Gilbreath Through Hassl v. St. Paul Fire and Marine Ins. Co., 1
| Decision Date | 17 May 1983 |
| Docket Number | No. 1,CA-CIV,1 |
| Citation | 141 Ariz. 113,685 P.2d 750 |
| Parties | Michelle GILBREATH, a minor, Through her natural mother and next friend, Diana HASSL, formerly Diana Vayda; Diana Hassl, Plaintiffs-Appellees, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a corporation, Defendant-Appellant. 5590. |
| Court | Arizona Court of Appeals |
This is an appeal by St. Paul Fire and Marine Insurance Company (Insurer) from a declaratory judgment in favor of Michelle Gilbreath (Michelle) holding the Insurer liable under its policy No. 689NA4386 which insured Paul and Helen Overdorff (Overdorffs), owners and operators of a business named Young Years Child Care, irrespective of Endorsement Number 2 of the policy.
Two issues are presented in this appeal:
(1) Whether the trial court erred in its interpretation of the Endorsement phrase "care, custody, or control of the insured" and in granting judgment to appellees based on that interpretation?
(2) Whether the trial court erred in denying appellant's collateral attack upon the portion of the underlying tort judgment in favor of appellee Diana Hassl individually?
The facts underlying this appeal are simple and not in dispute. Paul and Helen Overdorff were the owners of a sole proprietorship business named Young Years Child Care. They hired as an employee Pedro Giron. In December 1976, appellee Michelle Gilbreath, then eight years old, was sexually assaulted by Giron while he was in the course of his employment with Young Years.
Prior to the assault, on September 1, 1976, appellant St. Paul Fire and Marine Insurance Company had issued to the Overdorffs its general policy upon the premises of Young Years for fire, bodily injury liability, property damage liability, and burglary loss. Endorsement Number 2 to the liability portion of the policy consisted of the following provision:
It is understood and agreed that no coverage is provided for bodily injury to persons who are in care, custody, or control of the Insured.
A lawsuit was filed by Michelle's mother, appellee Diana Hassl (Diana), individually and as representative for Michelle, against the Overdorffs and Giron, alleging negligence, breach of contract and intentional tort. The Overdorffs tendered the defense of the tort action to the Insurer based upon the above policy, but the tender was refused, based upon Endorsement Number 2. The Overdorffs then stipulated to a judgment against them in favor of Michelle for $100,000 and Diana for $45,000. The appellees then filed an action seeking a declaratory judgment finding coverage under the policy issued by the Insurer. Both Michelle and the Insurer filed motions for summary judgment. The trial court granted Michelle's motion and denied the Insurer's. The Insurer had also requested that the trial court declare void the judgment in favor of Diana based on an alleged error of law. This request was impliedly denied by the summary judgment in favor of Michelle and Diana and the denial of the Insurer's motion. Appellant timely appealed from the judgment.
The first issue is whether Endorsement Number 2 to the liability policy was correctly interpreted not to exclude coverage for the liability sustained by the Overdorffs in the underlying tort judgment. The Insurer argues that the provision unambiguously excludes liability because Michelle was clearly in the care, custody or control of Paul and Helen Overdorff operating the business known as Young Years Child Care. The Insurer further argues that anyone in the care of Young Years is in the care of the Overdorffs, whether she is in the personal care of the Overdorffs, or in the care of an agent or employee of the Overdorffs. The Insurer argues appellees' construction would require the wording "in the personal and physical care, custody or control of the Insured."
Michelle and Diana argue that the key word in interpreting the exclusionary phrase is the word "insured." They argue that Giron clearly is not an insured under the policy. They reason that Insurer's construction would require the wording, "in the care, custody, or control of the Insured and his agents." At any rate, appellees argue the exclusion is ambiguous, and therefore must be construed against the interpretation argued by the Insurer.
In Cagle v. Home Insurance Co., 14 Ariz.App. 360, 483 P.2d 592 (1971), we quoted the Arizona Supreme Court's statement regarding the rules of construction applicable to an insurance contract as follows:
14 Ariz.App. at 363, 483 P.2d at 595. See Dairyland Mutual Insurance Co. v. Anderson 02 Ariz. 515, 517, 433 P.2d 963, 965 (1967). A.R.S. § 20-1119, involving the construction of insurance policies, provides: "Every insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended or modified by any rider, endorsement or application attached to and made a part of the policy." Regarding endorsements to the contract of insurance, the rules of construction are the same as outlined in Cagle.
The intention of the parties to an insurance contract is controlling, D.M.A.F.B. Fed. Cr. U. v. Employers Mut. L. Ins. Co. of Wis., 96 Ariz. 399, 402, 396 P.2d 20, 22-23 (1964), and all of the policy, including the endorsement must be read as a whole. Droz v. Paul Revere Life Insurance Company, supra [1 Ariz.App. 581, 405 P.2d 833 (1965) ]. "In so far * * * as a rider or indorsement modifies, qualifies, or restricts the terms of the original policy, the rider or indorsement controls." 1 Couch on Insurance 2d, § 15.30, at 701; and see, to the same effect, Lax v. Fidelity and Casualty Company of New York, 74 N.M. 123, 391 P.2d 411, 413 (1964), and McConnell v. Underwriters at Lloyds of London, 56 Cal.2d 637, 16 Cal.Rptr. 362, 364, 365 P.2d 418, 420 (1961).
Reserve Insurance Co. v. Staats, 9 Ariz.App. 410, 412, 453 P.2d 239, 241 (1969).
Insurer's policy No. 689NA4386 is divided into an Index page, a Declarations page, a General Conditions section and four Insuring Agreements described generally above. The named insured in the Declarations are:
On the Declarations page, the form of the named insured's business is marked Individual, while the boxes for indicating Co-partnership, Corporation, Joint Venture and Other are left blank. The Declarations state that, "The limit of the Company's liability for each coverage of each Insuring Agreement or endorsement shall be as indicated therein, subject to all the terms of this policy having reference thereto."
Insuring Agreement 36 contracts to cover the named insured under Coverages and The coverages are described as follows:
2. Coverages
Coverage D; Property Damage Liability Other Than Automobile.
The Company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of:
Coverage B. Bodily injury; or
Coverage D. Property damage;
to which this Insuring Agreement applies, caused by an occurrence, and the Company shall have the right and duty 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, and may make such investigation and settlement of any claim or suit as it deems expedient, but the Company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the Company's liability has been exhausted by payment of judgments or settlements.
The Agreement also provides:
5. SPECIAL CONDITIONS.
A. Persons Insured.
Each of the following is an insured under this Insuring Agreement to the extent set forth below:
* * *
* * *
As respects Coverages B and D.
(e) If the Named Insured is designated in this Policy as an individual, the person so designated but only with respect to the conduct of a business of which he is the sole proprietor, and the spouse of the Named Insured with respect to the conduct of such a business;
(f) If the Named Insured is designated in this Policy as a partnership or joint venture, the partnership or joint venture so designated and any partner or member thereof but only with respect to his liability as such;
(g) If the Named Insured is designated in this Policy as other than an individual,...
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Gilbreath Through Hassl v. St. Paul Fire and Marine Ins. Co., 17021-PR
...d/b/a Young Years Child Care, provided no coverage for injuries sustained by either plaintiff. Gilbreath v. St. Paul Fire & Marine Ins. Co., 141 Ariz. 113, 685 P.2d 750 (App.1984). We have jurisdiction pursuant to Ariz. Const., art. 6, § 5(3) and Ariz.R. of Civ.App.P. 23, 17A A detailed ver......
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