Southeastern Fire Ins. Co. v. Heard

Decision Date14 June 1985
Docket NumberCiv. No. C-84-150-G.
Citation626 F. Supp. 476
PartiesSOUTHEASTERN FIRE INSURANCE CO. v. Jackson M. HEARD, et al.
CourtU.S. District Court — Northern District of Georgia

Michael J. Gorby, Atlanta, Ga., for plaintiff.

G. Thomas Davis, Allen Gordon, Glenn Frick, Atlanta, Ga., for defendant.

ORDER

O'KELLEY, District Judge.

Presently pending before the court are the motions of plaintiff Southeastern Fire Insurance Company (Southeastern) and defendants Jackson Heard, Mark Heard, and Heard Fuel Company (the Heards) for summary judgment.1 Southeastern filed this declaratory judgment action seeking a determination that its policy did not cover a boating accident. Upon consideration, the court grants Southeastern's motion for summary judgment, and denies the Heards' motion for summary judgment.

The following facts are not in dispute. Southeastern issued homeowner's insurance policy No. HP-502-96-43 (the policy) to Jackson Heard. The policy contains the following exclusion:

1. Coverage E—Personal Liability ... does not apply to bodily injury or property damage:
....
e. arising out of the ownership, maintenance, use, loading or unloading of:
....
(3) a watercraft:
(a) owned by or rented to any insured if the watercraft has inboard or inboard-outdrive motor power of more than 50 horsepower or is a sailing vessel, with or without auxiliary power, 26 feet or more in overall length....

(Homeowners Policy "76," at 9, Ex. A to Southeastern's Complaint).

Ciffone, also a defendant in this action, alleges that defendants invited her to a business party on August 28, 1982 at Lanier Harbor Condominiums on Lake Lanier in Buford, Georgia. Ciffone went swimming in the lake and allegedly was run down by a boat operated by Craig Campbell, another person invited to the party. Jackson Heard owned this boat, which was 17 feet in length and contained an inboard/outboard motor of 140 horsepower.

Ciffone filed suit against the Heards in state court, alleging serious injuries suffered as a result of the Heards' negligent entrustment of the boat to Campbell, failure to warn, and breach of duty of care. The Heards assert that Southeastern would be liable for any judgment rendered against them, and have requested that Southeastern provide a defense in Ciffone's state court action. Southeastern filed this declaratory judgment action to determine whether its insurance covered the action. It claims that the exclusion applies to the incident.

The Heards concede that the policy excludes coverage of watercraft with an inboard or inboard/outdrive motor greater than 50 horsepower, and that the boat in question has an inboard/outboard motor of 140 horsepower. They contend, however, that the policy affords them coverage because the exclusion's language is unclear. According to them, the policy's wording indicates that power boats, as well as sailing vessels, are excluded only if they are 26 feet or more in length. The boat is 17 feet long.

An insurance contract is like any other; when it is clear and unambiguous the court will construe it as written. Richards v. Hanover Ins. Co., 250 Ga. 613, 299 S.E.2d 561 (1983); Travelers Indemnity Co. v. Whalley Construction Co., 160 Ga. App. 438, 441, 287 S.E.2d 226, 229 (1981); Cherokee Credit Life Ins. Co. v. Baker, 119 Ga.App. 579, 582, 168 S.E.2d 171, 174 (1969). The court will construe an ambiguous policy, especially the exclusions or limitations, against the insurer. Richards, 250 Ga. at 615, 299 S.E. at 563. The court is not to create ambiguity by lifting a clause out of context, nor "to call forth doubt or make hypercritical constructions." Baker, 119 Ga.App. at 583, 168 S.E.2d at 174-75. The natural, obvious meaning is preferred. Id. The policy is to be read in accordance with the insured's reasonable expectations whenever possible. Richards, 250 Ga. at 615, 299 S.E.2d at 563.

In the instant case, the court finds that the exclusionary language is clear and unambiguous. As the court reads the clause, it excludes coverage of a motorboat of more than 50 horsepower or a sailing vessel 26 feet or more in overall length. The court cannot find another logical reading of the clause, and will not twist its unambiguous meaning to obtain the construction that the Heards seek. The clause clearly indicated to Jackson Heard that his boat was excluded, and thus he could not have reasonably expected its coverage. Because the clause is clear and unambiguous, the court will not construe it against Southeastern but must interpret it as written. Therefore, the court finds that the exclusion covers the boat.

The Heards also assert that Ciffone based her cause of action against them on negligent entrustment, and not on their negligence in the ownership, maintenance, or use of the boat.2 Because an insurer's duty to defend is premised upon the injured party's allegations in her complaint, Haley v. Georgia Farm Bureau Mutual Ins. Co., 166 Ga.App. 596, 305 S.E.2d 160 (1983), the Heards claim that the exclusion does not cover the incident.

Georgia courts have not addressed whether an insurance policy excluding coverage of an instrumentality covers negligent entrustment of that instrumentality. The court therefore must attempt to predict how Georgia will deal with this issue. In making that determination, the court will examine Georgia cases on insurance law, and decisions from other jurisdictions discussing the precise issue.

Numerous other jurisdictions considering the issue have taken both sides. Some courts have held that the exclusion pertains not to negligent entrustment, but to injury arising out of ownership, use, operation, or maintenance of the instrumentality. The tort of negligent entrustment, on the other hand, is based on the insured's negligently entrusting the instrumentality to someone else. Thus, negligent entrustment is a separate tort. The injury does not arise out of ownership or use of the instrumentality, but out of is negligent entrustment.3 These courts often hold that the language of the phrase "arising out of the ownership, maintenance, operation, or use" is ambiguous, and construe it against the insurer.4 A few courts have held that when the injury arises from instrumentality-related and noninstrumentality-related causes, the latter are not excluded, and the insurer must defend.5

Other courts have found that the exclusion applies to negligent entrustment.6 Although several theories for this interpretation are offered, these cases in common have held that the language is clear and unambiguous. Some courts have used the "dovetail" approach, when an insured has both homeowner's and, for example, automobile policies.7 These courts have held that the homeowner's policy exclusions and the auto policy's coverage fit together, or dovetail. To stretch the homeowners exclusion to cover auto-related injuries would merely be duplicative.

Courts also have applied the exclusion based on an approach akin to the dovetail theory.8 These courts found that the purpose of homeowner's insurance is to insure against home risk, and that the parties' reasonable expectations are of this type of coverage. The cost of the insurance takes this risk into account. Automobiles clearly are excluded. To allow coverage for excluded instrumentalities is contrary to the policy's language and the parties' expectations. Additionally, such a result would broaden the risk anticipated in homeowner's policies and could lead to an increase in rates.

The most well reasoned and convincing rationale for exclusion of negligent entrustment is an analysis of the tort itself.9 Negligent entrustment is composed both of the entrustor's negligence in entrusting the instrumentality and the entrustee's negligent use of the instrumentality. Thus, the triggering element is negligent use of the item, for even if the entrustment was negligent, no cause of action could arise without an injury caused by negligent use of the item. Because negligent use is essential, negligent entrustment arises out of the use of a certain instrumentality. Thus, the exclusion applies. This construction is true to the exclusion's plain meaning.10

As stated earlier, no Georgia court has ruled on the precise issue of coverage for negligent entrustment. A review of Georgia insurance law and cases from other jurisdictions indicates that Georgia courts would follow those cases which hold that the clause excluding injury arising out of the use, inter alia, of an instrumentality applies to injury arising out of negligent entrustment of the instrumentality. First, the language of the exclusion in the instant action is clear and unambiguous. Ciffone's injuries allegedly occurred when Campbell drove the boat over her. The Heards cited Hartford Accident & Indemnity Co. v. Booker, 140 Ga.App. 3, 230 S.E.2d 70 (1976) as stating that the definition of use is elusive. The court noted that one is using an object when control over it is easily at hand. 140 Ga.App. at 4-5, 230 S.E.2d at 72. By this definition, Campbell was using the boat when it ran over Ciffone. Additionally, in Booker, the court interpreted "use" in the context of the state uninsured motorist statute, not an insurance policy.

In Assurance Co. of America v. Bell, 108 Ga.App. 766, 134 S.E.2d 540 (1963), the

court defined use as it appeared in an insurance policy. The word, in connection with the phrase "arising out of the use, operation, or maintenance," must be taken in its usual meaning as use of a motor vehicle. Id. at 772, 134 S.E.2d 540. Use implies ordinary use or employment of the instrumentality. Id. In Bell, a child released the brake, causing the car to drift. The court held that such action was not ordinary use as contemplated by the parties, such as driving. Id. Under the Bell court's definition of use, Ciffone's alleged injuries clearly arose out of use of the boat. Campbell was driving the boat in the lake, clearly an ordinary and normal use of a boat. While Campbell was driving the...

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