Allstate Ins. Co. v. Worthington, 93-4127

• Decision Date: 30 January 1995
• Docket Number: No. 93-4127,93-4127
• Citation: Allstate Ins. Co. v. Worthington, 46 F.3d 1005 (10th Cir. 1995)
• Parties: ALLSTATE INSURANCE COMPANY, an Illinois corporation, Plaintiff-Appellant, v. Richard WORTHINGTON, individually and as guardian ad litem of Kaycee Lynn Kimmel, Kristopher Dean Kimmel and Charlee Karena Kimmel; Karen Worthington, individually and as guardian ad litem of Kaycee Lynn Kimmel, Kristopher Dean Kimmel and Charlee Karena Kimmel; David Alan Roth, individually and as guardian ad litem of Kaycee Lynn Kimmel, Kristopher Dean Kimmel and Charles Karena Kimmel; Kelsey Kyle Kimmel, Nancy Ravera and Jae Lowder, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1005

46 F.3d 1005

ALLSTATE INSURANCE COMPANY, an Illinois corporation Plaintiff-Appellant, v. Richard WORTHINGTON, individually and as guardian ad litem of Kaycee Lynn Kimmel, Kristopher Dean Kimmel and Charlee Karena Kimmel; Karen Worthington, individually and as guardian ad litem of Kaycee Lynn Kimmel, Kristopher Dean Kimmel and Charlee Karena Kimmel; David Alan Roth individually and as guardian ad litem of Kaycee Lynn Kimmel Kristopher Dean Kimmel and Charles Karena Kimmel; Kelsey Kyle Kimmel, Nancy Ravera and Jae Lowder, Defendants-Appellees.

No. 93-4127.

United States Court of Appeals Tenth Circuit.

Jan. 30, 1995.

Robert G. Wright (Gary L. Johnson, also of Richards, Brandt, Miller & Nelson, with him on the briefs), Salt Lake City, UT, for plaintiff-appellant.

Colin King (Edward B. Havas and Alan W. Mortensen, also of Wilcox, Dewsnup & King, with him on the brief), Salt Lake City, UT, for defendants-appellees.

Before SEYMOUR, Chief Judge, LOGAN, Circuit Judge, and DAUGHERTY, District Judge. ^*

LOGAN, Circuit Judge.

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 Worthington (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 appeal, Allstate asserts that summary judgment for defendants was improper because (1) the insurance policy unambiguously provided that because the husband's intentional acts were not covered under the policy Brown's negligent acts also were not covered; and (2) Brown's actions or omissions did not constitute an "accident" under terms of the policy. ¹

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. ² I R. 78. Subsequently others sued Brown for severe emotional distress and other injuries based upon theories of negligence in returning weapons to her husband and negligently or recklessly failing to warn the potential victims or the proper authorities.

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 clearly excluded Brown's acts or omissions from coverage. As with any question of contract interpretation we examine closely the language of the particular contract. We apply Utah law, which provides that insurance policies are interpreted under general contract principles. Bergera v. Ideal Nat'l Life Ins. Co., 524 P.2d 599, 600 (Utah 1974); see also Utah Power and Light Co., 983 F.2d at 1553. Whether a contract is ambiguous is a question of law to be determined by this court. See Alf v. State Farm Fire and Casualty Co., 850 P.2d 1272, 1274 (Utah 1993); Stegall v. Little Johnson Assocs., 996 F.2d 1043, 1048 (10th Cir.1993). Ambiguities in an insurance contract are construed against the insurer. Utah Farm Bureau Mut. Ins. Co. v. Orville Andrews & Sons, 665 P.2d 1308, 1309 (Utah 1983); see also Royal College Shop, Inc. v. Northern Ins. Co., 895 F.2d 670, 674 (10th Cir.1990). "Under Utah law, an insurer must use explicit language if it intends to limit coverage by an exclusion." United States Fidelity & Guar. Co. v. Sandt, 854 P.2d 519, 524 (Utah 1993).

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. pp 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. pp 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 injury or property damage resulting from an act or omission intended or expected to cause bodily injury or property damage...." If we read the "an" in the first paragraph of the "Losses We Cover" section as meaning "any insured," it appears that an insured or any insured is covered for liability for bodily injury or property damage unless that injury or damage resulted from an act or omission intended or expected to cause bodily injury or property damage. The exclusionary clauses in question, pp 1(a) and 2(a), do not explicitly state whether the triggering act or omission must be performed by "the insured," by "any insured," or by "an insured."

Limitations on insurance coverage must be effected through an exclusion clause with language that clearly identifies the scope of...