793 S.E.2d 899
W. Va.2016Background
- In 2012 two teenage insureds (Sheila Eddy and Rachel Shoaf) murdered Skylar Neese; both teens confessed and were criminally convicted. The victims’ parents sued the teens and their mothers (Tara Clendenen and Patricia Shoaf) in state court for wrongful death, negligent supervision/entrustment, and related claims.
- ANPAC insured the Clendenens’ household; Erie insured the Shoafs’ household. Each homeowners policy contained (1) exclusions barring coverage for bodily injury/property damage “expected or intended by any insured” or “arising out of any criminal act committed by or at the direction of any insured” (ANPAC) or similar language for “anyone we protect” (Erie), and (2) severability clauses stating the insurance "applies separately" to each insured.
- ANPAC and Erie filed consolidated federal declaratory-judgment actions seeking rulings that (a) no coverage existed for the underlying claims under the intentional/criminal-acts exclusions and (b) the insurers had no duty to defend or indemnify the mothers. The federal court granted much summary relief but certified two questions to the West Virginia Supreme Court about the interaction of the exclusions and severability clauses.
- Certified questions: (1) Do the exclusion clauses ("any insured" / "anyone we protect") preclude coverage for insureds who did not commit intentional or criminal acts? (2) If so, do the severability clauses require applying the exclusions separately to each insured such that innocent co‑insureds remain covered?
- The West Virginia Supreme Court held (1) yes — the unambiguous "any insured"/"anyone we protect" exclusions preclude coverage for all insureds where the injury stems from the intentional/criminal acts of any insured; and (2) no — the severability clauses do not override those unambiguous exclusions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether unambiguous exclusions for acts "expected or intended by any insured" or "by anyone we protect" bar coverage for insureds who did not commit the intentional/criminal act | ANPAC/Erie: Exclusions are unambiguous and, read literally, bar coverage for all insureds when any insured commits the intentional/criminal act | Neeses/insureds: Columbia Casualty and insureds’ reasonable expectations support viewing coverage from innocent insureds’ standpoint; severability and wording create ambiguity | Held: Yes. The exclusions unambiguously preclude coverage for all insureds when the injury results from the intentional/criminal acts of any insured. |
| Whether severability clauses ("applies separately to each insured") require applying exclusions separately so innocent co‑insureds remain covered | Insurers: Severability clauses do not negate clear "any insured" exclusions; majority rule treats "any/an insured" as collective and severability does not inject ambiguity | Respondents: Severability language creates a conflict/ambiguity that must be construed for coverage and applied per‑insured | Held: No. Severability clauses do not override the unambiguous exclusions; applying the policy separately does not change the exclusion’s plain meaning. |
Key Cases Cited
- Columbia Casualty Co. v. Westfield Ins. Co., 217 W. Va. 250 (W. Va. 2005) (discusses "occurrence" perspective but not controlling for exclusion interpretation here)
- Chacon v. Am. Family Mut. Ins. Co., 788 P.2d 748 (Colo. 1990) ("any insured" exclusion held to bar coverage for innocent co‑insureds despite severability clause)
- Postell v. Am. Family Mut. Ins. Co., 823 N.W.2d 35 (Iowa 2012) (treats "any insured" language as unambiguous and not negated by severability)
- J.G. v. Wangard, 753 N.W.2d 475 (Wis. 2008) ("any covered person" exclusion unambiguously bars coverage for all insureds where injuries arise from another insured’s intentional conduct)
- Minkler v. Safeco Ins. Co. of Am., 232 P.3d 612 (Cal. 2010) (minority view: severability can create ambiguity and preserve coverage for innocent co‑insureds)