Brumley v. Lee

• Decision Date: 17 July 1998
• Docket Number: No. 76192,76192
• Citation: 963 P.2d 1224,265 Kan. 810
• Parties: Alberta BRUMLEY, et al., Appellants, v. David Wayne LEE, Defendant/Third-party Plaintiff, v. SAFECO INSURANCE COMPANY OF AMERICA, Third-Party Defendant/Appellee.
• Court: Kansas Supreme Court

Page 1224

963 P.2d 1224

265 Kan. 810

Alberta BRUMLEY, et al., Appellants, v. David Wayne LEE, Defendant/Third-party Plaintiff, v. SAFECO INSURANCE COMPANY OF AMERICA, Third-Party Defendant/Appellee.

No. 76192.

Supreme Court of Kansas.

July 17, 1998.

Syllabus by the Court

1. An insurance policy is construed so as to give effect to the intentions of the parties. If the language is ambiguous, the construction most favorable to the insured must prevail.

2. For a contract to be ambiguous, it must contain provisions or language of doubtful or conflicting meaning, as gleaned from a natural and reasonable interpretation of its language. Ambiguity in a written contract does not appear until the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning.

3. All pertinent provisions of an insurance policy must be considered together, other than in isolation, and given effect.

4. The test for ambiguity in an insurance policy is what a reasonably prudent insured would understand the language to mean, not what the insurer intends the language to mean.

5. An insurance policy containing exclusionary and severability of interests clauses is construed to require that the exclusions are to be applied only against the insured for whom coverage is sought and that coverage as to each insured must be determined separately based on the facts applicable to each insured.

6. The absence of any definition of the term "accident" in a liability insurance policy merely means that an interpretation by law shall apply rather than an interpretation by contractual language. Where the term is not defined in the policy, it must be interpreted in its usual, ordinary, and popular sense. The word will, however, be accorded a liberal construction since it is ambiguous.

7. The fact that an accident is caused by or is traceable to the act of a person other than the insured does not prevent the occurrence from being an accident. When the injury is not the result of the misconduct or the participation of the insured party, it is, to him or her, accidental although inflicted intentionally by the other party.

8. The determination of an accident within the definition of an occurrence in a liability insurance policy is to be made from the standpoint of the insured, not from the viewpoint of the victim, to whom any calamity may seem unfortuitous.

J. Eugene Balloun, of Shook, Hardy & Bacon, L.L.P., Overland Park, argued the cause, and Scott C. Nehrbass, of the same firm, was with him on the briefs, for appellant.

Paul Hasty, Jr., of Wallace, Saunders, Austin, Brown and Enochs, Chartered, Overland Park, argued the cause, and Arlen L. Tanner of the same firm, was with him on the briefs, for appellees.

ABBOTT, Justice.

This appeal concerns a homeowner's insurance policy and comes before the court upon rehearing. Pursuant to an order issued April 10, 1998, we withdrew our previous opinion and granted a rehearing to examine further the full scope of our decision.

This is an appeal from summary judgment in favor of third-party defendant Safeco Insurance Company of America (Safeco). The Court of Appeals found no liability coverage under the Safeco policy issued to David Wayne Lee and his wife Kimberlee for David's alleged negligence concerning Kimberlee's murder of Douglas Brumley. Douglas was the adopted child of plaintiffs Delmar and Alberta Brumley (Brumleys). The Court of Appeals concluded that the death was not an "occurrence" as defined in the policy. The Brumleys petitioned for review.

Safeco cross-petitioned for review on the Court of Appeals' reversal of the district court's ruling that the exclusion for bodily injury "expected or intended by any insured" precluded coverage. The Court of Appeals decided that Catholic Diocese of Dodge City v. Raymer, 16 Kan.App.2d 488, 825 P.2d 1144, aff'd 251 Kan. 689, 840 P.2d 456 (1992), controlled. We exercised our jurisdiction under K.S.A. 20-3018(b) by granting both the petition and cross-petition for review.

We reverse summary judgment for Safeco. We decline to address Safeco's assertion that Douglas Brumley was an "insured" within the meaning of the policy. Safeco failed to appeal the district court's denial of summary judgment on that issue.

FACTS

In 1992, there were difficulties with some children in the Brumley household. Kimberlee, the Brumleys' daughter, and David Lee agreed to house and care for Douglas, age 4, until the problems were resolved. Both Kimberlee and David abused Douglas when he was in their care. Kimberlee struck Douglas in the abdomen. He died 2 days later. Both Kimberlee and David were convicted of crimes relating to the abuse and death of Douglas.

The Brumleys allege that David negligently caused or contributed to the death of Douglas. The petition seeks damages for wrongful death and for Douglas' pain and suffering. David filed a third-party petition against Safeco, alleging that Safeco, as liability insurer of the Lees' home, should indemnify him. Safeco denied liability under its policy. The Brumleys and Safeco stipulated that if the court decided that the policy provided coverage, then Safeco would pay the Brumleys the policy limits of $100,000. The claims against David were dismissed, and the case continued as a declaratory judgment action on the coverage issue.

Safeco filed two summary judgment motions, arguing no coverage existed because: (1) Douglas resided with the Lees and was an "insured" under the policy; and (2) the acts complained of were not a covered "occurrence" in the policy or, alternatively, the acts causing the bodily injury were intentionally inflicted by "any insured." The district court denied Safeco's first summary judgment motion, finding material issues of fact existed as to whether Douglas was an "insured." The second motion was granted on the alternative grounds.

We construe an insurance policy in a way that will give effect to the intention of the parties. If the language is ambiguous, the construction most favorable to the insured must prevail. If the policy is not ambiguous, we do not remake the contract; we enforce the contract as made. Patrons Mut. Ins. Ass'n v. Harmon, 240 Kan. 707, 713, 732 P.2d 741 (1987).

Our test for ambiguity was described in Raymer, 251 Kan. at 693, 840 P.2d 456:

"To be ambiguous, a contract must contain provisions or language of doubtful or conflicting meaning, as gleaned from a natural and reasonable interpretation of its language. Ambiguity in a written contract does not appear until the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning. [Citation omitted.]"

There are three policy provisions involved in this case: (1) the severability clause, (2) the intentional act clause, and (3) the occurrence or accident clause.

We turn now to the relevant severability policy provisions. Under "Section II--Exclusions" the Safeco policy provides:

"Coverage E--Personal Liability ... do[es] not apply to bodily injury or property damage:

a. which is expected or intended by any insured." (Emphasis added.)

Under "Section II--Conditions" the policy provides:

"Severability of Insurance. This insurance applies separately to each insured. This condition shall not increase our limit of liability for any one occurrence." (Emphasis added.)

The Brumleys rely on two cardinal rules of contract construction as support for their arguments that the severability clause renders ambiguous the application of the intentional act exclusion and the "occurrence" definition in this case: (1) that all pertinent provisions of an insurance policy must be considered together, other than in isolation, and given effect; and (2) that the test for ambiguity in an insurance policy is what a reasonably prudent insured would understand the language to mean, not what the insurer intends the language to mean. E.g., Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63, 115 S.Ct. 1212, 131 L.Ed.2d 76 (1995); Associated Wholesale Grocers, Inc. v. Americold Corp., 261 Kan. 806, Syl. p 2, 934 P.2d 65 (1997). "Where the terms of a policy are ambiguous or uncertain, conflicting, or susceptible of more than one construction, the construction most favorable to the insured must prevail." 240 Kan. at 713, 732 P.2d 741. "[T]he drafter must suffer the consequences of not making the terms clear." Lightner v. Centennial Life Ins. Co., 242 Kan. 29, 36, 744 P.2d 840 (1987).

Historically, we start with Upland Mutual Insurance, Inc. v. Noel, 214 Kan. 145, 519 P.2d 737 (1974), which held that one looks to the underlying theory of liability alleged to determine whether there was coverage. Noel was followed by Rose Constr. Co. v. Gravatt, 231 Kan. 196, Syl. p 1, 642 P.2d 569 (1982), wherein Justice, now Chief Justice, McFarland, speaking for a unanimous court, held: "An automobile insurance policy containing exclusionary and severability of interests clauses is construed to require that the exclusions are to be applied only against the insured for whom coverage is sought" and "that coverage as to each insured must be determined separately based on the facts applicable to each insured." 231 Kan. at 198, 642 P.2d 569.

Dicta in the Rose case would suggest that the use of "any insured" in the clause instead of "each insured" would have led to a different result. That dicta does not escape Safeco's attention. The majority does not feel bound by that dicta, and whether "any insured" would have led to a different result was not an issue before the court.

Next came the case of Catholic Diocese of Dodge City v. Raymer, 16 Kan.App.2d 488, 825 P.2d 1144, affirmed by this court in a separate opinion, 251 Kan. 689, 840 P.2d 456. In Raymer, a teenager who was an insured under his parents' homeowner's policy vandalized a school. The teenager's acts were...