On appeal from the Superior Court Law Division, Camden County.
Matthews, Furman and Havey. The opinion of the court was delivered by Matthews, P.J.A.D.
[201 NJSuper Page 96] Plaintiff sustained serious personal injuries in an accident with Mack Messer's automobile while it was being driven by Messer's son Stanley. He sued the Messers, alleging negligent operation by Stanley, vicarious liability on Mack's part and negligent entrustment of the car by Mack to Stanley. Defendant Continental denied coverage under the homeowner's policy it had issued to Mack Messer on the ground that the injuries to plaintiff arose out of the operation of a motor vehicle and were specifically excluded by the terms of the policy. Mack Messer's automobile liability carrier offered the limits of its policy, $25,000, for personal injuries and $5,000 for property damage. The case was then settled with an agreement by the Messers to entry of a judgment against them for $265,000, of which they would pay $30,000, and assign Mack's rights under the homeowner's policy to plaintiff. In exchange, plaintiff agreed to accept the $30,000 and the assignment and to waive his right to proceed against the Messers personally for the balance of the $265,000 judgment.
Plaintiff then instituted this action for the balance of his judgment, alleging that defendant wrongfully disclaimed coverage under the homeowner's policy and refused to provide Mack Messer with a defense to the negligent entrustment counts of the complaint in the underlying tort action. Plaintiff sent defendant copies of the complaint that he had filed against the Messers and their answer. In a cover letter plaintiff asserted that the negligence on Mack Messer's part alleged in count six of the complaint fell within the coverage of the homeowner's insurance policy which defendant had furnished to Mack and Rita Messer.
A claims manager for defendant wrote Messer and advised him that the company denied coverage under the homeowner's policy for the allegations in the amended complaint on the ground that the injuries to Williamson arose out of the operation of a motor vehicle and were specifically excluded from coverage by the terms of the policy. The limit of liability coverage under the homeowner's policy issued by defendant to the Messers was $50,000. On page 9 of the policy, under "Section II -- Exclusions" the policy stated:
1. Coverage E -- Personal Liability and Coverage F -- Medical Payments to Others do not apply to bodily injury or property damage:
e. 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.
The trial judge held that there was no coverage and no duty to defend under the homeowner's policy by reason of the exclusion for bodily injury and property damage arising out of the ownership, maintenance, use, or loading or unloading of a motor vehicle. He noted that there was coverage under Mack Messer's automobile insurance policy and that the entire amount of that coverage had been paid. Accordingly, summary judgment was entered in defendant's favor and plaintiff now appeals.
Plaintiff argues that the amended complaint set forth two separate and distinct negligent acts alleged to have been committed by defendants. The first act was committed in the home of Mack Messer, in leaving the keys to his car where Stanley could find them, and the second on the highway by Stanley Messer in his operation of the car. While the policy excluded coverage for the second act, coverage was not excluded for the first because it does not allege that plaintiff's injuries arose out of the ownership, maintenance or use of the motor vehicle. In support, plaintiff cites McDonald v. Home Ins. Co., 97 N.J. Super. 501 (App.Div.1967). Plaintiff argues that the weight of authority in other jurisdictions holds that the negligent entrustment of a motor vehicle falls within the coverage provided by the standard homeowner's insurance policy, and that a narrow construction of the policy's exclusion requires reversal of the judgment here.
Defendant claims to distinguish the facts in McDonald from those in the present case and argues that two decisions subsequent to McDonald compel the result reached by the trial judge in the present case, citing Westchester Fire Ins. Co. v. Continental Ins. Co., 126 N.J. Super. 29 (App.Div.1973), aff'd o.b. 65 N.J. 152 (1974), and Bartels v. Romano, 171 N.J. Super. 23 (App.Div.1979).
In McDonald v. Home Ins. Co., the McDonalds sued defendant alleging that a homeowner's policy required Home to defend them in an action brought by Walter Dorman for damages for the death of Dorman's son. Dorman's son was a passenger in a car owned by Mickey McDonald, a minor, and was killed when Mickey drove the car into a tree. Dorman's complaint alleged that the death of his son was caused by the two-fold negligence of the McDonalds: failing to supervise and control their child, knowing of his violent and dangerous habits, and causing or permitting Mickey to purchase and operate the car. 97 N.J. Super. at ...