Opinion ID: 2130437
Heading Depth: 1
Heading Rank: 12

Heading: the insurer could use plain language to clearly exclude from coverage marshall's negligent entrustment liability

Text: The term an insured could have been made unambiguous if Allstate had included a separate definition of that term, making it clear that the noun it modifies (insured) refers to any named insured. [18] Conversely, if Allstate had used the term the insured to achieve the necessary clarity, then Marshall's negligent entrustment liability would clearly be covered under the policy and not within the scope of the exclusion. In Unigard Mutual Ins Co v Spokane School Dist, 20 Wash App 261; 579 P2d 1015 (1978), the Court stated the accepted view, namely, [W]here coverage and exclusion is defined in terms of the insured, courts have uniformly considered the contract between the insurer and several insureds, to be separable, rather than joint, i.e., there are separate contracts with each of the insureds.[ [19] ] If the Allstate exclusion used the term the insured, the insurer could argue that this term refers to all insureds. This grammatical argument is supported by the theory that a, an, and the are all articles which render the noun they modify subject to two potential meanings. At least one learned jurist has relied upon this argument, lending support to the common-sense notion that even the term the can create ambiguity in the noun it modifies. [20] If this argument were made by the insurer, however, it would fail because the insurer must clearly and unmistakably exclude negligent entrustment claims from its broad liability insurance contract. [21] Thus, the insured will not always win in claiming coverage under the intentional acts exclusion. If Allstate had merely added y to the word an, to give us any insured, then Marshall's negligence liability would clearly be excluded. [22] In sum, Allstate has failed to unambiguously exclude negligent entrustment liability of an innocent coinsured spouse, such as Marshall Freeman, either in its broad coverage provision or in the intentional acts exclusion. VI THERE IS NO CONTROLLING PRECEDENT THAT REQUIRES THE TERM AN INSURED TO BE READ ONLY TO MEAN ALL INSUREDS The majority relies primarily upon cases that have interpreted the meaning of motor vehicle exclusions in general liability insurance contracts. [23] These cases do not stand for any general principle applicable to the construction of the Allstate intentional acts exclusion for the obvious reason that they construe the meaning of different contractual language. [24] To decide this case, the majority has extracted a principle from these cases that is totally inapposite to the particular language of the Allstate intentional acts exclusion: [W]here an insurance policy exclusion precludes coverage for the particular injury, then it also excludes coverage for negligent entrustment of the instrumentality that caused the injury.[ [25] ] Any such abstract rule, which runs contrary to our established rules of contract interpretation, must be rejected for the reasons stated by Justice BOYLE: [Since] the duty to defend, like the duty to indemnify, is contractual, any delineation of the scope of the duty to defend without reference to the policy itself must be viewed as a mere generality.[ [26] ] But, assuming the validity of the abstraction arguendo, the analysis the majority relies upon is flawed on its own terms. The language of the Allstate policy differs dramatically from the provisions of the homeowner's liability policies from which the majority gleans the above abstract rule of insurance contract exclusion clause interpretation. Given the plain and obvious differences of language between the Allstate intentional acts exclusion and the exclusions construed by the cases on which the majority relies, it is apparent that these precedents are inapplicable. The coverage dispute involved here is conceptually and linguistically distinct from the issue courts have faced in construing the motor vehicle exclusionary clauses. The Allstate policy excludes bodily injury related to acts of an insured on the basis of the state of mind of a person committing those acts. Yet, the language of the exclusion leaves it unclear whether the negligence of a coinsured is covered when that negligent act is a cause of injury, but there is a concurrent cause of the same injury traceable to the intentional act of another insured (whose acts are clearly excluded). Those cases involve claims by insureds who seek coverage for negligent entrustment of an automobile, despite the existence of a motor vehicle exclusion in the general liability policy. They present an issue of contract interpretation that is conceptually distinct from the issue in this case. The issue there is whether the motor vehicle exclusion can be interpreted as unambiguously excluding all injury that is in any way causally related to the use of an inanimate object (i.e., a motor vehicle), or whether it also can be viewed as not excluding injuries caused by the loaning or negligent entrustment of the vehicle. See West American Ins Co v Hinze, 843 F2d 263, 267-268 (CA 7, 1988) (holding that the negligent supervision of a child is not within the scope of the motor vehicle exclusion clause because no negligent acts were committed in the handling of, or with respect to, the excluded instrumentality). By contrast, the intentional acts exclusion relates to injury that is the product of the acts of one particular insured whose behavior is of a certain type (i.e., is intentional). Thus, we must interpret an exclusion that does not clearly spell out whether all injury is excluded from coverage when the injury is caused both by the intentional acts of one insured and by the merely negligent acts of another. The key difference between the two exclusions is that the motor vehicle exclusions clearly exclude all negligence liability related to the use of the motor vehicle. [27] The intentional acts exclusion, by contrast, does not plainly exclude any negligence liability. Only by a strained construction of the exclusion that gives priority to one of two possible interpretations of the term an insured, can one arrive at the conclusion that negligent entrustment liability is excluded from coverage. Thus, I am unpersuaded by the majority's reliance upon the motor vehicle exclusion cases to support the conclusion that Allstate has no duty to defend Marshall against the claim of negligent entrustment. [28] Thus, derivative liability theory upon which the majority relies, [29] namely, that Allstate's duty to defend Marshall is derivative of its duty to defend Alonda, is plainly inapplicable here. Therefore, the cases cited in support of that theory would not control, even if they could be applied to decide this case under the derivative theory. [30] We must also keep in mind that the first issue is whether Allstate has a duty to defend Marshall Freeman. When interpreting the Allstate policy, we must attempt to discern what meaning would serve the broader purposes of the policy. [31] Judge WAHLS, in his dissent in Dragovich, [32] indicates why the language of insurance liability policies, such as the Allstate homeowner's policy here, often create a duty to defend that is broader than the duty to indemnify. Allstate, as drafter of the policy, has clearly intended to create a broad duty to defend. [33] Under this broad duty, Allstate has a clear obligation to defend Marshall Freeman against the allegations by Mary Kelly that he negligently entrusted his wife with a dangerous instrumentality. The pleadings clearly imply facts that would make Allstate liable under its duty to indemnify. Thus, the duty to defend in this case extends at least up to the point of summary judgment, since facts might be available that would establish coverage during the process of discovery. Dragovich, supra at 508 (WAHLS, J., dissenting). [34] I would apply the approach that Judge WAHLS followed to the case at bar. [35] Allstate has provided contractually a broad all risk form of coverage for a homeowner's liability, and cannot now attempt to exclude coverage for precisely the kind of negligent claims that it is designed to cover. The exclusionary clause language not only is ambiguous, but it conflicts with a broad coverage provision. This is an easy case since ambiguities in a policy exclusion are to be construed in favor of the insured  especially where there is a broad duty to defend provision in the policy. VII