Marquis v. State Farm Fire and Casualty Co.6/5/1998
tual Insurance, Inc. v. Noel, 214 Kan. 145, 150, 519 P.2d 737 (1974).
By way of background, we look to the decision made by the trial court in this regard. The trial court was faced with determining whether either the homeowner's policy or the contractor's policy provided coverage for negligent hiring, retention, or supervision. In addressing this question, the trial court reviewed both policies and concluded that the contractor's policy did provide coverage.
The provisions of the homeowner's policy provided the following exclusions:
"Coverage L and Coverage M do not apply to:
"e. Bodily injury or property damage arising out of the ownership, maintenance, use, loading or unloading of:
(2) a motor vehicle owned or operated by or rented or loaned to any insured; or
"f. bodily injury or property damage arising out of:
(1) the entrustment by any insured to any person; (2) the supervision by any insured of any person; (3) any liability statutorily imposed on any insured; or
(4) any liability assumed through an unwritten or written agreement by an insured; with regard to ownership, maintenance or use of any aircraft, watercraft, or motor vehicle (or any other motorized land conveyance) which is not covered under Section II of this policy."
The exclusion contained in the contractor's policy upon which State Farm relies provides under coverage L that the coverage does not apply
"7. to bodily injury or property damage arising out of the ownership, maintenance, use or entrustment of others of any aircraft, auto, or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and loading or unloading."
After reviewing both policies, the trial court construed the exclusion under the homeowner's policy to bar coverage for negligent supervision, hiring, or retention. The language of the homeowner's policy so provides. However, in reviewing the policy provisions of the contractor's policy, the court found that the exclusion, unlike that contained in the homeowner's policy, fails to clearly and unambiguously exclude coverage for negligent supervision, hiring, or retention and, thus, such claims were covered.
State Farm, in its homeowner's policy, clearly and unambiguously excluded negligent supervision, hiring, or retention. State Farm did not clearly and unambiguously exclude negligent supervision, hiring, or retention in its contractor's policy. Nevertheless, State Farm argues that the general exclusion in a contractor's policy, covering the use or entrustment to others of an automobile owned or operated by any insured, excludes a claim for negligent supervision, hiring, or retention because the claims arose out of the use of an automobile owned by the insured.
In Upland Mutual Insurance, Inc. v. Noel, 214 Kan. 145, we held that a homeowner's policy exclusion for bodily injury or property damage arising from the ownership, maintenance, operation, use, loading, and unloading of automobiles did not exclude coverage for the insured's liability for negligent entrustment of an automobile to another. " ven though the immediate cause of the injury . . . was . . . operation of the automobile," the legal theory of liability, which was well recognized under Kansas law, was not excluded by the policy. 214 Kan. at 150. Thus, the rule taken from Upland is that the theory of liability rather than the cause of the accident governs coverage. Where a policy seeks to exclude coverage for an accident arising out of the use of an automobile, coverage will still be found if the theory of liability establishes negligence independent of the use o
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