Ward v. Baker
Annotate this Case__________
No. 21222
__________
JINA L. WARD, INDIVIDUALLY,
AND AS NEXT FRIEND OF
MICHAEL CHASE WARD, AN INFANT; AND
GARY E. WARD,
Plaintiffs Below, Appellees,
v.
ALICE J. BAKER; BOYCE E. BAKER; RICHARD BAKER;
ERIE INSURANCE GROUP, A CORPORATION;
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,
A CORPORATION; AND
AETNA CASUALTY AND SURETY COMPANY,
A CORPORATION,
Defendants Below, Appellants
___________________________________
Certified Questions from the
Circuit Court of Cabell County
Honorable L. D. Egnor, Circuit Judge
Civil Action No. 89-C-1736
CERTIFIED QUESTIONS ANSWERED
___________________________________
Submitted: September 15, 1992
Filed: December 18, 1992
Stephen C. Littlepage
Hyer & Littlepage
Point Pleasant, West Virginia
Counsel for Plaintiffs
Mark L. Garren
Garren, Plymale, Lycan & Pritt
Huntington, West Virginia
Counsel for Defendants Alice J. Baker and
Boyce E. Baker
R. Gregory McNeer
Campbell, Woods, Bagley,
Emerson, McNeer & Herndon
Huntington, West Virginia
Counsel for Defendant State Farm Mutual Automobile
Insurance Company
James D. Lamp
Lamp, O'Dell, Bartram & Entsminger
Huntington, West Virginia
Counsel for Defendant Erie Insurance Group
William L. Mundy
Mundy & Adkins
Huntington, West Virginia
Counsel for Defendant Aetna Casualty and
Surety Company
JUSTICE WORKMAN delivered the Opinion of the Court.
SYLLABUS BY THE COURT
1. "To be effective under W. Va. Code, 33-6-31(a), an
exclusion must specifically designate by name the individual or
individuals to be excluded." Syl. Pt. 4, Burr v. Nationwide Mut.
Ins. Co., 178 W. Va. 398, 359 S.E.2d 626 (1987).
2. "A 'named driver exclusion' endorsement in a motor vehicle
liability insurance policy in this State is of no force or effect
up to the limits of financial responsibility required by W. Va.
Code, 17D-4-2 [1979]; however, above those mandatory limits, or
with regard to the property of the named insured himself, a 'named
driver exclusion' endorsement is valid under W. Va. Code, 33-6-31(a) [1982]." Syllabus, Jones v. Motorists Mut. Ins. Co., 177 W.
Va. 763, 356 S.E.2d 634 (1987).
3. Where a valid named driver exclusion is present in an
insured's insurance policy pursuant to West Virginia Code § 33-6-31(a) (1982) and where a third party personal injury claim arises
against the insured under a family purpose doctrine theory of
liability from an automobile accident where the named excluded
driver was operating the vehicle without the insured's consent, the
insured's insurer need only provide the minimum mandatory liability
coverage set forth in West Virginia Code § 17D-4-2 (1991).
4. "W. Va. Code, 33-6-31(b), as amended, on uninsured and
underinsured motorist coverage, contemplates recovery, up to
coverage limits, from one's own insurer, of full compensation for
damages not compensated by a negligent tortfeasor who at the time
of the accident was an owner or operator of an uninsured or
underinsured motor vehicle." Syl. Pt. 4, in part, State Auto. Mut.
Ins. Co. v. Youler, 183 W. Va. 556, 396 S.E.2d 737 (1990).
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." Syllabus, Keffer v. Prudential Ins. Co., 153 W.
Va. 813, 172 S.E.2d 714 (1970).
Workman, Justice:
This case is before the Court upon a December 11, 1991, order
of the Circuit Court of Cabell County which certified two questions
to this Court. A recitation of the facts is necessary in order to
frame the issues surrounding the certified questions. On November
1, 1987, in Cabell County, West Virginia, the Plaintiff, Jina L.
Ward, one of the Appellees, was involved in an accident when the
Defendant, Boyce Baker, causedSee footnote 1 his vehicle to collide with the
1986 Ford Escort driven by the Plaintiff. The Defendant was
driving a 1981 Pontiac which was owned by his sister, Alice Baker.
Alice Baker's vehicle was insured through Erie Insurance Group
(hereinafter referred to as Erie). The policy issued to Ms. Baker
contained the following named driver exclusion:
NO COVERAGE WHILE NAMED PERSON IS OPERATING OR
IN CHARGE OF AUTOMOBILE
. . . .
It is agreed that effective on the date this
endorsement is signed by the named Insured
[July 5, 1985], such insurance as is afforded
by this policy or any renewal thereof for
Bodily Injury Liability, for Medical Payments,
for Property Damage Liability, for
Comprehensive and for Collision shall not
apply while any automobile is operated by or
in charge by: Boyce Baker. . . .
The named driver exclusion is then signed by the Defendant Alice
Baker.
At the time of the accident, Boyce Baker was driving Alice
Baker's car at the request of Richard Baker (Alice and Boyce
Baker's father) for the purpose of obtaining building supplies.
All three Bakers resided in the same household. Richard had given
his son permission to drive the car while Alice was asleep in
another part of the house. Alice had provided Richard with keys to
her automobile, and Boyce used his father's keys to drive Alice's
vehicle. Richard Baker was not excluded under the Erie policy from
driving Alice's car, and Alice had given him express permission to
use her vehicle when he needed it. However, Alice had not given
Boyce permission to use her vehicle and had not authorized her
father to permit such usage.
As a result of the accident, the Plaintiffs filed an action
against Alice and Boyce Baker alleging that Boyce was guilty of
negligence in his operation of the vehicle and that Alice was
liable for Boyce's actions under the family purpose doctrine.
Subsequently, the Plaintiffs filed a petition for declaratory
judgment, and as a result of this petition, Aetna Casualty and
Surety Company (hereinafter referred to as Aetna), State Farm
Mutual Automobile Insurance Company (hereinafter referred to as
State Farm), Erie and Richard Baker were added as Defendants by
order of the circuit court. Richard Baker was apparently added
based on a claim of negligent entrustment. Aetna is the
Plaintiffs' underinsured motorist carrier, State Farm is Richard
Baker's insurer and Erie insures Alice Baker. Boyce Baker did not
have his own automobile insurance.
The lower court certified the following questions:
1. In light of McKenzie v. Federal Mutual
Insurance Company, 393 F. Supp. 295 (S.D.W.Va. 1975)
and W. Va. Code § 33-6-31 (1982), and where third
party personal injury claims arising from an auto
accident exist against (1) the named insured under
the Family Purpose Doctrine; (2) her father, as a
permissive user of the vehicle, who gave permission
to drive the insured vehicle to his son, a
specifically excluded driver under the daughter's
clear and unambiguous named driver exclusion; (3)
and the son, the specifically excluded driver; and
where the subject automobile liability carrier has
paid the minimum $20,000 statutory limit into court
in acknowledgement of its obligation under Jones v.
Motorists Mutual Ins. Co., [177 W. Va. 763,] 35[6]
S.E.2d 634 (1987) now, therefore:
a) Does the subject automobile liability
carrier have any further obligation to defend
the claims against;
i) The named insured/daughter
ii) The permissive user/father
iii) The specifically excluded driver/son
b) If so, does the subject automobile
liability carrier have any further obligation
to provide coverage for claims against:
i) The named insured/daughter
ii) The permissive user/father
iii) The specifically excluded driver/son
c) If so, considering coverage limits of
100,000 per person/300,000 per accident, in
what amounts for:
i) The named insured/daughter
ii) The permissive user/father
iii) The specifically excluded driver/son[?]
2. Does the policy of insurance issued by
State Farm Mutual Automobile Insurance Company
to its insured, Richard Baker, covering his
1987 Mercury automobile, extend coverage to
Richard Baker or his son, Boyce Baker, for the
operation by Boyce Baker of an automobile
owned by Alice Baker, daughter of Richard
Baker, on November 1, 1987, when the policy of
insurance specifically excludes liability
coverage for vehicles owned by a resident
relative (Alice) of the named insured
(Richard)?
The lower court did not directly answer either of the certified
questions, but did so implicitly by denying the motions for summary
judgment of each of the Defendants. Upon review of the arguments
of the parties and all matters of record submitted before the
Court, we hold that the Defendant Alice Baker's insurance company,
Defendant Erie, is responsible to the Plaintiffs for the minimum
statutory limit of $20,000 and that the Plaintiffs' underinsured
motorist carrier, Aetna, is responsible to the Plaintiffs for the
remainder of damages covered under the Plaintiffs' underinsured
motorist coverage. Moreover, the Defendant State Farm which
insures Richard Baker, has no duty to extend coverage to either
Richard Baker or Boyce Baker since it was not the insurer of the
vehicle involved in this matter. Finally, this decision in no way
precludes the action by the Plaintiffs against Richard Baker for
the negligent entrustment of Alice Baker's automobile to Boyce
Baker.
Certified Question No. 1
The first certified question is whether Erie has any further
obligation, beyond the payment of the $20,000 minimum liability
coverage, to either defend against claims or provide coverage for
claims arising from the accident. Erie argues that neither the
family purpose doctrine nor any other theory of liability against
Alice, Boyce, or Richard Baker increases Erie's maximum liability
under its named driver exclusion. Aetna asserts that: 1) the
availability of underinsured motorist coverage depends on the
determination of liability, the determination of damages, and the
amount of liability coverage actually available; 2) the family
purpose doctrine may impose vicarious liability on another for
negligent operation of a motor vehicle by a member of his or her
family; 3) a named driver exclusion does not negate an insurer's
obligation to defend and provide coverage to its named insured and
others not specifically excluded in accordance with the omnibus
statute, up to the limits of liability; and 4) the exclusions in an
automobile liability insurance policy which are not conspicuous,
plain and clear must be construed in accordance with the doctrine
of reasonable expectations. The Plaintiffs contend that this
Court's decision in Universal Underwriters Insurance Co. v. Taylor,
185 W. Va. 606, 408 S.E.2d 358 (1991), involving liability
insurance contracts, is applicable to the present case and that
neither Erie nor State Farm should escape liability.See footnote 2
West Virginia Code § 33-6-31(a) (1982)See footnote 3 specifically provides
that:
No policy or contract of bodily injury
liability insurance, or of property damage
liability insurance, covering liability
arising from the ownership, maintenance or use
of any motor vehicle, shall be issued or
delivered in this State to the owner of such
vehicle, or shall be issued or delivered by
any insurer licensed in this State upon any
motor vehicle for which a certificate of title
has been issued by the department of motor
vehicles of this State, unless it shall
contain a provision insuring the named insured
and any other person, except a bailee for hire
and any persons specifically excluded by any
restrictive endorsement attached to the
policy, responsible for the use of or using
the motor vehicle with the consent, expressed
or implied, of the named insured or his spouse
against liability for death or bodily injury
sustained, or loss or damage occasioned within
the coverage of the policy or contract as a
result of negligence in the operation or use
of such vehicle by the named insured or by
such person: Provided, That in any such
automobile liability insurance policy or
contract, or endorsement thereto, if coverage
resulting from the use of a nonowned
automobile is conditioned upon the consent of
the owner of such motor vehicle, the word
'owner' shall be construed to include the
custodian of such nonowned motor vehicles.
(emphasis added).
In syllabus point 4 of Burr v. Nationwide Mutual Insurance Co., 178
W. Va. 398, 359 S.E.2d 626 (1987), we interpreted the term
"specifically excluded" and concluded that "[t]o be effective under
W. Va. Code, 33-6-31(a), an exclusion must specifically designate
by name the individual or individuals to be excluded." It is
undisputed that Boyce Baker was specifically designated by Alice
Baker and her insurer, Erie, as an individual to be excluded.
The only other qualification that this Court has placed upon
the use of named driver exclusions was set forth in Jones v.
Motorists Mutual Insurance Co., 177 W. Va. 763, 356 S.E.2d 634
(1987). In Jones, we attempted to reconcile West Virginia Code §
33-6-31(a), allowing named driver exclusions, with West Virginia
Code § 17D-4-2 (1991), setting mandatory minimum insurance coverage
limits. We concluded the following:
A 'named driver exclusion' endorsement in
a motor vehicle liability insurance policy in
this State is of no force or effect up to the
limits of financial responsibility required by
W. Va. Code, 17D-4-2 [1979];See footnote 4 however, above
those mandatory limits, or with regard to the
property of the named insured himself, a
'named driver exclusion' endorsement is valid
under W. Va. Code, 33-6-31(a) [1982].
Jones, Syllabus, 177 W. Va. at 764, 356 S.E.2d at 635 (footnote
supplied).
In addition to requiring the insurer to provide the mandatory
minimum coverage limits even where a named driver exclusion
existed, we also required the insurer to "defend actions" on behalf
of its insured for claims and personal injuries arising from the
named excluded driver's operation of the vehicle. Id. at 765, 356 S.E.2d at 636; see also Horace Mann Ins. Co. v. Leeber, 180 W. Va.
375, 378, 376 S.E.2d 581, 584 (1988) ("First, if part of the claims
against an insured fall within the coverage of a liability
insurance policy and part do not, the insurer must defend all of
the claims although it might eventually be required to pay only
some of the claims. Second, an insured's right to a defense will
not be foreclosed unless such a result is inescapably necessary.
Thus, third, a liability insurer need not defend a case against the
insured if the alleged conduct is entirely foreign to the risk
insured against."See footnote 5)
In this case, Erie has already paid into court the mandatory
minimum $20,000 bodily injury coverage for the Plaintiff.
Therefore, due to the existence of the valid named driver
exclusion, Erie is not responsible for any damages in excess of the
$20,000. Further, Erie does not bear a duty to defend its insured,
Alice Baker, against this claim.
Further, it is the primary contention of the Plaintiff and the
Defendant, Aetna, that Erie is liable for damages based upon the
family purpose doctrine. The family purpose doctrine was explained
in Freeland v. Freeland, 152 W. Va. 332, 336, 162 S.E.2d 922, 925
(1968) overruled on other grounds, Lee v. Comer, 159 W. Va. 585,
224 S.E.2d 721 (1976) as follows:
[w]here one purchases and maintains an
automobile for the comfort, convenience,
pleasure, entertainment and recreation of his
family, any member thereof operating the
automobile will be regarded as an agent or
servant of the owner, and such owner will be
held liable in damages for injuries sustained
by a third person by reason of the negligent
operation of the vehicle by such agent or
servant. The family member is carrying out
the purpose for which the automobile was
provided. Were not liability incurred by the
owner of the automobile in such circumstances,
an innocent victim of the negligence of a
financially irresponsible driver would be
entirely without recourse. This could not be
condoned.
See Bartz v. Wheat, 169 W. Va. 86, 285 S.E.2d 894 (1982); Bell v.
West, 168 W. Va. 391, 284 S.E.2d 885 (1981). It is undisputed that
the family purpose doctrine is firmly entrenched in the law of West
Virginia. However, at issue is whether the family purpose doctrine
will prevail over an unambiguous contractual agreement which
contains a valid named driver exclusion.See footnote 6
The United States District Court for the Southern District of
West Virginia addressed this issue in McKenzie v. Federal Mutual
Insurance Co., 393 F. Supp 295 (S.D. W. Va. 1975). The McKenzie
case was a declaratory judgment action in which the plaintiff was
covered by an insurance policy which contained a restrictive
endorsement excluding her son from coverage under the policy. The
son, while driving the plaintiff's car, was alleged to have hit and
killed a child. A wrongful death action was subsequently brought
against the plaintiff alleging that the plaintiff was liable under
the family purpose doctrine. 393 F. Supp. at 296-97.
The district court concluded that the exclusionary language of
the contract of insurance was enforceable over the family purpose
doctrine and held that the plaintiff's insurance policy did not
extend coverage to claims arising from accidents in which the
excluded driver was operating the car. Id. at 298. Thus, the
plaintiff was not provided insurance coverage, and the insurance
company was not required to defend any of the plaintiff's interests
in the wrongful death action. Id.
We agree with the conclusion of McKenzie concerning the
refusal to extend insurance coverage and hold that where a valid
named driver exclusion is present in an insured's insurance policy
pursuant to West Virginia Code § 33-6-31(a) (1982) and where a
third party personal injury claim arises against the insured under
a family purpose doctrine theory of liability from an automobile
accident where the named excluded driver was operating the vehicle
without the insured's consent, the insured's insurer need only
provide the minimum mandatory liability coverage set forth in West
Virginia Code § 17D-4-2.
In syllabus point 4 of State Automobile Mutual Insurance Co.
v. Youler, 183 W. Va. 556, 396 S.E.2d 737 (1990) we held, in
pertinent part: "W. Va. Code, 33-6-31(b), as amended, on uninsured
and underinsured motorist coverage, contemplates recovery, up to
coverage limits, from one's own insurer, of full compensation for
damages not compensated by a negligent tortfeasor who at the time
of the accident was an owner or operator of an underinsured motor
vehicle." Thus, the Plaintiffs can recover under their
underinsurance coverage for damages in excess of the amounts
provided by Erie. In addition, Plaintiffs could potentially have
a claim against Richard Baker for negligent entrustment.
Certified Question No. 2
The second certified question concerns whether the insurance
policy issued by State Farm to Richard Baker extends coverage to
Richard Baker or Boyce Baker for Boyce Baker's use of a car owned
by Alice Baker when the State Farm policy specifically excludes
liability coverage for vehicles owned by a resident relative of the
insured. State Farm argues that the family purpose doctrine does
not extend coverage to either Richard Baker or Boyce Baker for
accidents occurring while Boyce was operating a vehicle that State
Farm does not insure. Aetna, however, argues that State Farm's
resident relative exclusion is not conspicuous, plain and clear,
and must therefore be construed in accordance with the doctrine of
reasonable expectations.
The State Farm policy was issued to Richard Baker and insures
a 1987 Mercury. It does not insure the vehicle owned by Alice
Baker and driven by Boyce Baker at the time of the accident.
Moreover, the State Farm policy affords to its insured the
following coverage:
We will:
1. pay damages which an insured
becomes legally liable to pay
because of:
a. bodily injury to others,
. . .
. . . .
caused by accident resulting from
the ownership, maintenance or use of
your car. . . .
Even though Boyce Baker may be an insured within the terms of the
State Farm policy, coverage for Boyce occurs only when he is
driving the insured's car, the insured's "newly acquired car," the
insured's "temporary substitute car," or a "non-owned car."
A "temporary substitute car" means
a car not owned by you or your spouse, if
it replaces your car for a short time.
Its use has to be with the consent of the
owner. Your car has to be out of use due
to its breakdown, repair, servicing,
damage or loss. A temporary substitute
car is not considered a non-owned car.
Moreover, a "non-owned" car is defined as
a car not:
1. owned by,
2. registered in the name of, or
3. furnished or available for the
regular or frequent use of: you,
your spouse, or any relatives.
Thus, none of the definitions of vehicles for which coverage might
be provided includes the 1981 pontiac owned by Alice Baker.
Moreover, her vehicle is specifically excluded by the definition of
"non-owned car."
This Court has repeatedly held that "[w]here 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." Syllabus, Keffer v.
Prudential Ins. Co., 153 W. Va. 813, 172 S.E.2d 714 (1970); accord
Syl. Pt. 1, Russell v. State Auto Ins. Co., No. 20491, (W. Va.
filed June 29, 1992).
The language of the State Farm insurance policy issued to
Richard Baker is clear and unambiguous. Therefore, we do not
address Aetna's argument regarding the doctrine of reasonable
expectations. That doctrine applies only to insurance policy
language found to be ambiguous. Russell, No. 20491, slip op. at 4
n.3; Buckhannon-Upshur County Airport Auth. v. R & R Coal
Contracting, Inc., 186 W. Va. 583, 588, 413 S.E.2d 404, 409, n.10
(1991). Accordingly, we answer certified question number two in
the negative, thereby concluding that State Farm is not obligated
to extend coverage to either Richard Baker or his son.
Based upon the foregoing, the certified questions presented to
this Court by the Circuit Court of Cabell County have been
answered. This case is hereby dismissed from the docket of this
Court.
Certified questions answered.
Footnote: 1Boyce Baker's negligence is not in dispute. Footnote: 2We summarily dismiss the Plaintiffs' argument that our decision in Taylor is controlling in this case. This case is factually dissimilar from Taylor. The driver of the vehicle in Taylor had been given permission by the owner to operate the car. In the present case, the owner neither directly gave permission to the driver nor authorized anyone else to grant such permission. Thus, we refuse to extend liability insurance coverage based upon our reasoning in Taylor. See 185 W. Va. at 607, 408 S.E.2d at 359, Syl. Pt. 4. Footnote: 3West Virginia Code § 33-6-1(a) (1982) was amended in 1988; however, since the accident occurred in 1987, the amendments have no effect on the outcome of this case. Footnote: 4West Virginia Code § 17D-4-2 provides for mandatory limits of $20,000 bodily injury for one person, $40,000 bodily injury for two or more persons, and $10,000 property damage minimum coverage requirements. Footnote: 5In this case, it is clear that the claim against the insured does not fall within the coverage of the liability insurance policy and therefore, Erie has no duty to defend. If, however, a claim were alleged against the insured which fell within the liability insurance coverage then Erie would have an obligation to defend its insured. Footnote: 6Since the named driver exclusion is dispositive of the issue here, we need not determine whether the family purpose doctrine would apply to this rather unique situation where a father and two emancipated adults reside together, as such a determination might hinge on further development of the facts.
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