INSURANCE-RELATED COURT CASES

Digested from case reports published online

COURT DECISIONS

Does homeowners policy cover
ATV injuries?

On December 27, 2019, Diamond Jones was riding as a passenger on the back of an all-terrain vehicle (ATV). The daughter of Jennifer and Richard Rekowski was driving the vehicle. While Jones was riding, a tree branch struck and injured her. The accident did not take place on the Rekowskis’ property.

The Rekowskis were insured by a homeowners policy issued by Erie Insurance Exchange. The exclusions section of the policy broadly provided that the policy did not cover “[b]odily injury, property damage or personal injury arising out of the ownership, maintenance or use of … any land motor vehicle.” Vehicles, however, are not excluded if:

(1) they are used solely at an insured location and not subject to motor vehicle registration;

(2) they are kept in dead storage at an insured location;

(3) they are a recreational land motor vehicle not designed for use on public roads while at an insured location;

(4) they are a golf cart, wherever used or located;

(5) they are a lawn or farm type vehicle or snowblower, wherever used or located, if not subject to motor vehicle registration;

(6) they are designed to assist the handicapped.

The policy did not define “lawn or farm type vehicle.” If the vehicle in question was a “recreational land motor vehicle,” under clause (3) above, the policy would not cover the accident because it did not occur “at an insured location.” If the vehicle was a “lawn or farm type vehicle,” the policy would cover the accident.

Jones filed a negligence action for her injuries against the Rekowskis and their daughter. In its answer, Erie contended that the policy did not cover the accident. Jones then filed an action for declaratory relief against Erie, the Rekowskis, and their daughter, jointly and severally, seeking a judgment that Erie was obligated to pay the insurance claim. The Rekowskis never filed an answer. The guardian ad litem for the Rekowskis’ daughter filed an answer and endorsed the final order. Both Jones and Erie filed motions for summary judgment.

The parties stipulated that depositions could be employed in support of their respective motions for summary judgment. Testimony in the depositions established that the ATV in question was a 2016 Honda TRX250TE with a 250 cubic centimeter engine. Bill Uhl, an expert for Jones “in the field of all-terrain vehicle uses,” explained that the vehicle in question was a “utility model designed for whatever kind of use that the owner has in mind.” He said it was possible to purchase a towing hitch for the vehicle and that the user could attach implements such as push blades, rototillers, or seeder spreaders. He also testified to other uses such a vehicle might have on a farm.

The Rekowskis never used this vehicle as a lawn or farm vehicle or owned any attachments for it. Jennifer Rekowski said the machine “barely pulls my daughter.” She was not aware of a place to attach implements to it. Richard Rekowski also did not believe any farm equipment could be attached to the ATV because of its limited power.

The circuit court concluded that the policy did cover the accident, reasoning that “lawn or farm type vehicle” was ambiguous language, and therefore it should be construed against the drafter. Erie appealed.

On appeal, Jones argued that the appeal should be dismissed because Erie failed to include a necessary party. In support of this argument, Jones noted that Erie did “not identify either the Rekowskis, their daughter, or the guardian ad litem as parties to the appeal in the petition’s Rule 5:17(i) certificate, nor does the certificate indicate that service was had upon them.” Erie included the Rekowskis and the guardian ad litem as defendants in the complaint, and they were also listed in the notice of appeal and served with the notice of appeal. The Rekowskis did not appear in the circuit court or participate in any way. The guardian ad litem participated in a limited fashion at the trial.

The Supreme Court of Virginia concluded that the Rekowskis and the guardian ad litem for the Rekowskis’ minor daughter were not necessary parties to the appeal. The Rekowskis and the guardian ad litem had notice and an opportunity to be heard in the declaratory judgment proceeding. The Rekowskis could have participated in the proceedings below, and they had notice of the appeal. The Rekowskis and the guardian ad litem chose not to participate in the appeal. Moreover, their interests on appeal were adequately represented by another litigant, Jones, who had the same or similar interests, namely securing full insurance coverage. The court concluded that dismissal of the appeal was not warranted.

The evidence, including from Jones’s expert, established that this ATV potentially could be used for either recreation or for use on a farm; i.e., it is a multi-use vehicle. A multi-use vehicle with potential for use on a farm is not a “farm type” vehicle. The court concluded that the language “lawn or farm type vehicle or snowblower” did not encompass a multi-use vehicle like an ATV.

The exception for a farm type vehicle does not apply, and the exclusion from coverage in the homeowners policy for “land motor vehicle[s]” does apply because the incident did not take place at an insured location. Therefore, the circuit court erred in denying Erie’s motion for summary judgment.

The Supreme Court of Virginia reversed the judgment of the circuit court and entered final judgment in favor of the insurer.

Erie Insurance Exchange v. Diamond Danielle Jones by her mother and next friend, Tracy Hardison—Supreme Court of Virginia—April 14, 2022—No. 210443.