Mailhiot v. Nationwide Mutual Fire Insurance Co.

Mailhiot v. Nationwide Mutual Fire Insurance Co. (98-357); 169 Vt. 498; 
740 A.2d 360

[Filed 27-Aug-1999}


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as  formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the  Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 98-357


Joseph Mailhiot & Detra Coltey	                      Supreme Court

	                                              On Appeal from
     v.		                                      Rutland Superior Court

Nationwide Mutual Fire Insurance	              May Term, 1999
Company


Alden T. Bryan, J.


       William H. Meub and Michael E. Zeliger of Keyser, Crowley, Carroll,
  George & Meub, P.C., Rutland, for Plaintiffs-Appellants.

       Michael J. Gannon and Joshua L. Simonds of Affolter Gannon & Flynn,
  Ltd., Burlington, for Defendant-Appellee.


PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.


       JOHNSON, J.  This case raises the issue of whether, when
  indemnification is sought  from an insurance company, the fact that a
  plaintiff has claimed two distinct theories of recovery  is sufficient to
  invoke the concurrent causation doctrine adopted in State Farm Mutual
  Insurance  Co. v. Roberts, 166 Vt. 452, 697 A.2d 667 (1997), thus allowing
  for recovery under a policy  despite the fact that one of the causes of the
  accident was an excluded risk.  We conclude that the  pleading of distinct
  theories of recovery does not establish concurrent causation, and therefore 
  affirm.

       Plaintiffs Joseph Mailhiot, Detra Coltey, and their son William
  Mailhiot appeal a ruling 

  

  of the superior court granting summary judgment to defendant Nationwide
  Mutual Fire Insurance  Company (Nationwide) on the issue of whether William
  Mailhiot's injuries were covered by a  Nationwide policy.  The relevant
  alleged facts are not disputed.  On July 10, 1994, William  Mailhiot
  ("Billy") visited Donald and Patricia Wyman's home to play with their son
  Eric.  Both  Billy and Eric were thirteen years old at the time.  Eric
  drove off the Wymans' property in an all  terrain vehicle (ATV) belonging
  to the family, carrying Billy as a passenger.  Eric lost control of  the
  ATV and crashed, causing severe injuries to Billy.

       Plaintiffs sued the Wymans, who settled with plaintiffs by assigning
  to plaintiffs their  rights under a Nationwide homeowners policy in
  exchange for a release from liability.  Plaintiffs  then sued Nationwide
  for failure to defend and cover the Wymans.  The parties filed cross 
  motions for summary judgment, and the trial court ruled in favor of
  defendant.  The trial court  concluded that Billy's injuries were not
  covered by the policy because the policy contained an  automobile exclusion
  providing that:

     [The policy's coverage for medical payments to others] do[es] not 
     apply to bodily injury or property damage arising out of the 
     ownership, maintenance, or use of . . . a motor vehicle owned or 
     operated by, or rented or loaned to an insured.

  On appeal, plaintiffs contest no issue of fact, but contend that the trial
  court erred as a matter of  law in ruling that plaintiffs' cause of action
  for negligent supervision was not independent of a  cause of action for
  negligent operation, maintenance, entrustment or use of a motor vehicle.

       Because there are no disputed issues of fact, we review only whether
  the trial court was  correct in deciding that Nationwide was entitled to
  judgment as a matter of law.  See Mello v.  Cohen, ___ Vt. ___, ___, 724 A.2d 471, 473 (1998).  Plaintiffs argue that Billy's injuries were  the
  result of two distinct causes: Eric Wyman's negligence in operating the
  motor vehicle (a risk 

 

  that plaintiffs acknowledge is clearly excluded under the policy) and his
  parents' negligence in  failing to adequately supervise the two children
  while they played.  Plaintiffs assert that the latter  theory of liability
  does not fall within the motor vehicle exclusion of the policy, and
  therefore  Billy's injuries should be covered.  The two causes of the
  accident are independent, plaintiffs  contend, because Billy could have
  just as easily fallen out of a tree or otherwise injured himself  as a
  result of the Wymans' negligent supervision.  Plaintiffs emphasize that
  negligent supervision  is a distinct cause of action and that Nationwide
  could have excluded claims for negligent  supervision from coverage if it
  had so chosen.

       We adopted the concurrent causation doctrine that plaintiffs argue
  applies to this case in  State Farm Mutual Insurance Co. v. Roberts, 166
  Vt. 452, 697 A.2d 667 (1997).  In that case,  the insured, Lyle Webb, drove
  to his friend David Roberts' house to give Roberts an engine.   See id. at
  454, 697 A.2d  at 668.  Webb and Roberts used a piece of plywood as a ramp
  to  facilitate the unloading of the engine; the ramp slipped, causing the
  engine to roll onto Roberts'  hand and injure him.  See id.   Roberts
  alleged that it was Webb's negligence in placing the ramp  on an icy spot
  on the floor that caused his injury.  See id. at 455, 697 A.2d  at 669. The
  issue on  appeal was whether an insurance policy's automobile exclusion
  precluded coverage, a  determination that depended on whether the acts of
  nonvehicle-related and vehicle-related  negligence were concurrent causes
  of the injury.  See id. at 455-56, 697 A.2d  at 669.  We  explained the
  concurrent causation doctrine as follows:

     Under that doctrine, if the liability of an insured arises from 
     concurrent but separate nonvehicle-related and vehicle-related 
     negligent acts, and the nonvehicle-related act is an included risk 
     under the insured's homeowner's policy, coverage exists even 
     though the policy contains an automobile exclusion.  In other 
     words, if an occurrence is caused by a risk included within the 

 

     policy, coverage may not be denied merely because a separate 
     excluded risk was an additional cause of the accident.

  Id. at 456, 697 A.2d  at 669 (citation omitted).

       Though we adopted the concurrent causation doctrine in the Roberts
  opinion, we  ultimately concluded that the doctrine did not apply to the
  facts of that case because the alleged  act of negligence (placing the ramp
  on an icy spot on the floor) was inseparable from the  excluded act
  (unloading a motor vehicle).  In so concluding, we contrasted Roberts with
  the  leading case on concurrent causation, State Farm Mutual Automobile
  Ins. Co. v. Partridge, 514 P.2d 123 (Cal. 1973), in which an insured
  modified a pistol to create a hair trigger, which then  discharged and
  injured his friend when the insured drove over a bump.  See Roberts, 166
  Vt. at  462, 697 A.2d  at 669.  The difference between the two cases is that
  in Roberts, the alleged  negligent act was entirely dependent upon the
  excluded act, while in Partridge, the relationship  between the two was
  entirely circumstantial.  In other words, the hazard created by the
  modified  pistol in Partridge existed independently of the hazard involved
  in operating the motor vehicle.   In Roberts, by contrast, the hazard
  associated with the negligent placement of the ramp would  never have
  existed absent the task of unloading the vehicle.

       In Roberts we cited a New Jersey case that also illustrates those
  circumstances in which  two causes of an accident are truly independent of
  one another.  In Salem Group v. Oliver, 607 A.2d 138 (N.J. 1992), the
  insured allegedly served alcohol to a nephew who was then involved  in an
  accident on an ATV while off the insured's property.  The question in that
  case was  "whether the insurer can avoid th[e] obligation [to defend an
  insured] because a separate  excluded risk, the operation of an all-terrain
  vehicle (ATV), constitute[d] an additional cause of  the injury."  607 A.2d 
  at 139.  The court applied the concurrent causation doctrine and 

 

  concluded that the negligent act of serving alcohol to a minor was distinct
  and therefore covered  by the policy.  The court reasoned that the cause
  was distinct because the insured would have  been liable for serving
  alcohol even if the nephew had borrowed another's vehicle.  The court 
  distinguished the case from others involving negligent entrustment of a
  vehicle to an insured's  son and negligent supervision of an employee:

     [The other opinions dealing with negligent supervision and 
     negligent entrustment] proceed on the assumption that the negligent 
     entrustment or supervision of a motor vehicle is intertwined with 
     the ownership and operation of the motor vehicle.  The negligent 
     entrustment or supervision cannot be isolated from the ownership 
     of the insured automobile.  In contrast, the serving of alcohol to a 
     minor does not depend on the insured's ownership of a motor 
     vehicle or its entrustment to another.

  Id. at 139-40.  Stated another way, there was a manifest hazard created by
  serving alcohol to a  minor that would have existed even in the absence of
  the use of insured's vehicle.  The  separateness of the two causes is also
  apparent because there were distinct  objects of the alleged  acts of
  negligence: alcohol on the one hand, and the motor vehicle on the other. 
  Therefore it  was a concurrent cause.
  
       In the instant case, by contrast, there is no way to separate the
  Wymans' alleged  negligence in supervising Eric and Billy from the
  vehicle-related conduct because the ATV was  the only possible object of
  their negligence.  Plaintiffs attempt to argue that the Wymans are 
  separately liable for negligent supervision because their negligence could
  have manifested itself  with any number of instrumentalities: a fall from a
  tree or an accident with a power tool, for  example.  An insured cannot be
  liable, however, for negligence in the abstract.  Rather, an  insured is
  liable for negligence with respect to a particular object or
  instrumentality.  In Oliver,  the distinct nonvehicle instrumentality was
  alcohol.  The only alleged negligent act in the instant 

 

  case, by contrast, was allowing the two boys to depart on the vehicle. 
  There was no manifest (as  opposed to abstract) hazard involved in the
  Wymans' relaxed supervision of their son and his  friend absent the hazard
  posed by operation of the ATV itself.  It is impossible to separate the 
  excluded conduct from any included conduct; therefore, the two causes are
  not independent of  one another and cannot be said to be concurrent.

       Plaintiffs contend that the motor vehicle in this case was "simply the
  medium by which  the insured's negligent supervision manifested harm." 
  However, this is precisely what the motor  vehicle exclusion is meant to
  address: the motor vehicle as medium.  See Oliver, 607 A.2d  at  142
  (Clifford, J., dissenting) (in insurance cases, concern is not with
  question of culpability or  why injury occurred, but only with nature of
  injury and how it happened).  This is in contrast to  cases like Partridge,
  for instance, where the motor vehicle was merely the incidental locale of 
  nonvehicle negligence, rather than the medium of negligence.

       Our holding in this case comports with the rule adopted by the
  majority of states that  have examined this issue.  See Taylor v. American
  Fire and Cas. Co., 925 P.2d 1279, 1282-83  (Utah Ct. App. 1996) (explaining
  minority and majority positions).  Under this rule, a court  must look to
  the causes of the injury and their relationship to one another rather than
  the theory  of recovery forwarded by a plaintiff.  See Taylor, 925 P.2d  at
  1283-84.  This approach is both  logical and just, because the coverage
  provided by an insurance policy is generally defined by  risks and/or
  causes of injuries, not theories of recovery.  See id. at 1283; American
  Universal  Ins. Co. v. Cummings, 475 A.2d 1136, 1137-38 (Me. 1984);
  Northern Assurance Co. v. EDP  Floors, Inc., 533 A.2d 682, 689 (Md. 1987).  

       Appellants urge us to join the minority of states that find coverage
  for vehicle-related 

 

  conduct if the claim is construed as one for negligent supervision.  See,
  e.g., Tuell v. State Farm  Fire & Cas., 477 N.E.2d 70 (Ill. App. Ct. 1985); 
  U.S. Fidelity & Guar. Co. v. State Farm  Mut. Auto. Ins. Co., 437 N.E.2d 663 (Ill. App. Ct. 1982); Grinnell Mutual Reinsurance Co. v.  Employers
  Mut. Cas. Co., 494 N.W.2d 690 (Iowa 1993).  The rationale in these cases
  seems to  be that coverage is not precluded so long as the plaintiff pleads
  a distinct cause of action or  theory of recovery. (FN1)  See, e.g., Tuell,
  477 N.E.2d  at 74.  This rule would be inconsistent  with the precedent
  established in Roberts, which looked to the relevant instrumentality and
  the  relationship between the alleged causes rather than the theory of
  recovery to determine whether  the causes were concurrent.

       We believe the majority rule is also preferable because it gives
  effect to the intentions of  the parties and the plain language of the
  policy, which we are obligated to do in interpreting a  policy.  Garneau v.
  Curtis & Bedell, Inc., 158 Vt. 363, 367, 610 A.2d 132, 134, (1992) 
  (insurance policy is contract that must be interpreted according to its
  terms and the parties'  evident intent as gathered from language used);
  Sanders v. St. Paul Mercury Ins. Co., 148 Vt.  496, 507, 536 A.2d 914, 921
  (1987) (in absence of ambiguity in agreement, statutory violation,  or
  inherently unfair or misleading language, we give effect to plain meaning
  of policy).  The  minority rule allows the naming of a distinct theory of
  recovery to create coverage for a risk that  would otherwise be excluded,
  thus effectively modifying the language the parties agreed upon  after the
  fact.  

       The hazard created by the Wymans' negligent supervision of their son
  and his friend 

 

  would not have existed absent the hazard posed by the ATV.  Because the
  alleged act of  negligence (negligent supervision of the two boys in
  allowing them to depart on the ATV) is  inseparable from the excluded
  conduct (operation of the ATV), the concurrent causation doctrine  does not
  apply to this case.  Therefore, the accident fell within the automobile
  exclusion, and the  trial court ruled correctly in finding there was no
  coverage under the policy.  (FN2)

       Affirmed.


	                               FOR THE COURT:



	                               _______________________________________
	                               Associate Justice


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                                  Footnotes


FN1.  In Grinnell, the Iowa case, the court provided no real analysis of why
  the negligent supervision in that case was found  to be an independent
  proximate cause; rather, the court merely stated this as its conclusion.

FN2.  Because the policy defines a motor vehicle to include recreational
  vehicles while off an insured location, there was some  discussion at oral
  argument about the possibility that the ATV was not a motor vehicle under
  the policy definition when the  Wymans allowed Billy and Eric to depart,
  because that decision was made while the boys and the vehicle were still on
  an  insured location.  Because this argument was raised for the first time
  at oral argument, however, we do not consider it on  appeal.