Title: HEIDI RENE LAWRENCE, PERSONAL REPRESENTATIVE OF THE ESTATE V. STATE FARM FIRE AND CASUALTY COMPANY, an Illinois corporation

State: wyoming

Issuer: Wyoming Supreme Court

Document:

HEIDI RENE LAWRENCE, PERSONAL REPRESENTATIVE OF THE ESTATE V. STATE FARM FIRE AND CASUALTY COMPANY, an Illinois corporation2006 WY 56133 P.3d 976Case Number: 05-191Decided: 05/10/2006
APRIL 
TERM, A.D. 2006

 
 
HEIDI 
RENE LAWRENCE, PERSONAL REPRESENTATIVE OF THE ESTATE OF CODY LEE HOLT, ASSIGNEE 
OF VALERIE JOHNSON AND D'ANDRA AMENDE,

 
 
Appellant

(Plaintiff),

 
 
v.

 
 
STATE 
FARM FIRE AND CASUALTY COMPANY, an Illinois corporation,

 
 
Appellee

(Defendant).

 
 

Appeal 
from the DistrictCourtofSheridanCounty

The 
Honorable Gary P. Hartman, Judge

 
 
Representing 
Appellant:

 
 
Michael 
C. Steel of Lonabaugh and Riggs, LLP, Sheridan, Wyoming

 
 

Representing 
Appellee:

 
 
George 
E. Powers Jr., of Sundahl, Powers, Kapp & Martin, Cheyenne, Wyoming

 
 
Before 
HILL, C.J., and GOLDEN, KITE, VOIGT, and BURKE, 
JJ.

 
 

HILL, 
Chief Justice.

 
 
[¶1]      Appellant, Heidi 
Rene Lawrence (as personal representative for the estate of Cody Lee Holt and as 
assignee of Valerie Johnson and D'Andra Amende) (hereafter Lawrence), seeks 
review of the district court's partial summary judgment order to the effect that 
Appellee, State Farm Fire and Casualty Company (State Farm), had no duty to 
provide a defense on behalf of Valerie Johnson or D'Andra Amende, in connection 
with Lawrence's lawsuit against them.  
Lawrence sought to recover damages from 
Valerie Johnson and D'Andra Amende for negligent act(s) they committed and which 
Lawrence claimed 
were covered by Valerie Johnson's homeowner's insurance policy issued by State 
Farm.  We will 
affirm.

 
 
ISSUES

 
 
[¶2]      In her initial 
brief, Lawrence 
states this as the only issue on appeal:

 
 
            
Did [State Farm] breach the subject insurance policy by refusing to 
defend its insured, Valerie Johnson, against the negligence claim alleged in the 
underlying action?

 
 
State 
Farm poses this issue as the appropriate one for our 
consideration:

 
 
            
When [Lawrence] sued Valerie Johnson for damages caused by the death of 
Cody Lee Holt in an [sic] one-car automobile accident involving Johnson's car, 
was [State Farm] required to defend that claim under Johnson's homeowner's 
policy which contained an exclusion for damages "arising out of the ownership, 
maintenance, use, loading or unloading of  a motor vehicle owned  by  any 
insured  ?"

 
 
In her 
reply brief, Lawrence enlarges considerably on her 
understanding of the issues:

 
 
1.  This 
appeal does not involve a negligent entrustment claim.  [Lawrence] concedes that the "instrumentality" 
argument repeated throughout State Farm's brief makes sense in the context of 
negligent entrustment claims.  It 
makes sense because such claims, by definition, require the plaintiff to 
establish the insured's ownership and control of a motor vehicle.  [Lawrence's] negligence claim, on the other 
hand, does not require proof that Valerie Johnson owned or controlled the motor 
vehicle.  Knowingly providing "gas 
money" to a group of unlicensed1 teenagers is a negligent act 
regardless of whose car it is used to purchase gas for.

 
 
2.  This 
is not a case like Matlack v. Mountain 
West Farm Bureau Mutual Insurance Co., 2002 WY 60, 44 P.3d 73 (Wyo. 2002), 
where the facts alleged in the underlying action did not match the "label" 
attached to the cause of action.  In 
the underlying action, the factual allegations supported [Lawrence's] negligence 
claim.  Wyoming precedent and, 
moreover, the policy language at issue, required State Farm to defend Johnson 
because there was the potential that she would be adjudged "legally liable" for 
damages regardless of whether she owned the car.

 
 
3.  This 
appeal does not involve a negligent supervision claim.  There is a distinct difference between 
relaxed supervision and active negligent conduct.

 
 
4.  Johnson's 
affirmative act of knowingly providing the gas money was causally connected to 
the accident.   It is too late 
for State Farm to argue the merits of [Lawrence's] negligence claim.  It should have defended Johnson and made 
its argument to the jury.

 
 
FACTS 
AND PROCEEDINGS

 
 
[¶3]      No fact finding 
was done below.  This case was 
disposed of below based upon the district court's construction of the contract 
of insurance.  However, we glean 
these basic and largely undisputed facts from the record so as to provide 
context for our resolution of the arguments set out above.

 
 
[¶4]      Lawrence is the mother of 
Cody Lee Holt (Holt) and the duly appointed personal representative of his 
estate.  Holt died from injuries he 
suffered in a one-car crash that occurred just south of Billings, Montana, on July 4, 2003.  The car that was involved in this crash 
was owned by Valerie Johnson (hereafter Johnson).  Johnson had purchased the car for her 
daughter D'Andra Amende (hereafter Amende) to use, and on the date of the 
accident, Johnson allowed Amende to use the car and provided her with gas money 
so as to operate it.  Johnson was 
not aware of what specific use Amende was going to make of the car, but Johnson 
and Amende were on the premises of the Johnson family home when Johnson provided 
the gas money to her daughter.  
Neither Amende nor any of the other teenagers who were occupants of the 
car on that date had a valid driver's license.

 
 
[¶5]      The four 
teenagers proceeded to drive to Billings, where 
they spent the day and were then returning home to Sheridan very late in the 
day of July 4, 2003.  During the 
return trip, Amende entrusted the driving of the car to another teenager, 
Chelsea Dailey (Dailey), who also did not have a driver's license.  Dailey lost control of the car and, 
during the one-car crash, Holt was ejected from the automobile and crushed by it 
when it rolled over him.  None of 
the occupants of Amende's car were wearing seat belts.  The insurance company which covered the 
car owned by Johnson and driven by Amende, as well as the insurance company that 
covered Dailey, settled claims filed by Lawrence on behalf of her son's 
estate.

 
 
[¶6]      Lawrence then initiated an 
additional claim against Johnson, giving notice as well to State Farm which 
provided Johnson with her homeowner's insurance policy.  As noted above, Lawrence's theory was that 
Johnson's act of giving her daughter gas money (while both mother and daughter 
were on the premises of their home) was the negligent act that ultimately led to 
Holt's death.

 
 
[¶7]      In her notice to 
State Farm, Lawrence called for a mediation conference to 
be held on April 9, 2004.  By letter 
dated April 8, 2004, State Farm informed Lawrence's attorney that it would not 
participate in the conference, explaining that "the Johnson's Homeowners Policy 
with State Farm Fire and Casualty Company does not provide any coverage for this 
accident."

 
 
[¶8]      Johnson and 
Amende entered into a settlement agreement with Lawrence, resolving Lawrence's wrongful death claims against 
Johnson and Amende.  Furthermore, 
these parties entered into an Assignment of Rights and Claims in which Johnson 
and Amende confessed judgment in favor of Lawrence in an aggregate amount of $750,000.00, and 
Lawrence agreed 
not to execute on those judgments except against State Farm.  Once all of this had been accomplished, 
Lawrence filed 
her complaint against State Farm.  
The parties then filed cross motions for partial summary 
judgment.

 
 
[¶9]      By order entered 
on June 22, 2005, the district court entered a partial summary judgment in favor 
of State Farm and denied Lawrence's motion for partial summary 
judgment.  That order contained 
these findings and conclusions:

 
 
            
1.  On July 4, 2003, Cody Lee Holt died of injuries received in 
an automobile accident.

            
2.  Following the death of Cody Lee Holt, Plaintiff Heidi 
Lawrence presented claims and demands against various individuals, including 
Valerie Johnson and D'Andra Amende.

            
3.  At the time of the automobile accident, Johnson and Amende 
were insured under a policy of homeowner's insurance issued by Defendant State 
Farm Fire and Casualty Company (hereafter "State Farm").

            
4.  When presented with a copy of the Complaint filed in the 
case of Lawrence v. Johnson and 
Amende, Sheridan County District Court Civil Action No. CV2004-473, State 
Farm denied coverage for the claims asserted against Johnson and Amende.  State Farm did not extend a defense for 
any of the claims asserted against Johnson and Amende.

            
5.  Plaintiff Lawrence has taken 
a judgment against Johnson and Amende and has received an assignment of rights 
that purports to transfer Johnson's and Amende's rights against State Farm, if 
any, to Lawrence.  
Lawrence 
has filed this lawsuit seeking to enforce those rights and to recover on her 
judgment in the Lawrence v. Johnson and 
Amende lawsuit.

            
6.  Lawrence and State Farm have stipulated and agreed that the 
initial foundational issue that needs to be addressed is the issue of whether or 
not State Farm's homeowner's policy provided liability insurance coverage for 
the claims asserted in the Lawrence  v. Johnson and Amende lawsuit.  Accordingly, the parties have filed 
cross motions for partial summary judgment on this issue.

            
7.  In analyzing the terms of the policy at issue and the duty 
to defend imposed upon an insurer, such as State Farm, this Court has been 
guided by the principles stated in State 
ex rel. Farmers Insurance Exchange v. District Court for the Ninth Judicial 
District, 844 P.2d 1099, 1101-1102 (Wyo. 1993), in Shoshone First Bank v. Pacific Employers 
Insurance Co., 2 P.3d 510, 513-514 (Wyo. 2000) and in similar 
cases.

            
8.  The State Farm homeowner's policy at issue is not 
ambiguous.  The policy contains 
clear exclusions, which bar coverage for the bodily injury claims asserted by 
Lawrence against 
Johnson and Amende.  The policy 
contains a motor vehicle exclusion, which bars coverage for bodily injury claims 
"arising out of the ownership, maintenance, use, loading or unloading of 
. . .  a motor vehicle owned or operated by or rented or loaned 
to any insured."  In addition, the 
policy contains additional exclusions for claims arising out of an insured's 
entrustment  or supervision of any 
person's use of a motor vehicle, such as the motor vehicle involved in the 
automobile accident involved in this case.

            
9.  The claims asserted by Lawrence against Johnson and Amende 
were not covered by the terms of the State Farm homeowner's policy and State 
Farm had no duty to defend those claims.  
All of these claims arise out of the use of a motor vehicle, an 
instrumentality clearly excluded from coverage under the terms of the 
policy.  To the extent that the 
Plaintiff asserts that there should be coverage under some alternative theory, 
such theories fall afoul of the express exclusions relating to entrustment and 
supervision claims.  Under the clear 
and unambiguous terms of the policy, State Farm has clearly expressed the intent 
that the liability coverage provided by this policy would not extend to or 
include claims of the nature asserted against Johnson and Amende as a result of 
the death of Cody Lee Holt.

 
 
            
IT IS THEREFORE ORDERED AS FOLLOWS:

 
 
            
A.  State Farm is hereby granted partial summary judgment.  The State Farm homeowner's policy at 
issue did not provide coverage for the claims asserted by Lawrence against Johnson 
and Amende in the Lawrence v. Johnson and 
Amende lawsuit.  State Farm had 
no duty to defend or to indemnify Johnson and/or Amende under the allegations 
contained in the Complaint file therein.

            
B.  Plaintiff's motion for Partial Summary Judgment is hereby 
denied.

 
 
[¶10]   In order to ensure that an appeal 
could be taken from the partial summary judgment described above, without 
running afoul of W.R.C.P. 54(b), on August 1, 2005, the parties stipulated to a 
final judgment that dismissed all remaining claims with prejudice.  On August 4, 2005, Lawrence amended her 
notice of appeal to include that order.  
The case was argued to the Court on December 13, 2005, and thereafter was 
taken under advisement.

 
 
STANDARD 
OF REVIEW

 
 
[¶11]   When we review a summary judgment, 
we have before us the same materials as did the district court, and we follow 
the same standards which applied to the proceedings below.  The propriety of granting a motion for 
summary judgment depends upon the correctness of the dual findings that there is 
no genuine issue as to any material fact and that the prevailing party is 
entitled to judgment as a matter of law.  A genuine issue of material fact exists 
when a disputed fact, if proven, would have the effect of establishing or 
refuting an essential element of an asserted cause of action or defense.  We, of course, examine the record from a 
vantage point most favorable to the party who opposed the motion, affording to 
that party the benefit of all favorable inferences that fairly may be drawn from 
the record.  Questions of law are 
reviewed de novo.  Martin v. Committee for Honesty and Justice 
at Star Valley Ranch, 2004 WY 128, ¶8, 101 P.3d 123, 127 (Wyo. 2004); also 
see Matlack v. Mountain West Farm Bureau 
Mutual Insurance Company, 2002 WY 60, ¶6, 44 P.3d 73, 76-77 (Wyo. 
2002).

 
 
DISCUSSION

 
 
[¶12]   We have had many occasions to 
address the duty to defend in circumstances that are akin to the matter at 
hand.  In Matlack, ¶¶15-17, 44 P.3d  at 79-80, we 
summarized much of the applicable case law and held:

 
 
Next, we 
are faced with the question of whether a duty to defend existed in this case 
even though coverage was clearly not available.  Our jurisprudence has established an 
insurer's duty to defend is broader than its duty to provide coverage.  Shoshone First Bank v. Pacific Employers 
Insurance Co., 2 P.3d 510, 513-14 (Wyo.2000).

            

The 
insurer is obligated to afford a defense as long as the alleged claim rationally 
falls within the policy coverage.  
The obligation to defend is an independent consideration in liability 
insurance, and it is invoked by any claim alleged in the complaint that is 
potentially covered under the policy.

 
 

Id. 
(citations omitted).  The insurer in 
Shoshone First Bank assumed the duty 
to defend because a claim of invasion of privacy was made which could have 
potentially been considered a "personal injury" under the terms of the 
policy.  If the policy potentially 
covers one or more claims, the insurer has a duty to defend all claims, and any 
doubts about coverage should be resolved against the insurer.  Alm v. Hartford Fire Insurance Company, 
369 P.2d 216, 219 (Wyo.1962).

 
 
Ms. 
Matlack argues that, unlike the situation in Reisig where we found no duty to defend 
because conversion could not constitute an "accident" as contemplated in an 
insurance policy very similar to the one at issue here, her complaint recites 
various causes of action so that, if her claim for trespass were not covered by 
the policy because it involved an intentional act, other claims would arguably 
give rise to a duty to defend.  In 
Reisig, the complaint stated only one 
claim for conversion.  A simple 
reading of Ms. Matlack's amended complaint exposes the flaw in her 
argument.  All the causes of action 
rely upon the same facts the intentional trespass.  Simply because Ms. Matlack sought to 
denominate causes of action as "negligence" or "negligent infliction of 
emotional distress," the facts cannot be magically transformed and thereby 
create a duty to defend.  This court 
rejected a similar argument in First 
Wyoming Bank, 860 P.2d 1094.  
There, the Robinsons and the Russells tried to transform a 
breach-of-contract case into an insured claim by including a cause of action 
entitled "negligence."   
However, the underlying nature of the dispute was the bank's alleged 
failure to loan money to them as promised;  
e.g., a breach of contract.  
Those facts did not constitute an "occurrence" within the meaning of the 
policy, and, consequently, we found no duty to defend.

 
 
            
To determine whether a claim is rationally covered by the terms of the 
policy, as we said in First Wyoming 
Bank, "we analyze the duty to defend by examining the facts alleged in the 
complaint."  860 P.2d  at 1097.  "Therefore, to determine Continental's 
duty to defend the Bank in the Robinson/Russell litigation, we examine the terms 
of Continental's policy and the allegations contained in the Robinson/Russell 
complaint."  860 P.2d  at 
1097-98.  The court then reviewed 
the complaint and found, "Although there is a claim in the complaints labeled 
'NEGLIGENCE,' the facts in the complaint do not demonstrate alleged loss 
resulting from negligence or alleged loss 'caused by an occurrence,' but instead 
demonstrate alleged losses resulting from a breach of contract."  860 P.2d  at 1099.  Further, the opinion noted that 
misrepresentation could have been a possible claim under the facts alleged but 
the claim would have required proof of an intentional act and would not 
constitute an "accident" or "occurrence" within the meaning of the policy.  860 P.2d  at 1100.

 
 
Also see 
generally, C.T. Drechsler, Annotation, Consequences of Liability Insurer's Refusal 
to Assume Defense of Action Against Insured upon Ground that Claim upon Which 
Action is Based is not Within Coverage of Policy, 49 A.L.R.2d 694, esp. § 4 
(1956, and Later Case Service 1999, Supp. 2005). 

 
 
[¶13]   We begin our further analysis by 
examining the terms of the policy at issue here, keeping in mind that the 
alleged claim must rationally fall within the policy coverage, and that the 
obligation to defend is invoked by any claim alleged in the complaint that is 
potentially covered under the policy.  
The cover page of the homeowner's policy at issue here calls the 
policyholder's attention to this:  
"This policy is one of the broadest forms available today, and provides 
you with outstanding value for your insurance dollars.  However, we want to point out that every 
policy contains limitations and exclusions.  Please read your policy carefully, 
especially Losses Not Insured' and all exclusions."

 
 
[¶14]   In "Section II  Liability 
Coverages" the policy provided:

 
 
If a 
claim is made or a suit is brought against an insured for damages because of bodily injury or property damage to which this coverage 
applies, caused by an occurrence,2 we will:

            
1.  pay up to our limit of liability for the damages for which 
the insured is legally liable; 
and

            
2.  provide a defense at our expense by counsel of our 
choice.

 
 
The word 
"occurrence" is defined in the policy as follows:

 
 
7.  "occurrence," when used in Section II of 
this policy, means an accident, including exposure to conditions, which results 
in:

            
a.  bodily injury; 
or

            
b.  property 
damage[.]

 
 
As noted 
by the district court in its order, the policy specifically excluded coverage 
arising out of the "ownership, maintenance, use, loading or unloading of:  (2) 
a motor vehicle owned or operated by 
or rented or loaned to any insured[.]" as well as "bodily injury or property damage arising out of  (1) 
the entrustment by any insured to 
any person; (2) the supervision by any insured of any 
person[.]"

 
 
[¶15]   Next we examine the complaint in 
detail to ascertain if any claim alleged in the complaint was potentially 
covered under the policy.  As noted 
in our recitation of the facts and circumstances of this case, as well as the 
summary of Lawrence's argument, it is contended that Johnson's act of giving her 
daughter gas money was an independent act of negligence (an "occurrence") that 
stands apart from Amende's use of the automobile and Johnson's entrustment of 
the vehicle to her.  The complaint 
recites that in her demand letter, Lawrence specifically identified the giving of 
the gas money as an act of negligence ("You are guilty of negligence on at least 
two counts.  First, you failed to 
act with reasonable care for the protection of others when you gave your 
daughter gas money, thereby enabling her dangerous conduct, without taking 
reasonable steps to investigate who was driving the car.  Second, you negligently entrusted the 
car to your daughter, knowing that she did not have a driver's license and was 
not qualified, by instruction or experience, to operate the car or exercise 
control over the car without exposing third parties to an unreasonable risk of 
harm.").  The remainder of the 
complaint, and its many attachments, bears out that one of Lawrence's claims was that 
Johnson's negligence was founded, in part, on her providing her daughter with 
gas money.  It is clear from the 
briefs and arguments made by Lawrence to this Court that the only issue raised 
here, which might have put State Farm on notice that it was obligated to provide 
a defense, was Johnson's providing her daughter with gas money.  Lawrence further contends that that discrete 
act can be separated out from the motor vehicle exclusion, as well as the 
entrustment/supervision exclusion.  
This theory is based upon the Wyoming statutes that require all drivers to 
have a driver's license.  Wyo. Stat. 
Ann. § 31-7-106(a) (LexisNexis 2005), and also see §§ 31-7-108 and 31-7-110 
(allowing minors to have limited and temporary driver's permits, which Amende 
had).  Further, Wyo. Stat. Ann § 
31-7-135 (LexisNexis 2005) provides:  
"No person shall authorize or knowingly permit a motor vehicle owned by 
him or under his control to be driven or towed upon any highway by any person 
who is not licensed for the type or class of vehicles to be driven or is in 
violation of any provision of this act."

 
 
[¶16]   We are unable to agree with 
Lawrence's 
contention for several reasons.  The 
first is that Lawrence would have us conclude that the 
negligent act was Johnson giving her daughter gas money, period.  We think it is evident beyond cavil that 
the sentence Lawrence posits must be completed like this:  The negligent act, if any, was Johnson 
giving her  daughter gas money so 
that she could operate the motor vehicle in question.  In sum, we are unable to identify a 
thread of argument that we view as cogent.  
We think Johnson's act or acts were inextricably related to the operation 
of the motor vehicle and, hence, fell squarely within an exception to the 
insurance coverage at issue here.  
Thus, State Farm had no obligation to interpose a defense to Lawrence's claims.  We note at this juncture that the 
application of the motor vehicle exclusion is dispositive of this case.  The district court found that the 
entrustment/supervision exclusion also applied, but we need not address that 
issue dispositively because of our holding above. 

 
 
[¶17]   Lawrence cites many cases in her briefs.  However, both in her briefs and in oral 
argument, Lawrence conceded that she could not cite a 
case that could be viewed as pertinent authority that supported the argument 
made above.  Our independent 
research came to the same conclusion.  
At oral argument, Lawrence was asked to identify the cases that 
it considered to most strongly support her argument.  Two cases were 
identified.

 
 
[¶18]   The first was The Salem Group v. Oliver, 128 N.J. 1, 
607 A.2d 138 (N.J. 1992).  In the Oliver case, the New Jersey Supreme 
Court held that the motor vehicle exclusion in an insurance policy did not 
operate to relieve the appellant insurance company of the duty of providing a 
defense with respect to the fifth count of the complaint that alleged social 
host liability for supplying alcoholic beverages to Oliver:  "No one disputes that insurers are 
generally obligated to defend their insureds on social host claims.  The critical question is whether the 
insurer can avoid that obligation because a separate excluded risk, the 
operation of an all-terrain vehicle (ATV), constitutes an additional cause of 
the injury."  Id., 607 A.2d 139.  We do not agree with Lawrence's contention that 
the Oliver case supports her core 
argument.

 
 
[¶19]   The second case is Sarp v. U.S. Fidelity Guaranty Company, 
572 So. 2d 158 (La.App. 1 Cir. 1990), cert. denied 573 So. 2d 1136 (La. 1991).  Much like the Oliver case summarized above, the result 
in the Sarp case turned on the 
insured having provided his minor son with alcoholic  beverages.  The Court of Appeal of Louisiana, First Circuit, 
reasoned:

 
 
The 
petition here alleges Lanier Juneau's negligence in the serving of alcohol and in 
permitting consumption of alcohol by minors in his home.  This theory of negligence rests upon a 
statutory duty not to purchase alcohol for minors,  and a civil duty, that can 
be inferred from this statute, to prohibit minors from consuming alcohol.  This duty encompasses risks beyond that 
of an automobile accident.  We can 
foresee various means other than use of an automobile by which negligent conduct 
due to intoxication could have resulted in injury.  The use of the automobile in this case, 
though an essential fact of this 
accident, was not an essential element of the theory of liability.  [Italics in the 
original.]

 
 

Sarp, 572 So. 2d  at 160.

 
 
[¶20]   We are not persuaded that the Sarp case supports Lawrence's argument 
either, because in the instant case use of the automobile was an essential 
element of the theory of liability.

 
 
CONCLUSION

 
 
[¶21]   We hold that the district court did 
not err in granting summary judgment in favor of State Farm.  The order of the district court is 
affirmed.

 
 
FOOTNOTES

 
 

1Meaning that 
none of the four teenagers involved in this incident held a valid driver's 
license.

 
 

2Each of the 
terms printed in bold is a term defined in the definition section of the 
policy.