Columbia Mut. Ins. Co. v. Neal

• Decision Date: 02 March 1999
• Docket Number: No. 74163,74163
• Citation: 992 S.W.2d 204
• Parties: COLUMBIA MUTUAL INSURANCE COMPANY, Respondent, v. Dawn NEAL, Appellant.
• Court: Missouri Court of Appeals

Page 204

992 S.W.2d 204

COLUMBIA MUTUAL INSURANCE COMPANY, Respondent, v. Dawn NEAL, Appellant.

No. 74163.

Missouri Court of Appeals,

Eastern District,

Division Four.

March 2, 1999.

Motion for Rehearing and/or Transfer to

Supreme Court Denied May 5, 1999.

Application to Transfer Denied

June 29, 1999.

Joan M. Tanner, Gray & Ritter, P.C., St. Louis, for appellant.

Joan B. Bernstein, Gerre Langton, Evans & Dixon, L.L.C., St. Louis, for respondent.

GARY M. GAERTNER, Judge.

Appellant, Dawn Neal ("mother"), appeals the summary judgment entered by the Circuit Court of Jefferson County in favor of respondent, Columbia Mutual Insurance Company ("Columbia"), in its action seeking a declaration that Columbia's motor vehicle and household exclusions preclude coverage under its homeowners' policy. We reverse in part and remand in part.

On August 12, 1993, David A. Swan ("decedent"), mother's two-year-old son, was killed when James Cave ("Cave"), backed a vehicle owned by decedent's grandparents, Cecil and Sheila Cave ("grandparents"), over decedent. The accident occurred on grandparents' property.

On November 12, 1995, mother filed a petition for damages for wrongful death against grandparents and Cave. Count I against Cave alleged decedent was killed as a result of Cave's negligence in the operation of the 1983 GMC vehicle owned by grandparents. Count II against grandparents alleged they were negligent in the supervision of decedent.

On September 5, 1997 the wrongful death action was settled and the settlement was approved by the Circuit Court of Jefferson County. The claim against the driver, Cave, was settled for $25,000, the policy limit of the Hawkeye Security Insurance Company policy of automobile insurance on the vehicle. The claim against grandparents was settled for $100,000 with an agreement that, pursuant to statute, satisfaction of that judgment would be had only through the proceeds of the Columbia Mutual Insurance Company homeowners' policy issued to grandparents. Columbia provided a defense to grandparents in the wrongful death action filed by mother, under a reservation of rights, but grandparents dismissed Columbia's attorney and entered into the settlement agreement, described above, with mother.

On May 13, 1996, Columbia filed its petition for declaratory judgment seeking the declaration that the motor vehicle and household exclusions preclude recovery under the homeowners' policy issued by them to grandparents. On November 17, 1997, following discovery, Columbia filed a motion for summary judgment. Mother filed a response to the motion, wherein she admitted certain undisputed facts. The following are some of the facts the parties agree to. Decedent was born on April 12, 1991. Decedent and mother lived with grandparents from decedent's birth until the summer of 1991, during the fall and winter of 1991-92, and from the summer of 1992 until June of 1993. Mother had moved out of grandparents' house on three separate occasions, taking decedent with her each time. For the two months prior to decedent's death, he was staying with grandparents while mother was living in St. Louis and looking for a job. Decedent apparently slept in grandparents' bedroom. The arrangement, as understood by mother, was that decedent would stay with grandparents for an undetermined period of time until mother obtained employment in St. Louis. Grandmother does not recall the arrangement. Nobody disputes the fact mother could take decedent at any time. AFDC checks and food stamps for decedent were mailed to grandparents except for the periods of the summer of 1991 and spring and summer of 1992. It appears from the record that mother signed over the AFDC checks to grandparents. Based on statements from grandfather, decedent was not claimed as a dependent on their tax returns.

The parties also agree that on August 12, 1993, the date of the accident, there was in effect Homeowners' Policy No. HO100194, issued by Columbia to grandparents, which provided liability insurance with limits of $100,000 per occurrence and medical payments coverage with limits of $1,000. The homeowners' insurance policy provides for the following liability coverages:

COVERAGE E - Personal Liability

If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this insurance applies, we will:

1. pay up to our limit of liability for damages for which the insured is legally liable; and

2. provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent.

COVERAGE F - Medical Payments to Others

We will pay the necessary medical expenses that are incurred or medically ascertained within three years from the date of an accident causing bodily injury. * * * This coverage does not apply to you or regular residents of your household....

The homeowners' policy defines the relevant terms printed in bold.

1. "bodily injury" means bodily harm, sickness or disease, including required care, loss of services, and death that results.

3. "insured" means you and residents of your household who are:

a. your relatives; or

b. other persons under the age 21 and in the care of any person named above.

5. "occurrence" means an accident including exposure to conditions, which results, during the policy period in:

a. bodily injury; or

b. property damage.

The homeowners' policy excludes coverage for the following:

1. Coverage E - Personal Liability and Coverage F - Medical Payments to Others do not apply to bodily injury ...

e. arising out of:

(1) the ownership, maintenance, use, loading or unloading of motor vehicles ... owned or operated by or rented or loaned to an insured;

(2) the entrustment by an insured of a motor vehicle ... to any person; ...

2. Coverage E - Personal Liability does not apply to:

f. bodily injury to you or an insured within the meaning of Part a. or b. of "insured" as defined.

3. Coverage F - Medical Payments to others does not apply to bodily injury:

d. to any person other than a residence employee of an insured regularly residing on any part of the insured location.

Finally, the parties do not dispute that Cave, the driver of the vehicle that killed decedent, was not an insured under the homeowners' policy.

On March 24, 1998, the court granted Columbia's motion for summary judgment. In its conclusions of law, the court found the exclusion for liability coverage for bodily injury suffered by an insured was applicable because decedent was a resident of grandparents' household at the time of death, and the medical payments coverage was excluded for the same reason. The court also found the motor vehicle exclusion applied because the negligence of the grandparents in adequately supervising decedent was not independent of or divisible from the use of a motor vehicle. Mother filed a timely notice of appeal.

Mother raises two points on appeal. In her first point, mother contends the trial court erred in granting summary judgment in favor of Columbia on the basis that the automobile exclusion applies because mother's claim against grandparents is one for negligent supervision of a minor, which is independent of and distinct from the use of a vehicle. We agree with mother.

The standard of review of a summary judgment is de novo. ITT Commercial Finance v. Mid-Am. Marine, 854 S.W.2d 371, 376 (Mo.banc 1993). We "review the record in the light most favorable to the party against whom judgment was entered[,]" and accord that party the benefit of all inferences which may reasonably be drawn from the record. Id. A summary judgment order is proper if there is an absence of disputed issues of material fact and the movant has demonstrated that it is entitled to judgment as a matter of law. Id. at 380.

When an insurance company relies upon a policy exclusion to deny coverage, the burden is on the insurance company to prove the facts which make the exclusion applicable. Harold S. Schwartz v. Continental Cas., 705 S.W.2d 494, 498 (Mo.App. E.D.1985); Walters v. State Farm Mut. Auto. Ins., 793 S.W.2d 217, 219 (Mo.App. S.D.1990). When reviewing the policy, "[w]e will construe the exclusion clause strictly against the insurer." Killian v. State Farm Fire and Cas. Co., 903 S.W.2d 215, 217 (Mo.App. W.D.1995). In Killian, the minor plaintiff was injured while driving a neighbor's moped. Id. The plaintiff sued the insureds for negligent supervision and negligent entrustment of the moped. The homeowners' policy specifically excluded claims for negligent supervision by any insured of any person and claims for negligent entrustment by any insured to any person. Id. at 218. Therefore, the court found there was no coverage based on the two explicit exclusions in the insureds' homeowners policy. Id.

In Centermark Properties v. Home Indem., 897 S.W.2d 98, 101 (Mo.App. E.D.1995), the court found coverage under a commercial general liability policy, specifically finding that the automobile exclusion did not apply to a claim of negligent supervision of the insured's employees. In Centermark, the negligent supervision and training of employees led to a third person stealing a vehicle off insured's lot and colliding with the injured party. The court found coverage based on the fact that there were "allegations of negligence that appear independent of ownership, maintenance, operation, or use of an automobile...." Id. at 101. Further, the court noted, "[I]t is widely accepted that where an insured risk and an excluded risk constitute concurrent proximate causes of an accident, a liability insurer is liable so long as one of the causes is covered by the policy."... Id. In finding the insurance company obligated to defend and indemnify because one of the causes of the accident was covered by the policy, the court noted, " ....while one proximate cause of the damage may have been the use of an automobile owned by Centermark, which was...