469_C271

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Homeowner	Concurrent Causation
Auto Exclusion	Controlled Substances

AUTO EXCLUSION INVOKED IN NEGLIGENCE CLAIMS

Co Fat Le and Dao T. Phan held a homeowners policy with American Family Mutual Insurance Company. Their son, Trai Van Le, was listed as an insured. The policy contained a motor vehicle exception that excluded coverage for bodily injury or property damage "arising out of the ownership, supervision, entrustment, maintenance, operation, use, loading or unloading of any type of motor vehicle." The policy also excluded coverage for bodily injury or property damage arising out of the use of controlled substances.

In April 2001, Trai Van Le drove his car into the garage of his parents' home. Four of his friends were also in the car. Trai Van Le closed the garage door but left the car's motor, air conditioning, and cassette player running. All five boys died from acute carbon monoxide intoxication, but methylenedioxymethamphetamine (Ecstasy) intoxication was also found to be a significant factor in the deaths. The parents of Trai Van Le's four friends filed wrongful death lawsuits. The lawsuits alleged that Trai Van Le negligently used an automobile, and that Co Fat Le and Dao T. Phan were generally negligent and negligent in maintaining a dangerous condition on their premises.

Co Fat Le and Dao T. Phan notified American Family and requested it to provide their defense under their homeowners policy. American Family filed a declaratory judgment action, asking the court to declare that it had no duty to defend or indemnify Co Fat Le and Dao T. Phan because the claims were excluded under the policy's vehicle and controlled substances exclusions. The United States District Court for the Eastern District of Missouri, applying Missouri law, found in favor of American Family, holding that the vehicle exclusion applied to both negligence claims. The parties to the underlying lawsuit appealed.

The United States Court of Appeals, Eighth Circuit, affirmed the decision of the lower court. It reasoned that Missouri law provides that when an insured risk and an excluded risk constitute "concurrent proximate causes" of an injury, an insurer is liable so long as one of the causes is covered by the policy. For this doctrine to apply, the court had to determine whether the allegations of negligence filed against Co Fat Le and Dao T. Phan were distinct from the claims arising out of the ownership or use of a vehicle. If they were not distinct, and the claims depended upon Trai Van Le's use of the automobile, then the automobile exclusion applied. The court found that there would not have been an injury if Trai Van Le had not run the automobile in the closed garage. Thus, the negligence allegations were not distinct, and the automobile exclusion applied.

The judgment of the lower court was affirmed.

American Family Mutual Insurance Company vs. Co Fat Le-No. 05-2373-United States Court of Appeals, Eighth Circuit-March 3, 2006-439 Federal Reporter 3d 436