Summary
holding that auto liability exclusion applied to both the employer and the employees because the employer in the underlying action "was not alleged to have done anything more or different than its employee."
Summary of this case from Nautilus Ins. Co. v. Design Build InterAmerican, Inc.Opinion
Case No. 00-8251-CIV-HURLEY
June 15, 2001
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
THIS CAUSE is before the court upon cross-motions for summary judgment. After consideration of the motions, arguments of counsel, relevant case law, and the record evidence viewed in the light most favorable to the non-moving party, defendant's motion for summary judgment will be granted.
Plaintiff Nurses Plus purchased a commercial general insurance policy from the defendant New Hampshire Insurance Company, ("New Hampshire"). Under the policy, New Hampshire,
will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply.
An exclusion in the policy states that the insurance does not apply to
"Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any . . . auto . . . owned or operated by or rented or loaned to any insured.
The term "insured" is defined as "Your employees, other than your executive officers, . . . or your managers, but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business."
The insurance policy also contains a severability clause which states,
Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies:
a. As if each Named insured were the only Named Insured; and
b. Separately to each insured against whom claim is made or "suit" is brought.
While the policy was in effect, Letoria Turner, an employee of Nurses Plus, was involved in an automobile accident in Alabama. Ms. Turner was driving an automobile which she owned and maintained. As a result of the accident, Vera Mae Smith, the conservator of the estate of Greta Lorraine Harris, filed suit in Alabama claiming negligence by Ms. Turner, and seeking to hold Nurses Plus liable on the theory of respondeat superior. Nurses Plus, relying on the insurance policy, demanded that New Hampshire provide counsel and defend it in the negligence suit. New Hampshire declined. Ultimately, summary judgment was entered in favor of Nurses Plus. Nurses Plus then filed this suit seeking a declaratory judgment and alleging a breach of contract for New Hampshire's refusal to provide a defense in the Alabama lawsuit.
Nurses Plus contends that the policy's severability clause, viewed in tandem with the exclusion clause and its reference to "any insured," creates an ambiguity as to who is covered. Therefore Nurses Plus asserts that the ambiguity should be resolved against the insurer, resulting in a judicial finding of coverage for Nurses Plus. New Hampshire, on the other hand, argues that the tern "any insured" in the exclusion clause is unambiguous. It contends that despite the severability clause, a showing of bodily injury arising from the use of an auto by any insured will preclude coverage for all insureds. The court concludes that neither position is correct.
The policy in this case contains two significant clauses: a severability clause and an exclusion for bodily injury arising from the operation of an automobile. The severability clause creates a separate insurable interest for each individual insured. In other words, the acts of each insured must be evaluated independent of the acts of other insureds. See, e.g., Premier Ins. Co. v. Adams, 632 So.2d 1054 (Fla. 5th DCA 1994); Liberty Mutual Ins. Co. v. Sentry Ins. Co., 288 So.2d 556, 559 (Fla. 2d DCA 1974). The exclusion, on the other hand, states the policy will not cover bodily injury arising out of the use of an auto by "any insured."
Courts interpreting insurance policies without a severability clause and with an exclusion referring to "any insured," have found the exclusionary language unambiguous and, consequently, have found no coverage for all insureds if any insured was alleged to have caused injury arising from the excluded conduct. Cf. Michigan Millers Mutual Ins. Corp. v. Benfield, 140 F.3d 915, 926 (11th Cir. 1998). However, the combination of a severability clause and an exclusion referring to "any insured," creates an ambiguity regarding coverage. The problem lies in the fact that the severability clause informs an insured that his entitlement to coverage will be determined solely on the basis of acts attributed to him, whereas the exclusion states that coverage will be denied for all insureds if any one insured is alleged to have engaged in excluded conduct. In short, protection afforded by one provision is negated by another. Because this ambiguity results from conflicting clauses inserted into the policy by the insurance company, case law dictates that the ambiguity should be resolved against the drafter and in favor of coverage. See Anderson v. Auto-Owners Ins., Co., 172 F.3d 767, 769 (11th Cir. 1999). Courts have applied this maxim when confronted with a severability clause and an exclusion referring to "any insured," by giving full meaning and operative effect, to the extent possible, to both provisions. Thus, courts view each insured independently, and apply the exclusion to deny coverage only when the specific insured — as opposed to any insured — is alleged to have engaged in the excluded conduct. Two cases exemplify this approach. In Premier Insurance Company v. Adams, 632 So.2d 1054 (Fla. 5th DCA 1994), parents were sued for negligent supervision of their son, while their son was sued for sexually abusing a minor. The parents' homeowners' policy contained a severability clause and an exclusion for intentional acts by any insured. The Florida appellate court, relying on the principle that "an interpretation which gives a reasonable meaning to all provisions of a contract is preferred to one which leaves a part useless or inexplicable" id. at 1057, concluded that the parents — as opposed to the son — had coverage because (1) under the severability clause, the acts attributed to the parents had to be evaluated independent of the acts attributed to the son and (2), negligent supervision is not an intentional act and, therefore, did not fall within the exclusion.
Similarly, in Worcester Mutual Ins. Co. v. Marnell, 496 N.E.2d 158 (Mass. 1986), parents were sued on the theories of negligent supervision and negligent failure to prevent their son from consuming alcoholic beverages in their home. Their son was also sued for causing a death by driving while intoxicated. The parents' homeowners' policy contained a severability clause and an exclusion for bodily injury resulting from an automobile owned, operated by, or loaned to any insured. The Supreme Judicial Court of Massachusetts, citing the principle that "an interpretation which gives a reasonable meaning to all of the provisions of a contract is to be preferred to one which leave apart useless or inexplicable," id. at 245, looked to the severability clause and held that the parents' acts had to be viewed independently of the son's. Under this interpretation, the court concluded that the parents — as opposed to the son — had coverage because negligent supervision is not conduct which would trigger the exclusion.
The combined effect of the severability clause and the exclusion in the policy in the case at bar unquestionably excluded coverage for the employee whose alleged conduct fell squarely within the exclusion. Similarly — and despite the full benefit afforded by the severability clause — Nurses Plus would not have been covered if the Alabama complaint had expressly alleged that Nurses Plus caused bodily injury arising from the operation of an automobile. Again, this allegation would have triggered the exclusion. Bearing in mind that an insurer's duty to defend is triggered by the allegations of the complaint, see United States Fidelity and Guaranty Co. v. Armstrong, 479 So.2d 1164, 1167 (Ala. 1985), the issue presented by this case is whether Nurses Plus was entitled to coverage when the allegations in the Alabama complaint invoked the doctrine of respondeat superior.
Under the doctrine of respondeat superior, "an employer is liable, despite having no fault whatsoever, for the acts of its employees taken within the scope of their employment." Hamilton v. Carell, 243 F.3d 992, 1001 (6th Cir. 2001); see also, Crowell v. Clay Hyder Trucking Lines, Inc., 700 So.2d 120, 123 (Fla. 2nd DCA 1997). The basis for placing a loss on the employer is the allocation of the economic cost of an injury resulting from a risk of incident to the enterprise. Carroll Air Systems, Inc. v. Greenbaum, 629 So.2d 914, 917 (Fla. 4th DCA 1994); see also RESTATEMENT (THIRD) or TORTS: Apportionment Liab. § 13 (1999) (rationale behind respondeat superior is that the costs of an agent's torts should be borne by the enterprise).
If the Alabama plaintiff could have established the requirements for respondeat superior, Nurses Plus — as a matter of law — would have been placed in the shoes of its employee. Unlike the allegations inPremier and Worcester Mutual, where separate, not-excluded negligence was asserted against each set of parents, Nurses Plus was not alleged to have done anything more or different than its employee. Rather, by virtue of respondeat superior, the plaintiff sought to impute the negligence of the employee, Ms. Turner, to the employer. Nurses Plus. For all practical purposes, this was the functional equivalent of an allegation that Nurses Plus caused bodily injury and damages through the use of an automobile. Such an allegation — even with the full benefit of the severability clause — fell within the insurance policy's exclusion, and this negated Nurses Plus' entitlement to coverage. Since there are no contested issues of material fact, it is
ORDERED and ADJUDGED:
(1) Defendant's motion for summary judgment [DE # 34] is GRANTED.
(2) Plaintiff's motion for summary judgment [DE # 33] is DENIED.