Weekly Law Resume - Insurance Coverage – Duty to Defend

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Farmers Insurance Exchange v. The Superior Court of Los Angeles County (Bautista)
California Court of Appeal, Second Appellate District (October 28, 2013)

Questions often arise as to whether there is coverage when there are two negligent acts, one of which is excluded under a policy, and another which is not. This case considered the extent to which a motor vehicle exclusion in a homeowners policy applied where the incident occurred in the insured’s driveway and there were allegations of negligent supervision of the victim.

Farmers Insurance Exchange (“Farmers”) issued a homeowners insurance policy for a house in Pomona to Jose Bautista and Lourdes M. Sanchez. Sara Bautista, Jose’s wife, was an additional insured under the policy, which had limits of $300,000. The policy excluded bodily injury that “results from the ownership, maintenance, use, loading or unloading of . . . motor vehicles . . . .” Farmers also issued a vehicle insurance policy with limits of $60,000, covering a 2004 Dodge pickup truck owned by Jose Bautista.

On August 17, 2007 the Bautistas’ granddaughter, Valerie Bautista, who was less than two years old, was killed in the driveway of the Bautistas’ house when Jose Bautista ran over her with his pickup truck. Sara Bautista routinely allowed the grandchildren to greet Jose at his truck when he came home. She knew that she needed to take extra precautions and supervise the younger grandchildren, including Valerie, when they went to greet Jose, to keep them out of what the Bautistas call the “zone of danger.” On the day of the accident, however, Valerie “got out of the house without [Sara] knowing it.” She walked in front of Jose’s truck, and he ran her over. Subsequently, Valerie’s mother and father, Kenia Casaya and Jose Luis Bautista, Jr., filed an action against the Bautistas, alleging causes of action for negligence in operating a motor vehicle, and for general negligence. In the second cause of action, the plaintiffs alleged that Sara Bautista negligently cared for and supervised Valerie Bautista.

Farmers defended the Bautistas in the action, which resolved by stipulated judgment in the amount of $360,000 for the plaintiffs and a covenant not to execute in exchange for an assignment action by the Bautistas. Farmers filed a declaratory relief action, seeking a declaration that it was not obligated to provide coverage under the homeowners policy because of the motor vehicle exclusion and because of an exclusion for residents of the insured’s household, since Valerie was a resident at the time of her death. Farmers filed a motion for summary judgment, arguing that because Jose’s use of a vehicle caused Valerie’s death, Sara’s negligent supervision was not an independent cause of Valerie’s death, so the motor vehicle exclusion applied. The trial court found that Sara’s negligent supervision was independent of the “use” of the motor vehicle, and that the exclusion did not apply. Farmers filed a writ of mandate.

The Court of Appeal reversed, finding that Sara’s alleged negligent supervision was not an independent cause of Valerie’s death, separate and independent of the “use” of a motor vehicle by Jose.

The Court reviewed a number of cases that had dealt with causation by two separate acts of negligence, one of which would be excluded under a policy, and another that would not. The Court noted that the difficulty in resolving the issue arises in part from determining how independent a proximate cause has to be in order to avoid the motor vehicle exclusion, and “in part from the elasticity of the concept of proximate cause.” In reviewing the other cases, the Court found that a key issue would be whether the excluded activity “played an active role in causing the injury.”

Here, Valerie’s death was caused directly by the negligent driving of Jose (which was excluded under the homeowners policy). In contrast, Sara’s non-vehicular negligence (failing to supervise children while Jose drove his truck in the driveway) could only have occurred at the time and place of the vehicular negligence: in the Bautistas’ driveway when Jose came home from work. The Court held that Sara’s negligence was sufficiently related to Jose’s use of the vehicle and “part of a course of uninterrupted conduct” that it fell within the motor vehicle exclusion. Farmers thus had no liability under the homeowners insurance policy as a matter of law.

The Court of Appeal issued a writ of mandate ordering the trial court to enter an order granting Farmers’ motion for summary adjudication.

COMMENT
When there are two negligent acts causing the injury or loss, one excluded and one not excluded, there will be coverage only if the non-excluded act can be found to have caused the injuries independently of the excluded act. If it still takes the excluded act to ultimately cause the loss, then there will be no coverage.

For a copy of the complete decision see:

http://www.courts.ca.gov/opinions/documents/B248324A.PDF