Am. Nat'l Prop. & Cas. Co. v. Clendenen

Decision Date17 November 2016
Docket NumberNo. 16-0290,16-0290
Citation793 S.E.2d 899,238 W.Va. 249
Parties AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY, Plaintiff Below, Petitioner v. Tara CLENDENEN, James Clendenen, Mary A. Neese, Administratrix And Personal Representative of the Estate of Skylar Neese, Deceased, David Neese, and Mary A. Neese, Individually, Defendants Below, Respondents and Erie Insurance Property and Casualty Company, Plaintiff Below, Petitioner, v. Mary A. Neese, Individually and as Administratrix of the Estate of Skylar Neese, David Neese, Tara Clendenen, and Patricia Shoaf, Defendants Below, Respondents.
CourtWest Virginia Supreme Court

Dwayne E. Cyrus, Esq., Shuman, McCuskey & Slicer, PLLC, Charleston, West Virginia, Margaret L. Miner, Esq., J. Robert Russell, Esq., Shuman, McCuskey & Slicer, PLLC, Morgantown, West Virginia, Counsel for Petitioner, American National Property and Casualty Company.

Amy M. Smith, Esq., Steptoe & Johnson PLLC, Bridgeport, West Virginia, Laurie C. Barbe, Esq., Steptoe & Johnson, PLLC, Morgantown, West Virginia, Counsel for Petitioner, Erie Insurance Property & Casualty Company.

Jill Cranston Rice, Esq., Morgantown, West Virginia, Andrew T. Kirkner, Esq., Washington, DC, Counsel for Amicus Curiae, West Virginia Insurance Federation.

Michael Benninger, Esq., Benninger Law, PLLC, Morgantown, West Virginia, Counsel for Respondents, Tara and James Clendenen and Sheila Eddy.

William L. Frame, Esq., Wilson Frame & Metheney, PLLC, Morgantown, West Virginia, Counsel for Respondents, Mary and David Neese.

Paul W. Gwaltney, Jr., Esq., Trevor K. Taylor, Esq., Taylor Law Office, Morgantown, West Virginia, Counsel for Respondent, Patricia Shoaf.

Benjamin, Justice:

This Court is presented with the following two certified questions from the United States District Court for the Northern District of West Virginia:

1. Applying West Virginia public policy and rules of contract construction, do the unambiguous exclusions in American National's policy for bodily injury or property damage "which is expected or intended by any insured even if the actual injury or damage is different than expected or intended," and "arising out of any criminal act committed by or at the direction of any insured," and the unambiguous exclusion in Erie's policy for "bodily injury, property damage, or personal injury expected or intended by ‘anyone we protect’ ...," preclude liability coverage for insureds who did not commit any intentional or criminal act?
2. If so, do the unambiguous severability clauses in the insurance policies, which state that the insurance applies separately to each insured, prevail over the exclusions and require the insurers to apply the exclusions separately to each insured, despite the intentional and criminal actions of co-insureds?

We have considered the parties' briefs, oral arguments, and the record before us.1 For the reasons expressed more thoroughly below, we answer the first certified question in the affirmative and the second certified question in the negative.

I. FACTUAL AND PROCEDURAL BACKGROUND

Teenagers Sheila Eddy, Rachel Shoaf, and Skylar Neese had been friends for years. In the spring and summer of 2012, Sheila and Rachel wanted to terminate their friendship with Skylar but were afraid to do so because they believed Skylar would disclose some embarrassing information she knew about them. So, Sheila and Rachel plotted to kill Skylar instead. On the night of July 5, 2012, Sheila and Rachel picked Skylar up in a car belonging to Sheila's mother, Tara Clendenen. Sheila and Rachel drove Skylar to a remote location outside of Brave, Pennsylvania, where they stabbed Skylar to death and hid her body. Skylar's body was not discovered until January 2013, more than six months after her disappearance. Sheila and Rachel eventually confessed to, and were convicted of, the murder. Sheila pleaded guilty to first degree murder and was sentenced to life in prison with mercy. Rachel pleaded guilty to second degree murder and was sentenced to thirty years in prison.

A. The Underlying State Court Action

In 2014, Skylar's parents, Respondents David and Mary Neese, filed a wrongful death civil action in the Circuit Court of Monongalia County, West Virginia, against Sheila Eddy, Tara Clendenen, Rachel Shoaf, and Patricia Shoaf, Rachel's mother, to recover damages in connection with Skylar's death.2 At the time of Skylar's murder, Sheila lived with Mrs. Clendenen and Rachel lived with Mrs. Shoaf. The Neeses asserted, among other things, that Mrs. Clendenen and Mrs. Shoaf had been negligent in their supervision of Sheila and Rachel in numerous respects, such as failing to monitor their activities, behavior, and whereabouts, and in Mrs. Clendenen's case, in entrusting to Sheila the car the girls used to drive Skylar to Pennsylvania on the night of her murder.3 Notably, the Complaint does not allege that Mrs. Clendenen or Mrs. Shoaf were part of the plan or had any reason to know of the same.

B. The ANPAC Policy

In July 2012, Tara Clendenen, who was residing with her husband, James Clendenen, was an insured under a homeowner's insurance policy issued by ANPAC to James Clendenen. Sheila Eddy, who pleaded guilty to first degree murder in the death of Skylar Neese, was also an insured under the ANPAC homeowner's policy issued to James Clendenen, as she was a minor in the care of Tara Clendenen during that time period. Mrs. Clendenen requested that ANPAC provide defense and indemnification with respect to the claims asserted in the Complaint. ANPAC agreed to provide a defense to Mrs. Clendenen in the Neese action pursuant to a reservation of rights.

The insurance policy at issue, ANPAC Homeowner's Policy number 47-H-761-55L-3, provides in pertinent part, as follows:

SECTION II—LIABILITY COVERAGES
Coverage E—Personal Liability
If a claim is made or a suit is brought against any insured for damages because of bodily injury or property damage to which this coverage applies, we will:
a. pay up to our limit of liability for the damages for which the insured is legally liable; ...

The policy provides certain conditions and limitations under the liability section of the policy as follows:

SECTION II—CONDITIONS
a. Limit of Liability . Regardless of the number of insureds , claims made or persons injured, our total liability under Coverage E for all damages resulting from any one occurrence shall not exceed the limit of liability for Coverage E stated in the Declarations ....
b. Severability of Insurance . This insurance applies separately to each insured . This condition shall not increase our limit of liability for any one occurrence .

The homeowner's policy also states that the coverage provided by Coverages E and F is subject to the following exclusions, among others:

SECTION II EXCLUSIONS
1. Coverage E—Personal Liability and Coverage F—Medical Payments to Others do not apply to bodily injury or property damage :
a. Which is expected or intended by any insured even if the actual injury or damage is different than expected or intended;
p. Arising out of any criminal act committed by or at the direction of any insured ; ....
C. The Erie Policy

At the time of Skylar's murder, Mrs. Shoaf and her daughter, Rachel, were insured under an Erie Ultracover HomeProtector Insurance Policy No. Q55-7600737 issued to Mrs. Shoaf by Petitioner Erie Insurance Property and Casualty Company (hereinafter "Erie").4 The Erie Homeowners Policy includes the following insuring agreement for personal injury liability coverage:

We will pay all sums up to the amount shown on the Declarations which anyone we protect becomes legally obligated to pay as damages because of bodily injury or property damage caused by an occurrence during the policy period. We will pay for only bodily injury or property damage covered by this policy.

"Anyone we protect " is defined, in relevant part, as follows: "anyone we protect means you and the following members of your household: 1. relatives and wards; 2. other persons in the care of anyone we protect...."

The Erie Homeowners Policy also contains certain exclusions from the personal injury liability coverage, including the following:

We do not cover under Bodily Injury Liability Coverage, Property Damage Liability Coverage, Personal Injury Liability Coverage, and Medical Payments To Others Coverage :
1. Bodily injury , property damage or personal injury expected or intended by anyone we protect even if:
a. the degree, kind or quality of the injury or damage is different than what was expected or intended; or
b. a different person, entity, real or personal property sustained the injury or damage than was expected or intended.
We do not cover under Bodily Injury Liability Coverage, Property Damage Liability Coverage, or Personal Injury Liability Coverage :
....
9. Personal injury arising out of willful violation of a law or ordinance by anyone we protect .

Like the ANPAC Homeowners Policy, the Erie Homeowners Policy also contains severability of insurance language. The Limits of Protection provision in Erie's policy expressly states in pertinent part:

This insurance applies separately to anyone we protect . Regardless of the number of people we protect, claims made or persons injured, our total liability under Personal Liability Coverage for damages resulting from one occurrence , offense, claim or suit will not exceed the amount shown on the Declarations for Personal Liability Coverage . All bodily injury, property damage and personal injury resulting from one accident or from continuous or repeated exposure to the same general conditions is considered the result of one occurrence , offense, claim or suit.
D. The Federal Declaratory Judgment Action

Although not a party to the state court action, ANPAC and Erie filed declaratory judgment actions in the United States District Court for the Northern District of West Virginia seeking a determination that the homeowner's insurance policies do not provide coverage for the claims being asserted...

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