The opinion of the court was delivered by
Plaintiff Catholic Diocese of Dodge City (Catholic Diocese)appeals the district court's finding in a garnishment proceedingthat intentional damage to property caused by an insured minor isexcluded from coverage under the provisions of the insurer'shomeowners policy. The Court of Appeals reversed
[251 Kan. 690]
the district court and remanded the cause with directions,finding that although the damage caused by the child'sintentional act was intended to be excluded from coverage, thepolicy's severability clause made the policy ambiguous;therefore, the parents' negligent failure to supervise theirchild was covered by the policy. Catholic Diocese of Dodge Cityv. Raymer, 16 Kan. App. 2d 488, 825 P.2d 1144 (1992). We acceptedFarmers Insurance Co., Inc.'s (Farmers) petition for review.After review, we affirm the Court of Appeals.
Anthony Hammeke, a minor, participated in acts of vandalism ata school. The Catholic Diocese, owner of the school, filed apetition against Anthony and his parents, Allan and BrendaHammeke, alleging a cause of action (1) for property damageagainst Anthony; (2) for property damage against Allan and Brendabased on their failure to exercise reasonable parental care incontrolling and supervising Anthony; and (3) on their statutoryliability, pursuant to K.S.A. 38-120, for the damagesintentionally caused by Anthony. Farmers, Allan and Brenda'shomeowners insurance carrier, was notified of the action.
Subsequently, the district court entered a default judgment inrem against Allan and Brenda Hammeke for failure to exercisereasonable parental care in controlling and supervising Anthonyand awarded damages of $18,858.67. The Catholic Diocese thenfiled for an order of garnishment against Farmers. Farmers filedan answer to the garnishment, claiming it was not indebted toAllan and Brenda under their homeowners insurance policy becausethe policy did not cover property damage either expected orintended by the policy insureds. Both parties filed motions forsummary judgment. The district court found that the intentionalact of any insured was not covered by the homeowners policy andgranted Farmers' motion for summary judgment.
The Catholic Diocese appealed, raising three issues: (1)Farmers is bound by the default judgment finding Allan and Brendanegligent in supervising Anthony because it refused to defend itsinsured rather than seek a declaratory judgment on its duty todefend or reserve its rights in the lawsuit; (2) under the policylanguage "an insured" should be equated with "the insured," sothe exclusion from coverage does not operate against Allan andBrenda; and (3) the language of a severability of interestsclause
[251 Kan. 691]
in the policy makes the policy's exclusionary provisionambiguous, thereby providing coverage for Allan and Brenda'snegligent act of supervising their child. The Court of Appealsfound that the Catholic Diocese's first two claims had no merit,but determined the insurer's insertion of a severability ofinterests clause into its insurance policy made ambiguous theotherwise unambiguous language of the policy's exclusion forintentional acts by an insured. The Court of Appeals reversed thedistrict court's award of summary judgment to Farmers in thegarnishment action and remanded the cause with instructions toenter summary judgment for the Catholic Diocese. We grantedFarmers' petition for review.
Summary judgment is proper where the pleadings, depositions,answers to interrogatories, and admissions on file, together withthe affidavits, if any, show that there is no genuine issue as toany material fact and that the moving party is entitled tojudgment as a matter of law. When a summary judgment ischallenged on appeal, an appellate court must read the record inthe light most favorable to the party who defended against themotion for summary judgment. Patterson v. Brouhard,246 Kan. 700, 702-03, 792 P.2d 983 (1990). The parties agree there are nocontroverted material facts.
The construction of a written instrument is a question of law,and the instrument may be construed and its legal effectdetermined by an appellate court. Whether an ambiguity exists ina written instrument is a question of law to be decided by thecourt. Kennedy & Mitchell, Inc. v. Anadarko Prod. Co.,243 Kan. 130, 133, 754 P.2d 803 (1988).
The pertinent provisions of the homeowners policy are asfollows: "DEFINITIONS "Throughout this policy, `you' and `your' mean the `named insured' shown in the Declarations and spouse if a resident of the same household. `We,' `us' and `our' mean the Company named in the Declarations which provides this insurance. In addition certain words appear in bold type. They are defined as follows:
1. Under Section II—Liability, occurrence means: a sudden event, including continuous or repeated exposure to the same conditions, resulting in bodily injury or property damage neither expected nor intended by the insured. . . . .
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7. Insured means you and the following persons if permanent residents of your household: a. your relatives. b. anyone under the age of 21. . . . . "SECTION II—LIABILITY "Coverages "Coverage E—Personal Liability "We shall pay all damages from an occurrence which the insured is legally liable to pay because of bodily injury or property damage covered by this policy. "At our expense we shall defend an insured against any covered claim or suit. We may investigate and settle any claim or suit that we consider proper. . . . . "Exclusions . . . . "Applying To Coverage E AND F — Personal Liability and Medical Payments To Others "We do not cover bodily injury or property damage: . . . . 3. Either: a. caused intentionally by or at the direction of an insured, or b. resulting from any occurrence caused by an intentional act of an insured person where the results are reasonably foreseeable. . . . . "Conditions . . . . 2. Separate Insurance. This insurance applies separately to each insured. This condition does not increase our limit of liability for any one occurrence."
Because the Catholic Diocese did not request that we review theCourt of Appeals' rejection of its first two claims, the onlyquestion for this court to determine is whether the homeownerspolicy's severability of interests clause makes ambiguous theotherwise unambiguous language of the policy's exclusion forintentional acts by an insured, thereby providing coverage to theparents for their alleged negligent supervision of their child.
The Catholic Diocese asserts the policy's severability ofinterests clause, which states, "This insurance appliesseparately to each insured," makes the policy's exclusionaryprovision ambiguous. Farmers argues the plain language of itspolicy excludes coverage for the damages sought to be recoveredby the Catholic Diocese in its action against Allan and Brenda.
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The language of a policy of insurance, like any other contract,must, if possible, be construed in such manner as to give effectto the intention of the parties. Where the terms of a policy ofinsurance are ambiguous or uncertain, conflicting, or susceptibleof more than one construction, the construction most favorable tothe insured must prevail. Since the insurer prepares its owncontracts, it has a duty to make the meaning clear. If theinsurer intends to restrict or limit coverage provided in thepolicy it must use clear and unambiguous language in doing so;otherwise, the policy will be liberally construed in favor of theinsured. When an insurance contract is not ambiguous, the courtmay not make another contract for the parties. Its function is toenforce the contract as made. Patrons Mut. Ins. Ass'n v.Harmon, 240 Kan. 707, 713, 732 P.2d 741 (1987).
To be ambiguous, a contract must contain provisions or languageof doubtful or conflicting meaning, as gleaned from a natural andreasonable interpretation of its language. Ambiguity in a writtencontract does not appear until the application of pertinent rulesof interpretation to the face of the instrument leaves itgenuinely uncertain which one of two or more meanings is theproper meaning. Patrons, 240 Kan. at 713.
The Court of Appeals noted that its initial reading of theexclusion indicated the property damage for which Allan andBrenda are alleged to be liable is not covered by the policybecause the damage was intended by Anthony, an insured under thepolicy. In reaching the opposite conclusion, the Court of Appealsfirst discussed and distinguished two cases which determined thatintentional acts of the insured were not covered under thehomeowners policies.
In Allstate Ins. v. Freeman, 432 Mich. 656, 690,443 N.W.2d 734 (1989), the Michigan Supreme Court considered the insured'sassertion that the insurer had "a separate and distinct duty tocover each insured under the policy." The wife, an insured, shotan individual in the shoulder. The victim filed a tort suitalleging the husband negligently entrusted a firearm to his wife.The homeowners policy under which the husband sought coverage forthe claim against him contained a provision excluding fromcoverage "bodily injury or property damage which may reasonablybe expected to result from the intentional or criminal acts of an
[251 Kan. 694]
insured person or which is in fact intended by an insuredperson." 432 Mich. at 685. The trial court granted the husband'sinsurer, Allstate, summary judgment in a declaratory judgmentaction, concluding the insurer had no duty under the terms of itspolicy to defend the husband in the tort suit. 432 Mich. at682-84.
On appeal, the husband raised two arguments in support of hiscontention that Allstate had a duty to defend him in the tortsuit. The Michigan Supreme Court rejected his first argument thatthe term "an insured" as used in the policy was ambiguous. 432Mich. at 699. The husband additionally argued that Allstate had aseparate duty to cover him under the policy. The Michigan court,however, found that any duty of the insurer to defend the husbandwas solely derivative of its duty to defend the wife under thepolicy. The court concluded the exclusion for intentional orcriminal acts which cause "bodily injury" precluded the husband'sclaim for coverage for injuries caused by an intentional act ofany insured under the policy. 432 Mich. at 692.
In support of its holding, the Freeman court cited anddiscussed cases where the insureds had sought coverage for claimsbrought against them for negligent entrustment of a vehicle.These cases denied coverage because the negligent entrustmenttheory is derived from the ownership, use, or operation of avehicle. Because claims against the insureds actually using thevehicles were not covered, it followed that claims for negligententrustment of the vehicles were also not covered. 432 Mich. at690-92. The Freeman court looked to the underlying cause of theinjury to determine coverage and not to the specific theory ofliability. The Freeman court concluded that under suchexclusion, the insurer had no duty to defend or indemnify thewife. 432 Mich. at 689-90.
While not actually considering the effect of a severability ofinterests clause on a provision excluding from coverageintentional acts by an insured, Freeman did consider and rejectthe assertion that the insurer had a separate duty to cover eachinsured under the policy. The Freeman court concluded aninsurer's duty to defend and indemnify does not depend solelyupon the terminology used in a plaintiff's pleadings. Rather, itis necessary to focus on the nature of an injury and not thenomenclature of the underlying claim in order to determinewhether coverage exists.
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The Court of Appeals noted that unlike Michigan, Kansas, inUpland Mutual Insurance, Inc. v. Noel, 214 Kan. 145, 519 P.2d 737(1974), extended coverage under a homeowners policy to aclaim for negligent entrustment of a vehicle. In Noel, thehomeowners policy covered damages for bodily injury and propertydamage, but excluded from coverage "`"the ownership,maintenance, operation, use, loading and unloading of (1)automobiles or midget automobiles while away from the premises orthe ways immediately adjoining. . . ."'" 214 Kan. at 147.
The Noel court noted the general rule that exceptions,limitations, and exclusions to insuring agreements require anarrow construction on the theory that the insurer, havingaffirmatively expressed coverage through broad promises, assumesa duty to define any limitations on that coverage in clear andexplicit terms. The court observed that in the homeowners policythe insurer agreed with the named insured to pay on behalf of theinsured all sums which the insured should become legally liableto pay because of bodily injury and property damages. 214 Kan.at 149. It found nothing in this broad insuring clause whichrestricted coverage to accidents or injuries occurring on thepremises of the homeowner. In fact, it was clear that theinsuring clause covered a wide variety of accidents which mightoccur off the premises. The court stated that any escape fromliability by the insurer under its policy would have to be foundin the special exclusion which was set forth in its policy. TheNoel court pointed out that where an insurer attempts to avoidliability under an insurance policy on the ground that the lossfor which recovery is sought is covered by some exclusionaryclause, the burden is on the insurer to prove the facts whichbring the case within the specified exception. 214 Kan. at 150.
The Noel court noted it was not alleged in the petition thatthe Noels were liable on the theory that they owned, maintained,operated, or used the automobile or that the automobile wasnegligently driven by the Noels or their agent. The plaintiff'stheory of damages was based upon the insureds' negligententrustment of the vehicle. The court observed that the rationaleof "negligent entrustment" is not founded upon the negligence ofthe driver of the automobile, but upon the primary negligenceof the entruster in supplying the chattel, an automobile, to an
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incompetent and reckless driver. The Noel court determinedunder such circumstances the policy afforded coverage. 214 Kan.at 150-51.
In Chacon v. American Family Mut. Ins. Co., 788 P.2d 748(Colo. 1990), vandalism of an elementary school by the Chacons'10-year-old son and another boy caused damages in excess of$6,000. The school district's insurer reimbursed the schooldistrict for the damages incurred. The insurer, pursuant to itssubrogation rights, then filed suit against the Chacons pursuantto a statute which allows a school district to recover damages inan amount not to exceed $3,500 from the parents of a minor underthe age of 18, living with such parents, who willfully damagesproperty belonging to the district. A default judgment wasentered against the Chacons for $3,492.21 plus costs andinterest.
Prior to commencement of the suit by the school district'sinsurer, the Chacons filed a loss claim relating to the damagescaused by their son's vandalism under their homeowners policywhich was then in effect with American Family. Coverage wasdenied based upon the policy's "intentional act" exclusion. TheChacons then brought suit against American Family for breach of acontractual duty to defend, settle, or indemnify.
The Colorado Supreme Court rejected arguments that aseverability of interests clause made ambiguous an exclusion forbodily injury or property damage "intended by any insured."(Emphasis added.) In reaching its decision, the court discussedcases which concentrated on the meaning of the language "anyinsured" as opposed to "the insured." Although it acknowledgeddecisions finding similar exclusions from coverage ambiguousbecause of severability clauses, a majority of the Chacon courtfound the decisions denying coverage more persuasive because eachdecision "considers and gives effect to all the policy provisionsand recognizes that an insurance policy is a contract between theparties which should be enforced in a manner consistent with theintentions expressed therein." 788 P.2d at 752.
After considering this court's decisions in Noel,214 Kan. 145, and Rose Constr. Co. v. Gravatt, 231 Kan. 196, 642 P.2d 569(1982), the Court of Appeals found that the reasoning of theMichigan and Colorado courts> was not persuasive. We agree withthe Court of Appeals determination that the Michigan and Colorado
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cases are not persuasive. Unlike Michigan, Kansas does not lookto the underlying cause of the injury to determine coverage, butto the specific theory of liability alleged. The Colorado actionwas based on the parents' statutory liability for their child'sintentional damage to a school. In the present action, theparents were alleged to have negligently supervised their child.
In reaching its conclusion that the policy provided coverage,the Court of Appeals followed the reasoning of the WisconsinCourt of Appeals in Northwestern Nat. Ins. Co. v. Nemetz,135 Wis.2d 245, 400 N.W.2d 33 (Ct.App. 1986). In that case, theWisconsin trial court construed the insurer's property insurancepolicies to afford liability coverage to an insured whose husbandallegedly intended or expected the burning of a structureoccupied by the insured's tavern and a third party's adjoininghardware store. 135 Wis.2d at 250. The trial court concluded thatthe insurer's policies afforded liability coverage to the wiferegardless of her husband's culpability. The insurer appealed.The Wisconsin Court of Appeals, observing that the insurancecontract contained a severability clause purporting to separatethe insureds' interests while the exclusion clause, "we do notcover . . . damage . . . expected or intended by an insured,"attempted to join the insureds' obligations. 135 Wis.2d at 256.It concluded that the contract was ambiguous because theseverability clause created a reasonable expectation that eachinsured's interests were separately covered, while the exclusionclause attempted to exclude coverage for both insureds caused bythe act of only one. Because it was required to construe thepolicy against the insurer and could not release the insurer froma risk that it could have excluded through more careful contractdrafting, the Wisconsin Court of Appeals upheld the trial court.
This court previously considered the impact of a similarseverability of interests clause on a policy exclusion in Rose,231 Kan. 196. In Rose, a garnishment proceeding against aninsurer, the insurer denied a claim for coverage based on apolicy exclusion for "`damage to (a) property owned ortransported by the insured, (b) property rented to or in chargeof the insured other than a residence or a private garage, or (c)property as to which the insured is for any purpose exercisingphysical control.'" 231 Kan. at 197. The Rose court observedthat Gravatt, the insured for
[251 Kan. 698]
whom coverage was sought, neither rented, was in charge of, norcontrolled the damaged property, and then considered the impactof a severability of interests clause on the exclusion.
The Rose court resolved the issue of whether the claimagainst the insured was covered by the policy, noting the policyexcludes damages to property "rented to or in charge of theinsured" and found the policy's use of the term "the insured" tobe significant because it obviously is not the same as "namedinsured" or "any insured." 231 Kan. at 198. Justice McFarland,writing for a unanimous court, observed that even in the absenceof a severability of interests clause, a strong argument could bemade that the exclusions did not apply to Gravatt inasmuch as hewas the insured for exclusionary purposes, and he neither rented,had charge of, nor controlled the damaged property. The Rosecourt concluded the severability of interests clause could onlybuttress the argument that coverage as to each insured must bedetermined separately based on the facts applicable to each suchinsured.
The Court of Appeals noted that the general rule is thatexceptions, limitations, and exclusions to insuring agreementsrequire a narrow construction on the theory that the insurer,having affirmatively expressed coverage through broad promises,assumes a duty to define any limitations on that coverage inclear and explicit terms. It found in light of Noel, whichlooked to the theory of liability in determining policy coverage,and Rose, which expressly held a severability clause requiresthat policy exclusions are to be applied only against the insuredfor whom coverage is sought, the exclusion in this homeownerspolicy should not be construed to deny coverage for Allan andBrenda's liability for negligently supervising their minor childAnthony. The Court of Appeals determined that Farmers' insertioninto the policy of a severability of interests clause madeambiguous the otherwise unambiguous language of the exclusion forintentional acts by an insured.
In Kansas, the general rule is that exceptions, limitations,and exclusions to insuring agreements require a narrowconstruction on the theory that the insurer, having affirmativelyexpressed coverage through broad promises, assumes a duty todefine any limitations on that coverage in clear and explicitterms. Here,
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the parents were alleged to have committed a negligent act, notan intentional act. We agree with the Court of Appealsdetermination that under the specific facts of this case, inconstruing the exclusionary and severability of interests clausesof a homeowners insurance policy, the exclusions are to beapplied only against the insured for whom coverage is sought. Thedistrict court erred in granting summary judgment to Farmers inthis garnishment action.
The judgment of the Court of Appeals reversing the districtcourt and remanding the case is affirmed. The judgment of thedistrict court is reversed and the cause is remanded withinstructions to enter summary judgment for Catholic Diocese.
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