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IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2005 Term
____________
No. 32573
____________
PAMELA E. HOWE, individually,
and as adoptive parent and next friend of
TREY J. HOWE, a minor,
Appellant
v.
DUANE A. HOWE, AMERICAN STANDARD
INSURANCE COMPANY OF OHIO and
AMERICAN FAMILY INSURANCE COMPANY,
Appellees
_____________________________________________________
Appeal from the Circuit Court of Marion County
Honorable David R. Janes, Judge
Civil Action No. 02-C-232
AFFIRMED
_____________________________________________________
Submitted: September 14, 2005
Filed: November 17, 2005
Paul T. Farrell, Jr.
J. Michael Benninger
Wilson, Frame, Benninger & Metheney, P.L.L.C.
Morgantown, West Virginia
Attorneys for Appellant |
Robert P. Martin
Phillip C. Monroe
Campbell, Woods, Bagley, Emerson, McNeer & Herndon, P.L.L.C.
Charleston, West Virginia
Attorney for Appellees |
JUSTICE BENJAMIN delivered the Opinion of the Court.
CHIEF JUSTICE ALBRIGHT dissents and reserves the right to file a dissenting
opinion.
JUSTICE STARCHER dissents and reserves the right to file a dissenting opinion.
JUSTICE DAVIS concurs and reserves the right to file a concurring opinion.
SYLLABUS BY THE COURT
1. “A
circuit court's entry of summary judgment is reviewed de novo.” Syllabus
Point 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
2. “Determination
of the proper coverage of an insurance contract when the facts are not in dispute
is a question of law.” Syllabus Point 1, Tennant v. Smallwood, 211
W. Va. 703, 568 S.E.2d 10 (2002).
3. “'The
law of the state in which a contract is made and to be performed governs the
construction of a contract when it is involved in litigation in the courts of
this state'. Syl. pt. 1 (in part) Michigan National Bank v. Mattingly,
W. Va., 212 S.E.2d 754 (1975).” Syllabus Point 2, General Electric
Co. v. Keyser, 166 W. Va. 456, 275 S.E.2d 289 (1981).
4. “The
provisions of a motor vehicle policy will ordinarily be construed according to
the laws of the state where the policy was issued and the risk insured was principally
located, unless another state has a more significant relationship to the transaction
and the parties.” Syllabus Point 2, Lee v. Saliga, 179 W. Va.
762, 373 S.E.2d 345 (1988).
5. “Where
a choice of law question arises with regard to the interpretation of coverage
provisions in a motor vehicle insurance policy executed in another state, the
public policy considerations inherent in the fact that the substantive law
of the other state differs from our own will ordinarily be adequately addressed
by application of the significant relationship conflict of laws test enunciated
in Syllabus Point 2 of Lee v. Saliga, 179 W. Va. 762, 373 S.E.2d
345 (1988).” Syllabus Point 4, Nadler v. Liberty Mut. Fire Ins.
Co., 188 W. Va. 329, 424 S.E.2d 256 (1992).
6. The
conflicts of law principles announced in Syllabus Point 2 of Lee v. Saliga,
179 W. Va. 762, 373 S.E.2d 345 (1988) and Syllabus Point 4 of Nadler v.
Liberty Mut. Fire Ins. Co., 188 W. Va. 329, 424 S.E.2d 256 (1992), applicable
to the interpretation of coverage under a motor vehicle insurance policy are
also applicable to the interpretation of coverage under a motorcycle insurance
policy, a homeowner's insurance policy and a personal liability umbrella insurance
policy.
7. “The
mere fact that the substantive law of another jurisdiction differs from or is
less favorable than the law of the forum state does not, by itself, demonstrate
that application of the foreign law under recognized conflict of laws principles
is contrary to the public policy of the forum state.” Syllabus Point 3, Nadler v.
Liberty Mut. Fire Ins. Co., 188 W. Va. 329, 424 S.E.2d 256 (1992).
Benjamin, Justice:
In
the instant appeal we are asked to review the Circuit Court of Marion County's
July 20, 2004 Opinion Order Denying in Part Plaintiff's Motion for Summary
Judgment on the Declaratory Judgment Action and Granting in Part American Standard
Insurance Company of Ohio and American Family Insurance Company's Motion for
Summary Judgment. In that Order, the circuit court, applying Ohio law, held
that liability coverage did not exist under several policies of insurance issued
in the State of Ohio to Ohio residents for injuries sustained in a motorcycle
accident occurring on September 13, 2000 in Farmington, Marion County, West
Virginia. Appellant primarily argues that the “intra- insured suit” exclusions
contained in the policies, admittedly valid under the law of the State of Ohio,
are unenforceable in this State because they violate West Virginia public policy.
Appellant also argues that the circuit court erred in finding liability coverage
did not exist under a homeowner's insurance policy for claims arising from
an alleged negligent entrustment of a motorcycle helmet due to the policy's
exclusion for claims “arising out of the ownership, supervision, entrustment,
maintenance, operation, use, loading or unloading of any type of motor vehicle
. . . [.]” After due consideration of the record below, the arguments
raised by the parties and the relevant legal precedent, we affirm the judgment
of the Circuit Court of Marion County.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Appellant
Pamela E. Howe married Appellee Duane Howe on September 9, 2000, in the State
of Ohio. Both were at the time, and continue to be, Ohio residents. On September
13, 2000, while traveling through Marion County, West Virginia, Mr. and Mrs.
Howe were involved in a motorcycle accident which resulted in Mrs. Howe sustaining
serious injuries. The accident occurred when Mr. Howe, who was operating the
motorcycle on which Mrs. Howe was a passenger, allegedly struck the rear of
a vehicle which was stopped at a red light. The motorcycle involved in the
accident was a 1996 Harley Davidson, owned by Mr. Howe, which was garaged,
licensed, registered and maintained in the State of Ohio.
At the
time of the September 13, 2000 motorcycle accident, Mr. Howe possessed four insurance
policies issued by American Standard Insurance Company [“ASIC”] and/or
American Family Insurance Company [“AFIC”]. These policies include:
(1) ASIC Motorcycle Policy No. 0749-9531-04-SCYC-OH (insuring the 1996 Harley
Davidson involved in the accident); (2) AFIC Ohio Homeowners Policy No. 34-P10307-01;
(3) AFIC Family Car Policy No. 0749-9531-07-03-FPPA-OH (insuring a 1995 Dodge
Dakota); and (4) AFIC Personal Liability Umbrella Policy No. 34-U-00995-01.
On September
3, 2002, Appellant initiated a civil action in the Circuit Court of Marion County
alleging damages arising from Mr. Howe's negligence both in operating
the motorcycle at the time of the accident and in not providing her with a
proper safety helmet. Her complaint also sought a declaration of the liability
and underinsured motorist coverage available under the four policies of insurance
listed above. After certain discovery was conducted, the parties filed cross-motions
for summary judgment relating to the coverage issues.
In her
November 18, 2003 Motion for Partial Summary Judgment on the Declaratory Judgment
Action, Appellant argued that ASIC and AFIC improperly relied upon Intra-Insured
Suit (or “household”) exclusions
(See
footnote 1) contained in each of the respective policies to deny
coverage for the claims asserted against her husband. Appellant asserted in her
motion that the validity of these exclusions was unsettled under Ohio law
(See
footnote 2) and that they violate the public policy of this State
and should not be enforced in any event. Appellant also argued she was entitled
to uninsured motorist coverage
(See
footnote 3) under the motorcycle policy, the family car policy and
the umbrella policy. Conversely, ASIC and AFIC filed their Motion for Summary
Judgment on November 20, 2003 arguing that Ohio law applied to determine
the scope of coverage, if any, provided by the policies and that, under Ohio
law, the policies do not provide either liability or underinsured motorist
coverage for Appellant's claims arising from the September 13, 2000 motorcycle
accident.
After
a May 17, 2004 hearing on the respective motions, the circuit court entered an
Opinion Order on July 20, 2004. Invoking West Virginia conflicts of law principles,
the circuit court held that the determination as to what coverages were available
under the various insurance policies was to be governed by Ohio law as the policies
were issued in the State of Ohio to Ohio residents to insure risks principally
located in Ohio. The circuit court noted that the only relationship West Virginia
has to the parties or transaction was that the motorcycle accident occurred in
West Virginia. The circuit court rejected Appellant's argument that West Virginia
law should apply because the exclusions at issue violate our public policy. The
circuit court distinguished our decision in
Paul v. National Life, 177
W. Va. 427, 352 S.E.2d 550 (1986), wherein we refused to apply Indiana's
guest passenger statute, by noting that
Paul involved a foreign statute
which, if applied, would operate to immunize the tortfeasor from liability. By
contrast, the instant action involved the determination of coverage available
under foreign insurance contracts, not immunization from liability. Thus, the
circuit court determined application of Ohio law was justified as Ohio had a
more significant relationship to the parties and transactions at issue and West
Virginia's relationship to the parties and transactions was minimal. Moreover,
the circuit court found West Virginia public policy did not forbid application
of Ohio law.
Applying
Ohio law, the circuit court found coverage did not exist under any of the policies
at issue.
(See footnote 4) Central
to the circuit court's findings was the recognition that “household” exclusions,
which were included in each of the policies at issue, are valid under Ohio law.
(See
footnote 5) The “household” exclusion contained in the
motorcycle policy issued to Mr. Howe provides:
PART I - LIABILITY COVERAGE
Exclusions:
This
coverage does not apply to:
. . .
9.
Bodily
injury to:
b.
You or
any person related to you and residing in your household.
c. Any
person related to the operator and residing in the household of the operator.
Similarly,
the umbrella policy contains the following provisions:
DEFINITIONS
. . .
9. Insured means:
a. The named
insured;
b. Your
relatives;
. . .
18. Relative means
a resident of your household who is:
a. Related
to you by blood, marriage or adoption, including your ward or
foster child;
. . .
EXCLUSIONS
This
policy does not cover:
. . .
10. Intra-Insured
Suits. We will not cover personal injury to the named
insured or anyone within the meaning of part a or b of the definition
of insured.
Finally,
the following provisions contained within the homeowner's policy are relevant:
DEFINITIONS
. . .
9. Insured
a. Insured means you and,
if residents of your household:
(1) your relatives;
. . .
14. You and your refer
to the person or people shown as the named insured in the Declarations.
These words also refer to your spouse who is a resident of your household.
. . .
EXCLUSIONS - SECTION II
Coverage
D - Personal Liability and Coverage E - Medical Expense do not apply
to:
. . .
11.
Intra-insured
Suits. We will not cover
bodily injury to any
insured.
. . .
16.
Vehicles
a. We will
not cover bodily injury or property damage arising out of the
ownership, supervision, entrustment, maintenance, operation, use, loading or
unloading of any type of motor vehicle, motorized land conveyance or trailer[.]
In its
July 20, 2004 Opinion Order, the circuit court found neither the motorcycle policy
nor the umbrella policy provided coverage for Appellant's claims due to the “household” exclusions.
Further, the circuit court found coverage did not exist under the
homeowner's policy due to the vehicle exclusion.
On July
23, 2004, Appellant moved the circuit court, pursuant to Rule 54(b) of the West
Virginia Rules of Civil Procedure, to amend the July 20, 2004 Opinion Order
to include the language “that there is no just reason for delay” and
permit immediate appeal of the July 20, 2004 Opinion Order. (See
footnote 6) The circuit court granted the motion by Order dated September
9, 2004. Appellant timely filed her Petition for Appeal with this Court, which
we accepted by Order dated March 25, 2005. Upon review of the record below, the
arguments of the parties and the pertinent legal authorities, we affirm the Circuit
Court of Marion County, West Virginia.
II.
STANDARD OF REVIEW
In
the instant matter, Appellant seeks reversal of the Circuit Court of Marion
County's July 20, 2004, Opinion Order granting partial summary judgment in
favor of ASIC
and AFIC regarding various insurance coverage issues. “A circuit court's
entry of summary judgment is reviewed de novo.” Syl. Pt. 1, Painter
v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994). Likewise, the “[d]etermination
of the proper coverage of an insurance contract when the facts are not in dispute
is a question of law.” Syl. Pt. 1, Tennant v. Smallwood, 211 W.
Va. 703, 568 S.E.2d 10 (2002). See also Payne v. Weston, 195 W. Va.
502, 506-07, 466 S.E.2d 161, 165-66 (1995)(“The interpretation of an insurance
contract . . . is a legal determination which . . . is reviewed de novo on
appeal.” (citation omitted)). Recognizing our plenary review, we turn
now to the issues presented in the instant appeal.
III.
DISCUSSION
The
primary issue on appeal is whether the circuit court erred by applying Ohio
law to determine the scope of coverage available, if any, under the motorcycle
policy, the homeowner's policy and the umbrella policy issued to Mr. Howe,
an Ohio resident, to insure risks principally arising in the State of Ohio,
for injuries sustained by Appellant, Mr. Howe's wife, during a motorcycle accident
occurring in the State of West Virginia in September 2000. The parties agree
that if Ohio law applies, coverage does not exist under the policies for Appellant's
claims. Thus, we begin our discussion, as we must, with a review of our law
governing the resolution of conflicts of law applicable to questions of insurance
coverages.
This
Court has repeatedly recognized that questions of policy
coverage as
opposed to
liability are governed by conflicts of law principles applicable
to contracts.
Lee v. Saliga, 179 W. Va. 762, 766, 373 S.E.2d 345,
349 (1988);
Liberty Mut. Ins. Co. v. Triangle Indus., Inc., 182 W. Va.
580, 583, 390 S.E.2d 562, 565 (1990);
Nadler v. Liberty Mut. Fire Ins. Co.,
188 W. Va. 329, 334, 424 S.E.2d 256, 261 (1992). Our general rule with
respect to conflicts of law was set forth within Syllabus Point 2 of
General
Electric Co. v. Keyser, 166 W. Va. 456, 275 S.E.2d 289 (1981), wherein
we held:
“'The
law of the state in which a contract is made and to be performed governs the
construction of a contract when it is involved in litigation in the courts of
this state'. Syl. pt. 1 (in part)
Michigan National Bank v. Mattingly,
W. Va., 212 S.E.2d 754 (1975).”
In
Lee v. Saliga, 179 W. Va. 762, 373 S.E.2d 345 (1988),
we modified this general rule when addressing coverage available under a motor
vehicle policy of insurance and adopted a modified modern “more significant
relationship” test, which combines the principles set forth in Sections
6 and 193 of the Restatement (Second) of Conflict of Laws with our prior case
law. The “more significant relationship” test adopted in
Lee provides
that “[t]he provisions of a motor vehicle policy will ordinarily be construed
according to the laws of the state where the policy was issued and the risk
insured was principally located, unless another state has a more significant
relationship to the transaction and the parties.” Syl. Pt. 2,
Lee.
Though
not presented with a public policy argument in
Lee, we acknowledged a
conflicts of law principle which permits a state to ignore the law of another
state where that law is contrary to the state's own public policy.
Lee,
179 W. Va. at 770, 373 S.E.2d at 353,
n. 19. Four years later, in
Nadler v. Liberty Mutual Fire Insurance
Company, 188 W. Va. 329, 424 S.E.2d 256 (1992), we squarely addressed
the effect an argument that application of a foreign jurisdiction's law violates
our public policy has on a conflicts of law analysis. In
Nadler, we
held:
Where
a choice of law question arises with regard to the interpretation of coverage
provisions in a motor vehicle insurance policy executed in another state, the
public policy considerations inherent in the fact that the substantive law of
the other state differs from our own will ordinarily be adequately addressed
by application of the significant relationship conflict of laws test enunciated
in Syllabus Point 2 of
Lee v. Saliga, 179 W. Va. 762, 373 S.E.2d
345 (1988).
Syl. Pt. 4,
Nadler v. Liberty Mut. Fire Ins. Co., 188 W. Va.
329, 424 S.E.2d 256 (1992).
Both
Lee and
Nadler involved
the interpretation of motor vehicle insurance policies entered into in foreign
jurisdictions. In those cases, we considered the importance of promoting the
parties' reasonable expectations when entering into an insurance contract in
formulating our rules governing the interpretation of coverage under foreign
motor vehicle insurance policies.
Lee, 179 W. Va. at 768-69, 373
S.E.2d at 351-2;
Nadler, 188 W. Va. at 337, 424 S.E.2d at 264. In
Lee,
we looked to such factors as the residency of the parties, the principle location
of the risk insured and where the policy was issued to determine the parties'
reasonable expectations and noted:
The
usual coincidence of the insurance agent, insured, and the risk in the same state
dictates that the parties would be more familiar with that state's insurance
statutes, which often supplement or control the policy provisions. This law should
control the reasonable expectation[s] of the parties, rather than that of another
state whose only connection to the dispute is the fortuity that the accident
occurred there.
Lee, 179 W. Va. at 769, 373 S.E.2d at 352. Implicit in our analysis
was the recognition that a motor vehicle may engage in interstate travel and
that the coverage provided under the policy insuring the motor vehicle should
not vary according to the state where the vehicle may happen to be located
at the time of an accident. We did, however, provide an exception to the general
rule of applying the law of the state where the policy was issued and the risk
insured was principally located where another state has a more significant
relationship to the transaction and the parties.
In the
instant matter, we are not presented with a motor vehicle insurance policy, but
with a motorcycle insurance policy, a homeowner's insurance policy and an umbrella
policy. A motorcycle insurance policy is very similar to a motor vehicle policy
such as those at issue in
Lee and
Nadler. Both insure a motorized
method of transportation, one with two wheels, the other with four. Therefore,
we believe the reasoning supporting the conflicts of law principles announced
in
Lee and
Nadler governing motor vehicle insurance policies is
equally applicable to motorcycle insurance policies.
As noted,
in formulating the conflicts of law analysis applicable to motor vehicle policies,
we have focused primarily upon the reasonable expectations of the parties when
entering the contract for insurance. We believe the reasoning underlying the
adoption
of our conflicts of law analysis in
Lee is stronger when considering
the reasonable expectations of the parties in entering a contract for homeowner's
insurance. Unlike a motor vehicle or motorcycle policy, which principally insure
movable methods of transportation, a homeowner's insurance policy principally
insures an immovable object, a home, and liability arising from the ownership
thereof. Likewise, the purpose of a personal liability umbrella policy is to
insure against liabilities incurred which exceed the limits of coverage available
under motor vehicle and homeowner's insurance policies. If the parties can
reasonably expect that the law of the state where a motor vehicle or homeowner's
insurance policy is issued would govern the interpretation of available coverages
under the policies, it is equally reasonable for the parties to expect the
same law to govern the interpretation of coverage afforded under a personal
liability umbrella insurance policy, a policy which ordinarily affords coverage
which is excess to that afforded under the motor vehicle and homeowner's policies.
Thus, we see no reason to distinguish between the conflicts of law principles
applicable to interpretations of coverages available under motor vehicle policies
of insurance, motorcycle policies of insurance, homeowner's policies of insurance
and personal liability umbrella policies of insurance in light of the parties'
reasonable expectations. Accordingly, we now hold that the conflicts of law
principles announced in Syllabus Point 2 of
Lee v. Saliga, 179 W. Va.
762, 373 S.E.2d 345 (1988) and Syllabus Point 4 of
Nadler v. Liberty
Mut. Fire Ins. Co., 188 W. Va. 329, 424 S.E.2d 256 (1992), applicable
to the interpretation of coverage under a motor vehicle insurance policy are
also applicable to the interpretation of coverage under a motorcycle insurance
policy, a homeowner's
insurance policy and/or a personal liability umbrella insurance policy.
(See
footnote 7)
Thus,
the circuit court correctly invoked the principles announced in
Lee and
Nadler to
determine that Ohio has a more significant relationship to the parties and transactions
at issue. Both Appellant and her husband were (and continue to be) Ohio residents,
the policies of insurance at issue were all issued in the State of Ohio to insure
risks principally located in the State of Ohio and there is no question relating
to a West Virginia resident's liability or ability to collect a judgment. The
only relationship West Virginia has to the parties or transactions at issue is
the “mere fortuity” that the accident at issue occurred within our
borders.
(See footnote 8) Clearly,
as admitted by Appellant, Ohio has a more significant
relationship to the coverage issues presented. Having recognized the significance
of Ohio's interest in the resolution of the coverage issues under Ohio law,
we must address Appellant's argument that Ohio law violates our public policy.
Appellant
admits the “'household' exclusion is valid and enforceable under Ohio law.” Appellant
urges this Court to reject application of Ohio law as contrary to our public
policy. In order to prevail on this argument, Appellant must demonstrate more
than a mere difference in substantive law. As we held in
Nadler:
The
mere fact that the substantive law of another jurisdiction
differs from or is less favorable than the law of the forum state does not,
by itself, demonstrate that application of the foreign law under recognized
conflict of laws principles is contrary to the public policy of the forum state.
Syl. Pt. 3, Nadler.
Appellant
cannot point to any decision of this Court that declares “household” exclusions
are a violation of West Virginia public policy. Indeed, none exist. Nor does
she address or acknowledge prior decisions of this Court upholding similar
family use exclusions as valid and not against the public policy of this State
in the context of underinsured motorist coverage. See Syl. Pt. 2, Thomas
v. Nationwide Mut. Ins. Co., 188 W. Va. 640, 425 S.E.2d 595 (1992);
Syl. Pt. 4, Cantrell v. Cantrell, 213 W. Va. 372, 582 S.E.2d 819
(2003)(per curiam). Instead, Appellant primarily relies upon our decision in Paul
v. National Life, 177 W. Va. 427, 352 S.E.2d 550 (1986), for the proposition
that West Virginia has a strong public policy in favor of compensating persons
injured by the negligence of others. While Appellant is correct that Paul does
recognize such a public policy, she takes the holding of Paul too far
and fails to acknowledge the distinction between precluding liability and excluding
coverage.
In Paul,
we held that foreign automobile guest passenger statutes, which operate to immunize
a tortfeasor from liability, violate the public policy of this State and will
not be applied in our courts. Syl. Pt. 2, Paul. Paul involved West
Virginia residents who
were killed in a single vehicle automobile accident in Indiana. The estate
of the passenger brought a wrongful death action against the driver's estate
in West Virginia. The estate raised Indiana's guest passenger statute, which
immunized a driver from liability for the injury death of a passenger in the
vehicle. This Court, relying on our abolition of tort immunities in various
circumstances, refused to apply the statute based on our strong public policy
against providing tort immunity. Paul, 177 W. Va. at 433-34, 352
S.E.2d at 556. Specifically, we stated “It is the strong public policy
of this State that persons injured by the negligence of another should be able
to recover in tort.” Id. at 433, at 556. Paul simply did
not involve the issue of insurance coverage to facilitate such recovery. In
the instant matter, application of Ohio law does not immunize Mr. Howe from
liability. Instead, application of Ohio law merely precludes coverage for Mr.
Howe's liability under the various policies of insurance. The ability to collect
insurance proceeds does not diminish his liability.
We likewise
reject Appellant's argument that Informational Letter No. 140 promulgated by
the West Virginia Insurance Commissioner in 2002 evidences a strong public policy
against “household” exclusions in policies of insurance. In Informational
Letter No. 140, the Insurance Commissioner declared “household” exclusions
in automobile liability insurance policies void up to the mandatory policy limits
set forth in W. Va. Code § 33-6-31. The letter went on to recognize
the potential validity of the exclusions in some circumstances not involving
mandatory liability limits. Thus, we do not see how this letter evidences the
strong public policy suggested by Appellant.
This
Court does not take a request to invoke our public policy to avoid application
of otherwise valid foreign law lightly. As we stated in
Nadler:
We
adhere to the general principle that a court should not refuse to apply foreign
law, in otherwise proper circumstances, on public policy grounds unless the foreign
law is contrary to pure morals or abstract justice, or unless enforcement would
be of evil example and harmful to its own people.
Id. at 338, at 265 (internal citations and quotations omitted). Appellant
has not demonstrated the strong public policy necessary to avoid application
of Ohio law in this matter. Therefore, we affirm the decision of the Circuit
Court of Marion County to apply Ohio law in determining the scope of coverages
available under the various policies of insurance.
We summarily
dispose of Appellant's second assignment of error. Appellant argues the circuit
court erred in denying coverage under the homeowner's policy based upon the motor
vehicle exclusion. However, Appellant acknowledges that the homeowner's policy
also included a “household” exclusion not addressed by the circuit
court. Because we find the circuit court correctly applied Ohio law to enforce
the “household” exclusions in the motorcycle and umbrella policies,
we likewise conclude that the “household” exclusion contained within
the homeowner's policy would preclude coverage for Appellant's claims.
(See
footnote 9)
Thus, we need not address the propriety of the circuit court's ruling on the
motor vehicle exclusion's application to Appellant's negligent entrustment
claims as coverage does not exist under the homeowner's policy due to the “household” exclusion.
IV.
CONCLUSION
Upon
plenary review of the issues presented, we find the Circuit Court of Marion
County did not err in its application of Ohio law and its finding that the
various policies of insurance at issue do not afford coverage for Appellant's
claims against her husband. Accordingly, we affirm the Circuit Court of Marion
County's July 20, 2004 Opinion Order Denying in Part Plaintiff's Motion for
Summary Judgment on the Declaratory Judgment Action and Granting in Part American
Standard Insurance Company of Ohio and American Family Insurance Company's
Motion for Summary Judgment.
The
specific exclusions at issue are set forth below and will be referred to
interchangeably as “household” exclusions throughout this opinion.
Footnote: 2 Subsequent
to the filing of her motion before the circuit court, Appellant apparently
conceded that “household” exclusions are valid and enforceable
under Ohio law.
Footnote: 3 The
September 3, 2002 complaint did not include the availability of uninsured
motorist coverages under the motorcycle, family car and umbrella policies
within the scope of the declaratory judgment action. On January 20, 2004,
a Stipulation and Agreed Order was entered to include such coverages within
the scope of the declaratory judgment action.
Footnote: 4 Although
the circuit court's order addressed several provisions under the four policies,
the instant appeal is limited to the circuit court's application of Ohio
law to enforce the various “household” exclusions contained within
the policies and its ruling on coverage for Appellant's negligent entrustment
claim under the homeowner's policy. Additionally, even though each of the
four policies contain “household” exclusions, Appellant is not
challenging the circuit court's finding that coverage does not exist under
the family car policy. With respect to the family car policy, the circuit
court found coverage did not exist based upon two exclusions, the “household” exclusion
and an exclusion barring “liability coverage for bodily injury arising
out of the use of any motorized vehicle with less than four wheels.” Appellant
does not assert error with the circuit court's finding that coverage does
not exist based upon the “less than four wheels” exclusion. Thus,
the validity and enforcement of the “household” exclusion in the
family car policy is moot as coverage does not exist regardless of its inclusion
in the policy.
Footnote: 5 Although
the homeowner's policy contains a “household” exclusion and its
validity was raised in the parties' motions before the circuit court, the
circuit court did not address the same in its Opinion Order. In her filings
before this Court, Appellant concedes that our ruling on the applicability
of Ohio law would also, necessarily, impact the enforcement of the “household” exclusion
contained within the homeowner's policy.
Footnote: 6 Appellant
also filed a Rule 59(e) motion to alter or amend the Opinion Order with respect
to the circuit court's finding regarding rejection of uninsured and underinsured
motorist coverage under the umbrella policy. That motion was granted and
the circuit court's finding with respect to rejection of such coverage was
stricken as premature from the July 20, 2004 Opinion Order by Order dated
September 9, 2004. Thereafter, by letter dated October 12, 2004, Appellant's
counsel informed the circuit court of Supreme Court of Ohio's September 29,
2004 decision in
Kyle v. Buckeye Union Ins. Co., 814 N.E.2d 1195 (2004),
which, according to counsel, “disposes of [Appellant's] claim for uninsured
motorist benefits under Ohio law.” Appellant also informed the circuit
court that the only remaining issue pending before the circuit court was
Mr. Howe's liability for his wife's injuries.
Footnote: 7 We
also note the similarity of this holding to that in
Liberty Mutual Insurance
Company v. Triangle Industries, Inc., 182 W. Va. 580, 380 S.E.2d
562 (1990), which involved the law applicable to interpretation of coverage
under an insurance contract made in one state to be performed in another
and adopted a test similar to that announced in
Lee and
Nadler.
In the Syllabus of
Liberty Mutual, we held:
In
a case involving the interpretation of an insurance policy, made in one state
to be performed in another, the law of the state of the formation of the contract
shall govern, unless another state has a more significant relationship to the
transaction and the parties, or the law of the other state is contrary to the
public policy of this state.
Footnote: 8 The
underlying facts of this case are strikingly similar to those presented in
Nadler where
we upheld the application of Ohio law in determining the scope of underinsured
motorists coverage available under a motor vehicle policy of insurance. In
Nadler,
we noted:
It
is apparently undisputed that Ohio has the more significant relationship with
the parties and the transaction at issue in this case. The plaintiffs and their
decedents were residents of Ohio
at the time of the accident. The insurance policy in question was issued in
Ohio, and it appears that the vehicles covered thereby were registered and
garaged in Ohio. In the absence of evidence to the contrary, we can assume
that Ohio was “the principal location of the insured risk during the term
of the policy.” Rest. (Second) Conflict of Laws § 193.
By
comparison, the parties' contacts with West Virginia were minor. The accident
occurred here, and the owner and driver of the truck were West Virginia residents.
These occurrences, however, have no bearing on the extent of the coverage afforded
the plaintiffs under the terms of their insurance contract issued in Ohio. Upon
these facts, we conclude that the parties reasonably expected the law of Ohio
to control the interpretation of the insurance contract rather than the law of
West Virginia, “whose only connection to the dispute is the fortuity that
the accident occurred there.”
Lee v. Saliga, 179 W. Va. at 769,
373 S.E.2d at 352.
See Johnson v. Neal, 187 W. Va. 239, 418 S.E.2d
349 (1992);
Liberty Mut. Ins. Co. v. Triangle Indus., Inc., supra.
Nadler, 188 W. Va. at 335, 424 S.E.2d at 262. However, in the instant
matter, unlike
Nadler, no West Virginia residents were involved in the
underlying accident.
Footnote: 9 We
have long held that we “may, on appeal, affirm the judgment of the lower
court when it appears that such judgment is correct on any legal ground disclosed
by the record, regardless of the ground, reason or theory assigned by the
lower court as the basis for its judgment.” Syl. Pt. 3, Barnett v.
Wolfork, 149 W. Va. 246, 140 S.E.2d 466 (1965). Thus, the failure
of the circuit court to address the “household” exclusion in the
homeowner's policy does not preclude us from finding the policy's “household” exclusion
precludes
coverage under Ohio law for Appellant's injuries as the issue was raised and
briefed by the parties below.