American Fam. Mut. Ins. Co. v. Wheeler
842 N.W.2d 100
Neb.2014Background
- Ryan Wheeler, insured under his father Rick Wheeler’s American Family homeowners and umbrella liability policies, allegedly sexually assaulted a minor, C.M.; the minor’s parents (the McCrarys) sued both Ryan (for intentional assault) and Rick (for negligent supervision and failure to warn).
- American Family defended Rick under a reservation of rights, then filed a declaratory judgment action seeking a ruling that its policies did not provide coverage for Rick based on policy exclusions for intentional injury/sexual abuse.
- Both policies defined an occurrence as accidental and contained exclusions disallowing coverage for injury caused by or arising from sexual abuse or intentional acts by "an insured" or "any insured."
- Both policies also contained identical severability clauses: "This insurance applies separately to each insured. This condition will not increase our limit for any one occurrence."
- The district court granted summary judgment for American Family, concluding the exclusions unambiguously barred coverage for Rick despite the severability clause; the court noted split authority in other jurisdictions but followed the majority view.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether severability clause requires coverage analysis based solely on Rick's conduct | McCrarys: Severability treats each insured as if sole insured, so exclusions should be applied to Rick alone based on his negligence | American Family: Exclusions referencing "an/any insured" plainly bar coverage for all insureds implicated by the excluded conduct | Held for American Family: Severability does not override "an/any insured" exclusions; exclusions apply as written |
| Whether severability clause creates ambiguity in the policy so exclusions must be construed for coverage | McCrarys: At minimum severability makes policy ambiguous, so interpret in favor of insured | American Family: Policy language is unambiguous; severability does not create a reasonable conflicting interpretation | Held: No ambiguity; plain meaning controls, construed against McCrarys |
| Whether district court erred by making rulings as to Ryan without personal jurisdiction | Rick (cross-appeal): Court lacked personal jurisdiction over Ryan, so rulings about Ryan are void | American Family: Court’s comments about Ryan were incidental to Rick’s coverage determination | Held: Parties and court agree rulings as to Ryan are ineffectual but incidental observations fine; no reversible error as to Rick |
| Whether McCrarys are entitled to attorney fees | McCrarys: Requested fees after declaratory ruling | American Family: Judgment in its favor defeats fee award | Held: Fees denied because American Family prevailed |
Key Cases Cited
- Volquardson v. Hartford Ins. Co., 264 Neb. 337, 647 N.W.2d 599 (Neb. 2002) ("an insured" language held clear and unambiguous)
- American Family Mut. Ins. Co. v. Corrigan, 697 N.W.2d 108 (Iowa 2005) (severability clause does not nullify "any insured" criminal-acts exclusion)
- American Family Mut. Ins. Co. v. Bower, 752 F. Supp. 2d 957 (N.D. Ind. 2010) (severability clause requires analyzing coverage based on each insured’s own conduct)
- Minkler v. Safeco Ins. Co. of America, 49 Cal.4th 315 (Cal. 2010) (illustrative of minority view favoring coverage when severability creates ambiguity)