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Auto Club Family Insurance Co. v. Moroney

United States District Court, D. Kansas

February 15, 2018

BLAKELUND MORONEY et al., heirs at law to KEVIN P. MORONEY, deceased, and SUZANNE ESTRELLA and BENJAMIN ESTRELLA, Defendants.



         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' 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 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 non-moving 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]

         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]

         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 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:

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:

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:


         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]

         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.

         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 unambiguous language.”[38] If the policy language is ambiguous, then it must be construed in favor of the insured.[39]

         A. Exclusion for ...

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