Mendoza v. Rivera-Chavez

• Decision Date: 18 May 2000
• Docket Number: No. 66246-1.,66246-1.
• Citation: 999 P.2d 29,140 Wash.2d 659
• Parties: Jose MENDOZA and Elisa Mendoza, husband and wife, Respondents, v. Ramiro RIVERA-CHAVEZ and Jane Doe Chavez, husband and wife, Defendants, Leader National Insurance, Petitioner. Leader National Insurance, a foreign corporation, doing business in the State of Washington, Petitioner, v. Ramiro Rivera-Chavez, Respondent, Jose Mendoza and Elisa Mendoza, husband and wife; Salvador Ruiz; Alejendro M. Munos-Mancinas; Javier S. Beltron and the Heirs or Representatives of the Estate of Evelio Ochoa Ramirez, Respondents.
• Court: Washington Supreme Court

999 P.2d 29

140 Wash.2d 659

Jose MENDOZA and Elisa Mendoza, husband and wife, Respondents, v. Ramiro RIVERA-CHAVEZ and Jane Doe Chavez, husband and wife, Defendants, Leader National Insurance, Petitioner.

Leader National Insurance, a foreign corporation, doing business in the State of Washington, Petitioner, v. Ramiro Rivera-Chavez, Respondent, Jose Mendoza and Elisa Mendoza, husband and wife; Salvador Ruiz; Alejendro M. Munos-Mancinas; Javier S. Beltron and the Heirs or Representatives of the Estate of Evelio Ochoa Ramirez,

Respondents.

No. 66246-1.

Supreme Court of Washington.

Argued February 15, 2000.

Decided May 18, 2000.

Debra Stephens, Bryan Patrick Harnetiaux, Harbaugh & Bloom, Gary Neil Bloom, Spokane, Amicus Curiae on Behalf of Washington State Lawyers Association.

Weeks & Skala, James Daniel Maloney, Roland Louis Skala, Yamika, for Petitioner.

Roy & Boutillier, Theodore Archie Roy, Yakima, Roy & Boutillier, Kevin Michael

Roy, Selah, D. Bruce Morgan, Newcastle, for Respondent.

SANDERS, J.

We are asked whether a clause in an automobile insurance policy which excludes coverage for use of the vehicle "in the commission of any felony" is ambiguous or void as against public policy. We hold, following Mutual of Enumclaw Ins. Co. v. Wiscomb, 97 Wash.2d 203, 643 P.2d 441 (1982), the clause is void as against public policy. Accordingly, we affirm the Court of Appeals and remand.

I. Facts

Eliza and Jose Mendoza were seriously injured when their Nissan pickup was in a head on collision with a Subaru station wagon that had crossed the centerline of the road. One of the passengers in the Subaru died as a result of the accident. The Subaru driver, Ramiro Rivera-Chavez, admitted he was intoxicated at the time of the accident and pleaded guilty to one count each of vehicular assault and vehicular homicide, both felonies.

The Mendozas brought a personal injury lawsuit against Rivera-Chavez that was settled by entry of judgment for $150,000. The Mendozas then obtained a writ of garnishment directed to Leader National Insurance Company (Leader), one of Rivera-Chavez's insurers at the time of the accident. In a separate suit, Leader sought a declaratory judgment to determine coverage under its policy as to claims by the Mendozas and the other passengers. The garnishment proceedings and Leader's declaratory action were consolidated. Cross motions for summary judgment were brought. Leader argued that both the felony exclusion and the migrant workers' exclusion in the insurance policy precluded coverage. The trial court ordered summary judgment in favor of Leader denying coverage on the basis of the migrant workers exclusion only, and awarded Leader reasonable attorney fees pursuant to RCW 6.27.230 because it prevailed in a controverted garnishment proceeding. The Mendozas appealed and Leader cross-appealed the denial of summary judgment on the basis of the felony exclusion. The Court of Appeals reversed the trial court's grant of summary judgment to Leader on the migrant workers exclusion, affirmed the denial of summary judgment to Leader on the felony exclusion and remanded the case for trial. Mendoza v. Rivera-Chavez, 88 Wash.App. 261, 273, 945 P.2d 232 (1997). Leader then petitioned this court for review, which was granted only on the validity of the insurance policy exclusion for automobiles used in the commission of a felony. 135 Wash.2d 1005, 959 P.2d 125 (1998).

II. Standard of Review

The issue before this court is whether Leader is entitled to summary judgment on the felony exclusion issue. Although summary judgment is proper only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law when all facts and inferences are resolved in favor of the nonmoving party, CR 56(c), Failor's Pharmacy v. Department of Soc. & Health Servs., 125 Wash.2d 488, 493, 886 P.2d 147 (1994), the question here presented, however, is one of law, not fact.

III. Analysis

The Mendozas ask us to strike down the felony exclusion in Leader's insurance policy because it violates public policy. We agree the Leader exclusion is broad enough to encompass felonies (such as vehicular homicide and vehicular assault) which depend on the extent of injury to the victim of the accident rather than the risk to the insurer. Therefore, following Wiscomb, 97 Wash.2d 203, 643 P.2d 441, we hold the Leader felony exclusion to be void as against public policy and need not address claims of ambiguity.

It is well established that insurance companies may limit their liability unless the limitation is contrary to public policy. Brown v. Snohomish County Physicians Corp., 120 Wash.2d 747, 753, 845 P.2d 334 (1993). "Public policy" is a nebulous term and on the whole, courts are reluctant to hold that a clause in an insurance policy is in violation of public policy. Boeing Co. v. Aetna Cas. & Sur. Co., 113 Wash.2d 869, 876 n. 1, 784 P.2d 507, 87 A.L.R.4th 405 (1990). In order to give more meaning to the term, it has been held that a contract will not violate public policy unless it is "`prohibited by statute, condemned by judicial decision, or contrary to the public morals.'" State Farm Gen. Ins. Co. v. Emerson, 102 Wash.2d 477, 481, 687 P.2d 1139 (1984) (quoting 17 C.J.S. Contracts § 211, at 1024 (1963)).

This court has been careful to look to a particular statute to guide it in defining public policy. We will not make public policy from whole cloth. For example, although the courts have found relevant statutes in the area of motor vehicle insurance (the financial responsibility act (FRA) (RCW 46.29) and the underinsured motorist statute (RCW 48.22.030)), they have failed to find similar statutes relating to homeowners' insurance. As a result, "family members" exclusion clauses which have been held to violate public policy based on the FRA with respect to automobile insurance (Wiscomb, 97 Wash.2d 203, 643 P.2d 441) have been held not to violate public policy in the context of homeowners insurance (Emerson, 102 Wash.2d 477, 687 P.2d 1139; see also Cary v. Allstate Ins. Co., 78 Wash.App. 434, 897 P.2d 409 (1995),

aff'd,

130 Wash.2d 335, 922 P.2d 1335 (1996)).

In the present case, the relevant statutes for determining public policy are the FRA and the mandatory liability insurance act (RCW 46.30).

The FRA requires a driver to provide proof of insurance or financial security after an accident has occurred failing which the driver's license will be suspended (RCW 46.29.060-46.29.240) and, in certain situations, requires a driver who has had his or her license suspended or revoked to prove financial responsibility for the future before the license is renewed (RCW 46.29.250-46.29.440). Schermer states that:

the function of the security suspension provisions [which are implicated following an accident] is to pressure an uninsured or financially irresponsible motorist into paying damages arising out of a past accident, while the function of the certification provisions [for proof of future responsibility] is to secure the public against damages which may arise out of future accidents.

2 Irvin E. Schermer, Automobile Liability Insurance 3D, § 20.01, at 20-3 (1995).

The FRA is aimed at protecting the public from motorists who are unable to compensate the victims of accidents. Washington courts have recognized this strong public policy behind the statute. LaPoint v. Richards, 66 Wash.2d 585, 590, 403 P.2d 889 (1965) ("Manifestly the purpose of the Financial Responsibility Act is for the protection of the public."); Emerson, 102 Wash.2d at 482, 687 P.2d 1139 ("The focus on innocent victims in automobile exclusion clauses is improper because the purpose of the financial responsibility act and uninsured motorist statute is to protect them."); Tissell v. Liberty Mut. Ins. Co., 115 Wash.2d 107, 112, 795 P.2d 126 (1990) ("We began with the premise that the financial responsibility act, RCW 46.29, states a public policy in favor of full compensation for accident victims.").

Leader strenuously argues the FRA is no longer a source of public policy since the passage of the mandatory liability insurance act (RCW 46.30.010-46.30.901), which took effect in 1990. Pet. for Review at 18-19; Supplemental Br. of Pet. at 4-6. Leader focuses on a provision in the FRA which states, "This chapter shall not be held to apply to or affect policies of automobile insurance against liability which may now or hereafter be required by any other law of this state" (RCW 46.29.510(1)), and points to the provision of the mandatory liability insurance act which states that it is not intended to "modify, amend, or invalidate existing insurance contract terms, conditions, limitations, or exclusions" (RCW 46.30.010). However, this argument loses the forest for the trees. The relationship between the two statutes is one of harmony rather than discord: the public policy of protecting victims from careless drivers is reinforced rather than marred by the mandatory liability insurance act, which specifically states It is a privilege granted by the state to operate a motor vehicle upon the highways of this state. The legislature recognizes the threat that uninsured drivers are to the people of the state. In order to alleviate the threat posed by uninsured drivers it is the intent of the legislature to require that all persons driving vehicles registered in this state satisfy the financial responsibility requirements of this chapter.

RCW 46.30.010.

Indeed, we have previously agreed mandatory insurance would strengthen the policy behind the FRA. Wiscomb, 97 Wash.2d at 207, 643 P.2d 441 ("Thus, to the greatest extent possible without requiring mandatory insurance coverage, the Legislature has demonstrated its intended policy...."). Therefore, contrary to Leader's argument, both the FRA and the mandatory liability insurance act express a strong public policy in favor of compensating the victims of road accidents.

In considering the public...