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Litz v. State Farm Fire and Casualty Co.6/27/1997
Emphasis added). To the extent that Pamela Litz, an insured, engaged in a "business pursuit," she is not entitled to coverage with respect to the tort suit. But the policy leaves open the question of whether coverage is barred for all policy holders or merely for the particular insured who has breached the insurance contract; the policy does not expressly state that coverage is denied to all insureds based on the conduct of " an insured." . . . As I read the policy language, its plain meaning leads to the conclusion that an insured's business pursuits may result in the denial of coverage to that insured, but not to all other persons insured under the same policy.
See Allstate Ins. Co. v. Worthington, 46 F.3d 1005, 1008 (10th Cir. 1995) (construing similar policy language in an exclusion); McFarland v. Utica Fire Ins. Co., 814 F. Supp. 518, 525 (S.D. Miss. 1992), aff'd, 14 F.3d 55 (5th Cir. 1994) ("The language of the exclusion withholds coverage for 'an' act committed by 'an' insured, not 'an' act committed by 'any' insured. Hence, one also may reasonably conclude that the exclusion provision is directed only at the acting insured.")
Our decision in St. Paul Fire & Marine Insurance Company v. Molloy, 291 Md. 139, 433 A.2d 1135 (1981) supports this interpretation of the Litzes' policy. In Molloy, Charles and Diane Molloy were co-insureds under a fire insurance policy issued by St. Paul. The policy obligated the insureds to use all reasonable means to save and preserve the insured property. Mr. Molloy was alone in the home at the time the Molloy residence caught fire, and he was later charged with arson. St. Paul denied liability for the loss as to both Mr. and Mrs. Molloy because Mr. Molloy intentionally set the house on fire and thus violated the conditions of the policy. Id. at 143, 433 A.2d at 1137.
The policy in Molloy did not specify whether the insurance was joint or several. We held in Molloy that unless the insurance policy provides otherwise, an insurer's obligation "'should be considered several as to each person insured.'" Id. at 153, 433 A.2d at 1142 (quoting Howell v. Ohio Casualty Ins. Co., 130 N.J. Super. 350, 327 A.2d 240, 243 (N.J. Super. Ct. App. Div. 1974)). The Court summarized:
We conclude that the trial court correctly instructed the jury that this insurance contract provides coverage for each of the name insured's interests separately, and that the alleged incendiary act of Charles does not defeat liability to Diane for her share of the loss. Consequently, Diane is entitled to be compensated for damage to her interest in the property.
Id. at 153, 433 A.2d at 1142.
Unlike the insurance policy in Molloy, the Litzes' policy contained an explicit severability of insurance clause specifying that the insurance was to apply separately to each insured. This provision is a clear reflection that the parties intended the insurance policy to provide coverage for each named insureds separately. In light of this express severability clause, we construe the business pursuits exception in the Litzes' policy to mean that the business pursuits of "an" insured disqualify only that insured from coverage in the event of property damage or bodily injury resulting from the business pursuit; other insureds, i.e., those not engaging in a business pursuit, remain covered under the policy.
The Supreme Judicial Court of Massachusetts, in a case involving the interaction of a policy exclusion and a severability clause, described the effect of the severability clause as "requiring that each insured be treated as having a separate insurance policy." Worcester Mutual Ins. Co. v. Marnell, 398 Mass. 240, 496 N.E.2d 158, 161 (Mass. 1986
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