Am. Nat'l Prop. v. Burns
| Decision Date | 23 April 2019 |
| Docket Number | No. 18-8006,18-8006 |
| Citation | 922 F.3d 1045 |
| Parties | AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY, Plaintiff-Appellee, v. David James BURNS; Robin Burns, as personal representative of Tyler Burns, Defendants-Appellants, and Dora Sam, Defendant. |
| Court | U.S. Court of Appeals — Tenth Circuit |
In this appeal, David James Burns and Robin Burns (as representatives of Tyler Burns) (collectively, the "Burnses") seek review of a district court order granting summary judgment in favor of American National Property and Casualty Company ("American National").
In October 2014, then-sixteen-year-old Phillip Sam shot and killed Tyler Burns. The Burnses brought a wrongful death action in state court against, among others, Phillip's mother, Dora Sam, alleging that she had negligently stored the handgun used in the shooting. Dora was a named policyholder of an American National homeowner's policy (the "Policy") effective at the time of the shooting, and she demanded that American National indemnify and defend her in the wrongful death action. American National then filed an action in federal court seeking a declaration that there was no coverage.
The district court granted summary judgment for American National. In relevant part, it concluded first that Phillip was a "resident" of Dora's home at the time of the shooting. And because the Policy defines "insureds" to include relatives who were "resident[s]" of a named insured's home, and excludes personal liability coverage for intentional and criminal actions by "any insured," the district court determined that there was no coverage as to Dora for the shooting. The court also ruled that this result was not unsettled by the Policy's inclusion of a severability clause, concluding that to determine otherwise would render the "any insured" exclusion meaningless.
The Burnses now raise two claims of error. First, they argue that Phillip was not a resident of Dora's household at the time of the shooting because he had been staying with his father, Nathan Sam, at that time and, relatedly, had expressed an intent or desire to live with Nathan. Second, they argue that there is an ambiguity introduced by including both an "any insured" exclusion and a severability clause in the same policy, and that this ambiguity must be construed in favor of coverage for Dora. The Burnses have also filed two motions — one a motion to certify issues presented in this case to the Wyoming Supreme Court, and the other to seal Volume VIII of the Appendix.1
For the reasons explained below, we conclude that "resident" as contained in the Policy is an ambiguous term that might reasonably be construed in favor of coverage for Dora, and we reverse and remand on this basis. Further, we deny both the motion to certify and the motion to seal.
After Dora and Nathan divorced in 2013, a decree gave them joint legal custody of their minor children, including Phillip, with Dora listed as the "primary residential custodian." Aplts.' App. at 370 (Divorce Decree, filed Sept. 10, 2013). In deference to Nathan's itinerant work schedule, Nathan was to have physical custody of the children when he was in Cheyenne, Wyoming; Dora was to have the children "all other times." Id. Consistent with the decree, Dora testified that Phillip lived with her and "sometimes lived with his dad." Id. at 225 (Dora Sam Dep., filed Oct. 6, 2017). Nathan also discussed this arrangement at his deposition, confirming that the children would "come over and spend time with [him] when [he was] in town." Id. at 234 (Nathan Sam Dep., filed Oct. 6, 2017).
From roughly October 1 to October 5, 2014, Phillip, then sixteen years old, stayed with Nathan, who had returned to Cheyenne from a work trip. At one point on October 5, Nathan dropped Phillip off at Dora's house for five or six minutes so Phillip could pick up his work uniform. Though Dora was out of town, Nathan and Phillip nevertheless "texted [her] ahead of time[]" before Phillip entered the house. Id. at 237. While he was inside, Phillip did not just grab his work uniform; he also stole Dora's boyfriend's semi-automatic pistol from the master bedroom closet. Phillip and Nathan then returned to Nathan's house for about an hour, at which time Nathan dropped Phillip off at a friend's house.
Early the following morning, Phillip shot and killed Tyler Burns with the pistol he took from Dora's house. When he was subsequently booked into jail, Phillip provided Nathan's address as his residence. Phillip was ultimately convicted of first-degree murder and related crimes. See Sam v. State, 401 P.3d 834 (Wyo. 2017), cert. denied, ___ U.S. ___, 138 S.Ct. 1988, 201 L.Ed.2d 248 (2018).
In September 2016, following Phillip's conviction, the Burnses brought a wrongful death and survival action against Dora, Dora's boyfriend, and Phillip in Wyoming state court for damages associated with Tyler's death. Dora, facing a claim for negligent storage of a handgun, demanded that American National indemnify and defend her under her homeowner's policy.
American National thereafter filed this action in federal court, naming Dora and the Burnses as defendants and seeking a declaration that insurance coverage did not exist. Moving for summary judgment, American National noted that the Policy's personal liability coverage does not apply to intentional or criminal actions by "any insured," Aplts.' App. at 26, 28 (Ex. 1 to Compl., filed Dec. 15, 2016), and, furthermore, that "insured[s]" under the Policy include the named policyholder "and the following residents of [their] household: a. [their] relatives[;] b. any other person under the age of 21 who is in the care of any person named above," id. at 15 (emphasis added). Though the Policy does not further define "resident," American National relied on these provisions to argue that Phillip was an "insured" — and thus (in its view) no coverage existed as to Dora for the shooting — because he was Dora's minor son who resided with her and was "in [her] care." Id. at 196-97 (Pl.'s Br. in Supp., filed Sep. 14, 2017). American National also argued that the Policy's severability clause, which states that "[t]his insurance applies separately to each insured," id. at 30, did not preclude exclusions of coverage to Dora for the intentional actions of other insureds. The Burnses opposed, arguing that Phillip was not a resident of Dora's home at the time of the shooting and that the severability clause created an ambiguity that had to be construed in favor of coverage for Dora.
The district court granted American National's motion, ruling first that Phillip was a "resident" of Dora's home at the time of the shooting because, inter alia, Dora was the "primary residential parent"; a person can have more than one residence at a time and can temporarily leave home without changing residences; and it is unclear whether a minor can form the intent to change residences, if such intent is necessary. Id. at 349-50 (Order Granting Pl.'s Mot. for Summ. J., dated Jan. 3, 2018). And because Phillip was a "resident" of Dora's household and also her relative, he was an insured under the Policy, and there was thus no coverage as to Dora for Phillip's intentional or criminal actions. The district court further concluded that the Policy's severability clause did not create an ambiguity that had to be construed in favor of coverage, reasoning that to hold otherwise would "basically render the exclusions meaningless." Id. at 357.
Following the district court's entry of judgment, the Burnses timely filed a notice of appeal, arguing that Phillip was not a "resident" of Dora's household at the time of the shooting and that the Policy's severability clause created an ambiguity that had to be construed in favor of coverage for Dora.
We "review the district court's entry of summary judgment de novo, applying the same standards as the district court." Bekkem v. Wilkie, 915 F.3d 1258, 1266-67 (10th Cir. 2019). "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. Civ. P. 56(a); accord Fox v. Transam Leasing, Inc., 839 F.3d 1209, 1213 (10th Cir. 2016). When applying this standard, we "examine the record and all reasonable inferences that might be drawn from it in the light most favorable to the non-moving party." Havens v. Colo. Dep't of Corr., 897 F.3d 1250, 1259 (10th Cir. 2018) (quoting Barber ex rel. Barber v. Colo. Dep't of Revenue, 562 F.3d 1222, 1228 (10th Cir. 2009)).
Under Wyoming law — the substantive law we apply in this diversity action, see, e.g., Scottsdale Ins. Co. v. Tolliver, 636 F.3d 1273, 1277 (10th Cir. 2011) — "[t]he language of an insurance policy is ambiguous if it is capable of more than one reasonable interpretation." N. Fork Land & Cattle, LLLP v. First Am. Title Ins. Co., 362 P.3d 341, 346 (Wyo. 2015) (quoting Doctors' Co. v. Ins. Corp. of Am., 864 P.2d 1018, 1024 (Wyo. 1993)). And, "[b]ecause insurance policies represent contracts of adhesion where the insured has little or no bargaining power to vary the terms, if the language is ambiguous, the policy is strictly construed against the insurer." Hurst v. Metro. Prop. & Cas. Ins. Co., 401 P.3d 891, 895 (Wyo. 2017) (alteration in original) (quoting N. Fork Land, 362 P.3d at 346); see also T.M. ex rel. Cox v. Exec. Risk Indem. Inc., 59 P.3d 721, 726 (Wyo. 2002) (). Relatedly, when insurance coverage is dependent upon how a term in a policy is defined and that term "is fairly susceptible of [multiple] constructions, the one favorable to the insured will be adopted." Aaron v. State Farm Mut. Auto. Ins. Co., 34 P.3d 929, 933 (Wyo. 2001) (quoting Commercial Union Ins. Co. v. Stamper, 732 P.2d 534, 539 (Wyo. 1987)); see also Mena v. Safeco Ins. Co., 412 F.3d 1159, 1163-64 (...
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