IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2016 Term FILED
_______________ November 17, 2016
released at 3:00 p.m.
No. 16-0290 RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
_______________ OF WEST VIRGINIA
AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY,
Plaintiff Below, Petitioner
v.
TARA CLENDENEN, JAMES CLENDENEN,
MARY A. NEESE, Administratrix and Personal Representative
of the Estate of Skylar Neese, deceased,
DAVID NEESE, and MARY A. NEESE, individually,
Defendants Below, Respondents
AND
ERIE INSURANCE PROPERTY AND CASUALTY COMPANY,
Plaintiff Below, Petitioner,
v.
MARY A. NEESE, Individually and as Administratrix of the Estate of Skylar Neese,
DAVID NEESE, TARA CLENDENEN, and PATRICIA SHOAF,
Defendants Below, Respondents.
____________________________________________________________
From the United States District Court for the Northern District of West Virginia
The Honorable Irene M. Keeley, Judge
Civil Action Nos. 1:14-cv-155 and 1:14-cv-172
CERTFIED QUESTIONS ANSWERED
____________________________________________________________
Submitted: September 21, 2016
Filed: November 17, 2016
Dwayne E. Cyrus, Esq.
Michael Benninger, Esq.
Shuman, McCuskey & Slicer, PLLC
Benninger Law, PLLC
Charleston, West Virginia
Morgantown, West Virginia
Margaret L. Miner, Esq.
Counsel for Respondents,
J. Robert Russell, Esq. Tara and James Clendenen and Sheila Eddy
Shuman, McCuskey & Slicer, PLLC
Morgantown, West Virginia William L. Frame, Esq.
Counsel for Petitioner, Wilson Frame & Metheney, PLLC
American National Property and Casualty Morgantown, West Virginia
Company Counsel for Respondents,
Mary and David Neese
Amy M. Smith, Esq.
Steptoe & Johnson PLLC
Paul W. Gwaltney, Jr., Esq.
Bridgeport, West Virginia
Trevor K. Taylor, Esq.
Laurie C. Barbe, Esq.
Taylor Law Office
Steptoe & Johnson, PLLC
Morgantown, West Virginia
Morgantown, West Virginia
Counsel for Respondent, Patricia Shoaf
Counsel for Petitioner,
Erie Insurance Property & Casualty
Company
Jill Cranston Rice, Esq.
Morgantown, West Virginia
Andrew T. Kirkner, Esq.
Washington, DC
Counsel for Amicus Curiae,
West Virginia Insurance Federation
JUSTICE BENJAMIN delivered the Opinion of the Court.
ii
SYLLABUS BY THE COURT
1. “A de novo standard is applied by this Court in addressing the legal
issues presented by a certified question from a federal district or appellate court.” Syl. Pt.
1, Light v. Allstate Ins. Co., 203 W.Va. 27, 506 S.E.2d 64 (1998).
2. “When reviewing a question certified from a federal district or
appellate court, this Court will give the question plenary review, and may consider any
portions of the federal court’s record that are relevant to the question of law to be
answered.” Syl. Pt 2, Valentine v. Sugar Rock, Inc., 234 W. Va. 526, 766 S.E.2d 785
(2014).
3. “‘Where the policy language involved is exclusionary, it will be
strictly construed against the insurer in order that the purpose of providing indemnity not
be defeated.’ Syl. pt. 5, Nat’l Mut. Ins. Co. v. McMahon & Sons, 177 W.Va. 734, 356
S.E.2d 488 (1987), overruled on other grounds by Potesta v. U.S. Fidelity & Guar. Co.,
202 W.Va. 308, 504 S.E.2d 135 (1998).” Syl. Pt. 8, Nat’l Union Fire Ins. Co. of
Pittsburgh v. Miller, 228 W. Va. 739, 724 S.E.2d 343 (2012).
4. “Language in an insurance policy should be given its plain, ordinary
meaning.” Syl. Pt. 1, Soliva v. Shand, Morahan & Co., Inc., 176 W. Va. 430, 345 S.E.2d
33 (1986).
i
5. “Where the provisions of an insurance policy contract are clear and
unambiguous they are not subject to judicial construction or interpretation, but full effect
will be given to the plain meaning intended.” Syl., Keffer v. Prudential Ins. Co., 153 W.
Va. 813, 172 S.E.2d 714 (1970).
6. “It is well settled law in West Virginia that ambiguous terms in
insurance contracts are to be strictly construed against the insurance company and in
favor of the insured.” Syl. Pt. 4, Nat’l Mut. Ins. Co. v. McMahon & Sons, 177 W. Va.
734, 356 S.E.2d 488 (1987).
7. “Whenever the language of an insurance policy provision is
reasonably susceptible of two different meanings or is of such doubtful meaning that
reasonable minds might be uncertain or disagree as to its meaning, it is ambiguous.” Syl.
Pt. 1, Prete v. Merch. Prop. Ins. Co., 159, W. Va. 508, 223 S.E.2d 441 (1976).
ii
Benjamin, Justice:
This Court is presented with the following two certified questions from the
United States District Court for the Northern District of West Virginia:
1. Applying West Virginia public policy and rules of contract construction, do
the unambiguous exclusions in American National’s policy for bodily
injury or property damage “which is expected or intended by any insured
even if the actual injury or damage is different than expected or intended,”
and “arising out of any criminal act committed by or at the direction of any
insured,” and the unambiguous exclusion in Erie’s policy for “bodily
injury, property damage, or personal injury expected or intended by
‘anyone we protect’ . . . ,” preclude liability coverage for insureds who did
not commit any intentional or criminal act?
2. If so, do the unambiguous severability clauses in the insurance policies,
which state that the insurance applies separately to each insured, prevail
over the exclusions and require the insurers to apply the exclusions
separately to each insured, despite the intentional and criminal actions of
co-insureds?
We have considered the parties’ briefs, oral arguments, and the record
before us.1 For the reasons expressed more thoroughly below, we answer the first
certified question in the affirmative and the second certified question in the negative.
I. FACTUAL AND PROCEDURAL BACKGROUND
Teenagers Sheila Eddy, Rachel Shoaf, and Skylar Neese had been friends
for years. In the spring and summer of 2012, Sheila and Rachel wanted to terminate their
1
We wish to acknowledge the Amicus Curiae brief filed by the West Virginia
Insurance Federation in support of the Petitioners.
1
friendship with Skylar but were afraid to do so because they believed Skylar would
disclose some embarrassing information she knew about them. So, Sheila and Rachel
plotted to kill Skylar instead. On the night of July 5, 2012, Sheila and Rachel picked
Skylar up in a car belonging to Sheila’s mother, Tara Clendenen. Sheila and Rachel drove
Skylar to a remote location outside of Brave, Pennsylvania, where they stabbed Skylar to
death and hid her body. Skylar’s body was not discovered until January 2013, more than
six months after her disappearance. Sheila and Rachel eventually confessed to, and were
convicted of, the murder. Sheila pleaded guilty to first degree murder and was sentenced
to life in prison with mercy. Rachel pleaded guilty to second degree murder and was
sentenced to thirty years in prison.
A. The Underlying State Court Action
In 2014, Skylar’s parents, Respondents David and Mary Neese, filed a
wrongful death civil action in the Circuit Court of Monongalia County, West Virginia,
against Sheila Eddy, Tara Clendenen, Rachel Shoaf, and Patricia Shoaf, Rachel’s mother,
to recover damages in connection with Skylar’s death.2 At the time of Skylar’s murder,
Sheila lived with Mrs. Clendenen and Rachel lived with Mrs. Shoaf. The Neeses
asserted, among other things, that Mrs. Clendenen and Mrs. Shoaf had been negligent in
2
James Clendenen, who is Tara Clendenen’s husband and Sheila Eddy’s step
father, was not sued, although he is the named insured on the American National Property
and Casualty (hereinafter “ANPAC”) policy at issue.
2
their supervision of Sheila and Rachel in numerous respects, such as failing to monitor
their activities, behavior, and whereabouts, and in Mrs. Clendenen’s case, in entrusting to
Sheila the car the girls used to drive Skylar to Pennsylvania on the night of her murder.3
Notably, the Complaint does not allege that Mrs. Clendenen or Mrs. Shoaf were part of
the plan or had any reason to know of the same.
B. The ANPAC Policy
In July 2012, Tara Clendenen, who was residing with her husband, James
Clendenen, was an insured under a homeowner’s insurance policy issued by ANPAC to
James Clendenen. Sheila Eddy, who pleaded guilty to first degree murder in the death of
Skylar Neese, was also an insured under the ANPAC homeowner’s policy issued to
James Clendenen, as she was a minor in the care of Tara Clendenen during that time
period. Mrs. Clendenen requested that ANPAC provide defense and indemnification with
respect to the claims asserted in the Complaint. ANPAC agreed to provide a defense to
Mrs. Clendenen in the Neese action pursuant to a reservation of rights.
3
In Count I of the Complaint, “Murder,” the Neeses seek compensatory and
punitive damages. In Count II, “Negligence/Reckless Concealment,” the Neeses seek
damages for concealing Skylar’s body and providing false and misleading information
regarding her disappearance. In Count III, “Negligent Supervision/Entrustment,” they
allege that Mrs. Clendenen and Mrs. Shoaf, as parents, guardians, and custodians of
Sheila Eddy and Rachel Shoaf, “were negligent and careless in their supervision and
guidance of their daughters.”
3
The insurance policy at issue, ANPAC Homeowner’s Policy number 47-H
761-55L-3, provides in pertinent part, as follows:
SECTION II - LIABILITY COVERAGES
Coverage E - Personal Liability
If a claim is made or a suit is brought against any insured for damages
because of bodily injury or property damage to which this coverage
applies, we will:
a. pay up to our limit of liability for the damages for which the insured is
legally liable;. . .
The policy provides certain conditions and limitations under the
liability section of the policy as follows:
SECTION II - CONDITIONS
a. Limit of Liability. Regardless of the number of insureds, claims made
or persons injured, our total liability under Coverage E for all damages
resulting from any one occurrence shall not exceed the limit of liability
for Coverage E stated in the Declarations....
b. Severability of Insurance. This insurance applies separately to each
insured. This condition shall not increase our limit of liability for any one
occurrence.
The homeowner’s policy also states that the coverage provided by
Coverages E and F is subject to the following exclusions, among others:
SECTION II EXCLUSIONS
1. Coverage E - Personal Liability and Coverage F - Medical Payments
to Others do not apply to bodily injury or property damage:
4
a. Which is expected or intended by any insured even if the actual
injury or damage is different than expected or intended;
***
p. Arising out of any criminal act committed by or at the direction of
any insured; . . . .
C. The Erie Policy
At the time of Skylar’s murder, Mrs. Shoaf and her daughter, Rachel, were
insured under an Erie Ultracover HomeProtector Insurance Policy No. Q55-7600737
issued to Mrs. Shoaf by Petitioner Erie Insurance Property and Casualty Company
(hereinafter “Erie”).4 The Erie Homeowners Policy includes the following insuring
agreement for personal injury liability coverage:
We will pay all sums up to the amount shown on the Declarations which
anyone we protect becomes legally obligated to pay as damages because
of bodily injury or property damage caused by an occurrence during the
policy period. We will pay for only bodily injury or property damage
covered by this policy.
“Anyone we protect” is defined, in relevant part, as follows: “anyone we protect means
you and the following members of your household: 1. relatives and wards; 2. other
persons in the care of anyone we protect. . . .”
4
Erie also provided automobile coverage to both Mrs. Clendenen for her 2006
Toyota Camry and to Mrs. Shoaf for her automobile. The parties have agreed that the
Erie automobile policies are not at issue because Skylar’s death did not arise out of the
operation of a motor vehicle.
5
The Erie Homeowners Policy also contains certain exclusions from the
personal injury liability coverage, including the following:
We do not cover under Bodily Injury Liability Coverage, Property
Damage Liability Coverage, Personal Injury Liability Coverage, and
Medical Payments To Others Coverage:
1. Bodily injury, property damage or personal injury expected or
intended by anyone we protect even if:
a. the degree, kind or quality of the injury or damage is different
than what was expected or intended; or
b. a different person, entity, real or personal property sustained the
injury or damage than was expected or intended.
....
We do not cover under Bodily Injury Liability Coverage, Property
Damage Liability Coverage, or Personal Injury Liability Coverage:
. . . .
9. Personal injury arising out of willful violation of a law or
ordinance by anyone we protect.
Like the ANPAC Homeowners Policy, the Erie Homeowners Policy also
contains severability of insurance language. The Limits of Protection provision in Erie’s
policy expressly states in pertinent part:
This insurance applies separately to anyone we protect. Regardless of the
number of people we protect, claims made or persons injured, our total
liability under Personal Liability Coverage for damages resulting from one
occurrence, offense, claim or suit will not exceed the amount shown on the
Declarations for Personal Liability Coverage. All bodily injury, property
damage and personal injury resulting from one accident or from
6
continuous or repeated exposure to the same general conditions is
considered the result of one occurrence, offense, claim or suit.
D. The Federal Declaratory Judgment Action
Although not a party to the state court action, ANPAC and Erie filed
declaratory judgment actions in the United States District Court for the Northern District
of West Virginia seeking a determination that the homeowner’s insurance policies do not
provide coverage for the claims being asserted in the Complaint and that the insurers
have no duty to defend or indemnify Sheila Eddy, Tara Clendenen, Patricia Shoaf or
Rachel Shoaf in that case.5 The actions were consolidated by the federal court.
ANPAC and Erie filed motions for summary judgment in the consolidated
declaratory judgment action, arguing that no coverage exists under their homeowner’s
policies because there was no “occurrence” within the meaning of the policy and, even if
there was an occurrence, the policy exclusions for intentional and criminal acts
unambiguously exclude coverage. The Neeses filed a combined cross-motion for
summary judgment and opposition to ANPAC’s and Erie’s motions arguing that Mrs.
Clendenen and Mrs. Shoaf are entitled to coverage under the homeowner’s policies for
5
In its declaratory judgment action, ANPAC also sought a ruling as to coverage
under a separate automobile policy issued by ANPAC to James Clendenen but not
covering the automobile operated by Sheila Eddy on the night in question. Erie, which
issued a homeowner’s insurance policy insuring Patricia and Rachel Shoaf and
automobile policies insuring various automobiles owned by the Shoafs and Clendenens,
filed its own declaratory judgment action.
7
the following reasons: 1) Skylar’s death was an accident, and thus, an occurrence from
the viewpoint of Mrs. Clendenen and Mrs. Shoaf; and 2) the criminal and intentional act
exclusions in the homeowner’s policies conflict with the severability clauses, thereby
creating an ambiguity that must be resolved in favor of the defendants.6 They did not
contend that the exclusions and severability clauses themselves are ambiguous. Rather,
they argued that ambiguity results when one applies the severability clause to the
exclusions.
Patricia Shoaf filed a cross-motion for summary judgment and brief in
response against Erie arguing that she does not fall within the exclusions in the policy,
that the severability clause protects her from exclusion, and that Erie owes her coverage
under the personal injury portion of her policy for various torts allegedly pleaded in the
state court case. While the Neeses and Mrs. Clendenen conceded that Sheila and Rachel
were not entitled to defense and indemnification because of their criminal actions, Mrs.
Shoaf argued that she believed coverage existed for the claims against her and Rachel.
On March 1, 2016, the court entered an order ruling on the parties’
respective motions and made the following conclusions: (1) that pursuant to Columbia
Casualty Company v. Westfield Insurance Company, 217 W. Va. 250, 617 S.E.2d 797
6
Tara Clendenen joined the Neeses’ cross-motion for summary judgment and
brief in response. Eddy did not file a response or cross-motion.
8
(2005), the death of Skylar Neese was an “occurrence” from the perspective of Tara
Clendenen and Patricia Shoaf under the ANPAC and Erie policies, (2) that under the
respective exclusions, Sheila Eddy and Rachel Shoaf were not entitled to defense and
indemnification for their intentional, criminal acts, (3) that as conceded by the parties, the
respondents are not entitled to coverage under any of the automobile insurance policies,
(4) that neither Patricia nor Rachel Shoaf are entitled to defense and indemnification
under the personal injury portion of the Erie homeowner’s policy, and (5) that the
“language of the exclusions and severability clauses in the relevant homeowner’s policies
is not ambiguous.” It nevertheless found that “[i]t is unclear how, under its public policy
and rules of contract construction, West Virginia would prioritize the exclusions and
severability clauses in the [ANPAC] and Erie homeowner’s policies to determine
whether coverage is available to Mrs. Shoaf and Mrs. Clendenen in the state court
action.” Accordingly, the federal court decided to certify questions to this Honorable
Court pursuant to the Uniform Certification of Questions of Law Act, W. Va. Code § 51
1A-1, et seq.
II. STANDARD OF REVIEW
When considering an order certifying questions from a federal court, we
give the court’s assessment of the questions a plenary review. “A de novo standard is
applied by this Court in addressing the legal issues presented by a certified question from
a federal district or appellate court.” Syl. Pt. 1, Light v. Allstate Ins. Co., 203 W.Va. 27,
9
506 S.E.2d 64 (1998). “When reviewing a question certified from a federal district or
appellate court, this Court will give the question plenary review, and may consider any
portions of the federal court’s record that are relevant to the question of law to be
answered.” Syl. Pt 2, Valentine v. Sugar Rock, Inc., 234 W. Va. 526, 766 S.E.2d 785
(2014).
III. ANALYSIS
As stated above, the district court found that like the majority of courts to
have considered this issue, and based upon the rules of construction, the intentional and
criminal acts exclusions in both homeowner’s policies are unambiguous. See Chacon v.
American Family Mut. Ins. Co., 788 P.2d 748, 751 (Colo. 1990) (finding exclusion for
intentional acts unambiguous). The district court likewise found that the severability
clauses in both policies are unambiguous. See EMCASCO Ins. Co. v. Diedrich, 394 F.3d
1091, 1097 (8th Cir. 2005) (“[T]he definition of an ‘insured’ and the intentional acts
exclusion in the [homeowner’s policy] is unambiguous. The severability clause does not
create any ambiguity.”).
The district court further concluded that although the parties disagreed as to
whether an ambiguity results when one applies the severability clause to the exclusions,
this fact did not render the policies ambiguous. See Am. States Ins. Co. v. Surbaugh, 231
W. Va. 288, 295, 745 S.E.2d 179, 186 (2013). However, with respect to the issue of
which clause (the intentional/criminal acts exclusions or the severability clause) should
10
prevail over the other, the district court concluded that, due to it being a matter of public
policy, the issue should be considered by this Court by way of a certified question.
Accordingly, the district court certified two questions to this Court: (1) Whether, under
West Virginia public policy and the rules of contract construction, the exclusions in the
policies should preclude Mrs. Clendenen and Mrs. Shoaf, who admittedly did not murder
Skylar, from obtaining coverage based on the actions of their daughters, who were also
insured under the policies; and, (2) whether the severability clauses in the policies require
ANPAC and Erie to apply the exclusions separately against each insured, based upon that
insured’s own actions.
A. First Certified Question
The first certified question presented by the district court specifically asks
whether, applying West Virginia public policy and rules of contract construction, do the
unambiguous exclusions in [ANPAC’S] policy for bodily injury or property damage
“which is expected or intended by any insured even if the actual injury or damage is
different than expected or intended,” and “arising out of any criminal act committed by or
at the direction of any insured,” and the unambiguous exclusion in Erie’s policy for
“bodily injury, property damage, or personal injury expected or intended by ‘anyone we
protect’ . . . ,” preclude liability coverage for insureds who did not commit any
intentional or criminal act?
11
With respect to this issue, ANPAC and Erie contend that even though
Skylar’s death was an “occurrence” from the standpoint of Mrs. Clendenen and Mrs.
Shoaf, coverage should nevertheless be denied under exclusions for the intentional or
criminal acts of “any insured” or “anyone we protect” because it is appropriate to view
those exclusions from the perspective of their co-insureds, Sheila and Rachel, who,
unlike Mrs. Clendenen and Mrs. Shoaf, intended to bring about Skylar’s death. They
argue that because the claims for wrongful death damages in the Complaint are all
inextricably tied to the intentional criminal conduct of Sheila Eddy and Rachel Shoaf,
insureds under their respective homeowners policies, and because public policy favors
application of unambiguous intentional/criminal acts exclusions as written, the first
certified question must be answered in the affirmative. They also assert that the majority
of jurisdictions to consider the question have applied similar exclusions to preclude
coverage to an insured based on the intentional or criminal acts of a co-insured.7
Conversely, the Neeses argue that the insurers’ position is inconsistent with
the rule adopted by this Court in Columbia Casualty, given our recognition in that case
7
Additionally, in support of the Petitioners’ position, the West Virginia Insurance
Federation argues that the majority rule in America requires that coverage be excluded
where the language of a policy excludes coverage for the intentional acts of “any” insured
and an insured commits an intentional or expected act. See American Family Mut. Ins.
Co. v. White, 65 P.3d 449, 456 (Ariz. Ct App. 2003) (“Most courts that have construed
the phrase ‘any insured’ in an exclusion have found that it bars coverage for any claim
attributable to the excludable acts of any insured, even if the policy contains a
severability clause. We join that majority.”); see also Chacon, 788 P.2d 748.
12
that the purpose of liability policies is to insure against one’s own negligence, rather than
the intentional acts of another. 217 W. Va. at 254, 617 S.E.2d at 801. Additionally, they
contend that Mrs. Clendenen and Mrs. Shoaf had a reasonable expectation that they
would be covered under the ANPAC and Erie homeowners policies for their own
negligent acts. See Minkler v. Safeco Ins. Co. of Am., 232 P.3d 612, 624 (Cal. 2010)
(mother had “no reason to expect that [her son’s] residence in her home, and his
consequent status as an additional insured on her homeowners policies, would narrow her
own coverage . . . against claims arising from his intentional acts.”) They assert that even
if this Court finds that the exclusions are not against West Virginia public policy or the
rules of construction, the use of the “any person” or “anyone we protect” language in the
exclusions creates an ambiguity as to whose conduct is at issue in deciding whether to
apply the exclusions, especially in light of the severability provisions included in each of
the policies. They maintain that under the rules of contract construction, “[w]here the
policy language involved is exclusionary, it will be strictly construed against the insurer
in order that the purpose of providing indemnity not be defeated.” Syl. Pt. 8, Nat’l Union
Fire Ins. Co. of Pittsburgh v. Miller, 228 W. Va. 739, 724 S.E.2d 343 (2012).
Mrs. Shoaf argues that with regard to the Erie policy, the term “anyone we
protect” is defined with reference to a “special meaning” specifically selected by Erie,
and that under West Virginia law, when a term or expression is defined by a statute, rule,
or contract, the Court uses the intended meaning of words or terms. Mrs. Shoaf
13
maintains that by including the pronoun “anyone” within the defined expression, Erie has
created a situation in which its intentional acts exclusion is not operative if “anyone” it
indemnifies commits an intentional act that causes damages. She argues that the only
damages which are excluded are those that were intentionally caused by all insureds,
because “anyone we protect” is defined collectively as “you and ... relatives and wards.”
She asserts that the definition of “anyone we protect” is conjunctive (“and”) not
disjunctive (“or”). In reading the policy exclusion this way, she contends that it does not
operate unless both Patricia Shoaf and Rachel Shoaf intended the death of Skylar Neese.8
This Court has held that “[l]anguage in an insurance policy should be given
its plain, ordinary meaning.” Syl. Pt. 1, Soliva v. Shand, Morahan & Co., Inc., 176 W.
Va. 430, 345 S.E.2d 33 (1986). Accord Polan v. Travelers Ins. Co., 156 W.Va. 250, 255,
192 S.E.2d 481, 484 (1972). (“[T]he terms of an insurance policy should be understood in
their plain, ordinary and popular sense, not in a strained or philosophical sense.”).
“Where the provisions of an insurance policy contract are clear and unambiguous they
8
In a brief summary response, Tara Clendenen only addresses the second certified
question presented and asserts a blanket argument that with respect to the ANPAC policy,
the severability clause and intentional or criminal act exclusions are irreconcilable,
reasonably susceptible to two different meanings, and are, therefore, ambiguous. James
Clendenen filed a separate summary response arguing, for the first time, that certain
provisions and definitions in the ANPAC policy are ambiguous. Because his specific
arguments were not previously presented to the district court and are therefore not within
the parameters of the two questions certified, we will not address the issues raised in Mr.
Clendenen’s summary response.
14
are not subject to judicial construction or interpretation, but full effect will be given to the
plain meaning intended.” Syl., Keffer v. Prudential Ins. Co., 153 W. Va. 813, 172 S.E.2d
714 (1970).
By contrast, “[w]henever the language of an insurance policy provision is
reasonably susceptible of two different meanings or is of such doubtful meaning that
reasonable minds might be uncertain or disagree as to its meaning, it is ambiguous.” Syl.
Pt. 1, Prete v. Merch. Prop. Ins. Co., 159, W. Va. 508, 223 S.E.2d 441 (1976). See also,
Payne v. Weston, 195 W.Va. 502, 507, 466 S.E.2d 161, 166 (1995) (“a court should read
policy provisions to avoid ambiguities and not torture the language to create them”)
(citations and internal quotations omitted); Surbaugh, 231 W. Va. at 292-93, 745 S.E.2d
at 183-84. “It is well settled law in West Virginia that ambiguous terms in insurance
contracts are to be strictly construed against the insurance company and in favor of the
insured.” Syl. Pt. 4, Nat’l Mut. Ins. Co. v. McMahon & Sons, 177 W. Va. 734, 356 S.E.2d
488 (1987). However, “[t]he mere fact that parties do not agree to the construction of a
contract does not render it ambiguous. The question as to whether a contract is
ambiguous is a question of law to be determined by the court.” Surbaugh, 231 W. Va. at
295, 745 S.E.2d at 186.
In this case, ANPAC and Erie excluded coverage because an intentional or
expected act was committed by “any insured” or “anyone . . . protect[ed].” We do not
15
believe that these phrases are ambiguous. The policy language expressly excludes
coverage for damages caused by the intentional acts of any insured. We therefore turn to
the consideration of whether the application of this unambiguous language precludes
coverage to all insureds for claims of bodily injury arising from intentional and/or
criminal conduct by any insured, irrespective of whether the particular insured seeking
coverage committed the intentional or criminal act resulting in the bodily injury.
Unambiguous intentional/criminal acts exclusions have been held
consistent with public policy in other jurisdictions irrespective of whether the insured
seeking coverage is accused of intentional, criminal or just negligent conduct. Indeed, the
majority of jurisdictions to consider the question raised herein by the first certified
question apply intentional acts exclusions similar to the exclusions in ANPAC and Erie’s
policies to preclude coverage to an insured based on the intentional or criminal acts of a
co-insured. The majority of courts have held that unlike the phrase, “the insured,” the
phrase “any insured” unambiguously expresses a contractual intent to create joint
obligations and to prohibit recovery by an innocent co-insured.
In Chacon v. Am. Family Mitt. Ins. Co., 788 P.2d 748, the insureds, Reyes
and Sarah Chacon, sought coverage from American Family Mutual Insurance Company
(“American Family”) based on the severability clause of their insurance policy. The
Chacons sought coverage for liability stemming from their son’s vandalism of a local
16
school building. The Chacons, like Tara Clendenen and Patricia Shoaf, argued that the
severability clause, which provided that “each person described above is a separate
insured under this policy,” created coverage in the face of an intentional or expected acts
exclusion that excluded coverage for the intentional or expected acts of “any insured.”
The Colorado Supreme Court rejected the Chacons’ argument, holding that American
Family had properly excluded coverage for the Chacons based on the intentional acts of
the son, an insured under the policy. Significantly, in its decision, the Chacon Court
distinguished between the phrase “the insured” and the phrase “any insured:”
Initially, the ‘intentional act’ exclusion contained in the Chacons’
homeowner’s policy referring to the actions of ‘any insured,’ must be
distinguished from those policies which refer to the actions of ‘the insured.’
The majority of courts which have considered this issue have held that
‘unlike the phrase ‘the insured,’ the phrase ‘any insured,’ unambiguously
expresses a contractual intent to create joint obligations and to prohibit
recovery by an innocent co-insured.
Id. at 751. The Colorado court also explained that the language “any insured” excluded
coverage for all insureds based on the intentional or expected acts of any person insured
under the policy.
We find the reasoning of the majority of courts more persuasive than that of
Worcester, because it considers and gives effect to all the policy provisions
and recognizes that an insurance policy is a contract between the parties
which should be enforced in a manner consistent with the intentions
expressed therein.
Id. at 752. The court found that
[a]n insurance policy is a contract which should be interpreted consistently
with the well settled principles of contractual interpretation. . . . This
approach acknowledges that:
17
[A]n insurance contract is a mutual agreement, ratified by the
insured by his acceptance, both parties are bound by its
provisions, unless waived or annulled for lawful reasons. In
the absence of statutory inhibition, an insurer may impose any
terms and conditions consistent with public policy which it
may see fit.
Id. (quoting Appleman, INSURANCE LAW AND PRACTICE § 7004, at 37-39 (rev. ed.
1981) (footnotes omitted)).
In a similar case, the Court of Appeals of Louisiana found that homeowner
and farm liability policies excluded coverage for the parents’ alleged negligent
supervision of their minor child who threw another minor through a plate glass window.
Perkins v. Shaheen, 867 So.2d 135 (La. App. 3rd Cir. 2004). The policies at issue
excluded from coverage bodily injury “resulting from intentional acts or directions by
you or any insured.” Id. at 137. In holding the exclusionary language applied to the
negligent supervision claim, the Court noted that the “exclusionary clause is not restricted
to intentional acts of the particular insured sought to be held liable, but it is broad enough
to exclude coverage for any loss intentionally caused, or at the direction of, an insured
person. . . .” Id. at 139 (citing Neuman v. Mauffray, 771 So. 2d 283 (La. App. 1st Cir.
2000)). The Perkins Court also explained the purpose of the intentional acts exclusion:
The focus of the policy exclusion is on the cause of the damages, not the
cause of action alleged. All damages caused by intentional acts are
excluded, regardless of the classification of the cause of action against the
individual defendants. [The plaintiff] cannot avoid the consequences of the
policy language by attempting to couch her allegations against the
[defendant parents] as negligent, rather than intentional.
18
Id. (emphasis added).
In Postell v. American Family Mutual Insurance Co., 823 N.W.2d 35 (Iowa
2012), the Supreme Court of Iowa held that an innocent insured spouse whose co-insured
husband started a house fire in a suicide attempt could not recover under a homeowner
insurance policy that included an exclusion for intentional loss “by or at the direction of
any insured.” Id. at 45 (emphasis added). In that case, the court reasoned:
It is well-settled law in this state that the use of the words, “any insured,” is
an unambiguous phrase that precludes coverage for all insureds, including
an innocent coinsured spouse. . . . In Vance [v. Pekin Insurance Company,
457 N.W.2d 589 (Iowa 1990)], we went so far as to encourage insurance
companies to purge their fire insurance policies of ambiguity by replacing
the exclusion of language of “the” insured with “a,” “any,” or “an” insured.
457 N.W.2d at 593. (citing Leane English Cerven, The Problem of the
Innocent Co-insured Spouse: Three Theories on Recovery, 17 Val. V.L.
Rev. 849, 872 (1983)). This rule is consistent with other jurisdictions.
....
Therefore, under our long-standing rule of construing “any insured” in
insurance policies as barring recovery to the innocent coinsured spouse,
American Family properly denied coverage . . . under the intentional loss
exclusion.
Id. (citations omitted) (footnote omitted).
The court noted in Postell that many jurisdictions follow this well-settled
law:
See Chacon v. Am. Family Mut. Ins. Co., 788 P.2d 748, 752 (Colo. 1990)
(finding “any insured” created a joint obligation under the policy’s
intentional acts exclusion applying to the insured innocent parents and
19
insured minor son who committed vandalism); Trinity Universal Ins. Co. v.
Kirsling, 139 Idaho 89, 73 P.3d 102, 105 (2003) (holding that an intentional
acts exclusion which excluded “any loss” arising out of any act committed
by or at the direction of “an insured” and ‘“with the intent to cause a loss”
barred coverage); Woodhouse v. Farmers Union Mut. Ins. Co., 241 Mont.
69, 785 P.2d 192, 194 (1990) (holding “an insured” unambiguously bars
coverage to an innocent coinsured); McAllister v. Millville Mut. Ins. Co.,
433 Pa. Super. 330, 640 A.2d 1283, 1289 (1994) (denying coverage to
innocent coinsured when other insured committed arson and policy
included an intentional acts provision referring to “an insured” and a
neglect exclusion referring to “any insured”); Dolcy v. R.l Joint Reins. Ass
‘n, 589 A.2d 313,316 (R.I. 1991) (holding that the policy’s intentional loss
exclusion referring to “an insured” imposes a joint obligation); Utah Farm
Bureau Ins. Co. v. Crook, 980 P.2d 685, 688 (Utah 1999) (finding the
intentional loss exclusion referring to “an insured” denied coverage to
innocent coinsured when the other coinsured burned down the house); see
also Century-Nat’l Ins. Co. v. Garcia, 51 Cal. 4th 564, 568-69, 120 Cal.
Rptr. 3d 541, 246 P.3d 621 (2011) (recognizing that statutory language of
“any insured” increasing the hazard of loss or concealing fraud refers to
joint or collective liability, not several as when the standard policy refers to
“the insured”).
823 N.W.2d. at 45-46 n.6.
Similarly, in J.G. v. Wangard, 753 N.W.2d 475 (Wis. 2008), the Supreme
Court of Wisconsin held that an exclusion for any damages arising out of an act intended
by “any covered person” unambiguously barred liability coverage for the wife’s alleged
negligence in failing to prevent her husband’s intentional sexual assaults of a minor. Id. at
488. The court reasoned:
We . . . conclude that Great Northern and Pacific’s use of the phrase “any
covered person” in the policies’ intentional acts exclusions, like the phrase
“any insured” . . . unambiguously precludes coverage for all insureds. The
express language of the two homeowner’s policies in question broadly
excludes from coverage “any damages arising out of an act intended by any
20
covered person to cause personal injury or property damage.” (emphasis
added.) Without considering whether [wife’s] negligent conduct was itself
“intentional,” . . . it is clear that J.G.’s and R.G.’s alleged damages arose
out of [husband’s] intentional wrongful conduct. For this reason, the
exclusion plainly bars coverage as to Steven and to Deborah if, as is
undisputed, J.G. and R.G.’s personal injury damages arose out of Steven’s
intentional sexual contact with J.G.
Id. (citations omitted).9
9
See also Am. Family Mut. Ins. Co. v. White, 65 P.3d 449, 503 (Ariz. Ct App.
2003) (court prohibited recovery in a similar case where the insured sought coverage for
negligent supervisions claims after his minor son struck the plaintiff in the head and the
insured’s policy contained a “violation of criminal law” provision which excluded
coverage “arising out of...violation of any criminal law for which any insured is
convicted.”); Bailey v. Lincoln General Ins. Co., 255 P.3d 1039, 1046-47 (Colo. 2011)
(rejecting the proposition that a criminal acts exclusion in an excess insurance policy was
void as against public policy, and noting that “not only is it the public policy of this state
to protect tort victims, but it is also the public policy of this state to provide insurers and
insureds the freedom to contract, allowing insurers to shift risk based on their insureds’
misconduct, especially when that misconduct significantly increases the risk of insurers’
liability and may be encouraged by indemnification.”); Am. Family Mut. Ins. Co. v.
Corrigan, 697 N.W.2d 108, 116-117 (Iowa 2005) (“Although insurance policies are
interpreted favorably toward the insured, this rule applies only when there is an
ambiguity in the policy, and we have found none here.... No statute, rule, or prior
decision of this court has been identified that would make the insurance policy provisions
at issue here against public policy.”); Villa v. Short, 947 A.2d 1217, 1219 (N.J. 2008)
(holding that an intentional acts exclusion unambiguously excluded liability coverage for
claims against all insureds based on the intentional acts of any insured where the insureds
were sued in connection with sexual assaults committed by their son); Co-operative Ins.
Cos. v. Woodward, 45 A.3d 89 (Vt. 2012) (holding that an exclusion in the insured's
homeowner policy for loss caused by the intentional acts of “an insured” applied to both
insureds under the policy and precluded coverage for claims of the insured wife's
negligent supervision of her husband who kidnapped, drugged, sexually assaulted, and
killed his niece).
21
While Mrs. Shoaf asserts, as noted above, that the definition of “anyone we
protect” in Erie’s policy must be construed conjunctively, we find her argument
unconvincing.10 In Kundahl v. Erie Insurance Group, 703 A.2d 542 (Pa. Super. 1997),
the court rejected an argument similar to the argument made by Mrs. Shoaf. In Kundahl,
the court held as follows:
[I]n the present case, the Kundahls’ homeowner’s policy specifically
precludes coverage of loss where the intentional or negligent acts by
“anyone we protect” caused the loss. A loss caused by “anyone we protect”
unequivocally evinces joint responsibility, since the term “anyone” is
naturally inclusive as opposed to exclusive. See Webster’s New Collegiate
Dictionary 93 (9th Ed. 1987). Thus, if any one [insured] violates the policy,
coverage must be denied to all insureds. See McAllister [v. Millville Mm.
10
Again, the policy contains the following definition:
“[A]nyone we protect” means you and the following residents of
your household:
1. relatives and wards:
2. other persons in the care of anyone we protect.
Under Home and Family Liability Protection, anyone we protect also means:
3. any person or organization legally responsible for animals or
watercraft which are owned by you, or any person included in 1. or 2., and
covered by this policy. Any person or organization using or having custody
of custody of these animals or watercraft in the course of any business, or
without permission of the owner is not anyone we protect;
4. any person with respect to any vehicle covered by this policy. Any
person using or having custody of this vehicle in the course of any business
use, or without permission of the owner is not anyone we protect.
22
Ins. Co., 433 Pa. Super. 330, 640 A.2d 1283, 1289 (1994)] (“The use of the
terms ‘any’ and ‘an” in the exclusions clearly indicate that the insureds”
obligations under the policy’s neglect and intentional provisions are joint,
not several.”‘ (emphasis added). We conclude, therefore, that the trial court
erred in finding that the homeowner’s policy was ambiguous. McAllister,
supra.
703 A.2d at 545 (citation omitted) (footnote omitted).
With respect to Mrs. Shoaf, Erie’s policy did not limit its intentional acts
exclusion to only the insureds that actually committed the intentional act by using
language limiting coverage for only “the” insured. Rather, Erie excluded coverage to all
insureds for intentional or expected acts by “anyone we protect.” This distinction is
significant as it clearly evidences the insurer’s intent to create a co-obligation between
the insureds covered by the policy and to exclude coverage for all insureds based on the
intentional or expected acts of any insured. Accordingly, we conclude that Erie’s
homeowner’s policy specifically excludes coverage of loss to any insured where the
intentional acts by “anyone we protect” caused the loss. A loss caused by “anyone we
protect” unequivocally evinces joint responsibility, since the term “anyone” is naturally
inclusive as opposed to exclusive. Kundahl, 703 A.2d 542. Thus, if any one [insured]
violates the policy, coverage must be denied to all insureds. See Payne, 195 W.Va. at
507, 466 S.E.2d at 166 (“a court should read policy provisions to avoid ambiguities and
not torture the language to create them”) (citations and internal quotations omitted);
Surbaugh, 231 W. Va. at 292-93, 745 S.E.2d at 183-84. A policy should never be
interpreted so as to create an absurd result, but instead should receive a reasonable
23
interpretation, consistent with the intent of the parties. See, e.g., Thompson v. State Auto.
Mut. Ins., 122 W.Va. 551, 554, 11 S.E.2d 849, 850 (1940). The same analysis applies to
ANPAC’s policy related to Mrs. Clendenin.
Here, the Neeses seek the same wrongful death damages against both
Sheila and Rachel and their mothers. The focus of the intentional/criminal acts exclusions
is on the cause of the damages, not the negligent supervision and negligent entrustment
causes of actions alleged against Tara Clendenen and Patricia Shoaf. Perkins, 867 So.2d
at 139. As all such bodily injury claims arise from the intentional and criminal conduct of
Sheila Eddy and Rachel Shoaf, insureds under the policy, the exclusions preclude
coverage for all of the claims. Additionally, since the exclusionary language is
admittedly unambiguous, we conclude that the applicable policy exclusions create joint
obligations and prohibit coverage for the Neeses’ claims against Tara Clendenen and
Patricia Shoaf.
In so finding, we conclude that the subject exclusions are consistent with
our public policy. Our case law makes it clear that our public policy and rules of
construction require courts to apply intentional and criminal act exclusions to torts based
on intentional acts even when the claims are couched in terms of negligence.
24
This Court has observed that intentional acts exclusions and exclusions that
remove a whole class of injuries from coverage are consistent with the public policy of
this State, even where the result of the same is to deprive innocent victims of
compensation. See Horace Mann Ins. Co. v. Leeber, 180 W. Va. 375, 380-81, 376 S.E.2d
581, 586-87 (upholding an “intentional injury” exclusion and precluding coverage where
an insured teacher was sued for having sexual contacts with a minor student. “[T]he
allegations of ‘negligence’ [against the school board] in the complaint are ‘a transparent
attempt to trigger insurance coverage by characterizing allegations of [intentional]
tortious conduct under the guise of ‘negligent’ activity’”. . . “Most courts conclude that it
is against public policy to permit insurance coverage for a purposeful or intentional tort,
[meaning a tort involving the intent to act and to cause some harm].”); see also Rich v.
Allstate Ins. Co., 191 W. Va. 308, 310, 445 S.E.2d 249, 251 (1998) (holding a “family
exclusion” consistent with public policy in a negligence case brought against an insured
grandparent where a minor child residing in the insured household was injured while
riding a lawnmower. “[T]here is no legislative declaration regarding the requirements of
homeowner’s insurance coverage. Therefore, the parties must rely exclusively upon the
policy language in order to determine whether there is coverage in this instance.”).11
11
These are not the only instances where this Court has found that intentional acts
exclusions and exclusions that remove a whole class of injuries from coverage are
consistent with the public policy of this State. See Berkhouse v. Great American
Assurance Co., No. 13-0264, 2013 WL 6152414 (W. Va. Nov. 22, 2013) (holding that an
umbrella policy’s liquor liability exclusion that excluded “[a]ny liability of any
(continued . . .)
25
While Respondents focus their arguments almost exclusively on this
Court’s discussion in Columbia Casualty in arguing that the applicability of the policy
exclusions should be viewed from the standpoint of Mrs. Clendenen and Mrs. Shoaf, we
believe that this reliance on Columbia Casualty is misplaced. In that case, this Court
considered a question certified from the Fourth Circuit regarding whether two inmate
‘Insured,’” excluded coverage for negligent training and supervision claims against the
Charleston Moose Lodge); Sayre v. State Farm Fire & Casualty Co., No. 11-0962, 2012
WL 3079148 (W. Va. May 25, 2012) (upholding the validity of a family exclusion in a
homeowner policy that excluded liability coverage for bodily injury to “‘you [the named
insured] or any insured’” where the husband, a named insured, killed his wife, also a
named insured); West Virginia Fire & Casualty Co. v. Stanley, 216 W. Va. 40, 602
S.E.2d 483 (2004) (precluding coverage for negligent supervision claims against a
husband and wife in an action arising from the alleged sexual misconduct of their minor
son, a co-insured); Smith v. Animal Urgent Care. Inc., 208 W. Va. 664, 542 S.E.2d 827
(2000) (finding that the inclusion of negligence-type allegations in a complaint that was
in essence a sexual harassment claim will not prevent the operation of an “intentional
acts” exclusion contained in an insurance liability policy). Additionally, applying West
Virginia law, in Westfield Insurance Co. v. Merrifield, No. 2:07-cv00034, 2008 WL
336789, **5-6 (S.D.W. Va. Feb. 5, 2008), the Southern District of West Virginia held
that a homeowner insurance policy did not provide coverage for negligence claims
brought against insured parents whose son was convicted of first degree murder, death of
a child by guardian or custodian, and sexual abuse by a guardian. The policy contained an
exclusion for bodily injury “arising out of sexual molestation, corporal punishment or
physical or mental abuse.” The Court rejected the mother’s argument that Columbia
Casualty Co. v. Westfield Insurance Co., 217 W. Va. 250, 617 S.E.2d 797, should be
extended to require the policy exclusions -as opposed to the insuring language involved
in Columbia Casualty -to be viewed from the perspective of the mother. The Court
reasoned that the policy unambiguously barred coverage for injuries arising out of sexual
molestation. Because the only harm alleged in the underlying complaint was the death of
a child caused by his physical and sexual abuse, the “bodily injury” arose from sexual
molestation by Michael Merrifield, not from the negligent or intentional acts of his
parents. Merrifield, 2008 WL 336789 at **5-6.
26
deaths by suicide in the Randolph County Jail were “occurrences” under an insurance
policy issued to the Randolph County Commission. This Court concluded that there was
potential insurance coverage for the claims made against the Randolph County
Commission by the estates of the two inmates who committed suicide because when the
policy language was applied to and from the perspective or standpoint of the county
commission the deaths were “occurrences” under the insurance policy terms. 217 W. Va.
at 251, 617 S.E.2d at 797-98.
We noted that because of the specific language used in the Fourth Circuit’s
certified question, we did not need to discuss the relationship between the terms
“occurrence” and “accident” in the insurance policy at issue, or the exclusionary
language in the policy relating to intentional acts, except to say that no other language in
the policy appeared to be inconsistent with its holding. Id. at 253 n.2, 617 S.E.2d at 799
n.2. Thus, Columbia Casualty concerned the issue of what is an “occurrence” under
West Virginia law where, as this Court noted, the term “accident” was not defined in the
policy. Id at 252, 617 S.E.2d at 799. Applying the rule of syllabus point five of Tackett v.
American Motorists Ins. Co., 213 W. Va. 524, 584 S.E.2d 158 (2003), this Court resolved
the corresponding “doubt” regarding coverage in favor of the insured. 217 W.Va. at 252,
617 S.E.2d at 799. We decline to extend our holding in Columbia Casualty beyond its
context. As we cautioned in that Opinion,
[d]iscussions in judicial opinions of insurance coverage issues often involve
parsing the convoluted and confusing language of insurance policies. There
27
is an elevated risk in such discussions of making similarly convoluted and
confusing judicial statements - particularly when the statements are taken
outside of the boundaries of the case in which they are made.
Id. at 251-52, 617 S.E.2d at 798-99.
Because the claims for wrongful death damages in the Complaint are all
inextricably tied to the intentional criminal conduct of Sheila Eddy and Rachel Shoaf,
insureds under the ANPAC and Erie policies, and because public policy favors
application of unambiguous intentional/criminal acts exclusions as written, we conclude
that the first certified question must be answered in the affirmative.
B. Second Certified Question
The second certified question presented by the district court asks whether
the unambiguous severability clauses in the insurance policies, which state that the
insurance applies separately to each insured, prevail over the exclusions within the
policies and require the insurers to apply the exclusions separately to each insured,
despite the intentional and criminal actions of co-insureds.
ANPAC and Erie contend that the second certified question must be
answered in the negative because the severability clauses in the policies do not conflict
with the application of the intentional/criminal act exclusions as written. They argue that
to hold otherwise would do violence to the plain language of the insurance policy and the
28
intent of the parties without furthering the historical purpose of the severability condition.
They assert that the majority of courts across the country addressing the impact of
severability clauses on exclusionary language utilizing “an insured” or “any insured”
have concluded that the severability clause has no bearing on the application of the
exclusionary language. They also maintain that the severability clause was created to
apply to exclusions referencing “the insured,” such as employee exclusions or workers’
compensation exclusions. See Wheeler, 842 N.W.2d at 107-08 (citing 3 Windt,
INSURANCE CLAIMS AND DISPUTES (6th Ed.), Section 11:8). They contend that the
clause is “intended to afford each insured a full measure of coverage up to the policy
limits, not to negate the policy’s intentional acts exclusion.” Allstate Ins. Co. v. Kim, 121
F. Supp 2d 1301, 1308 (D. Haw. 2000).
Conversely, the Respondents argue that the insurers’ severability language
specifically stating that “this insurance applies separately to,” “each insured” (in the
ANPAC policy), and “to anyone we protect” (in the Erie policy), results in the exclusions
being applied separately to Mrs. Clendenen and Mrs. Shoaf, neither of whom is alleged to
have committed any intentional or criminal acts for which coverage is sought. They argue
that even if the exclusionary provisions have the effect of precluding coverage for a
negligent insured based on the intentional or criminal acts of a co-insured, as the
Petitioners argue, there is at least a conflict between the exclusions and the severability
provisions. They contend that applying standard rules of contract construction applicable
29
to West Virginia insurance contracts, the ambiguity created by the conflict must be
resolved against the insurer and in favor of the insured. Or, as framed by the second
certified question, the severability provisions must “prevail over the exclusions and
require the insurers to apply the exclusions separately to each insured, despite the
intentional and criminal actions of co-insureds.”
The ANPAC severability clause provides, “This insurance applies
separately to each insured. This condition shall not increase our limit of liability for any
one occurrence.” The policy defines “Insured” as follows:
6. “Insured” means you and the following residents of your household:
a. your relatives;
b. any other person under the age of 21 who is in the care of any person
named above.
Similarly, the Erie severability provision provides, “This insurance applies
separately to anyone we protect.” Under the policy,
“anyone we protect” means you and the following residents of your
household:
1. relatives and wards;
2. other persons in care of anyone we protect ....
Although this issue has never been squarely addressed by this Court, we
recently determined that a severability clause does not defeat a family exclusion. In Sayre
v. State Farm Fire & Casualty Co., No. 11-0962, 2012 WL 3079148 (W. Va. May 25,
30
2012), this Court rejected the insured’s argument that a severability clause in the
“Conditions” section of a homeowner’s policy created an ambiguity that defeated a
family exclusion. We agreed with the circuit court’s conclusion that the severability
clause had no application and concluded that summary judgment for State Farm was
proper. Id at *2.
Numerous courts have reviewed the interplay between severability clauses
that apply the insurance policy to all insureds and exclusions based on intentional or
expected acts. As referenced above, the majority of these courts have found that, where
the language of a policy excludes coverage for the intentional acts of “any” insured and
an insured commits an intentional or expected act, coverage is excluded for all insureds.12
12
See American Family Mutual Insurance Co. v. White, 65 P.3d at 456 (“Most
courts that have construed the phrase ‘any insured’ in an exclusion have found that it bars
coverage for any claim attributable to the excludable acts of any insured, even if the
policy contains a severability clause. We join that majority.”). See also Chacon, 788
P.2d at 752 (preferring to give full effect to exclusions referring to “any insured,” despite
a severability clause, in order to respect the party’s contractual expectations and enforce
the court’s contractual analysis); EMCASCO Ins. Co. v. Diedrich, 394 F.3d at 1097-98
(imposing joint obligations under South Dakota law for an intentional acts exclusion
referring to “one or more insureds,” despite the severability clause); Allstate Ins. Co. v.
Kim, 121 F. Supp. 2d 1301, 1308 (D. Hawaii 2000) (finding “an insured” is
unambiguous, applies to innocent coinsureds, and is not affected by the severability
clause); J.G. v. Wangard, 753 N.W.2d 475 (holding severability clause did not render
“any insured” exclusion ambiguous); SECURA Supreme Ins. Co. v. M.S.M, 755 N.W.2d
320, 328-29 (Minn. Ct. App. 2008) (holding that the severability clause did not make the
criminal acts exclusion referring to “any” insured ambiguous); Mut. of Enumclaw Ins.
Co. v. Cross, 10 P.3d 440, 445 (Wash. App. 2000) (holding that “an insured” exclusion
was “clear and specific language [that] prevail[ed] over a severability clause, i.e., that an
(continued . . .)
31
In a case similar to the instant one, SECURA, the Court of Appeals of
Minnesota found that coverage was precluded for a negligent supervision claim filed
against a minor child’s parents after their son attacked a neighbor. 755 N.W.2d at 322.
Therein, the court considered the issue of whether the criminal acts exclusion and the
severability clause can co-exist. The court concluded that the criminal acts exclusion was
unambiguous and applied to the claims against the parents. The court found,
Larson’s injuries were undeniably causally connected to M.S.M.’s criminal
conduct in attacking her. As such, Larson’s injuries “result[ed] from” this
criminal act, notwithstanding the fact that the McArdles’ negligence may
have also contributed to the same injuries. Accordingly, the district court
exclusion is not negated by or rendered ambiguous by a severability clause”); Johnson v.
Allstate Ins. Co., 687 A.2d 642 (ME 1997) (“An unambiguous exclusion is not negated
by a severability clause.”); see also Safeco Ins. Co. of Am. v. White, 913 N.E.2d 426, 440
(Ohio 2009) (collecting cases with majority view); Postell, 823 N.W.2d at 46-47 (“We
have already considered the question of what effect severability-of-interest clauses have
on insurance policy exclusions. The answer-none . . . Our rule remains consistent with the
majority position of other jurisdictions”); Am. Family Mut. Ins. Co. v. Copeland-
Williams, 941 S.W.2d 625, 627-29 (Mo. Ct. App. 1997) (holding that “any insured” in
the exclusionary clause is unambiguously collective rather than several, despite
severability clause); Northwest G.F. Mut. Ins. Co. v. Norgard, 518 N.W.2d 179 (N.D.
1994)(“the purpose of severability clauses is to spread protection, to the limits of
coverage, among all of the . . . insureds. The purpose is not to negate bargained-for
exclusions which are plainly worded.”); Villa v. Short, 947 A.2d at 1224-25 (finding that
a severability clause does not inject ambiguity or remove the joint obligation imposed by
intentional and criminal acts exclusions referring to either “an insured” or “any insured”);
McAllister [v. Millville Mut. Ins. Co., 433 640 A.2d 1283, 1289 (Pa. Sup. 1994)] (finding
joint obligations under the exclusion even though the policy defined each named insured
as a “separate insured”); Great Cent. Ins. Co. v. Roemmich, 291 N.W.2d 772, 774-75
(S.D. 1980) (establishing that an exclusion applying to “any insured” is unambiguous and
unaffected by a severability clause).
32
correctly interpreted and applied this phrase in SECURA’s policy to allow
invocation of the criminal-act exclusion.
Id. at 327-28.
Addressing Larson’s argument that the “any insured” language of the
criminal acts exclusion was inconsistent with the severability clause, the court noted that,
in contrast to the situation where the exclusion uses the phrase, “the insured,” an
exclusion that employs the phrase, “‘any insured’ or ‘an insured’... unambiguously
excluded coverage’ for the [“innocent” co-insured].” Id. at 328 (quoting Travelers Indem.
Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888, 895 (Minn. 2006)). With
respect to the applicability of the severability clauses, the Court went on to hold that,
A simple application of the policy reinforces our conclusion that no
ambiguity is created when the two clauses interact. When applying the
criminal-act exclusion to Patrick McArdle alone, as the severability clause
requires, the plain and unambiguous result is the exclusion of coverage for
Larson’s negligence claim because the bodily injuries that her claim is
premised on “result[ed] from” the “criminal acts” of “any insured,” with the
“any insured” being M.S.M. The same result occurs when the policy is
applied separately to Suzanne McArdle. The act of applying the policy
separately to each insured does not alter or create ambiguity in the
substance or sweep of the exclusion. Because there is no ambiguity, there is
no basis for application of the reasonable-expectation doctrine.
755 N.W.2d at 329. The court held that summary judgment was proper as to the parents’
claim for coverage “[b]ecause the [criminal acts] exclusion precludes insurance coverage
for Larson’s injuries that she sustained when M.S.M. attacked her.” Id.
33
Likewise, a United States District Court in the Fourth Circuit has also
adopted the majority rationale with respect to applicability of a severability clause. In
Standard Fire Insurance Company v. Proctor, 286 F. Supp. 2d 567 (D. Md. 2003),
another case of assault and battery, an insured sought coverage under a homeowner’s
policy for liability stemming from his son’s beating of a neighbor after a dispute about an
auto accident. After dispensing with the question of whether the Plaintiff properly
pleaded a negligence claim, the U.S. District Court for the District of Maryland held that
the insurer, Standard Fire Insurance Company (“Standard Fire”) properly excluded
coverage:
This Court, however, agrees with the majority of jurisdictions who have
taken the alternative approach and interpreted “any insured” as
unambiguously expressing “a contractual intent to create joint obligations
and to prohibit recovery by an innocent co-insured.” In Chacon, the
homeowner’s policy indicated that personal liability coverage did not
extend to “bodily injury or property damage . . . which is expected or
intended by any insured,” and included a severability clause providing that
“each person described above is a separate insured under this policy.” The
court indicated that a severability clause “is not inconsistent with the
creation of a blanket exclusion for intentional acts.” Furthermore, the court
concluded that the “any insured” provision “clearly and unambiguously
expresses an intention to deny coverage to all insured when damage is
intended or expected as a result of the actions of any insured.”
Id. at 574-575 (Internal citations omitted).
Additionally, in Allstate Ins. Co. v. Kim, the District Court of Hawaii
addressed a similar situation where parents sought coverage for the negligence claims
against them arising from an assault committed by their minor son. The court found
34
coverage was precluded by the intentional acts exclusion even though the policy
contained a limit of liability clause stating “this insurance applies separately to each
insured person.” 121 F.Supp.2d at 1307-08. The court observed that the intentional acts
exclusion was consistent with the “sound public policy that a wrongdoer should not profit
from his own wrongdoing or be indemnified against the effects of his wrongdoing” and
“public policy against insurance for losses resulting from such acts.” Id. at 1306-07.
Determining that the limits of liability clause did not prevent application of the
intentional acts exclusion to bar coverage for the alleged negligence of the parents, the
Kim Court noted the provision, “was intended to afford each insured a full measure of
coverage up to the policy limits, not to negate the policy’s intentional acts exclusion.” Id.
at 1308. The court observed that “the majority of courts” have held that the “any insured”
exclusion expresses a “contractual intent to create joint obligations and preclude coverage
to innocent co-insureds,” despite the presence of a severability clause. Id. To hold
otherwise “would effectively nullify exclusions from coverage in any case involving
coinsured and a policy with a severability provision.” Id. at 1309.
The Kim Court further remarked that “[i]t is inconceivable that parties to a
policy would include clauses specifically excluding coverage for claims based on certain
types of conduct, but intend those exclusions to have no effect in any case involving
claims against coinsured spouses.” Id. (quoting California Casualty Ins. Co. v. Northland
Ins. Co., 48 Cal.App.4th 1682 (1996)). To the contrary,
35
The plain, ordinary, and accepted sense in common speech meaning and
interpretation of the exclusion clause is that it is a specific and tailored
provision designed to notify the policy holders that they are not covered for
any intentional or criminal act and to so limit coverage. The plain, ordinary
meaning of the Limits of Liability Clause is that it spreads the protection of
the insurance policy to all the insureds up to the policy limits and is not
designed to negate the exclusions which are plainly worded.
121 F.Supp. at 1309. Accordingly, the court concluded that the insurer had no duty to
defend and indemnify parents in the negligence action. Id.
While the Respondents herein urge this Court to adopt the minority view
espoused by the California Supreme Court in Minkler v. Safeco Ins. Co. of Am., 232 P.3d
612 (Cal. 2010) and find that a conflict exists between the exclusions and the severability
provisions, we find their argument unpersuasive. In Minkler, the alleged victim of sexual
molestation by the adult son of the Safeco policyholder sued both the perpetrator and the
policyholder mother. The claim against the policyholder mother was for negligent
supervision. Id. at 615. The plaintiff obtained a default judgment against the policyholder
mother and settled for an assignment of her rights against Safeco. The plaintiff then
brought a suit in federal court against Safeco for breach of contract and breach of the
covenant of good faith and fair dealing. Id. at 616. Citing the severability of interests
clause, the plaintiff argued that the policyholder mother was entitled to coverage
notwithstanding the intentional acts exclusion cited by Safeco in denying coverage and
defense in the underlying claim. Id.
36
The Supreme Court of California found that “the original intent [of the
severability clause] was to make clear the separate application of policy exclusions, not
just liability limits, to each individual insured.” Id. The Minkler Court went on to explain
that when the severability clause was juxtaposed against an intentional acts exclusion
using the term “an insured” or “any insured,” an ambiguity resulted in which the Court
had to find that the policy “‘[c]ondition []’ stating that ‘[t]his insurance’ applies
separately to each insured is not reasonably susceptible of the construction that the entire
policy, particularly its exclusions from coverage, has such a separate effect as to each
insured.” Id.13
We are unconvinced by Minkler and the small minority line of cases
holding that the two provisions cannot be reconciled. Other Courts have reached this
same result. As the Nebraska Supreme Court observed in Wheeler, 842 N.W.2d at 107,
in exploring the history and purpose of severability clauses,
13
Accord., Premier Insurance Co. v. Adams, 632 So.2d 1054, 1055 (Fla. Dist. Ct.
App. 1994) (finding that the severability clause juxtaposed with the intentional acts
exclusion created an ambiguity to be read in the favor of the insured); Syl. Pt. 5, Brumley
v. Lee, 963 P.2d 1224 (Kan. 1998) (“An insurance policy containing exclusionary and
severability of interests clauses is construed to require that the exclusions are to be
applied only against the insured for whom coverage is sought and that coverage as to
each insured must be determined separately based on the facts applicable to each
insured.”); Worcester Mut. Ins. Co. v. Marnell, 496 N.E.2d 158 (Mass. 1986) (finding
that the severability clause required the exclusion to be read solely against the each
insured individually).
37
Severability clauses are common in insurance contracts, as is this particular
language. Historically, severability clauses became part of the standard
insurance industry form contract in 1955 to clarify “‘‘what insurance
companies had intended all along, namely that the term “the insured” in an
exclusion refer[red] merely to the insured claiming coverage.”‘
Id. In also rejecting the minority view in Minkler, the Court reasoned:
Summed up, the majority position emphasizes the plain meaning of
the “an insured” or “any insured” language in a particular exclusion. It
emphasizes that the severability clause’s command to apply the insurance
separately to each insured does not change the exclusion’s plain language
or create ambiguity in its application. The minority position, on the other
hand, concludes that the severability clause’s command to apply the
insurance separately to each insured requires that each insured’s conduct be
analyzed as if he or she were the only insured under the policy. Or, at the
very least, such an interpretation is a reasonable one, making the policy
ambiguous, which a court must construe in favor of coverage.
We find the majority position more persuasive and adopt it here. It is
consistent with our oft-stated approach to give language in an insurance
contract its plain meaning. We have in the past concluded that the “an
insured” language, and implicitly the “any insured” language, is clear and
unambiguous. Such language means what it says, and the severability
clause does not operate to override this clear and unambiguous language. In
other words, applying the insurance separately to each insured, as the
severability clause requires, does not change that the exclusions reference
“an insured” or “any insured.” As one appellate court explained, “The act
of applying the policy separately to each insured does not alter or create
ambiguity in the substance or sweep of the exclusion.”
Our goal in interpreting insurance policy language is to give effect to
each provision of the contract. Adopting the minority position would render
the “an” or “any” language superfluous, while adopting the majority
position would not. Further, we do not agree with the ... argument that the
majority position renders the severability clause meaningless. First, the
severability clause affects the interpretation of exclusions referencing “the
insured.” There are such exclusions in these policies, such as the “Illegal
Consumption of Alcohol” exclusion. And second, as American Family
explained at oral argument, the severability clause still has application
outside of its role in interpreting the scope of exclusion.
38
Id. at 107-08 (footnotes omitted).14
We likewise conclude that Minkler focused on the reasonable expectations
of the insured without any deference to the rule of contract construction that a contract’s
plain and unambiguous language will be applied, not construed, by the courts. In
contrast, the majority position represented by Wheeler adheres to the rules of insurance
contract construction. We conclude that adopting the minority position would render the
“any” or “anyone” language in the applicable provisions superfluous, while adopting the
majority position would not. The majority position gives meaning to both the exclusion
and the severability clause and is consistent with the rules of insurance contract
construction this Court outlined in Soliva.
Accordingly, we conclude that with respect to the two insurance policies at
issue in this case, the severability clause’s command to apply the insurance separately to
each insured does not alter the intentional/criminal act exclusions’ plain meaning or
create ambiguity in its application. The purpose of severability clauses is to spread
14
See also Co-operative Insurance Cos. v. Woodward, 45 A.3d 89 (rejecting
Minkler and hold that “assuming without deciding, that the provision at issue is a
severability clause, we conclude that this clause has no effect on - and cannot override
the intentional-acts exclusion for certain acts committed by ‘an insured.’ . . . . Even if
each insured - in this case, uncle and homeowner - is treated as having separate coverage,
the exclusionary language remains unambiguous because “an” is collective. Father’s
contention that the two provisions “simply cannot be reconciled” is therefore without
merit.”).
39
protection, to the limits of coverage, among all of the insureds. The purpose is not to
negate unambiguous exclusions. The policies should be “read as a whole with all policy
provisions given effect.” Syl. Pt. 1, Soliva, 176 W. Va. 430, 345 S.E.2d 33.
The negligent supervision and negligent entrustment claims advanced
against Tara Clendenen and Patricia Shoaf are necessarily ancillary to the conduct of
Sheila Eddy and Rachel Shoaf, their daughters. Just as the courts held in SECURA,
Proctor, and Kim, when applying the severability clause to the exclusions, the
exclusionary language still prohibits coverage to the allegedly negligent co-insureds.
Given the fact that the damages claimed against Tara Clendenen and Patricia Shoaf all
arose from the intentional and criminal conduct of their co-insureds, we conclude that
coverage is excluded under these policies.
Undoubtedly, the Neeses deserve sympathy and respect for their horrific
loss. That said, we must also be mindful that insurers price policies specifically based on
the anticipated risk. Insurers exclude certain coverages which the insurer is either unable
or unwilling to underwrite to keep costs low and accurately price insurance products for
all policyholders. In this case, the Clendenens and Shoafs paid premiums that were
commensurate with their coverage – which excluded coverage for all insureds caused by
the intentional acts of any insured. The severability clauses contained in the ANPAC and
Erie policy conditions do not alter or in any way negate the effect of the
40
intentional/criminal acts exclusions to exclude coverage for the claims asserted. Simply
put, the severability clauses are not in conflict with the exclusions. For these reasons, we
answer the second certified question in the negative.
IV. CONCLUSION
For all of the foregoing reasons, we answer the first certified question in the
affirmative and hold that the unambiguous exclusions in ANPAC’s policy for bodily
injury or property damage “which is expected or intended by any insured even if the
actual injury or damage is different than expected or intended,” and “arising out of any
criminal act committed by or at the direction of any insured,” and the unambiguous
exclusion in Erie’s policy for “[b]odily injury, property damage, or personal injury
expected or intended by ‘anyone we protect’. . .” preclude liability coverage to Tera
Clendenen and Patricia Shoaf for the claims in the underlying case brought by the Neeses
because the murder of Skylar Neese was expected or intended by Sheila Eddy and Rachel
Shoaf, co-insureds under their respective policies. We further answer the second certified
question in the negative and hold that the unambiguous severability clauses in ANPAC’s
and Erie’s policies, which state that the insurance applies separately to each insured, do
not prevail over the unambiguous intentional/criminal acts exclusions.
Certified Questions Answered.
41