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American Family Mutual Ins. Co. v. Wheeler

Supreme Court of Nebraska

January 24, 2014

American Family Mutual Insurance Company, Appellee and Cross-Appellee,
v.
Rick W. Wheeler, Appellee and Cross-Appellant, and Joshua McCrary et al., Appellants.

Page 101

Appeal from the District Court for Sarpy County: DAVID K. ARTERBURN, Judge. Affirmed.

David A. Domina, Omaha, Brian E. Jorde, and Jeremy R. Wells, of Domina Law Group, P.C., L.L.O., for appellants Joshua McCrary et al.

Betty L. Egan, of Walentine, O'Toole, McQuillan & Gordon, L.L.P., Omaha, for appellee Rick W. Wheeler.

Jane D. Hansen, Omaha, for appellee American Family Mutual Insurance Company.

Heavican, C.J., Connolly, Stephan, McCormack, Miller-Lerman, and Cassel, JJ.

Syllabus

1. Insurance: Contracts: Appeal and Error. An insurance policy's interpretation presents a question of law that an appellate court decides independently of the trial court.

2. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an appellate court views the evidence in the light most favorable to the party against whom the court granted the judgment and gives such party the benefit of all reasonable inferences deducible from the evidence.

3. Insurance: Contracts: Appeal and Error. An insurance policy is a contract. An appellate court construes insurance contracts like any other contract, according to the meaning of the terms that the parties have used.

4. Insurance: Contracts: Appeal and Error. When an insurance contract's terms are clear, an appellate court gives them their plain and ordinary meaning as a reasonable person in the insured's position would understand them.

5. Insurance: Contracts: Words and Phrases: Appeal and Error. When an insurance contract is ambiguous, an appellate court will construe the policy in favor of the insured. A contract is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings.

6. Insurance: Contracts: Appeal and Error. An appellate court's goal in

Page 102

interpreting insurance policy language is to give effect to each provision of the contract.

Connolly, J.

[287 Neb. 251] SUMMARY

Ryan Wheeler, Rick Wheeler's son, allegedly sexually assaulted Joshua McCrary and Maren McCrary's minor daughter, C.M. The McCrarys sued Rick for negligence. American Family Mutual Insurance Company (American Family), Rick's liability insurer, sought a declaratory judgment that its policies did not cover Rick, which request the district court granted. The primary issue is whether a severability clause, which requires that the insurance be applied separately to each insured, changes the effect of (or renders ambiguous) exclusions which would otherwise bar coverage for Rick. We conclude that it does neither. We affirm.

BACKGROUND

INSURANCE POLICIES

Rick has two liability insurance policies with American Family: a homeowners' policy that includes personal liability coverage and a separate personal liability umbrella policy. Both he and Ryan are insureds under the policies. Both policies provide personal liability coverage; the homeowners' policy, for example, provides coverage for " compensatory damages for which any insured is legally liable because of bodily injury or property damage caused by an occurrence." Both policies define an " occurrence," as an accident or exposure to conditions which results in bodily injury or property damage.

Both policies also contain a long list of exclusions from coverage. As relevant here, the homeowners' policy contains exclusions for " Abuse" and " Intentional Injury." The " Abuse" exclusion reads:

We will not cover bodily injury or property damage for any insured who participates in, acquiesces to or in any way directs any act of sexual molestation or contact, corporal punishment, ...

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