State Farm Mut. Auto. Ins. Co. v. Menendez

• Decision Date: 25 August 2011
• Docket Number: No. SC10–116.,SC10–116.
• Citation: 70 So.3d 566
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner,v.Gilda MENENDEZ, et al., Respondents.
• Court: Florida Supreme Court

70 So.3d 566

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner,

v.Gilda MENENDEZ, et al., Respondents.

No. SC10–116.

Supreme Court of Florida.

Aug. 25, 2011.

Warren B. Kwavnick of Cooney Trybus Kwavnick Peets, PLC, Fort Lauderdale, FL, and Elizabeth K. Russo of Russo Appellate Firm, P.A., Miami, FL, for Petitioner.Lauri Waldman Ross and Theresa L. Girten of Ross and Girten, Miami, FL, and Karel Remuo of Coral Gables, FL; Gonzalo R. Dorta and Jonathan H. Kaskel of Gonzalo R. Dorta, P.A., Coral Gables, FL, for Respondent.Mark Andrew Boyle, Sr., Geofrey H. Gentile, Sr., Debbie Sines Crockett and Michael W. Leonard of Boyle and Gentile, P.A., Fort Myers, FL, and Stephen A. Marino, Jr., Miami, FL, on behalf of the Florida Justice Association, as Amicus Curiae.CANADY, C.J.

State Farm Mutual Automobile Insurance Company seeks review of State Farm Mutual Automobile Insurance Co. v. Menendez, 24 So.3d 809 (Fla. 3d DCA 2010), in which the Third District Court of Appeal determined that the household exclusion in State Farm's policy issued to Gilda Menendez is ambiguous and therefore could not be enforced to eliminate coverage for bodily injuries suffered by members of the household of a permissive-driver insured. The Third District thus applied the rule that ambiguous policy provisions must be interpreted in favor of the insured. The Third District's decision expressly and directly conflicts with Linehan v. Alkhabbaz, 398 So.2d 989 (Fla. 4th DCA 1981), in which the Fourth District Court of Appeal concluded that a similar household exclusion provision did bar coverage for the injury claims of a member of the permissive driver's household. We have jurisdiction. See art. V, § 3(b)(3), Fla. Const. We conclude that the household exclusion provision in the policy issued to Menendez unambiguously applies to claims by members of the household of a permissive-driver insured. We therefore quash the Third District's decision and approve Linehan.

I. BACKGROUND

Menendez, the named insured in an automobile insurance policy issued by State Farm, permitted her granddaughter, Fabiola G. Llanes, to use her vehicle. While operating the vehicle, the granddaughter was in an accident with another vehicle, resulting in injuries to herself, her parents, Fabiola P. and Roger Llanes, and Menendez. When the accident occurred, the granddaughter was living with her parents, and Menendez was living at a separate address. Menendez filed a declaratory judgment action against State Farm and Fabiola G., Fabiola P., and Roger Llanes, seeking a determination that the policy provided insurance coverage for the bodily injuries suffered by the Llaneses. State Farm asserted in defense that due to the household exclusion in the policy, there is no coverage for the Llaneses' bodily injuries. In addition, State Farm filed a cross-claim seeking a declaration that it had no obligation to defend or indemnify the granddaughter in any action filed by the parents or Menendez arising from the accident.

The policy issued to Menendez expressly defines terms in the insurance policy that appeared in bold and italicized type. Specifically, the policy defines the following material terms and phrases:

Insured—means the person, persons or organization defined as insureds in the specific coverage.... ....

Relative—as used in Sections I, III, IV and V means a person related to you or your spouse by blood, marriage or adoption (including a ward or foster child) who resides primarily with you. It includes your unmarried and unemancipated child away at school.

As used in Section II, relative means a relative of any degree by blood or marriage who usually makes his home in the same family unit, whether or not temporarily living elsewhere.

....

You or Your—means the named insured or named insureds shown on the declarations page.

The portion of Menendez's policy titled “Liability—Coverage A”—which appears in Section I of the policy—obligates State Farm to “defend any suit against an insured ” for covered damages and to pay damages which “an insured becomes legally liable to pay” because of bodily injury or property damage caused by accident resulting from the ownership, maintenance, or use of Menendez's car. The Coverage A provision—in its omnibus insured clause—then provides that for purposes of that coverage, the term “ insured ” includes “ you,” “ your spouse,” “the relatives of the first person named in the declarations,” “any other person while using such a car if its use is within the scope of consent of you or your spouse,” and “any other person or organization liable for the use of such a car by one of the above insureds.”

The household exclusion to Coverage A provides that there is no coverage for “any bodily injury to” “any insured or any member of an insured's family residing in the insured's household.” State Farm asserted that the meaning of the household exclusion is plain and that “the insured's ” as used in the exclusion refers to the prior phrase “an insured's ” used earlier in the exclusion. State Farm thus reasoned that because the granddaughter, as a permissive driver of Menendez's vehicle, was an insured under the policy and the granddaughter and her parents resided in the same household, there is no coverage under the policy for the parents' bodily injuries.

In contrast, Menendez and the Llaneses contended that the term “the insured's ” at the end of the exclusion could not have the same meaning as the term “an insured's ” used earlier in the exclusion. They argued that “the insured's ” refers to the named insured, Menendez, and that “the insured's ” does not include permissive drivers. Under this interpretation, the household exclusion would eliminate coverage for bodily injury claims of members of only the named insured's household. Accordingly, Menendez and the Llaneses asserted that because the parents did not reside with the named insured at the time of the accident, the household exclusion is inapplicable to their injuries. In addition, the Llaneses argued that the granddaughter is not an insured under the policy and thus State Farm was obligated to provide coverage for her injuries.

State Farm, the Llaneses, and Menendez each filed a motion for summary judgment. After hearing arguments from the parties, the trial court concluded that the household exclusion is ambiguous. As a result, the trial court granted the motions for summary judgment filed by Menendez and the Llaneses, denied State Farm's motion for summary judgment, and entered a final summary judgment against State Farm. State Farm appealed the final summary judgment.

The Third District Court of Appeal affirmed. Based on the section of the policy which defines “ insured ” as including both the named insured and “any other person while using such a car if its use is within the scope of consent of” the named insured, the Third District concluded that the household exclusion clearly eliminates coverage for any bodily injury claims asserted by Menendez and her granddaughter. Menendez, 24 So.3d at 811. The Third District agreed with the trial court, however, that the household exclusion is susceptible to more than one reasonable interpretation regarding coverage of the parents' bodily injuries. After discussing the arguments made by the respondents and State Farm, the Third District construed the exclusion in favor of the insured and against the insurer and thus affirmed the trial court's order. Id. at 811–12. State Farm then petitioned this Court for review on the basis of express and direct conflict, and we accepted jurisdiction.

II. ANALYSIS

Before this Court, State Farm and the respondents agree that at the time of the accident, the granddaughter was using Menendez's car with Menendez's consent and therefore qualified as an omnibus insured under the policy. They further agree that absent an applicable exclusion, State Farm would be bound by Coverage A to defend the granddaughter in an action for bodily injuries arising from the accident and that if the granddaughter was found legally liable, State Farm would be bound to pay those damages. Finally, the parties agree that at the time of the accident, the granddaughter and her parents lived in the same residence but that Menendez did not live with them.

Thus, the sole question before this Court is the conflict issue—whether the household exclusion barring coverage for “any bodily injury to” “any insured or any member of an insured's family residing in the insured's household” unambiguously eliminates coverage for bodily injuries suffered by the members of the household of a permissive-driver insured. We agree with the Fourth District's decision in Linehan that the plain language of the household exclusion bars coverage for bodily injuries suffered by members of the household of a permissive-driver insured.

In Linehan, the Fourth District addressed the applicability of a substantively similar household exclusion, which provided—as paraphrased by the district court—that “this insurance does not apply under coverage A to bodily injury to any insured or any member of the family of any insured residing in the same household as the insured.” 398 So.2d at 990 n. 1. In that case, Katherine Alkhabbaz loaned her automobile to her aunt, Marianna R. Linehan. The vehicle was involved in an accident, killing Marianna and injuring her daughter, Laura Linehan, who was driving at the time. Marianna and Laura had resided together in the same household. Marianna's personal representative sued Alkhabbaz, Laura Linehan, State Farm, which insured the Alkhabbaz vehicle, and Liberty Mutual Insurance Company, which insured a vehicle owned by Marianna but not involved in the accident. State Farm contended that Laura, as a permissive driver, was an insured under the policy and asserted that since Marianna and Laura were residents of the same household, the household exclusion defeated the claims by Marianna's estate. The trial court granted...