Grinnell Mut. Reinsurance Co. v. Employers Mut. Cas. Co.
| Decision Date | 20 January 1993 |
| Docket Number | No. 91-1983,91-1983 |
| Citation | 494 N.W.2d 690 |
| Parties | GRINNELL MUTUAL REINSURANCE COMPANY, Appellee, v. EMPLOYERS MUTUAL CASUALTY COMPANY, Appellant. |
| Court | Iowa Supreme Court |
Marsha K. Ternus and Barbara A. Hering of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, for appellant.
Theodore T. Duffield of Patterson, Lorentzen, Duffield, Timmons, Irish, Becker & Ordway, Des Moines, for appellee.
Considered by LARSON, P.J., and CARTER, LAVORATO, NEUMAN, and ANDREASEN, JJ.
This case involves a dispute between Grinnell Mutual Reinsurance Company (Grinnell) and Employers Mutual Insurance Company (Employers) over the insurers' respective duties to defend and indemnify the insured, Grinnell-Newburg School District (School), for damages which arose from an accident in which Elizabeth Rhodes, a student, suffered injuries in attempting to exit a school bus negligently set in motion by Nathan Gray, one of her classmates. The district court found liability under the Employers business protection policy, notwithstanding the exclusion of coverage for "bodily injury ... arising out of the ownership, maintenance, operation, use, loading or unloading of any automobile ... owned or operated by ... any insured." Finding no error, we affirm the judgment of the district court.
The School was insured under both the Grinnell standard vehicle policy and the Employers business protection policy. Rhodes and Gray were students at Grinnell-Newburg Community School and, at the time of the accident, were about to embark with their class on a field trip led by Dana Melcher, an employee teacher of the School. Rhodes was injured when she jumped from the insured's school bus after it had been put in motion by Gray. The school bus had been left in gear, unlocked, and unattended with the keys in the ignition. No one was supervising the students at the time of the accident.
Rhodes and her parents filed suit against the School and Melcher for injuries suffered by Rhodes, claiming vehicle-related and nonvehicle-related negligence on the part of both defendants. Grinnell admitted potential liability under its automobile policy and undertook defense of the suit. Employers denied coverage under the motor vehicle exclusion contained in its policy and refused to participate in the defense of the suit or the settlement negotiations. The School's business protection policy with Employers contains the following language:
COVERAGE A--BODILY INJURY
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 A. bodily injury or
Coverage B. property damage
to which this insurance 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....
This insurance does not apply:
. . . . .
(b) to bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of
(1) any automobile ... owned or operated by or rented or loaned to any insured....
The suit was settled by Grinnell for $251,325.79. Grinnell also incurred $6,284.32 in defense expenses. Grinnell, after settling the suit, filed a petition for declaratory judgment under Iowa Rule of Civil Procedure 267 asking the court to determine the relative rights, duties and responsibilities of the insurers for the claims made against the School and Melcher. In addition, Grinnell sought a money judgment for contribution of fifty percent of the settlement and defense costs; each policy had identical exposure limits of $500,000. The parties submitted the case to the district court on stipulated facts and documents.
The district court found the School's nonvehicle-related acts of failing to properly supervise the students, as well as failing to promulgate and enforce reasonable safety rules regarding school bus loading procedures, were negligent acts and a proximate cause of Rhodes' injuries. Accordingly, the court entered judgment for Grinnell in the amount of $125,622.90 plus $3,142.16 for costs of defense. Employers appeals. The sole issue on appeal is whether the district court correctly applied the motor vehicle exclusion in the Employers business protection policy to the Rhodes' lawsuit.
This declaratory judgment action was filed and tried at law. Our review is on error. Grinnell Mut. Reinsurance Co. v. Voeltz, 431 N.W.2d 783, 785 (Iowa 1988). The district court's findings of fact have the effect of a jury verdict and are binding on us if supported by substantial evidence. Id.
Construction of an insurance policy and the interpretation of its language are matters of law for the court to decide, when as here, neither party offers extrinsic evidence about the meaning of the policy's language. Kalell v. Mutual Fire & Auto. Ins. Co., 471 N.W.2d 865, 866-67 (Iowa 1991). The district court's interpretation of the policy, therefore, is not binding on us. North Star Mut. Ins. Co. v. Holty, 402 N.W.2d 452, 455 (Iowa 1987). An insurance policy is construed as a whole, not by its separate provisions. Aid Ins. Co. v. United Fire & Casualty Co., 445 N.W.2d 767, 769 (Iowa 1989).
Coverage clauses are construed differently than exclusionary clauses. When construing coverage clauses, the words "arising out of" are given a broad, general and comprehensive meaning. Kalell, 471 N.W.2d at 867. Exclusionary clauses, however, require a narrow or restrictive construction. Id. Therefore, it is possible for the same language to be encompassed in the coverage of an automobile policy, yet not in the exclusion of a general liability policy. Id. A motor vehicle exclusion clause in a general liability policy acts to exclude only those injuries which are proximately caused by the vehicle. Id. at 868.
Employers argues Rhodes' injuries clearly arose out of the operation, use, loading or unloading of the School's bus because the bus was itself the instrumentality that caused the injury. All allegations of negligence, Employers maintains, are vehicle-related and fall within the terms of the motor vehicle exclusion. Therefore, Employers concludes, vehicle-related negligence must be the sole proximate cause of Rhodes' injuries. Employers urges the facts of this case are like those in Holty, where coverage was denied under the motor vehicle exclusion.
Grinnell urges the facts of the case establish separate acts of negligence, both vehicle-related and...
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