This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).






Carol Loney,





Illinois Farmers Insurance Company,



Filed March 20, 2001


Kalitowski, Judge


Anoka County District Court

File No. C4989704


Emmett D. Dowdal, 995 Wildwood Road, White Bear Lake, MN 55155 (for appellant)


Terrance W. Votel, Votel, Anderson & McEachron, 444 Cedar Street, Suite 1250, St. Paul, MN 55101 (for respondent)



            Considered and decided by Kalitowski, Presiding Judge, Schumacher, Judge, and Stoneburner, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellant-insured’s son damaged a co-worker’s motorcycle and the co-worker brought an action against appellant for damages.  Respondent-insurer refused to defend appellant under her homeowners’ insurance policy because of the exclusion in the policy for damages arising out of the use of a motor vehicle.  Appellant argues the district court erred in determining respondent owed no duty to defend contending:  (1) the exclusion does not apply because the claim against her was based on either the parental liability statute or her promise to pay; (2) because of the severability clause in the policy the exclusion does not apply to her; and (3) she had a reasonable expectation of coverage under her homeowners’ policy.  We affirm.


            Absent statutory laws to the contrary, an insurance contract is subject to general principles of contract law.  Waseca Mut. Ins. Co. v. Noska, 331 N.W.2d 917, 926 (Minn. 1983).  Coverage issues and the construction and interpretation of a policy are questions of law.  Jenoff, Inc. v. New Hampshire Ins. Co., 558 N.W.2d 260, 262 (Minn. 1997).  If there is no dispute of material fact, this court independently reviews the district court’s interpretation of the insurance contract.  National City Bank v. St. Paul Fire & Marine Ins. Co., 447 N.W.2d 171, 175 (Minn. 1989).  In examining an insurance policy, a court’s function is to “determine what the agreement was and enforce it.”  Fillmore v. Iowa Nat’l Mut. Ins. Co., 344 N.W.2d 875, 877 (Minn. App. 1984). 

            “An insurer’s duty to defend an insured is contractual.”  Meadowbrook, Inc. v. Tower Ins. Co., 559 N.W.2d 411, 415 (Minn. 1997) (citation omitted).  The duty to defend is different from and broader than an insurer’s duty to indemnify.  SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 316 (Minn. 1995).  “If any claim is arguably covered under a policy, the insurer must defend and reserve any arguments regarding coverage.”  Id. (citation omitted).  A court must compare the allegations in the complaint of the underlying cause of action with the terms of the insurance policy to determine the existence of a duty to defend.  Meadowbrook, 559 N.W.2d at 415.


            Appellant contends the district court erred in determining respondent owed no duty to defend because of the exclusion in appellant’s homeowners’ policy for damages arising out of use of a motor vehicle.  We disagree.  In reaching its conclusion the district court relied on Fillmore, a case where following a fatal car accident, the parents of the negligent driver were sued on claims of negligent entrustment and negligent supervision.  The accident victims’ families sought recovery from the parents’ homeowners’ insurance policy.  The Fillmore court held that the insurance company owed no duty to defend the insured parents because

[i]njuries arising from negligent entrustment and supervision * * * arise out of the use of an automobile.  Since the insureds’ homeowner’s policy excluded injuries arising out of the use of an automobile, the insurance company has no duty to defend or indemnify the insured.


344 N.W.2d  at 881.


The district court here stated:

Applying the holding in Fillmore to the present case, the claims against Carol Loney cannot be separated from her son’s actual use of the motorcycle.  The policy exclusions state [that] Farmers does not cover damage that “results from” or is “arising out of” the use of a motor vehicle.  Nick Loney’s driving the motorcycle is the source of any possible claim against Carol Loney.  The two cannot be separated in this case, and therefore the exclusions * * * apply.


Appellant claims Fillmore does not apply because appellant was not sued on a theory of negligent entrustment or negligent supervision.  She contends that the allegations in the complaint against her were based on statutory parental liability and her promise to pay damages, neither of which is excluded from her policy.  But applying the rationale in Fillmore, regardless of the legal theory, the action against appellant sought recovery of damages that arose out of use of a motorcycle, and her alleged liability is connected to that use.  This connection, damages arising from the use of a motor vehicle, is clearly excluded by appellant’s policy.  We conclude that the district court properly applied Fillmore and determined respondent did not owe a duty to defend. 


            Appellant also contends that pursuant to the severability clause in her homeowners’ policy, the actions of her son cannot be attributed to her.  She reasons that because she did not use a motor vehicle, the motor vehicle exclusion does not apply and respondent had a duty to defend her.  In support of this argument appellant cites a Michigan case, The Shelby Mut. Ins. Co. v. United States Fire Ins. Co., 12 Mich. App. 145, 162 N.W.2d 676 (1968).  But the reasoning in Shelby has been rejected by other courts, including the court in Rubins Contractors, Inc., v. Lumbermens Mut. Ins. Co., 821 F.2d 671, 676 (D. C. Cir. 1987), that stated:

It seems an extraordinary non sequitur to say that liability has not resulted from ownership or use of an automobile merely because the tort has a component separate from motor vehicle operation.


Moreover, the dissent in Shelby correctly reasoned that appellant cannot escape the fact that her parental liability

depends on the wrongful actions of [her] child.  The cause of action against the parents is nonetheless generated by the destruction of property by the use of an automobile.  The statute shifts liability without changing the nature of the cause of action.  The complaint is still based on the injury to property occasioned by the improper operation of an automobile and comes within the exclusionary provision of the policy.


Shelby, 12 Mich. App. at 150, 162 N.W.2d at 679 (Gillis, J., dissenting).  Following the reasoning in Fillmore, we decline to follow Shelby and conclude respondent owed no duty to defend.


            Appellant also contends respondent had a duty to defend her because she reasonably expected coverage under her homeowners’ policy.  We disagree.  Because of the unequal bargaining power between insurer and insured, courts recognize the doctrine of reasonable expectations.  Atwater Creamery Co. v. Western Nat’l Mut. Ins. Co., 366 N.W.2d 271, 277 (Minn. 1985) (recognizing that a layperson may not be able to read and understand insurance policies).  But here, appellant’s homeowners’ insurance policy unambiguously excluded damages arising from the use of a motor vehicle.  Moreover, the doctrine of reasonable expectations

has generally been limited to those cases in which the policy, while purporting to provide a specific coverage, so limited the coverage as to amount to a hidden exclusion.


National Indem. Co. of Minn. v. Ness, 457 N.W.2d 755, 757 (Minn. App. 1990) (citations omitted), review denied (Minn. Sept. 14, 1990).  Appellant’s policy did not purport to cover property damage resulting from the use of a motor vehicle, and her case is unlike other cases where the doctrine of reasonable expectations has been applied.  We conclude that appellant’s expectation of coverage was unreasonable.

            Likewise, we reject appellant’s contention that under the doctrine of illusory coverage, respondent owed a duty to defend.  The doctrine of illusory coverage is

best applied * * * where part of the premium is specifically allocated to a particular type or period of coverage and that coverage turns out to be functionally nonexistent.


Jostens, Inc. v. Northfield Ins. Co., 527 N.W.2d 116, 119 (Minn. App. 1995), review denied (Minn. Apr. 27, 1995).  Here, there is no indication that the premium for appellant’s homeowners’ policy specifically covered statutory liability or property damage arising from the use of a motor vehicle and that that coverage was nonexistent.  We conclude that appellant’s argument regarding illusory coverage is without merit.