Phillips v. Estate of Greenfield

• Decision Date: 21 September 1993
• Docket Number: MID-CENTURY,No. 72,060,72,060
• Citation: 1993 OK 110,859 P.2d 1101
• Parties: Gary PHILLIPS, father and next friend of Michelle Dawn Phillips, a female minor child under the age of eighteen (18) years, Plaintiff/Appellant, v. The ESTATE OF Rocky Paul GREENFIELD, Deceased, Ricky P. Greenfield, individually, and Ronald Curtis Underwood, individually, Defendants, v. STATE FARM FIRE AND CASUALTY COMPANY, an Illinois corporation, and/or State Farm General Insurance Company, an Illinois corporation, Garnishee/Appellee, v.INSURANCE COMPANY, Intervenor/Appellant.
• Court: Oklahoma Supreme Court

Page 1101

859 P.2d 1101

1993 OK 110

Gary PHILLIPS, father and next friend of Michelle Dawn

Phillips, a female minor child under the age of

eighteen (18) years, Plaintiff/Appellant, v. The ESTATE OF Rocky Paul GREENFIELD, Deceased, Ricky P.

Greenfield, individually, and Ronald Curtis

Underwood, individually, Defendants, v. STATE FARM FIRE AND CASUALTY COMPANY, an Illinois

corporation, and/or State Farm General Insurance

Company, an Illinois corporation, Garnishee/Appellee, v. MID-CENTURY INSURANCE COMPANY, Intervenor/Appellant.

No. 72,060.

Supreme Court of Oklahoma.

Sept. 21, 1993.

Certiorari to the Court of Appeals, Division IV; Appeal from the District Court of Oklahoma County; Jack R. Parr, Trial Judge.

Michelle Phillips, a passenger on a motorcycle driven by Rocky Greenfield was injured in an accident occurring on a public road. Phillips sued Rocky's father, Ricky Greenfield for negligent supervision or failure to control Rocky and he confessed judgment. Phillips then brought a garnishment action against State Farm Fire and Casualty Company and/or State Farm General Insurance, Ricky Greenfield's homeowner's insurance carrier. Phillips' uninsured motorist insurer, Mid-Century Insurance Company, intervened. The trial court granted summary judgment for State Farm. Phillips and Mid-Century appealed asserting the homeowner's policy did not exclude coverage for negligent supervision or failure to control. The Court of Appeals affirmed. We granted certiorari. Held: The homeowner's policy in clear and unambiguous language excludes coverage where an injury arises out of the use of a motor vehicle owned or operated by an insured and the undisputed facts show the instant injury arose out of the use of a motor vehicle owned and operated by an insured. CERTIORARI PREVIOUSLY GRANTED; COURT OF APPEALS' OPINION VACATED; TRIAL COURT JUDGMENTS AFFIRMED.

James M. Levine, James M. Levine, P.C., Oklahoma City, for appellant Phillips.

W.R. Cathcart, Allison A. Herzfeld, Cathcart, Gofton & Stratton, Oklahoma City, for appellee State Farm.

John F. Percival, Culp, Heath, Sushnik & Percival, Oklahoma City, for appellant Mid-Century.

LAVENDER, Vice Chief Justice.

We decide here whether language of a motor vehicle exclusion in a homeowner's insurance policy excludes liability coverage for bodily injury and medical payments for a motorcycle-automobile accident where the claim against the insured is based on the theory of negligent supervision of or failure to control a child. We hold the exclusion precludes coverage.

FACTS AND PROCEDURAL HISTORY

The following facts are either agreed to by the parties or the record shows they are undisputed. Ricky Greenfield (Greenfield) owned a motorcycle. He allowed his son, Rocky Greenfield (Rocky), 15 years old, to operate it only on the Greenfield's property and under the supervision of Greenfield or Rocky's mother. Rocky was an unlicensed driver. Greenfield kept the motorcycle padlocked in a shed. Prior to the accident Greenfield had transferred auto insurance covering the motorcycle to another vehicle, with the result the motorcycle was not covered by automobile liability insurance. Garnishee/appellee, State Farm General Insurance Company and/or State Farm Fire and Casualty Insurance Company (State Farm) carried the auto insurance on Greenfield's other vehicles and also the Greenfield's homeowner's insurance policy. Both Greenfield and Rocky were insureds under the policy. ¹

In late 1986, without parental permission, Rocky took the keys to the shed and motorcycle, which were kept on a key rack in an open and obvious place of the Greenfield home, and took plaintiff/appellant, Michelle Dawn Phillips (Phillips), a minor, for a ride on the motorcycle on a public road. The motorcycle and a car collided. Rocky was killed and Phillips injured.

Phillips, by her father, sued Rocky's estate and Ronald Curtis Underwood, the driver of the auto involved in the accident, but the claims against them were dismissed by Phillips without prejudice. Phillips also sued Greenfield for negligent entrustment and on allegations he rendered the motorcycle accessible to Rocky. In an amended petition, Phillips alleged negligence against Greenfield for leaving the motorcycle keys in an "open and obvious place thereby rendering them accessible to [Rocky]." (O.R. 9)

A judgment was rendered against Greenfield based on his confession. Phillips then brought a garnishment proceeding against State Farm based on the Greenfield's homeowner's policy. State Farm denied liability arguing the policy excluded coverage for bodily injury arising out of the ownership, maintenance, use, loading or unloading of a motor vehicle owned or operated by an insured. (State Farm Homeowners Policy, Section II Exclusions, (1)(e)(2), (O.R. 73). ²

Appellant, Mid-Century Insurance Company (Mid-Century), Phillips' automobile liability insurer, intervened based on its subrogation claim to $20,000 paid to Phillips pursuant to the uninsured motorist provisions of the automobile policy.

State Farm moved for and was granted summary judgment. Phillips and Mid-Century appealed arguing the claim against Greenfield in the amended petition was for negligent supervision of or failure to control a child and that such claim was not excluded from coverage. State Farm countered that the claim, rather than being based on the legal theory of negligent supervision, was really one for negligent entrustment subject to a specific separate exclusion in the policy. It also argued, even assuming the claim against Greenfield was for negligent supervision the general motor vehicle exclusion found in the State Farm Homeowners Policy, Section II Exclusions, (1)(e)(2), excluded coverage.

The Court of Appeals affirmed summary judgment for State Farm. They held the amended petition was inadequate to state a claim for negligent supervision and also that the policy's exclusion for motor vehicles in clear and unambiguous language excluded coverage under any theory of recovery, whether the claim was based on negligent entrustment or negligent supervision of a child. We granted certiorari. In that we, like the Court of Appeals, hold the policy excludes coverage for negligent supervision of a child under the undisputed facts, we find it unnecessary to decide if that court correctly determined the amended petition was insufficient to state a claim for negligent supervision. For purposes of our opinion we assume Phillips stated a claim against Greenfield for negligent supervision of or failure to control a child. ³

MOTOR VEHICLE EXCLUSION IN HOMEOWNER'S INSURANCE POLICY

APPLIES TO A CLAIM BASED ON THE THEORY OF

NEGLIGENT SUPERVISION

The exclusion pertinent to this case states as follows:

1. Coverage L [personal liability] and Coverage M [medical payments to others] do not apply to:

. . . . .

e. bodily injury or property damage arising out of the ownership, maintenance, use, loading or unloading of:

. . . . .

(2) a motor vehicle owned or operated by or rented or loaned to an insured; ....

(bolding in original)

Boiled down appellants argue the exclusion does not preclude coverage where the legal theory sued upon is negligent supervision because the parents are being sued for their own negligent acts in failing to control their child even though the instrumentality causing harm was a motor vehicle. On the other hand, State Farm argues the policy language in clear and unmistakable terms excludes coverage because the injuries arose out of the use of a motor vehicle owned by and operated by an insured. We agree with State Farm.

An insurance policy is a contract. If the terms are unambiguous, clear and consistent, they are to be accepted in their ordinary sense and enforced to carry out the expressed intention of the parties. Dodson v. St. Paul Insurance Company, 812 P.2d 372, 376 (Okla.1991). Whether an insurance contract is ambiguous is a matter for the court to determine as a matter of law. Id. When an insurance contract is susceptible of two meanings, i.e. if it is subject to an ambiguity, the familiar rule of insurance contract interpretation applies and words of inclusion are liberally construed in favor of the insured and words of exclusion strictly construed against the insurer. All American Insurance Company v. Burns, 971 F.2d 438, 442 (10th Cir.1992); Dayton Hudson Corporation v. American Mutual Liability Insurance Company, 621 P.2d 1155, 1158 (Okla.1980). Further, parties to an insurance contract are at liberty to contract for insurance to cover such risks as they see fit and are bound by the terms of the contract and courts will not undertake to rewrite the terms thereof. American Iron & Machine Works Company, Inc. v. Insurance Company of North America, 375 P.2d 873, Second Syllabus (Okla.1962); See also Torres v. Sentry Insurance, 558 P.2d 400, 401 (Okla.1976) (same statement of law applied to preclude coverage where exclusion in homeowner's policy unambiguously excluded coverage for liability arising out of the rendering of professional services as a physician). With these principles to guide us we turn to a discussion of the substantive issue.

Although the instant issue is one of first impression in Oklahoma other jurisdictions have decided the precise question or ones similar to it. See generally, Annotation, Construction and Effect of Provision Excluding Liability For Automobile Related Injuries or Damage From Coverage of Homeowner's or Personal Liability Policy, 6 A.L.R.4th 555 (1981). We believe those courts which would deny coverage on facts similar to those before us are more persuasive. They recognize the unambiguous language of the policy excludes coverage and reach a result which follows the expressed intent of the parties at the time of contracting.

In Bankert v. Threshermen's Mutual Insurance Company, 110 Wis.2d 469, 329 N.W.2d 150 (1983), the Supreme Court of Wisconsin applied an exclusion in a farmowner's policy to bar coverage where a...