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Tuesday, 26 November 2013 01:21

Homeowner’s Motor Vehicle Exclusion Bars Claim Coverage After Insured Runs Toddler Over Says CA Appeals Court

Reversing a trial court’s decision, a California appellate court has ruled that a motor vehicle exclusion in a homeowner’s insurance policy barred coverage of claims against the insured homeowner and his wife after he accidentally ran over his two-year old granddaughter with his pickup truck in his driveway.

After Jose Bautista’s tragic accident, his insurance carrier, Farmers Insurance Exchange, sought a declaration that it was not obligated to provide coverage under the homeowner’s insurance policy it had issued with respect to the resulting action that alleged, among other things, that Mr. Bautista’s wife had negligently supervised their granddaughter. The insurer argued that the motor vehicle exclusion in the homeowner’s policy precluded any potential coverage because all of the claims in the action arose out of Mr. Bautista’s use of a motor vehicle.

The trial court denied Farmers’ motion for summary adjudication, finding that the motor vehicle exclusion in the policy did not apply. The dispute reached the court of appeal.

The Homeowner’s Insurance policy provided personal liability coverage in the amount of $300,000 per occurrence under Coverage E, which stated:

We pay those damages which an insured becomes legally obligated to pay because of bodily injury ... resulting from an occurrence to which this coverage applies.
The policy excluded from Coverage E bodily injury that:
7. results from the ownership, maintenance, use, loading or unloading of ... b. motor vehicles...”

The Appellate Court’s Decision

The appellate court rejected the trial court’s ruling. In its decision, the court of appeal explained that the coverage issue turned on whether Mr. Bautista’s alleged negligent operation of his truck and Ms. Bautista’s alleged negligent supervision of her granddaughter were dependent or independent concurrent proximate causes of the girl’s fatal injuries. It then decided that Ms. Bautista’s alleged negligent supervision of her granddaughter allowed her to become exposed to the specific hazard created by the arrival of Mr. Bautista in his truck. None of the alleged negligent supervision existed “independently of [Mr. Bautista’s] use ... of the vehicle,” the appeals court added.

Therefore, the appellate court ruled, the trial court had erred in finding that Ms. Bautista’s alleged negligent supervision of her granddaughter existed independently of the “use” of a motor vehicle. Her alleged negligence “was sufficiently related to [Mr. Bautista’s] use of the vehicle and ‘part of a course of uninterrupted conduct’ that it fell within the motor vehicle exclusion.”

Farmers had no liability under the homeowner’s insurance policy as a matter of law and was entitled to summary adjudication on its complaint and the Bautistas’ cross-complaint that it had no duty to indemnify or defend the Bautistas in the underlying action, the appellate court concluded.

The case is Farmers Ins. Exchange v. Superior Court, No. B248324 (Cal. Ct. App. Oct. 28, 2013). Attorneys involved include: Archer Norris, Limor Lehavi, Mariyetta A. Meyers–Lopez; Greines, Martin, Stein & Richland, Robert A. Olson and Feris M. Greenberger for Petitioner; Louis G. Fazzi and Fernando J. Bernheim for Real Parties in Interest.

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