Title: State Farm Mutual Auto. Ins.  Co. v. Menendez, et al.

State: florida

Issuer: Florida Supreme Court

Document:

Supreme Court of Florida 
 
 
____________ 
 
No. SC10-116 
____________ 
 
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, 
Petitioner, 
 
vs. 
 
GILDA MENENDEZ, et al., 
Respondents. 
 
[August 25, 2011] 
 
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 
 
- 2 - 
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 
 
- 3 - 
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 
 
- 4 - 
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 
 
- 5 - 
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 
 
- 6 - 
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 
 
- 7 - 
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 summary judgment in favor of State Farm, and the Fourth 
District affirmed the summary judgment.  Id. at 990. 
In interpreting an insurance contract, we are bound by the plain meaning of 
the contract‟s text.  “If the language used in an insurance policy is plain and 
 
- 8 - 
unambiguous, a court must interpret the policy in accordance with the plain 
meaning of the language used so as to give effect to the policy as it was written.”  
Travelers Indem. Co. v. PCR Inc., 889 So. 2d 779, 785 (Fla. 2004).  “Policy 
language is considered to be ambiguous . . . if the language „is susceptible to more 
than one reasonable interpretation, one providing coverage and the other limiting 
coverage.‟”  Id. (quoting Swire Pac. Holdings v. Zurich Ins. Co., 845 So. 2d 161, 
165 (Fla. 2003)).  A provision is not ambiguous, however, “simply because it is 
complex or requires analysis.”  Penzer v. Transp. Ins. Co., 29 So. 3d 1000, 1005 
(Fla. 2010) (quoting Garcia v. Fed. Ins. Co., 969 So. 2d 288, 291 (Fla. 2007)).  
“When language in an insurance policy is ambiguous, a court will resolve the 
ambiguity in favor of the insured by adopting the reasonable interpretation of the 
policy‟s language that provides coverage as opposed to the reasonable 
interpretation that would limit coverage.”  Travelers Indem. Co., 889 So. 2d at 
785-86.  “Generally, courts will strive to interpret an automobile insurance policy 
based on the definitions contained within the policy.”  Grant v. State Farm Fire & 
Cas. Co., 638 So. 2d 936, 937 (Fla. 1994). 
Here, the text of the policy unambiguously excludes coverage for any bodily 
injury claims asserted by members of a permissive-driver insured‟s family residing 
in the household of the permissive-driver insured.  This meaning emerges from the 
policy‟s separate definitions of the terms “insured” and “the named insured” and 
 
- 9 - 
the way the words “insured” and “insured‟s” are used in the text of the household 
exclusion.  Both the broader context of the policy‟s defined terms and the 
immediate context of the policy exclusion provision point unambiguously to the 
conclusion that the household exclusion is applicable here. 
Contrary to the respondents‟ argument, the policy clearly and consistently 
distinguishes the term “insured” from the concept of the “the named insured.”  In 
the definitions, the policy provides that Menendez, the individual who contracted 
with State Farm for insurance coverage, will be referred to as “you” throughout the 
policy.  The policy then consistently uses “you” or the equally unambiguous 
phrases “the first person named in the declarations” or “the first insured named in 
the declarations” to refer to Menendez.  The fact that Menendez, “the named 
insured,” is consistently distinguished from the broader category of “insured,” 
undermines the Third District‟s conclusion that the household exclusion is 
ambiguous. 
Moreover, after defining “insured” for purposes of Coverage A as including 
individuals other than Menendez, such as permissive drivers, the policy does not 
distinguish “an insured” or “any insured” from “the insured.”  To the contrary, the 
policy uses the terms “an insured” and “the insured” interchangeably to refer to 
any type of insured, bolding and italicizing only the word “insured,” not the article 
preceding the defined term. 
 
- 10 - 
In the text of the household exclusion itself—excluding coverage for “any 
bodily injury to” “any insured or any member of an insured‟s family residing in the 
insured‟s household”—the reference to “the insured‟s household” cannot 
reasonably be understood as denoting only “the named insured‟s household.”  The 
interpretation advanced by the respondents ignores the preceding reference in the 
exclusion to “any insured or any member of an insured‟s family.”  The initial 
reference in the exclusion to “any insured” governs the succeeding reference to “an 
insured‟s family” and “the insured‟s household.”  In the last phrase, the word “the” 
points back to the preceding reference to “any insured” and “an insured‟s family.”  
The is “used as a function word to indicate that a following noun or noun 
equivalent refers to someone or something previously mentioned or clearly 
understood from the context or the situation.”  Webster‟s Third New International 
Dictionary 2368 (1993).  The exclusion‟s reference to family members “residing in 
the insured‟s household” therefore encompasses family members residing in the 
household of any insured. 
State Farm‟s position regarding the household exclusion is supported by this 
Court‟s decision in Webb v. American Fire & Casualty Co., 5 So. 2d 252 (Fla. 
1941).  In Webb, the plaintiff obtained a judgment against Sophie and Louis 
Davidson and then instituted garnishment proceedings against American Fire & 
Casualty Company by reason of an indemnity policy issued to Sophie Davidson.  
 
- 11 - 
Anna Webb was an employee of Louis Davidson.  American Fire claimed that 
Webb‟s injuries, which occurred while Louis was driving, were not covered 
because of a policy exclusion that stated, “This policy does not apply . . . (f) Under 
Coverage 1, to bodily injury or to death of the Insured; or to bodily injury or to 
death of any employee of the Insured while engaged in the business of the 
Insured.”  Id. at 252. 
This Court concluded that American Fire was not liable under the policy.  In 
interpreting the exclusion, this Court looked at the policy‟s definition of insured, 
which included “not only the named Insured but also any person while using the 
automobile when such actual use is with the permission of the named Insured.”  Id. 
at 253.  Because there was a dispute regarding whether Louis Davison had been 
added to the policy as a named insured before the accident occurred, this Court‟s 
holding addressed both possibilities.  This Court concluded that if Louis were a 
named insured, Webb could not recover “because the accident occurred while she 
was engaged as an employee of the insured.”  In the alternative, this Court 
determined that even if Sophie Davidson were the only named insured on the 
policy, Webb nevertheless could not recover “because the exclusion clause applies 
not only to the named insured but also applied to Louis Davidson who was using 
the automobile with the knowledge and consent of the named insured to transport 
his employee under his contract of employment with the plaintiff.”  Id.  In brief, 
 
- 12 - 
this Court interpreted the term “the Insured,” used in an exclusionary clause, as 
incorporating the policy definition of “insured,” which includes permissive drivers. 
Our interpretation of the household exclusion provision here is consistent 
with the reasoning of Webb and with the view adopted by the large majority of 
other jurisdictions that have addressed similarly worded policy provisions.  See 
Zipperer v. State Farm Mut. Auto. Ins. Co., 254 F.2d 853, 855 (5th Cir. 1958) 
(concluding that an exclusion stating that coverage did not apply “to the insured or 
any member of the family of the insured residing in the same household as the 
insured” barred coverage for injuries sustained by a passenger who was a relative 
of a permissive-driver insured); State Farm Mut. Auto. Ins. Co. v. Northwest 
Leasing Corp., 295 F. Supp. 516, 519 (D.N.D. 1969) (concluding that an exclusion 
for “bodily injury to the insured or any member of the family of the insured 
residing in the same household as the insured” applied to the wife of a permissive 
insured); Third Nat‟l Bank of Ashland v. State Farm Mut. Auto. Ins. Co., 334 
S.W.2d 261, 262-63 (Ky. 1960) (concluding that an exclusion barring coverage for 
bodily injuries “to the insured or any member of the family of the insured residing 
in the same household as the insured” applied to injuries suffered by the 
cohabitating sister-in-law of a permissive driver), superseded by statute as 
recognized in Lewis v. West Am. Ins. Co., 927 S.W.2d 829 (Ky. 1996) 
(concluding that in light of Kentucky Motor Vehicle Reparations Act, household 
 
- 13 - 
exclusions in automobile liability insurance policies violate public policy and thus 
are not enforceable); State Farm Mut. Auto. Ins. Co. v. Ballmer, 899 S.W.2d 523, 
525-26 (Mo. 1995) (concluding that an exclusion for bodily injury to “any insured 
or any member of an insured‟s family residing in the insured‟s household” was 
unambiguous and that “the insured” simply referred to any person or organization 
identified previously in the exclusion as “an insured,” which under the facts of that 
case included the permissive driver); Nodak Mut. Ins. Co. v. Wacker, 154 N.W.2d 
776, 778-80 (N.D. 1967) (concluding that “the insured” in a household exclusion 
included a permissive driver and barred the claim by the wife of the permissive 
driver).  But see Patton v. Patton, 198 A.2d 578, 580, 582-83 (Pa. 1964) 
(concluding that “the insured” in an exclusion eliminating coverage for bodily 
injury “to the insured or any member of the family of the insured residing in the 
same household as the insured” meant only the named insured and did not bar a 
claim by the wife of a permissive driver against the named insured). 
III.  CONCLUSION 
 
Based on the foregoing, we quash the Third District‟s decision, approve 
Linehan, and remand for proceedings consistent with this opinion.  The plain 
language of the household exclusion precludes coverage for bodily injuries 
suffered by members of the household of a permissive-driver insured, such as the 
parents in this case, Fabiola P. and Roger Llanes. 
 
- 14 - 
 
It is so ordered. 
PARIENTE, LEWIS, QUINCE, POLSTON, LABARGA, and PERRY, JJ., concur. 
 
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND 
IF FILED, DETERMINED. 
 
 
Application for Review of the Decision of the District Court of Appeal - Direct 
Conflict of Decisions 
 
 
Third District - Case No. 3D08-2969 
 
 
(Dade County) 
 
Warren B. Kwavnick of Cooney Trybus Kwavnick Peets, PLC, Fort Lauderdale, 
Florida, and Elizabeth K. Russ of Russo Appellate Firm, P.A., Miami, Florida,  
 
 
for Petitioner 
 
Lauri Waldman Ross and Theresa L. Girten of Ross and Girten, Miami, Florida 
and Karel Remuo of Coral Gables, Florida; Gonzalo R. Dorta and Jonathan H. 
Kaskel of Gonzalo R. Dorta, P.A., Coral Gables, Florida, 
 
 
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, Florida, and Stephen 
A. Marino, Jr., Miami, Florida, on behalf of the Florida Justice Association, 
 
 
as Amicus Curiae