Auto Club Family Insurance Company v. Moroney et al
Filing
20
MEMORANDUM AND ORDER denying 14 plaintiff's Motion for Summary Judgment; granting 15 defendant's Motion for Summary Judgment. Signed by Chief District Judge Julie A Robinson on 02/15/2018. (tvn)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
AUTO CLUB FAMILY
INSURANCE COMPANY,
)
)
)
)
Plaintiff,
)
vs.
)
)
)
BLAKELUND MORONEY et al.,
)
heirs at law to KEVIN P. MORONEY,
)
deceased,
)
)
and
)
)
SUZANNE ESTRELLA and
)
BENJAMIN ESTRELLA,
)
)
)
Defendants. )
)
Case No. 2:16-cv-02789-JAR-JPO
MEMORANDUM AND ORDER
This case involves an insurance-coverage dispute arising from events that
transpired on August 7, 2014. On that date, Conner Estrella, a minor, was driving his
parents’ vehicle when he struck and killed a pedestrian, Kevin P. Moroney. In
consolidated litigation pending in the District Court of Johnson County, Kansas, Kevin
Moroney’s heirs—Blakelund Moroney, Brenton Moroney, Brittany Moroney, and
Brogan Moroney (collectively “Defendants”)—claim damages resulting from Benjamin
and Suzanne Estrella’s alleged negligent entrustment of their vehicle to their son,
Conner.1 Plaintiff Auto Club Family Insurance Company, the provider of the Estrellas’
1
Although Benjamin, Suzanne, and Conner Estrella are also named as defendants, they have never
appeared in this case.
1
homeowner’s insurance policy, filed this declaratory judgment action on November 30,
2016.2 Plaintiff seeks an order declaring that pursuant to the homeowner’s policy at
issue, it has no obligation to defend the Estrellas, or to indemnify them for damages that
may be awarded to Defendants, in the underlying Johnson County litigation. Defendants
filed an Answer and Counterclaim on January 19, 2017, seeking a declaratory judgment
in their favor on the insurance-coverage issue.3
Now before the Court are the parties’ cross-motions for summary judgment
(Docs. 14 and 15). The motions are fully briefed and the Court is prepared to rule. As
explained more fully below, the Court denies Plaintiff’s motion for summary judgment
and grants Defendants’ motion for summary judgment.
I.
Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is
“no genuine dispute as to any material fact” and that it is “entitled to judgment as a
matter of law.”4 In applying this standard, the court views the evidence and all
reasonable inferences therefrom in the light most favorable to the non-moving party.5
The moving party initially must show the absence of a genuine issue of material fact and
entitlement to judgment as a matter of law.6 In attempting to meet this standard, a
movant who does not bear the ultimate burden of persuasion at trial need not negate the
2
Doc. 1.
3
Doc. 9.
4
Fed. R. Civ. P. 56(a).
5
City of Herriman v. Bell, 590 F.3d 1176, 1181 (10th Cir. 2010).
6
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Celotex Corp. v. Catrett, 477 U.S
317, 324 (1986); Spaulding v. United Transp. Union, 279 F.3d 901, 904 (10th Cir. 2002) (citing Celotex,
477 U.S. at 322–23).
2
other party’s claim; rather, the movant need simply point out to the court a lack of
evidence for the other party on an essential element of that party’s claim.7
If the moving party properly supports its motion, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.”8
The non-moving party may not simply rest upon its pleadings to satisfy its burden.9
Rather, the non-moving party must “set forth specific facts that would be admissible in
evidence in the event of trial from which a rational trier of fact could find for the
nonmovant.”10 The non-moving party cannot avoid summary judgment by repeating
conclusory opinions, allegations unsupported by specific facts, or speculation.11 “Where,
as here, the parties file cross motions for summary judgment, [the court is] entitled to
assume that no evidence needs to be considered other than that filed by the parties, but
summary judgment is nevertheless inappropriate if disputes remain as to material facts.”12
7
Adams v. Am. Guar. & Liab. Ins. Co., 233 F.3d 1242, 1246 (10th Cir. 2000) (citing Adler v. WalMart Stores, Inc., 144 F.3d 664, 671 (10th Cir. 1998)).
8
Spaulding, 279 F.3d at 904 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986)).
9
Anderson, 477 U.S. at 256; accord Eck v. Parke, Davis & Co., 256 F.3d 1013, 1017 (10th Cir.
2001).
10
Mitchell v. City of Moore, 218 F.3d 1190, 1197–98 (10th Cir. 2000) (quoting Adler, 144 F.3d at
671).
11
Adams, 233 F.3d at 1246; Argo v. Blue Cross & Blue Shield of Kan., Inc., 452 F.3d 1193, 1199
(10th Cir. 2006) (citation omitted).
12
James Barlow Family Ltd. P’ship v. David M. Munson, Inc., 132 F.3d 1316, 1319 (10th Cir.
1997) (citing Harrison W. Corp. v. Gulf Oil Co., 662 F.2d 690, 691–92 (10th Cir. 1981)).
3
II.
Uncontroverted Facts
In this case, the parties agree that the issue of insurance coverage is a question of
law appropriate for the Court to decide on summary judgment, and have agreed to the
following undisputed material facts.13
Defendants filed a Petition in the District Court of Johnson County, Kansas,
against Conner, Suzanne, and Benjamin Estrella for the wrongful death of Kevin
Moroney.14 Brenton Moroney, as special administrator of his father’s estate, also filed a
survivorship claim against Conner, Suzanne, and Benjamin Estrella in the same court.15
Those two lawsuits have now been consolidated into Case No. 15CV-00521.16
Defendants allege in the consolidated suits that on August 7, 2014, Connor
Estrella, a minor, consumed alcohol and possibly other intoxicating substances at a party
and then drove home just before midnight.17 They allege that on his way home, Conner
lost control of the vehicle he was driving and struck Kevin Moroney, who was standing
outside his home, causing fatal injuries.18 Conner was subsequently charged in the
District Court of Johnson County, Kansas with one count of involuntary manslaughter
while driving under the influence.19
13
For purposes of this Order, the Court has considered only Facts 1–17 as agreed upon by the
parties. See Doc. 14 at 5–10; Doc. 15 at 2–7. Although Defendants appear to have included additional
facts in their Motion for Summary Judgment and Response to Plaintiff’s Motion for Summary Judgment
(Doc. 15 at 9–10), the Court has disregarded those facts as not agreed upon by the parties or irrelevant to
the determination of the insurance-coverage issue in this case.
14
Doc. 14 at 5, ¶1; Doc. 15 at 2, ¶1.
15
Doc. 14 at 5, ¶2; Doc. 15 at 2, ¶2.
16
Doc. 14 at 5, ¶3; Doc. 15 at 3, ¶3.
17
Doc. 14 at 5, ¶4; Doc. 15 at 3, ¶4.
18
Doc. 14 at 5, ¶5; Doc. 15 at 3, ¶5.
19
Doc. 14 at 7, ¶11; Doc. 15 at 4, ¶11.
4
In the consolidated Johnson County suits, Defendants claim damages resulting
from the alleged negligent entrustment by Benjamin and Suzanne Estrella of their vehicle
to their son.20 They contend that the Estrellas knew or should have known that Conner
was likely to be an incompetent, irresponsible, or reckless driver by virtue of his past
criminal record and substance abuse history.21 Defendants allege that as a result of
Benjamin and Suzanne Estrella negligently entrusting their vehicle to Conner, Kevin
Moroney was severely injured and subsequently died, and that Defendants have suffered
pecuniary and non-pecuniary losses, harms, and damages as a result.22
Plaintiff had issued a motor-vehicle liability policy to Benjamin and Suzanne
Estrella, providing bodily-injury liability coverage in the amount of $250,000 “per
person” and $500,000 “per accident” insuring the vehicle operated by Conner at the time
of the accident at issue.23 Pursuant to that policy, Plaintiff provided the Estrellas with a
defense and paid Defendants the $250,000 policy limit regarding the wrongful-death and
survivorship claims filed in the District Court of Johnson County, Kansas, as well as
Defendants’ settlement of all claims against Conner.24
Plaintiff had also issued a “Premier” Homeowner’s Policy of Insurance (“the
Policy”) to Benjamin and Suzanne Estrella.25 Benjamin, Suzanne, and Conner Estrella
20
Doc. 14 at 6, ¶6; Doc. 15 at 3, ¶6.
21
Doc. 14 at 6, ¶9; Doc. 15 at 4, ¶9.
22
Doc. 14 at 7, ¶10; Doc. 15 at 4, ¶10.
23
Doc. 14 at 7, ¶12; Doc. 15 at 5, ¶12.
24
Doc. 14 at 7, ¶13; Doc. 15 at 5, ¶13.
25
Doc. 14 at 8, ¶14; Doc. 15 at 5, ¶14.
5
were Insureds under the Policy at the time of the accident at issue.26 The Policy provides
limits of $500,000 for Coverage E – Personal Liability – Each Occurrence.27
The parties cite several provisions of the Policy as being dispositive of the
insurance-coverage issue in this case. The parties first cite to several provisions in the
“Definitions” section:
DEFINITIONS
In this policy, you or your means any insured named in the
declarations. If there is only one insured named in the
declarations and the insured is a natural person, you or your
includes that person’s spouse if that spouse lives in the same
household on a regular, continuous and permanent basis. We,
us, and our means the Auto Club Family Insurance Company.
Bodily injury – means bodily harm, bodily sickness or bodily
disease, including death that results. Bodily injury does not
include damages for mental anguish, emotional distress or
similar damages unless such damages are directly caused by
actual physical injury to the person claiming damages.
Insured – means you and people who live in the residence
premises on a regular, continuous and permanent basis who are:
1. Your relatives by blood, marriage or adoption.
2. Any other person under the age of 21 who is in the care of
you or any person included under 1. above.
Motorized vehicle – means a self-propelled land or amphibious
vehicle, regardless of method of surface contact. Motorized
vehicle includes parts and equipment.28
The parties next cite to the provision on covered losses in Section II of the Policy:
SECTION II – LIABILITY COVERAGES
26
Doc. 14 at 8, ¶15; Doc. 15 at 5, ¶15.
27
Doc. 14 at 8, ¶16; Doc. 15 at 6, ¶16.
28
Doc. 14 at 8, ¶17; Doc. 15 at 6, ¶17 (emphasis in original).
6
COVERAGE E – PERSONAL LIABILITY
COVERAGE F – MEDICAL PAYMENTS TO OTHERS
WHAT LOSSES ARE COVERED – COVERAGE E
1. We will pay for actual damages that an insured is legally
obligated to pay due to bodily injury and property damage
caused by an occurrence to which this coverage applies.29
Finally, the parties cite two relevant exclusions from coverage under the Policy:
SECTION II – LIABILITY COVERAGES
WHAT LOSSES ARE NOT COVERED – EXCLUSIONS –
SECTION II
1. Under SECTION II we do not cover:
f. Bodily injury or property damage arising out of the
ownership, maintenance, use, loading or unloading of
motorized vehicles, including trailers of any type.
i. Bodily injury or property damage arising out of any
insured’s:
(1) entrustment to any other person;
(2) vicarious parental liability, whether or not imposed
by law, for the actions of a child or minor relating to
the operation, maintenance, loading or unloading; or
(3) supervision of any other person in the operation,
maintenance, loading or unloading;
of any motorized vehicle, including trailers of any type,
or of any watercraft or aircraft not covered under
SECTION II.30
29
Doc. 14 at 8, ¶17; Doc. 15 at 6, ¶17 (emphasis in original).
30
Doc. 14 at 8, ¶17; Doc. 15 at 6, ¶17 (emphasis in original).
7
Although the parties do not cite it in their briefs, Section II of the Policy also
contains a severability clause:
6. Severability of Insurance
This insurance applies separately to each insured, however, this
condition will not increase our limit of liability for any one
occurrence.
This severability of insurance provision in no way alters or
affects any provision of the policy indicating that it applies to
“any insured”. Any limiting or exclusionary provision in the
policy indicating that it applies to “any insured” means that such
limiting or exclusionary provision is applicable as to any
insured under this policy. Where we use the phrase “any
insured”, we intend that such provisions not be limited to any
one insured and that such provisions are applicable to any
insured under the policy.31
III.
Discussion
The parties have filed cross-motions for summary judgment, each party arguing
that under the terms of the Policy, judgment should be awarded in their favor. Plaintiff
argues that the Policy’s negligent-entrustment exclusion expressly excludes coverage for
Defendants’ claim that Benjamin and Suzanne Estrella negligently entrusted their vehicle
to their son, Conner. Alternatively, Plaintiff argues that the motor-vehicle exclusion
excludes coverage because the damages alleged by Defendants arose out of the use of a
motor vehicle. Defendants argue that the negligent-entrustment exclusion is ambiguous
and should therefore be construed in their favor as not excluding coverage for their
negligent-entrustment claim. Defendants further argue that Kansas law does not
recognize Plaintiff’s position that the motor-vehicle exclusion bars coverage.
31
Doc. 1, Ex. 3 at 66 (emphasis in original).
8
The interpretation and legal effect of an insurance contract is a matter of law to be
determined by the court.32 In construing an insurance policy, a court must consider the
instrument as a whole and interpret the policy language in such a way as to give effect to
the intent of the parties.33 If the policy language is clear and unambiguous, the court
must interpret it in its “plain, ordinary, and popular sense.”34 A policy is ambiguous
“when it contains language of doubtful or conflicting meaning based on a reasonable
construction of the policy’s language.”35
“Ambiguity in a written contract does not appear until the application of pertinent
rules of interpretation to the face of the instrument leaves it genuinely uncertain which
one of two or more meanings is the proper meaning.”36 Whether policy language is
ambiguous is a question of law, and the proper test is “not what the insurer intends the
language to mean, but what a reasonably prudent insured would understand the language
to mean.”37 An insurer has a “duty to define limitations to an insured’s coverage in clear
and explicit terms. To restrict or limit coverage, an insurer must use clear and
32
Gerdes v. Am. Family Mut. Ins. Co., 713 F. Supp. 2d 1290, 1295 (D. Kan. 2010) (quoting
Goforth v. Franklin Life Ins. Co., 449 P.2d 477 (Kan. 1969)); Am. Media, Inc. v. Home Indem. Co., 658
P.2d 1015, 1018 (Kan. 1983).
33
Magnus, Inc. v. Diamond State Ins. Co., 101 F. Supp. 3d 1046, 1054 (D. Kan. 2015) (citing
Brumley v. Lee, 963 P.2d 1224, 1226 (Kan. 1998)); Am. Family Mut. Ins. Co. v. Wilkins, 179 P.3d 1104,
1109 (Kan. 2008) (citation omitted); O’Bryan v. Columbia Ins. Grp., 56 P.3d 789, 792 (Kan. 2002) (citing
Farm Bureau Mut. Ins. Co. v. Horinek, 660 P.2d 1374 (Kan. 1983)).
34
O’Bryan, 56 P.3d at 792 (citing First Fin. Ins. Co. v. Bugg, 962 P.2d 515 (Kan. 1998)); Magnus,
101 F. Supp. 3d at 1054.
35
Kemper Ins. Cos. v. Weber, 168 P.3d 607, 610 (Kan. Ct. App. 2007).
36
Wilkins, 179 P.3d at 1109–10 (quoting O’Bryan, 56 P.3d at 792–93).
37
Id. at 1110 (quotation omitted).
9
unambiguous language.”38 If the policy language is ambiguous, then it must be construed
in favor of the insured.39
A.
Exclusion for Negligent Entrustment
The Court begins by construing Section II.1.i(1) of the Policy, which on its face
excludes coverage for certain damages arising out of negligent entrustment. Plaintiff first
argues that the Policy excludes coverage for Defendants’ claim that Benjamin and
Suzanne Estrella negligently entrusted their vehicle to Conner Estrella because Section
II.1.i(1) explicitly excludes coverage for injuries arising from negligent entrustment.40
The exclusion states that the Policy does not cover “[b]odily injury or property damage
arising out of . . . any insured’s entrustment to any other person,”41 and because
Benjamin and Suzanne Estrella entrusted their vehicle to Conner, Plaintiff argues that the
Policy does not cover any resulting damages.42
Defendants argue that because “any other person” is juxtaposed against the
opening phrase “any insured,” the plain meaning of “any other person” is any person
other than any insured.43 Because Conner was insured under the Policy, Defendants
reason, the exclusion for negligent entrustment does not apply and Defendants are
entitled to coverage for their claim.44 Defendants alternatively argue that the language is
38
Weber, 168 P.3d at 611 (citations omitted).
39
Magnus, 101 F. Supp. 3d at 1054 (citing Brumley v. Lee, 963 P.2d 1224, 1226 (Kan. 1998));
O’Bryan, 56 P.3d at 793 (citing Catholic Diocese of Dodge City v. Raymer, 840 P.2d 456, 459 (Kan.
1992)).
40
Doc. 14 at 17.
41
Id. at 14.
42
Id. at 17.
43
Doc. 15 at 16–17.
44
Doc. 19 at 4.
10
ambiguous and should therefore be construed in Defendants’ favor.45 Defendants argue
that this language is ambiguous because “any other person” could refer to any person
other than an insured, any person other than the specific insured accused of negligent
entrustment, or even any person other than the named insureds in the Policy, in this case
Benjamin and Suzanne Estrella.46
Plaintiff responds that Defendants are trying to create ambiguity where none
exists, and that the disputed language unambiguously excludes coverage for bodily injury
or property damage arising out of any one of the insured’s entrustment of the vehicle to
any other person.47 Furthermore, Plaintiff argues, the intent of the Policy is to exclude
claims of negligent entrustment involving motor vehicles because those claims are
covered under a separate motorist policy.48
After thoroughly analyzing the disputed language in the context of the Policy as a
whole, the Court finds that the Policy’s negligent-entrustment exclusion is ambiguous
and should therefore be construed in Defendants’ favor to cover Defendants’ claim of
negligent entrustment against Benjamin and Suzanne Estrella. Starting with the phrase
“any other person,” Merriam Webster defines “other” as “(1)(a) being the one (as of two
or more) remaining or not included, (b) being the one or ones distinct from that or those
first mentioned or implied.”49 In Riley v. Allstate Insurance Co.,50 the Kansas Court of
Appeals construed the term “any other person” in a Kansas statute and held that the plain
45
Doc. 15 at 17–18.
46
Id. at 14.
47
Doc. 17 at 3.
48
Id. at 4.
49
Doc. 15 at 14.
50
281 P.3d 591, 596 (Kan. Ct. App. 2012).
11
meaning of the statute dictated that “any other person” be read with the opening phrase
referring to the “owner of a motor vehicle” so that “any other person” meant “a person
other than the owner of the motor vehicle.”51
Plaintiff asserts that the construction in Riley does not cause ambiguity in this
case.52 But the Court finds Riley instructive in addressing how to interpret similar, if not
identical, language in the Policy. Therefore, because “any other person” is juxtaposed
against the opening phrase “any insured,” and because the word “other” is defined in
terms of what it does not include, the Court cannot construe the term “any other person”
without first construing “any insured.”
The Kansas Supreme Court has stated that the word “any” in the term “any
insured” is inherently ambiguous.53 “Any” can refer to “one,” but can also refer to
“some.”54 And in Catholic Diocese of Dodge City v. Raymer,55 the Kansas Court of
Appeals adopted a broad definition of “any insured,” finding that it referred to “any and
all insureds under the policy, not just ‘the insured’ seeking coverage.”56 Under Kansas
law, then, “any insured” is ambiguous and can range in scope from a single insured to all
insureds under a policy. In construing the meaning of “any other person” opposite “any
insured,” therefore, it is not immediately clear whether “any other person” includes other
insureds or not.
51
Id. at 596.
52
Doc. 17 at 4–5.
53
Brumley v. Lee, 963 P.2d 1224, 1227 (Kan. 1998).
54
Id.
55
825 P.2d 1144 (Kan. Ct. App. 1992).
56
Id. at 1148.
12
Further, as both parties have urged, the Court must interpret the Policy as a whole
rather than reading individual provisions in isolation.57 The Court must therefore
examine other clauses in the Policy and determine whether they have any effect on the
disputed language. Viewing the Policy as a whole, the Court finds that the definition of
the term “any insured” in the severability clause further supports a finding of ambiguity.
Under the Policy’s severability clause, which begins “[t]his insurance applies
separately to each insured,” 58 each insured effectively has his or her own policy.59
Courts are generally split as to whether a severability clause coupled with exclusions
applying to “any insured” bars coverage for co-insureds.60 More relevant to the present
dispute, many courts have also examined whether a severability clause renders the term
“any insured” ambiguous.61 In Kansas, the controlling precedent on this issue is Brumley
v. Lee.62
In Brumley, parents of a four-year-old child brought a wrongful-death claim
against a caregiver, David Lee, and his wife after the child suffered fatal injuries in their
care.63 Lee filed a third-party petition against the insurer of his home, seeking
indemnification.64 Although Lee’s wife inflicted the fatal blow, the child’s parents
57
See Am. Family Mut. Ins. Co. v. Wilkins, 179 P.3d 1104, 1109 (Kan. 2008) (citation omitted);
O’Bryan v. Columbia Ins. Grp., 56 P.3d 789, 792 (Kan. 2002) (citing Farm Bureau Mut. Ins. Co. v.
Horinek, 660 P.2d 1374 (Kan. 1983)).
58
Doc. 1, Ex. 3 at 66.
59
Brumley v. Lee, 963 P.2d 1224, 1228 (Kan. 1998).
60
See Am. Family. Mut. Ins. Co. v. Bower, 752 F. Supp. 2d 957, 968–69 (N.D. Ind. 2010)
(collecting cases addressing whether a severability clause coupled with exclusions applying to “any
insured” bars coverage for co-insureds).
61
Id.
62
963 P.2d at 1227.
63
Id. at 1226.
64
Id.
13
alleged that Lee acted negligently in allowing her to do so.65 Lee’s insurance policy had
an intentional-act exclusion stating that the policy did not cover bodily injury or property
damage “which [was] expected or intended by any insured.”66 The policy also had a
severability clause, which stated “[t]his insurance applies separately to each insured.”67
The insurance company argued that coverage was excluded because Lee’s wife was “any
insured” and had intentionally harmed the child.68 But the child’s parents argued that the
severability clause rendered the language “any insured” ambiguous, and the policy should
therefore be construed in favor of coverage.69
The Kansas Supreme Court held that the term “any insured” in the policy
exclusion was ambiguous when read with the severability clause because the term
rendered the scope of the exclusion unclear.70 Noting that the policy’s severability clause
would ordinarily cause the exclusion to apply only against the individual insured for
whom coverage was sought, and in view of its finding that the word “any” was inherently
ambiguous, the court found that the insurance company’s attempt to expand the exclusion
by using the term “any insured” rendered the entire clause ambiguous.71
Perhaps trying to guard against ambiguity of the kind in Brumley, Plaintiff has
explicitly defined the phrase “any insured” in its severability clause:
65
Id.
66
Id. at 1227 (emphasis added).
67
Id.
68
See id. at 1226 (noting insurance company’s position that coverage was excluded because “the
acts causing the bodily injury [to the child] were intentionally inflicted by ‘any insured’”).
69
Id. at 1227.
70
Id. at 1228.
71
Id. at 1227–28.
14
This severability of insurance provision in no way alters or
affects any provision of the policy indicating that it applies
to “any insured”. Any limiting or exclusionary provision in
the policy indicating that it applies to “any insured” means
that such limiting or exclusionary provision is applicable as
to any insured under this policy. Where we use the phrase
“any insured,” we intend that such provisions not be limited
to any one insured and that such provisions are applicable
to any insured under the policy.72
Plaintiff’s qualifying language in the severability clause appears to broaden the scope of
“any insured” to include all insureds under the policy, and to therefore broaden the scope
of the Policy’s exclusions. But broadening the scope of “any insured” so that it is not
“limited to any one insured” actually narrows the scope of “any other person” in the
negligent-entrustment exclusion. Because “any other person” is juxtaposed against “any
insured” in that exclusion, broadening the scope of “any insured” to apparently
encompass all insureds makes it logical to interpret “any other person” in the exclusion as
not including anyone insured under the policy. Because Conner Estrella was insured
under the Policy, he is not “any other person,” and under this interpretation, the Policy
would therefore cover Defendants’ claim of negligent entrustment against Benjamin and
Suzanne Estrella.
Plaintiff correctly argues that in interpreting the Policy’s language, this Court
must consider the parties’ intent.73 Plaintiff further argues that the intent of the Policy is
to exclude coverage for negligent entrustment involving a motor vehicle because those
claims are covered under a separate motorist policy.74 But the Court is not persuaded that
even a reasonably prudent insured, from whose perspective the Court views the Policy,
72
Doc. 1, Ex. 3 at 66 (emphasis in original).
73
Doc. 17 at 3.
74
Id. at 4.
15
would appreciate that negligent-entrustment claims should be covered by a separate
policy. At the very least, this factor does not outweigh the inherent ambiguity of the
word “any” and the further confusion created by the severability clause.
The Court therefore concludes that, as viewed from the perspective of a
reasonably prudent insured, the exclusion in Section II.1.i(1) is ambiguous and should be
construed in Defendants’ favor to provide coverage for Defendants’ claim of negligent
entrustment against Benjamin and Suzanne Estrella. Accordingly, the Court grants
Defendants summary judgment as a matter of law on the issue of whether the negligententrustment exclusion excludes coverage in this case.
B.
Motor-Vehicle Exclusion
Plaintiff next argues that even if the negligent-entrustment exclusion does not
exclude coverage, the Court should still find coverage excluded by the motor-vehicle
exclusion in Section II.1.f of the Policy.75 Plaintiff acknowledges that Kansas law is
against it on this issue.76 Kansas is among a minority of jurisdictions that look to the
theory of liability rather than the cause of the accident in determining whether motorvehicle exclusions exclude coverage for negligent entrustment.77 Because the theory of
liability for negligent entrustment in auto accidents is based on the negligence of the
entruster in supplying the vehicle rather than on the negligence of the driver in causing
the accident, motor-vehicle exclusions like the one in the Policy at issue here do not
exclude coverage for negligent entrustment in Kansas.78
75
Doc. 14 at 17.
76
Id. at 23.
77
See, e.g., Marquis v. State Farm Fire & Cas. Co., 961 P.2d 1213, 1221 (Kan. 1998).
78
See Upland Mut. Ins., Inc. v. Noel, 519 P.2d 737, 741 (Kan. 1974).
16
Plaintiff, citing to dissenting opinions from the Kansas Supreme Court on the
scope of motor-vehicle exclusions, argues that this case presents an opportunity to
overturn Kansas precedent on the issue.79 Defendants respond that the Kansas Supreme
Court has repeatedly refused to overturn said precedent, which therefore binds this Court
in interpreting Kansas law.80
This Court is indeed bound by the Kansas Supreme Court’s interpretation of
Kansas law on this issue, and must therefore determine how the Kansas Supreme Court
would likely rule in this situation.81 Plaintiff argues that Kansas law is “unsettled” as to
whether motor-vehicle exclusions such as the one in the Policy exclude coverage for
negligent entrustment.82 Contrary to Plaintiff’s assertion, however, Kansas law appears
quite settled on this issue. Kansas has adhered to the rule that the theory of liability
rather than the cause of the accident governs whether a motor-vehicle exclusion precludes
coverage for negligent entrustment at least since Upland Mutual Insurance, Inc. v. Noel
was decided in 1974, forty-four years ago.83 The last time the Kansas Supreme Court
addressed the issue in detail was almost fourteen years ago, in Crist v. Hunan Palace,
Inc.84 There, a majority of the court firmly declined to overrule Upland, citing reliance
on the rule and stare decisis.85 Plaintiff points to forceful dissenting opinions,86 but even
79
Doc. 14 at 23.
80
Doc. 15 at 12.
81
See Fagan v. Roberts, 508 F. App’x 773, 774 (10th Cir. 2013).
82
Doc. 17 at 6.
83
519 P.2d at 741.
84
89 P.3d 573 (Kan. 2004).
85
Id. at 580.
86
Doc. 17 at 6–7.
17
forceful dissents do not mean that the law is “unsettled.” Rather, a majority of the
Kansas Supreme Court seemed satisfied with the state of the law when it last addressed
the issue.87
Given that Plaintiff’s legal basis for excluding coverage for negligent entrustment
under the Policy’s motor-vehicle exclusion is not recognized by Kansas law, the Court
also grants Defendants summary judgment as a matter of law on that issue.
IT IS THEREFORE ORDERED BY THE COURT that Plaintiff’s Motion for
Summary Judgment (Doc. 14) is DENIED and Defendants’ Motion for Summary
Judgment (Doc. 15) is GRANTED.
IT IS SO ORDERED.
Dated: February 15, 2018
S/ Julie A. Robinson
JULIE A. ROBINSON
CHIEF UNITED STATES DISTRICT
JUDGE
87
Plaintiff rightly notes that it is within this Court’s discretion to certify a question to the Kansas
Supreme Court on this issue pursuant to K.S.A. § 60-3201. See Lehman Bros. v. Schein, 416 U.S. 386,
390–91 (1974). Certification may be invoked when applicable state law is unsettled. United States v.
Jones, 512 F. Supp. 2d 1193, 1194 (D. Kan. 2007). But as Kansas law is settled on this issue, the Court
declines to certify the question.
18
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