Builders Mutual Insurance v. North Main Construction, Ltd.

WYNN, Judge,

dissenting.

“[T]he sources of liability which are excluded from homeowners policy coverage must be the sole cause of the injury in order to exclude coverage under the policy.” State Capital Ins. Co. v. Nationwide Mut. Ins. Co., 318 N.C. 534, 546, 350 S.E.2d 66, 73 (1986) (emphasis added). The majority opinion does not dispute that the plain language of the policy did not exclude from coverage the negligent hiring, supervision, and/or retention claims of the Sirohi defendants against Exware and North Main. Since the negligent hiring, supervision, and/or retention is a non-excluded cause, the trial court did not err in granting summary judgment in favor of Defendants. Accordingly, I respectfully dissent.

It is well settled that in North Carolina insurance policies are construed strictly against insurance companies and in favor of the insured. Maddox v. Colonial Life & Accident Ins. Co., 303 N.C. 648, 650, 280 S.E.2d 907, 908 (1981). Provisions which exclude liability of insurance companies are not favored. Therefore all ambiguous provisions are strictly construed against the insurer and in favor of the insured. Wachovia Bank & Trust Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 355, 172 S.E.2d 518, 522-23 (1970).

The exclusion provision at issue in the general liability policy states:

2. Exclusions
This insurance does not apply to:
***
g. Aircraft, Auto Or Watercraft
“Bodily injury” or “property damage” arising out of the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and “loading or unloading”.

*91Our Supreme Court has previously established the following principle with respect to determining the coverage of homeowners or general “all risks” policies: “[T]he sources of liability which are excluded from homeowners policy coverage must be the sole cause of the injury in order to exclude coverage under the policy.” State Capital Ins. Co., 318 N.C. at 546, 350 S.E.2d at 73 (emphasis added); see also Avis v. Hartford Fire Ins. Co., 283 N.C. 142, 150, 195 S.E.2d 545, 549 (1973) (“As a general rule, coverage will extend when damage results from more than one cause even though one of the causes is specifically excluded.” (citations omitted)).

In State Capital, the owner of a pickup truck and a companion went on a hunting trip. 318 N.C. at 536, 350 S.E.2d at 67. The owner stored a rifle behind the seat of his truck because the truck’s gun rack was full. Id. The owner saw a deer and reached for the rifle from outside the truck. Id., 350 S.E.2d at 67-68. The rifle discharged, injuring the owner’s companion as he was exiting the truck. Id., 350 S.E.2d at 68. The Supreme Court held that “the exclusionary language in the State Capital homeowners policy should be interpreted as excluding accidents for which the sole proximate cause involves the use of an automobile. If there is any non-automobile proximate cause, then the automobile use exclusion does not apply.” Id. at 547, 350 S.E.2d at 74. The Supreme Court found that the “negligent mishandling of the rifle was a proximate cause of [the companion’s] injury[,]” and therefore the automobile use exclusion would not apply. Id.

In Nationwide Mut. Ins. Co. v. Davis, 118 N.C. App. 494, 501, 455 S.E.2d 892, 896 (1995), this Court found State Capital to be controlling. In Davis, the insured and her granddaughter were riding in the insured’s van. Id. at 495, 455 S.E.2d at 893. After they reached their destination, the granddaughter got out of the van, walked around the van, and was struck by another car. Id. at 496, 455 S.E.2d at 893. For the purposes of the insured’s automobile insurance policy, this Court held that the van was “in use” at the time of the accident. Id. at 498, 455 S.E.2d at 895. However, following State Capital, for purposes of the insured’s homeowners policy which had an automobile use exclusion, this Court held that “the ‘use’ of the van was not the sole proximate cause of the accident; a concurrent cause was Ms. Davis’ negligent supervision of [her granddaughter.]” Id. at 501, 455 S.E.2d at 895.

Like in State Capital and Davis, here, the claims of negligent hiring, supervision, and/or retention are non-automobile proximate *92causes. State Capital, 318 N.C. at 546, 350 S.E.2d at 73. Therefore, since Exware’s use of the automobile is not the sole proximate cause of the Sirohi’s injuries, the claim is not excluded from coverage by the automobile exclusion.

The majority relies on this Court’s opinion in Wilkins v. Am. Motorists Ins. Co., 97 N.C. App. 266, 388 S.E.2d 191 (1990), which is distinguishable from the instant case. In Wilkins, an airplane, owned by the plaintiff, crashed killing two people and injuring a third. Id. at 268, 388 S.E.2d at 192. The plaintiff was sued by the survivors alleging, inter alia, that he negligently failed to warn passengers that he damaged the airplane and negligently failed to properly instruct the pilot. Id. The plaintiff’s homeowners policy had an exclusion provision that did not provide coverage for injuries “arising out of the ownership, maintenance, use, loading or unloading of: (1) an aircraft[.]” Id., 388 S.E.2d at 193. This Court held that the claims were excluded from policy coverage because the alleged failure to warn of the damage to the airplane and negligent instruction to the pilot, “are causes which involve the use of the aircraft and . . . they could cause no injury that was not directly connected to the use of the aircraft.” Id. at 271-72, 388 S.E.2d at 194-95.

In this case, the claims of negligent hiring, supervision, and/or retention do not involve the use of the automobile and could cause an injury that is not directly connected to the use of the automobile. See id. Due to North Main’s negligent hiring, supervision, and/or retention an injury could have occurred, for example, through Exware’s use of construction equipment. Therefore, Wilkins is distinguishable from the instant case.

Accordingly, since the negligent hiring, supervision, and/or retention is a non-automobile proximate cause, the trial court did not err in granting summary judgment in favor of Defendants.