Catholic Diocese of Dodge City v. Raymer
| Decision Date | 30 October 1992 |
| Docket Number | No. 66677,66677 |
| Citation | 251 Kan. 689,840 P.2d 456 |
| Parties | , 78 Ed. Law Rep. 1082 The CATHOLIC DIOCESE OF DODGE CITY, Plaintiff-Appellant, v. Chad A. RAYMER, Anthony Hammeke, Terry Raymer, Teresa Raymer, Allan Hammeke, and Brenda Hammeke, Defendants, v. FARMERS INSURANCE CO., INC., Garnishee-Appellee. |
| Court | Kansas Supreme Court |
Syllabus by the Court
1. The general rules for interpreting an insurance policy are stated and applied.
2. In Kansas, the general rule is that exceptions, limitations, and exclusions to insuring agreements require a narrow construction on the theory that the insurer, having affirmatively expressed coverage through broad promises, assumes a duty to define any limitations on that coverage in clear and explicit terms.
3. Under the specific facts of this case, in construing exclusionary and severability of interests clauses contained in a homeowners insurance policy, it is held that the exclusions in the policy are to be applied only against the insured for whom coverage is sought.
Robert S. Lannin, of Croker, Huck, Kasher, Lanphier, DeWitt & Anderson, P.C., Omaha, Neb., argued the cause, and Martin J. Keenan, of Keenan & Boeckman, Great Bend, was with him on the briefs, for plaintiff-appellant.
Jerry M. Ward, of Ward Law Office, Great Bend, argued the cause, and was on the brief, for garnishee-appellee.
Plaintiff Catholic Diocese of Dodge City (Catholic Diocese) appeals the district court's finding in a garnishment proceeding that intentional damage to property caused by an insured minor is excluded from coverage under the provisions of the insurer's homeowners policy. The Court of Appeals reversed the district court and remanded the cause with directions, finding that although the damage caused by the child's intentional act was intended to be excluded from coverage, the policy's severability clause made the policy ambiguous; therefore, the parents' negligent failure to supervise their child was covered by the policy. Catholic Diocese of Dodge City v. Raymer, 16 Kan.App.2d 488, 825 P.2d 1144 (1992). We accepted Farmers Insurance Co., Inc.'s (Farmers) petition for review. After review, we affirm the Court of Appeals.
Anthony Hammeke, a minor, participated in acts of vandalism at a school. The Catholic Diocese, owner of the school, filed a petition against Anthony and his parents, Allan and Brenda Hammeke, alleging a cause of action (1) for property damage against Anthony; (2) for property damage against Allan and Brenda based on their failure to exercise reasonable parental care in controlling and supervising Anthony; and (3) on their statutory liability, pursuant to K.S.A. 38-120, for the damages intentionally caused by Anthony. Farmers, Allan and Brenda's homeowners insurance carrier, was notified of the action.
Subsequently, the district court entered a default judgment in rem against Allan and Brenda Hammeke for failure to exercise reasonable parental care in controlling and supervising Anthony and awarded damages of $18,858.67. The Catholic Diocese then filed for an order of garnishment against Farmers. Farmers filed an answer to the garnishment, claiming it was not indebted to Allan and Brenda under their homeowners insurance policy because the policy did not cover property damage either expected or intended by the policy insureds. Both parties filed motions for summary judgment. The district court found that the intentional act of any insured was not covered by the homeowners policy and granted Farmers' motion for summary judgment.
The Catholic Diocese appealed, raising three issues: (1) Farmers is bound by the default judgment finding Allan and Brenda negligent in supervising Anthony because it refused to defend its insured rather than seek a declaratory judgment on its duty to defend or reserve its rights in the lawsuit; (2) under the policy language "an insured" should be equated with "the insured," so the exclusion from coverage does not operate against Allan and Brenda; and (3) the language of a severability of interests clause in the policy makes the policy's exclusionary provision ambiguous, thereby providing coverage for Allan and Brenda's negligent act of supervising their child. The Court of Appeals found that the Catholic Diocese's first two claims had no merit, but determined the insurer's insertion of a severability of interests clause into its insurance policy made ambiguous the otherwise unambiguous language of the policy's exclusion for intentional acts by an insured. The Court of Appeals reversed the district court's award of summary judgment to Farmers in the garnishment action and remanded the cause with instructions to enter summary judgment for the Catholic Diocese. We granted Farmers' petition for review.
Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. When a summary judgment is challenged on appeal, an appellate court must read the record in the light most favorable to the party who defended against the motion for summary judgment. Patterson v. Brouhard, 246 Kan. 700, 702-03, 792 P.2d 983 (1990). The parties agree there are no controverted material facts.
The construction of a written instrument is a question of law, and the instrument may be construed and its legal effect determined by an appellate court. Whether an ambiguity exists in a written instrument is a question of law to be decided by the court. Kennedy & Mitchell, Inc. v. Anadarko Prod. Co., 243 Kan. 130, 133, 754 P.2d 803 (1988).
The pertinent provisions of the homeowners policy are as follows:
1. Under Section II-Liability, occurrence means: a sudden event, including continuous or repeated exposure to the same conditions, resulting in bodily injury or property damage neither expected nor intended by the insured.
....
7. Insured means you and the following persons if permanent residents of your household:
a. your relatives.
b. anyone under the age of 21.
....
"Exclusions
....
....
3. Either:
a. caused intentionally by or at the direction of an insured, or
b. resulting from any occurrence caused by an intentional act of an insured person where the results are reasonably foreseeable.
....
"Conditions
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2. Separate Insurance. This insurance applies separately to each insured. This condition does not increase our limit of liability for any one occurrence."
Because the Catholic Diocese did not request that we review the Court of Appeals' rejection of its first two claims, the only question for this court to determine is whether the homeowners policy's severability of interests clause makes ambiguous the otherwise unambiguous language of the policy's exclusion for intentional acts by an insured, thereby providing coverage to the parents for their alleged negligent supervision of their child.
The Catholic Diocese asserts the policy's severability of interests clause, which states, "This insurance applies separately to each insured," makes the policy's exclusionary provision ambiguous. Farmers argues the plain language of its policy excludes coverage for the damages sought to be recovered by the Catholic Diocese in its action against Allan and Brenda.
The language of a policy of insurance, like any other contract, must, if possible, be construed in such manner as to give effect to the intention of the parties. Where the terms of a policy of insurance are ambiguous or uncertain, conflicting, or susceptible of more than one construction, the construction most favorable to the insured must prevail. Since the insurer prepares its own contracts, it has a duty to make the meaning clear. If the insurer intends to restrict or limit coverage provided in the policy, it must use clear and unambiguous language in doing so; otherwise, the policy will be liberally construed in favor of the insured. When an insurance contract is not ambiguous, the court may not make another contract for the parties. Its function is to enforce the contract as made. Patrons Mut. Ins. Ass'n v. Harmon, 240 Kan. 707, 713, 732 P.2d 741 (1987).
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. Patrons, 240 Kan. at 713, 732 P.2d 741.
The Court of Appeals noted that its initial reading of the exclusion indicated the property damage for which Allan and Brenda are alleged to be liable is not covered by the policy because the damage was intended by Anthony, an insured under the policy. In reaching the opposite conclusion, the Court of Appeals first discussed and distinguished two cases which determined that intentional acts of the insured were not covered under the homeowners policies.
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