Douglass v. Hartford Ins. Co.

• Citation: 602 F.2d 934
• Decision Date: 07 August 1979
• Docket Number: No. 78-1616,78-1616
• Parties: Orville DOUGLASS and Wilma Douglass, Plaintiffs-Appellees, v. HARTFORD INSURANCE COMPANY, a Connecticut Insurance Corporation, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 934

602 F.2d 934

Orville DOUGLASS and Wilma Douglass, Plaintiffs-Appellees, v. HARTFORD INSURANCE COMPANY, a Connecticut Insurance

Corporation, Defendant-Appellant.

No. 78-1616.

United States Court of Appeals, Tenth Circuit.

Submitted Nov. 22, 1978.

Decided Aug. 7, 1979.

Jerry A. Retherford and L. Dan Rector, of Rector, Retherford, Mullen & Johnson, Colorado Springs, Colo., for defendant-appellant.

Richard W. Laugesen, Jr., of DeMoulin, Anderson, Campbell & Laugesen, Denver, Colo., for plaintiffs-appellees.

Before DOYLE, McKAY and LOGAN, Circuit Judges.

LOGAN, Circuit Judge.

This is an appeal by the Hartford Insurance Company (Hartford) from a district court judgment holding Hartford had the duty under one of its homeowner policies to defend the insured against a negligent entrustment suit. Jurisdiction is based upon diversity of citizenship and the Federal Declaratory Judgment Act, 28 U.S.C. § 2201.

We must decide whether Colorado would recognize negligent entrustment as an actionable tort, and whether the trial court correctly determined Hartford must defend this type of lawsuit under the circumstances of this case.

Plaintiffs-Appellees Orville and Wilma Douglass had in effect a homeowners policy extending general liability insurance coverage to themselves and their ten-year-old son Robert Ricky Douglass. During that time, a minibike the son was driving was struck by a truck, killing the boy and severely injuring his passenger, Todd Mahoney. The boys apparently were riding the minibike around a course which included the Mahoney's U-shaped driveway (adjacent to the Douglass residence) and portions of an adjacent county road. The accident occurred on the county road near the entrance to the driveway, when the bike drove in front of the oncoming truck.

The Douglasses requested Hartford investigate the accident and provide a defense under the homeowners policy in the event Mahoney sues, relying on the general liability insurance coverage language of the policy which reads:

This Company agrees to pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury or property damage, to which this insurance applies, caused by an occurrence. This Company shall have the right and duty, at its own expense, to defend any suit against the Insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, but may make such investigation and settlement of any claim or suit as it deems expedient.

Hartford denied any obligation, citing an exclusion to the general liability coverage as follows:

This policy does not apply: . . . to bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of:

(3) any recreational motor vehicle owned by any Insured, if the bodily injury or property damage occurs away from the residence premises;

The Douglasses then filed this action. Colorado law controls.

A hearing was held by the district court on opposing motions for summary judgment, the Douglasses claiming the recreational vehicle exclusion did not apply and the insurance company had a duty to defend; Hartford contended the opposite. The trial court ruled the minibike was a recreational vehicle within the meaning of the policy, and the accident occurred away from the residence premises. Although the Douglasses make arguments on those rulings in their brief, they did not cross-appeal and we do not treat their arguments.

The trial court, however, drew a distinction between tort liability arising out of the negligent use of the minibike and the liability of Mr. and/or Mrs. Douglass for the negligent act of entrusting their 10-year-old son with the minibike. It said:

(T)he gist of the action, the gravamen, if you will, is not the use of the motor vehicle, which arguably establishes a basis for these exclusions of the policy to become operative, but rather the gist or the gravamen of the tort is the failure to control and the failure to supervise what amounts to a dangerous instrumentality; and that is a ten year-old child with a self-propelled vehicle or projectile such as this minibike.

Relying upon the language and reasoning of Upland Mutual Ins., Inc. v. Noel, 214 Kan. 145, 519 P.2d 737 (1974), the court held that Hartford had a duty to defend Mr. and Mrs. Douglass against a negligent entrustment action arising from this accident. The trial court noted Colorado had not specifically recognized negligent entrustment as a tort, but said, "Since Colorado recognizes prima facie torts in other respects, I see no reason why they wouldn't recognize it here."

To date no suit has been filed, but the six-year-old passenger, Todd Mahoney, admittedly was seriously injured and the statute of limitations will not begin to run at least until he reaches the age of majority. The likelihood of suit on the negligent entrustment theory, and the need for investigative work to prepare a defense, seem sufficient to support jurisdiction and our consideration of the issues. No one argues to the contrary.

Colorado courts have not recognized the tort of negligent entrustment in those precise words. But in Dickens v. Barnham, 69 Colo. 349, 194 P. 356 (1920), a father was found to be negligent for allowing his eight-year-old son to have access to a rifle which the boy discharged, injuring a passerby. The court concluded:

A father may be liable on the ground that his own act in permitting the child to have access to some instrumentality potent for mischief is, in view of the child's want of capacity properly to manage it, the proximate cause of the injury.

194 P. at 357.

Hartford characterizes Dickens as recognizing a parent's liability for negligent supervision, but not negligent entrustment. The insurance company also contends there is a difference between an inherently dangerous instrumentality such as a rifle and the minibike involved here. Noting most negligent entrustment cases arise from automobile accidents, Hartford asserts imputing liability here to the parent effectively causes parents to be liable for their children's torts, contrary to Colorado law. See Mitchell v. Allstate Ins. Co., 36 Colo.App. 71, 534 P.2d 1235 (1975); Reaves v. Horton, 33 Colo.App. 186, 518 P.2d 1380 (1973), Aff'd in part, rev'd in part, 186 Colo. 149, 526 P.2d 304 (1974).

Negligent entrustment is a common law tort, recognized in virtually every state. The Restatement (Second) of Torts § 308 (1965) states the rule as follows:

It is negligence to permit a third person to use a thing or to engage in an activity which is under the control of the actor, if the actor knows or should know that such person intends or is likely to use the thing or to conduct himself in the activity in such a manner as to create an unreasonable risk of harm to others.

The illustrations and comments to § 308 clearly indicate the tort applies to automobiles and weapons. Professor Prosser points out negligent entrustment is based on the negligence of the entruster, and says:

A parent, for example, like anyone else, may be negligent in entrusting to a child a dangerous instrument such as a gun, or a thing which he has shown a propensity to misuse, such as matches, or an automobile, or in leaving such a thing where it is accessible to him. (Footnotes omitted.)

W. Prosser, Torts § 123 (4th ed. 1971). Another commentator states "(t)he crux of the negligence is the knowledge of the entruster of the youth, inexperience, known propensity towards reckless and irresponsible behavior, or other quality of the entrustee, indicating the possibility that he will cause injury." 1 J. Dooley, Modern Tort Law § 23.01 (1977).

There is a logical distinction between negligent entrustment, which may apply to any person entrusting a potentially dangerous instrumentality to a third person, and the duty of parents to control and supervise their children. The Restatement (Second) of Torts recognizes the distinction in §...