2 refers to “the insured.” These clauses are different from those in the eases relied upon by Allstate, in which the use of “an insured” rather than “the insured” in the exclusionary clause itself was held to prevent coverage for injury caused by the intentional acts of one insured, when a suit was brought against a coinsured on a theory of negligence. See, e.g., Allstate Ins. Co. v. McCranie, 716 F.Supp. 1440, 1447-49 (S.D.Fla.1989), aff'd, sub nom. Allstate Ins. Co. v. Manning, 904 F.2d 713 (11th Cir.1990); Allstate Ins. Co. v. Gilbert, 852 F.2d 449, 454 (9th Cir.1988); Allstate Ins. Co. v. Foster, 693 F.Supp. 886, 889 (D.Nev.1988); Allstate Ins. Co. v. Roelfs, 698 F.Supp. 815, 822 (D.Alaska 1987); State Farm, Fire and Gas. Co. v. Davis, 612 So.2d 458, 466 (Ala.1993). All of these cases dealt with language that excluded coverage to “an insured,” which the court read as “any insured.” We do not know why the Allstate policies differ. But we must deal with the particular policy and the specific language at issue before us. In the instant case the applicable exclusion clauses do not use the term “an insured”, “any insured,” or even “insured.”
Allstate points out its “joint obligations clause,” which reads “[t]he terms of this policy impose joint obligations on persons defined as an insured person. This means that the responsibilities, acts and failures to act of a person defined as an insured person will be binding upon another person defined as an insured person,” I Appellant’s App. 26 (bold in original). But Allstate does not urge that this clause renders unambiguous the pertinent liability exclusion clauses. Nevertheless, we considered this argument because another case relied on it. See Allstate Ins. Co. v. McCranie, 716 F.Supp. at 1448 (citing Allstate Ins. Co. v. Childs, No. 87-1055-Civ-ORL 18 (M.D.Fla. July 7, 1988)). We believe, based on the placement of the joint obligations clause in the policy, that the provision refers to obligations to pay premiums, to make timely claims, etc., and that in any event a reasonable insured would not understand a “joint obligations” clause to exclude liability coverage for all insureds when coverage was excluded for one insured.
Although we reason differently, we agree with the district court’s determination that the policy was ambiguous as to whether Allstate had a duty to defend and indemnify Brown when her coinsured husband was not covered because he engaged in an intentional or criminal act excluded by the policy. Based on Utah law that contracts of insurance are to be construed in favor of the insured, particularly exclusionary clauses, we hold that Allstate has a duty to defend suits alleging Brown’s negligence and, if liability is imposed, to indemnify Brown even though her coinsured is denied coverage because of his intentional or criminal acts.
In any event, our review indicates that the Utah courts have not specifically adopted nor rejected the view that negligent acts or omissions connected to intentional acts of other insureds are never covered by homeowner’s liability policies. Therefore, based on the Utah policies of construing exemptions against the insurance company and of focusing on individual responsibility, see Error v. Western Home Ins. Co., 762 P.2d 1077 (Utah 1988), we believe the district court correctly focused on the cause of action against the insured for whom the company is attempting to deny coverage — here, Brown’s negligence. See Catholic Diocese v. Raymer, 251 Kan. 689, 840 P.2d 456, 461 (1992) (looking to specific theory of liability alleged rather than underlying cause of injury to determine insurance coverage). If Allstate wants its homeowner’s insurance policies to exclude coverage for all insured persons for an excluded act by any insured person, it can do so by careful drafting.
Ill
Finally, Allstate asserts that Brown’s actions or omissions did not constitute an “accident.” The policy provides “[sjubject to the terms, limitations and conditions of this policy, Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an accident and covered by this part of the policy.” I Appellant’s App. 44 (bold in original). Allstate contends that the allegations against Brown do not constitute an “accident” under the policy because her alleged negligence is not the action that actually caused Karla Roth’s death or the other injuries, citing Mutual of Enumclaw v. Wilcox, 123 Idaho 4, 843 P.2d 154 (1992). In that case a woman was sued for her negligence in failing to warn potential victims of her ex-husband’s propensity to sexually molest children. The Idaho Supreme Court held the wife was not entitled to coverage because her conduct was not the conduct that caused the injuries. Allstate’s “no accident” argument goes too far we believe; it would seem to relieve the insurer from providing a defense to any suit brought against a nonaeting insured — e.g., when husband inadvertently dropped a substance on a walkway that caused injury and the injured party sues both insured spouses. As stated above, we believe Utah would more likely follow the courts that look to the actual allegations of negligence and not the “underlying actions.”
Further, Utah has adopted a broad definition of accident in accidental death policies. Winchester v. Prudential Life Ins. Co. of America, 975 F.2d 1479, 1487 (10th Cir.1992) (Utah courts apply the “less strict standard of defining ‘accidental’ as a result that was not reasonably foreseeable even if the means causing the result was foreseeable or even intentional.” (citation omitted)). The Utah court also has noted that in a liability policy, “courts have generally held that ‘accident’ includes results negligently caused by the insured.” Hoffman v. Life Ins. Co. of N. America, 669 P.2d 410, 416 n. 2 (Utah 1983).
We AFFIRM the district court’s holding that Allstate has a duty to defend and, if necessary, indemnify its insured, Karen Worthington Brown, in the suits that claim she negligently entrusted weapons and
. Allstate also argues that the "innocent coin-sured” case law does not afford coverage. See Error v. Western Home Ins. Co., 762 P.2d 1077 (Utah 1988). Because of our decision on the other points we need not, and do not, address this contention challenging the district court's alternative finding.
. Brown moved for summary judgment in the state suit, alleging that she had no duty to Karla Roth. The district court of Utah denied the motion, stating that it could not be concluded as a matter of law that she owed no duty to Karla Roth. Brown petitioned the Utah Supreme Court for relief from the denial of her motion; the Utah Supreme Court denied the petition.
. Many cases defendants rely on found policies ambiguous because of severability clauses, and we note that the policy in question does not contain a severability clause. Because we have ruled the pertinent clauses to be ambiguous for other reasons, however, we need not address the severability clauses.