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Homeowner |
Ambiguity |
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unloading |
Maintenance |
Margaret Dare sold a horse
trailer to Robert Ellingson. Ellingson was injured when the chain used to
restrain a horse at the rear of the trailer failed, resulting in the release of
the horse. Ellingson sued Dare, claiming that she had modified the trailer so
that the chain was unsafe. Dare tendered defense of the action to her
homeowners insurer, United Services Automobile Association. USAA denied coverage,
citing the following exclusion: "Medical Payments to Others do not apply
to bodily injury or property damage: e. arising out of: (1) ownership,
maintenance, use, loading or unloading of motor vehicles or all other motorized
land conveyances, including trailers, owned or operated by or rented or loaned
to an Insured." USAA filed a declaratory judgment action seeking a finding
that coverage was excluded by this provision. The lower court disagreed and
concluded that the word "maintenance" in the policy exclusion was
subject to more than one interpretation and that Ellingson's complaint alleged
more than one theory of recovery and could potentially fall within the policy
coverage. Dare filed a separate motion. In a separate order, the court found
that USAA had a duty to defend Dare in the underlying action. USAA appealed
both orders.
On appeal, both Dare and
Ellingson argued that the policy exclusion was ambiguous because it did not set
forth any time constraints pertaining to "ownership" or
"maintenance," nor did the policy define those terms. Since Dare did
not own the trailer at the time of the accident, both Dare and Ellingson argued
that the exclusion did not apply. In addition, both parties argued there were
multiple allegations in Ellingson's complaint outside of the maintenance
exclusion that could fall within the terms of the policy. Therefore, they
argued, the duty to defend was triggered.
The Appellate Court of
Illinois, First District, First Division, agreed with Dare and Ellingson that
the complaint alleged enough causes of action or theories of recovery that
could potentially fall within the policy's coverage. The complaint alleged that
the trailer was maintained, designed, modified, distributed, and sold with a
chain that was inadequate because of design and component characteristics that
rendered it unsafe. The complaint also alleged Dare should have known the chain
was inadequate, should have tested the chain, and that she failed to warn users
of risks. Finally, the complaint alleged that Dare failed to design the trailer
with a mechanism to adjust the height of the chain, and failed to design a
proper and secure chain hook.
USAA argued that so long as
Ellingson's injury arose out of Dare's maintenance of the horse trailer, the
vehicle exclusion applied. The court disagreed. According to the court, the
allegations were independent from the exclusionary terms of ownership or
maintenance of the trailer. USAA also pointed out that "but for"
Dare's ownership of the horse trailer, Ellingson would not have suffered
injury. According to USAA, because Dare's ownership of the horse trailer was a
necessary link in the chain of causation leading to the injury, the exclusion
applied. Again, the court disagreed. The term "ownership" was subject
to more than one reasonable interpretation. Because it was unclear whether the
exclusion applied only when the insured owned the trailer or whether ownership
extended beyond the sale of the property, the policy was ambiguous. As such, it
had to be construed against the insurer in favor of coverage.
The decisions of the lower
court in favor of Dare were affirmed.
United
Services Automobile Association vs. Dare. No. 1-04-1216-Appellate Court of Illinois, First District, First
Division-May 31, 2005-830 North Eastern Reporter 2d 670