Federated American Insurance v. Strong

McInturff, J.

(dissenting) — The majority opinion imputes the intentional acts of the wife to the husband and denies him the insurance coverage he paid for and had a contractual right to receive. I disagree and respectfully dissent.

The Federated American Insurance Company (Federated) issued an insurance policy which listed Clyde and Lisa Strong as insureds. The policy contained a severability clause in the liability section which provided separate contracts of insurance to each spouse. The policy also provided that Federated would not provide coverage for damages resulting from an intentional act of the insured. Because Mrs. Strong intentionally caused the collision, Federated properly denied her coverage. However, Mr. Strong was still *264entitled to the coverage created by the severability clause. Because the policy created separate contracts of insurance, the excluded acts of one insured cannot bar coverage for an additional insured who has not engaged in the excluded conduct. Unigard Mut. Ins. Co. v. Spokane Sch. Dist. 81, 20 Wn. App. 261, 265-66, 579 P.2d 1015 (1978). Thus under the terms of the policy, Federated had a contractual duty to provide coverage to Mr. Strong.

The majority opinion imputes the intentional acts of Mrs. Strong to Mr. Strong. It holds that to allow Mr. Strong to recover under his separate contract of insurance would allow the marital community to benefit which would be contrary to public policy as stated in U.S.F. & G. Ins. Co. v. Brannan, 22 Wn. App. 341, 589 P.2d 817 (1979). In Brannan, a husband shot his two business partners. He and his wife had purchased a homeowners policy which excluded coverage if the business pursuits of any of the insureds gave rise to the damage. Because the policy did not contain a severability clause, Unigard was distinguished:

In Unigard Mut. Ins. Co. v. Spokane School Dist. 81, 20 Wn. App. 261, 579 P.2d 1015 (1978), a young boy, insured through the policy of his parents, set fire to a school. The court noted:
The policy extends defense and indemnification to "the Insured," and it excludes from coverage intentional acts resulting in injury or damage "expected or intended from the standpoint of the insured."
(Italics ours.) Unigard Mut. Ins. Co. v. Spokane School Dist. 81, supra at 265. Since there were several insureds, there were separate contracts. The result was that an excluded act of one insured, an intentional act in Unigard, did not bar coverage for additional insureds, who had not engaged in excluded conduct. The parents were liable for their son's intentional act, but since the parents did not intend the act, the policy was available to protect them or their creditor the school district.
The instant case concerns a different coverage exclusion than that involved in Unigard. Here, the policy does not apply to "damage arising out of business pursuits of any Insured" (italics ours); thus, it does not matter that *265the event did not arise out of Mary Brannan's business. The policy provides no coverage if the business pursuits of any of the separate insureds gave rise to the damage. Thus, Unigard's holding, that this type of insurance policy is severable with respect to the various named insureds, becomes irrelevant to this issue.

U.S.F. & G. Ins. Co. v. Brannan, supra at 347-48.

The majority's reliance on Brannan is questionable. First, Brannan is clearly distinguishable. The policy in Brannan did not contain a severability clause. Second, the public policy analysis in Brannan appears to be in question following our Supreme Court's decision in Mutual of Enumclaw Ins. Co. v. Wiscomb, 97 Wn.2d 203, 643 P.2d 441 (1982). In that case, the family or household exclusion clause was held to be in violation of public policy. That clause excludes coverage for bodily injury to any member of the family residing in the same household as the insured. Our Supreme Court expressed the strong public policy of assuring protection to the innocent victims of automobile accidents. Wiscomb, at 207. I cannot overlook the fact that this case, like most cases involving automobile collisions, involved vehicles and persons other than the insured and their insurance company. The present case involved two other drivers and vehicles. By judicially excluding coverage, it is possible that these innocent third parties will be left without an effective remedy.

We must remember that Federated drafted and issued the present policy which contained the severability clause. Federated also accepted Mr. Strong's premium payments. If Federated desired to have the intentional act of any insured to exclude coverage for all insureds, it should have drafted the policy to reflect that desire.

The majority opinion discusses community property principles, agency law, and community benefit and liability. This discussion overcomplicates the issue before the court. The fact remains that Mr. Strong paid for and was issued an insurance policy which covered his losses. The only issue is whether the irresponsible acts of his estranged wife *266should be imputed to him so as to relieve Federated from its contractual obligation. In this day of "individualness", to relieve Federated of its duty to pay offends my sensibilities.

The judgment of the Superior Court should be reversed and Federated directed to pay its contractual obligation.

Reconsideration denied January 4, 1984.

Review granted by Supreme Court February 17, 1984.