An insurance company’s argument that a houseguest injured by the family dog was legally responsible was mauled, chewed and spit out by the 7th Circuit Court of Appeals.
David Williams sued his friends, Anthony and Jeanette Van de Venter, after he sustained a shoulder injury while walking their black Labrador, Emma. Williams was staying in the Van de Venters’ home in Monroe County when he took Emma into the backyard. As he held onto the leash, a neighborhood dog’s bark caused Emma to lurch, which pulled Williams to the ground.
The Van de Venters had a policy with American Family Insurance which included personal liability coverage indemnifying the homeowners for compensatory damages for bodily injury and guaranteeing a defense against lawsuits for such damages.
However, American Family argued that the intra-insured provisions in the policy relieved it of the duty to defend or indemnify the Van de Venters. Specifically, the provision stated the company would not cover injuries to any individual it insured which included any person legally responsible for an animal owned by the insured.
The company asserted Williams was legally responsible for the dog when he was hurt and, therefore, was an insured under the policy. Consequently, he cannot turn to the policy for coverage of his claim.
In American Family Mutual Insurance Company v. David Williams, et al., 15-3400, the 7th Circuit rejected that argument. It affirmed the U.S. District Court for the Southern District of Indiana which found in favor of the Van de Venters and Williams.
“AmFam wants us to evaluate in isolation the periods during which Williams accompanied Emma outside, disregarding the rest of their day together,” Chief Judge Diane Woods wrote for the court. “But doing so does not accurately reflect their relationship (or lack thereof). Despite spending all day in the same house, Williams’s only interactions with Emma took place when he twice affixed a leash to her collar, and for a few minutes, accompanied her outside, exercising at most limited control over her movements.”
The Chicago panel pointed out that Indiana law makes two kinds of people legally responsible for animals – owners and keepers. The panel found Williams did not fall into either category. He was not the owner of the dog, he did not harbor the dog and he was not responsible for giving her any food, water, affection or other care.
“…(F)itting Williams’s conduct within the term ‘legally responsible’ would take all the bite out of (AmFam’s) meaning in the policy. If any person exercising any control over an animal were legally responsible for it under the policy, then nearly all interactions with animals would be excluded from policy coverage,” Wood wrote. “The intra-insured provision was not meant to preclude coverage of every guest or business invitee who drops by the house and even momentarily controls the dog.”
Judge David Hamilton wrote a concurring opinion, further tearing apart American Family’s argument on the intra-insured provision.
He noted intra-insured exclusions prevent fraudulent and collusive claims such as by one family member against another, expecting the deep pocket of the insurance company to pay. However, he found that applying the exclusion to Williams’ claim has virtually no precedent and would be contrary to the basic principles of liability insurance.
“The intra-insured exception should not apply to deny coverage to the homeowners on claims by people who might be deemed insureds for such limited purposes and in such limited circumstances”, Hamilton wrote. “The purpose of the intra-insured exception simply does not apply to such people. The broader interpretation advocated by American Family would contradict other purposes and provisions in the policy, such as the liability coverage for injuries caused by domestic employees and the broad coverage that homeowners expect for accidents that injure visitors like Williams.”