Spivey v. Safeco Ins. Co.

• Decision Date: 10 December 1993
• Docket Number: No. 69112,69112
• Citation: 865 P.2d 182,254 Kan. 237
• Parties: Thomas S. SPIVEY, Appellant, v. SAFECO INSURANCE COMPANY and American Manufacturers Mutual Insurance Company, Appellees.
• Court: Kansas Supreme Court

Page 182

865 P.2d 182

254 Kan. 237

Thomas S. SPIVEY, Appellant, v. SAFECO INSURANCE COMPANY and American Manufacturers Mutual

Insurance Company, Appellees.

No. 69112.

Supreme Court of Kansas.

Dec. 10, 1993.

Syllabus by the Court

1. Rules for granting summary judgment are stated.

2. An insurer must look beyond the effect of the pleadings and must consider any facts brought to its attention or any facts which it could reasonably discover in determining whether it has a duty to defend. If those facts give rise to a "potential of liability" under the policy, the insurer bears a duty to defend. The duty to defend rests primarily on the possibility that coverage exists. This possibility may be remote, but if it exists the company owes the insured a defense.

3. The possibility of coverage under a liability insurance policy must be determined by a good faith analysis of all information known to the insurer or all information reasonably ascertainable by inquiry and investigation. If ambiguities in coverage, including exclusionary clauses, are judicially determined against the insurer, the ultimate result controls the insurer's duty to defend.

4. The duty to defend and whether a liability insurance policy provides coverage are not necessarily coextensive. The duty to defend arises whenever there is a "potential of liability" under the policy. Where a petition alleges an act that is clearly not covered, there would be no potential of liability under the policy.

5. A liability provision in an insurance contract excluding coverage for injuries expected or intended from the standpoint of the insured excludes from coverage an injury which the insured intentionally caused.

David L. Young, of Wassberg & Gallagher, Kansas City, MO, argued the cause, and Gary C. Haggerty, of the same firm, was on the briefs, for appellant.

F. Russell Peterson, of Wallace, Saunders, Austin, Brown and Enochs, Chartered, Overland Park, argued the cause, and James L. Sanders and D'Ambra M. Howard, of the same firm, were on the brief for, appellee Safeco Ins. Co.

Laurence R. Tucker, of Watson, Ess, Marshall & Enggas, Kansas City, MO, argued LOCKETT, Justice.

the cause, and Jayne A. Pearman, of the same firm, was with him on the brief, for appellee American Manufacturers Mut. Ins. Co.

Plaintiff insured appeals the district court's grant of summary judgment to defendant insurers. The insured filed this action alleging that the insurers breached their contract to defend him in a civil tort action filed in the federal district court by a female employee, who alleged the insured made sexual demands and committed intentional torts of assault, battery, and infliction of emotional distress and that he intentionally inflicted bodily harm upon her. The insured claims that the district court applied the wrong law and incorrectly found that (1) the policies were not ambiguous and (2) there was no coverage under the policies for the alleged acts and therefore no duty for the insurers to defend him.

In July 1978, M.P. was hired by General Motors Corporation (GM) and was eventually assigned to a department of which Thomas S. Spivey was superintendent. Eight years later M.P. filed separate lawsuits against Spivey and GM in the Circuit Court of Jackson County, Missouri, alleging that from 1978 to January 1986 Spivey made demands on her for sex and intentionally and recklessly committed various torts against her, including assault, battery, infliction of emotional distress, and infliction of bodily harm. She dismissed both suits and refiled them in the United States District Court for the Western District of Missouri.

Spivey admitted having a consensual sexual relationship with M.P. but denied all her allegations of intentional tort. Spivey requested that his insurance carriers defend him, but they refused. Two of the carriers that refused to defend Spivey are the remaining defendants in this case, Safeco Insurance Company (Safeco) and American Manufacturer's Mutual Insurance Company (AMMIC). M.P.'s lawsuit against GM was tried first. The United States District Court found for GM and against M.P. In its findings of fact, the federal judge concluded that M.P.'s relationship with Spivey was welcomed by M.P. and that Spivey did not commit the intentional torts alleged by M.P. On the basis of the findings and judgment in the GM case, Spivey was granted summary judgment in M.P.'s lawsuit against him. After successfully defending against M.P.'s action in federal court without the assistance of the insurance companies, Spivey then filed this action in the District Court of Johnson County against his insurers, alleging breach of contract for failure to defend him in the federal action.

All parties filed motions for summary judgment. For the purpose of the summary judgment motions, the district court applied Missouri law to the last Safeco policy issued to Spivey. The district court granted summary judgment for Safeco and AMMIC. Spivey appeals the order granting summary judgment to defendants. Spivey asserts numerous issues and sub-issues in his appeal. We have considered each claim. In the interest of clarity, we will discuss only the determinative issues in this opinion. We first, however, note our standard of review.

Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. When a summary judgment is challenged on appeal, an appellate court must read the record in the light most favorable to the party who defended against the motion for summary judgment. Patterson v. Brouhard, 246 Kan. 700, 702, 792 P.2d 983 (1990).

" 'The burden on the party seeking summary judgment is a strict one. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. On appeal we apply the same rule, and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied. [Citation omitted.]" Barbara Oil Co. v. Kansas Gas Supply Corp., 250 Kan. 438, 445, 827 P.2d 24 (1992).

SUMMARY JUDGMENT--THE SAFECO POLICIES

There are three successive homeowners/condominium-unit owners insurance policies under which Spivey was insured by Safeco, having combined effective dates of June 1974 to August 8, 1981. Spivey claims some of the alleged acts occurred in Missouri while the last policy was in effect; therefore Missouri law applies to that policy. Safeco claims all the alleged acts occurred in Kansas, and Kansas law governs all three of its policies. The Safeco policies defined "occurrence" as:

"An accident, including injurious exposure to conditions, which results during the policy term, in bodily injury or property damage."

The exclusions provision of the Safeco policies is stated under Exclusion (1)(f):

"This policy does not apply ... to bodily injury or property damage which is either expected or intended from the standpoint of the insured."

This provision appears immediately after the insuring agreements and before the definitions sections.

INSURANCE POLICY AMBIGUOUS

Spivey claims that Safeco's policy is ambiguous; therefore, the insurer had a duty to defend him in the federal lawsuit. The district court reviewed the written policy and found it was not ambiguous.

As a general rule, the interpretation or construction and meaning and legal effect of written instruments are matters of law exclusively for the court and not questions of fact for determination by the jury. Federal Land Bank of Wichita v. Krug, 253 Kan. 307, 311, 856 P.2d 111 (1993). Regardless of the construction given a written contract by the trial court, an appellate court may construe a written contract and determine its legal effect. Kennedy & Mitchell, Inc. v. Anadarko Prod. Co., 243 Kan. 130, Syl. p 1, 754 P.2d 803 (1988).

Insurance policies are to be enforced as written so long as the terms do not conflict with pertinent statutes or public policy. Where terms are ambiguous, the policy shall be construed to mean what a reasonable person in the position of the insured would have understood them to mean. A policy is not ambiguous, however, unless there is genuine uncertainty as to which of two or more possible meanings is proper. House v. American Fam. Mut. Ins. Co., 251 Kan. 419, Syl. p 3, 837 P.2d 391 (1992).

After reviewing the insurance contract, we find it is not ambiguous.

NO DUTY TO DEFEND

Spivey contends the district court incorrectly determined that there was no "occurrence" under the Safeco policies and therefore no duty to defend. Spivey asserts that the district court erred when it relied on M.P.'s petition in the federal case to determine whether the insurance carriers had a duty to defend rather than following the rule of Spruill Motors, Inc. v. Universal Underwriters Ins. Co., 212 Kan. 681, 512 P.2d 403 (1973), which requires the insurer also to consider any facts brought to its attention or which it could have reasonably discovered.

In Spruill, during a dispute over a bill for auto repairs, a customer, Rounkles, claimed one of Spruill's employees ran over the customer's foot. The customer sued and Spruill's insurer, after investigating the matter, refused to defend Spruill in the litigation. After the customer prevailed against Spruill, Spruill sued its insurer, seeking, inter alia, reimbursement for the judgment and attorney fees in the Rounkles case. The insurer denied it had any duty to represent Spruill because the customer's petition alleged injuries due to Spruill's employee's intentional torts. The insurer contended such intentional acts were outside the coverage of Spruill's liability insurance contract for two reasons: (1) It is against public policy to insure anyone against the results of his or...