Safeco Ins. Co. of America, Inc. v. McKenna

• Citation: 1977 NMSC 53,565 P.2d 1033,90 N.M. 516
• Decision Date: 01 July 1977
• Docket Number: No. 11102,11102
• Parties: SAFECO INSURANCE COMPANY OF AMERICA, INC., Plaintiff-Appellant, v. Bernard J. McKENNA and Richard E. McKenna, Defendants-Appellees, and Robert Ortiz, Intervenor-Appellee.
• Court: Supreme Court of New Mexico

Page 1033

565 P.2d 1033

90 N.M. 516

SAFECO INSURANCE COMPANY OF AMERICA, INC., Plaintiff-Appellant, v. Bernard J. McKENNA and Richard E. McKenna, Defendants-Appellees, and Robert Ortiz, Intervenor-Appellee.

No. 11102.

Supreme Court of New Mexico.

July 1, 1977.

Rehearing Denied Aug. 2, 1977.

Gallagher, Casados & Patten, David R. Gallagher, Albuquerque, Shaffer, Butt, Jones & Thornton, J. Duke Thornton, Albuquerque, for plaintiff-appellant

Bradford H. Zeikus, Albuquerque, for defendants-appellees.

Thomas D. Schall, Albuquerque, for intervenor-appellee.

OPINION

EASLEY, Justice.

Bernard McKenna (McKenna) had a homeowner's insurance policy with Safeco Insurance Company of America (Safeco). McKenna's son, Richard, was a minor and a member of his father's household. Robert Ortiz (Ortiz) filed a civil action in assault and battery for damages sustained in a fight with Richard, alleging intentional misconduct by Richard and also the negligence of McKenna in failing to exercise discipline and control over Richard, allegedly of known vicious proclivities. Both McKenna and Richard were made defendants.

Safeco sought a declaratory judgment in the District Court of Bernalillo County as to its liability and collateral obligation to defend McKenna and Richard. That court declared that, under the terms of the public liability provisions of the policy, Richard was "an insured," but that he was not "the insured" mentioned by the exclusionary clause of the policy pertaining to intentional torts, and accordingly concluded that Safeco was obligated to defend both McKenna and Richard and pay all damages awarded. The court also awarded $3,000.00 in attorney's fees to McKenna and Richard for defending the declaratory judgment action.

Safeco appealed the decision of the trial court, challenging both the award of attorney's fees and its obligation to defend Richard or pay any judgment against him, claiming error in the trial court's determination that the exclusionary clause did not apply to Richard. Safeco does not contest its obligation to defend or indemnify McKenna.

With regard to the issues before us the cases from other jurisdictions reflect that the terms of homeowners' liability policies are materially the same throughout the country. Pertinent portions of the Safeco policy are set forth in which the company agreed:

To Pay on behalf of the insured all sums which the insured shall become obligated to pay . . . To Pay, if requested by the named insured . . . the reasonable expense of necessary medical, surgical and dental services, (etc.) . . . Defend any suit against the insured . . . Pay . . . all costs taxed against the insured . . . Pay expenses incurred by the insured . . . Reimburse the insured for all reasonable expenses . . .

c. Definitions 1. "Insured" the unqualified word "insured" includes (a) the named insured and if residents of the household, his spouse, and relatives . . . (b) with respect to animals and watercraft owned by an insured, any person or organization legally responsible therefor and (c) with respect to farm tractors and trailers and self-propelled or motor or animal drawn farm implements, any employee of an insured while engaged in the employment of the insured and (d) in the event of the death of the named insured within the policy period unless the policy is cancelled, (1) the named insured's legal representative as the named insured but only with respect to the premises of the original named insured and those of his spouse, and (2) while a resident of said premises, any person who was an insured prior to the death.

2. Exclusions This Section does not apply: . . . c. to injury, sickness, disease, death or destruction caused intentionally by or at the direction of the insured; (Emphasis added.)

Only one page of the printed policy was placed in evidence, but there were many more instances on that page where the term "the insured" was employed to include both the named insured and the additional insureds. The policy provided that the "unqualified word 'insured' " meant the named insured and the additional insureds. However, the only times in the policy where the term "insured" was preceded by a definitive qualifying word was when the term "named insured" was used.

It is unquestioned that Richard intentionally inflicted injuries upon Ortiz and that Richard was an additional insured under the policy. The parties recognize that the controversy turns upon the legal construction of the exclusionary clause. The sole question is whether this intentional-tort exclusion was limited to McKenna, the "named insured," or applied as well to Richard, one of the additional insureds.

The McKennas argue that the exclusion does not apply to Richard and that the company is bound to defend him and pay any damages for the reason that he is not "the insured" mentioned in the exclusionary clause, that term being synonymous with "named insured," i. e., McKenna. Safeco maintains that the exclusionary clause applies to the intentional conduct of Richard as it would apply to like actions of McKenna, and that the phrase "the insured" is to be interpreted to mean the additional insureds as well as McKenna.

This court has held that exclusionary definitions in an insurance contract are to be enforced so long as their meanings are clear and they do not conflict with the statutory law. Willey v. Farmers Insurance Group, 86 N.M. 325, 523 P.2d 1351 (1974). However, the specific question involved here has not heretofore arisen on appeal in our courts. We recognize that there is a minority view to the contrary but nevertheless adopt the reasoning and holdings in National Union Fire Insurance Company v. Bourn, 441 S.W.2d 592 (Tex.Civ.App.1969) and Kipp v. Hurdle, 307 So.2d 125 (La.App.1974).

In Bourn, four young men deliberately and in concert intentionally committed an assault. The court held that, under an insurance policy clause with nearly the identical language as is under review here, the policy provision clearly and effectively excluded coverage for such intentional acts of an additional insured and held that the clause was valid.

In Kipp, the facts showed that Mrs. Hurdle, while driving by the Crocodile Inn looking for her husband, came upon his parked vehicle. She entered the lounge "in a rage and barefooted." Mr. Hurdle was dancing with Mrs. Kipp and Mrs. Hurdle "walked over to the rear of her husband, grabbed his arm, spun him around and slapped his face." Then she "grabbed the plaintiff by the hair of the head and shoved her to the floor." Mrs. Kipp was injured and sued Mr. and Mrs. Hurdle.

The clause in the homeowner's policy at issue in Kipp was materially the same as the one in our case. The court stated (307 So.2d at 129):

We are unable to agree with the trial court that there exists any ambiguity whatever in this policy. The policy plainly, simply and unequivocally states that it does not cover personal liability arising from a bodily injury either expected or intended by the insured. There is complete clarity in defining the person designated as the insured. Mrs. Hurdle, as the spouse living in the household of the named insured is an "insured" within the terms of the policy.

The trial court in the instant case erroneously characterized the clause which defined the additional insureds as the "omnibus clause." In Kipp, the court explained the difference between the two types of policy (307 So.2d at 129):

It is clear that this policy, by its terms, does not cover vicarious liability as such. There is no "omnibus clause" and there are no "omnibus insureds" under the policy issued to Hurdle. These terms are used in discussing liability arising ordinarily from the use of a motor vehicle with the permission of the named insured, or vicarious liability imposed on some other person or organization because of fault of the named insured or a driver operating the vehicle with permission of named insured. Such has no application to the type policy consideration herein.

The parties to an insurance contract may...