Jose Mendoza, et al., Respondents, v. Ramiro Rivera-Chavez, et al., Defendants, Leader National Insurance, Petitioner; Leader National Insurance, Petitioner, v. Ramiro Rivera-Chavez, et al., Respondents, 140 Wash. 2d 659

Sanders, J. We are asked whether a clause in an automobile insurance policy which excludes coverage for use of the vehicle “in the commission of any felony” is ambiguous or void as against public policy. We hold, following Mutual of Enumclaw Ins. Co. v. Wiscomb, 97 Wn.2d 203, 643 P.2d 441 (1982), the clause is void as against public policy. Accordingly, we affirm the Court of Appeals and remand. I Facts Eliza and Jose Mendoza were seriously injured when their Nissan pickup was in a head-on collision with a Subaru station wagon that had crossed the center fine of the road.

One of the passengers in the Subaru died as a result of the accident. The Subaru driver, Ramiro Rivera-Chavez, admitted he was intoxicated at the time of the accident and pleaded guilty to one count each of vehicular assault and vehicular homicide, both felonies. The Mendozas brought a personal injury lawsuit against Rivera-Chavez that was settled by entry of judgment for $150,000. The Mendozas then obtained a writ of garnishment directed to Leader National Insurance Company (Leader), one of Rivera-Chavez’s insurers at the time of the accident.

In a separate suit, Leader sought a declaratory judgment to determine coverage under its policy as to claims by the Mendozas and the other passengers. The garnishment proceedings and Leader’s declaratory action were consolidated. Cross motions for

summary judgment were brought. Leader argued that both the felony exclusion and the migrant workers’ exclusion in the insurance policy precluded coverage. The trial court ordered

summary judgment in favor of Leader denying coverage on the basis of the migrant workers exclusion only, and awarded Leader reasonable attorney fees pursuant to RCW 6.27.230 because it prevailed in a controverted garnishment proceeding. The Mendozas appealed and Leader cross-appealed the denial of

summary judgment on the basis of the felony exclusion. The Court of Appeals reversed the trial court’s grant of

summary judgment to Leader on the migrant workers exclusion, affirmed the denial of

summary judgment to Leader on the felony exclusion and remanded the case for trial. Mendoza v. Rivera-Chavez, 88 Wn. App. 261, 273, 945 P.2d 232 (1997). Leader then petitioned this court for review, which was granted only on the validity of the insurance policy exclusion for automobiles used in the commission of a felony. 135 Wn.2d 1005, 959 P.2d 125 (1998). II Standard of Review The issue before this court is whether Leader is entitled to

summary judgment on the felony exclusion issue. Although

summary judgment is proper only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law when all facts and inferences are resolved in favor of the nonmoving party, CR 56(c), Failor’s Pharmacy v. Department of Soc. & Health Servs., 125 Wn.2d 488, 493, 886 P.2d 147 (1994), the question here presented, however, is one of law, not fact. III Analysis The Mendozas ask us to strike down the felony exclusion in Leader’s insurance policy because it violates public policy.

We agree the Leader exclusion is broad enough to encompass felonies (such as vehicular homicide and vehicular assault) which depend on the extent of injury to the victim of the accident rather than the risk to the insurer. Therefore, following Wiscomb, 97 Wn.2d 203, we hold the Leader felony exclusion to be void as against public policy and need not address claims of ambiguity. It is well established that insurance companies may limit their liability unless the limitation is contrary to public policy. Brown v.

Snohomish County Physicians Corp., 120 Wn.2d 747, 753, 845 P.2d 334 (1993). “Public policy” is a nebulous term and on the whole, courts are reluctant to hold that a clause in an insurance policy is in violation of public policy. Boeing Co. v. Aetna Cas. & Sur. Co., 113 Wn.2d 869, 876 n.1, 784 P.2d 507, 87 A.L.R.4th 405 (1990). In order to give more meaning to the term, it has been held that a contract will not violate public policy unless it is “ ‘prohibited by statute, condemned by judicial decision, or contrary to the public morals.’ ” State Farm Gen. Ins. Co. v.

Emerson, 102 Wn.2d 477, 481, 687 P.2d 1139 (1984) (quoting 17 C.J.S. Contracts § 211, at 1024 (1963)). This court has been careful to look to a particular statute to guide it in defining public policy. We will not make public policy from whole cloth. For example, although the courts have found relevant statutes in the area of motor vehicle insurance (the financial responsibility act (FRA) (chapter 46.29 RCW) and the underinsured motorist statute (RCW 48.22.030)), they have failed to find similar statutes relating to homeowners’ insurance.

As a result, “family members” exclusion clauses which have been held to violate public policy based on the FRA with respect to automobile insurance (Wiscomb, 97 Wn.2d 203) have been held not to violate public policy in the context of homeowners insurance (Emerson, 102 Wn.2d 477; see also Cary v. Allstate Ins. Co., 78 Wn. App. 434, 897 P.2d 409 (1995), aff’d, 130 Wn.2d 335, 922 P.2d 1335 (1996)). In the present case, the relevant statutes for determining public policy are the FRA and the mandatory liability insurance act (chapter 46.30 RCW).

The FRA requires a driver to provide proof of insurance or financial security after an accident has occurred failing which the driver’s license will be suspended (RCW 46.29.060-46.29.240) and, in certain situations, requires a driver who has had his or her license suspended or revoked to prove financial responsibility for the future before the license is renewed (RCW 46.29.250-46.29.440).

Schermer states that: the function of the security suspension provisions [which are implicated following an accident] is to pressure an uninsured or financially irresponsible motorist into paying damages arising out of a past accident, while the function of the certification provisions [for proof of future responsibility] is to secure the public against damages which may arise out of future accidents. 2 Irvin E. Schermer, Automobile Liability Insurance 3d, § 20.01, at 20-3 (1995). The FRA is aimed at protecting the public from motorists who are unable to compensate the victims of accidents.

Washington courts have recognized this strong public policy behind the statute. LaPoint v. Richards, 66 Wn.2d 585, 590, 403 P.2d 889 (1965) (“Manifestly the purpose of the Financial Responsibility Act is for the protection of the public.”); Emerson, 102 Wn.2d at 482 (“The focus on innocent victims in automobile exclusion clauses is improper because the purpose of the financial responsibility act and uninsured motorist statute is to protect them.”); Tissell v. Liberty Mut. Ins.

Co., 115 Wn.2d 107, 112, 795 P.2d 126 (1990) (“We began with the premise that the financial responsibility act, RCW 46.29, states a public policy in favor of full compensation for accident victims.”). Leader strenuously argues the FRA is no longer a source of public policy since the passage of the mandatory liability insurance act (RCW 46.30.010-46.30.901), which took effect in 1990. Pet. for Review at 18-19; Supplemental Br. of Pet. at 4-6. Leader focuses on a provision in the FRA which states, “This

chapter shall not be held to apply to or affect policies of automobile insurance against liability which may now or hereafter be required by any other law of this state” (RCW 46.29.510(1)), and points to the provision of the mandatory liability insurance act which states that it is not intended to “modify, amend, or invalidate existing insurance contract terms, conditions, limitations, or exclusions” (RCW 46.30.010). However, this argument loses the forest for the trees.

The relationship between the two statutes is one of harmony rather than discord: the public policy of protecting victims from careless drivers is reinforced rather than marred by the mandatory liability insurance act, which specifically states, It is a privilege granted by the state to operate a motor vehide upon the highways of this state. The legislature recognizes the threat that uninsured drivers are to the people of the state.

In order to alleviate the threat posed by uninsured drivers it is the intent of the legislature to require that all persons driving vehicles registered in this state satisfy the financial responsibility requirements of this chapter. RCW 46.30.010. Indeed, we have previously agreed mandatory insurance would strengthen the policy behind the FRA. Wiscomb, 97 Wn.2d at 207 (“Thus, to the greatest extent possible without requiring mandatory insurance coverage, the Legislature has demonstrated its intended policy . . . .”).

Therefore, contrary to Leader’s argument, both the FRA and the mandatory liability insurance act express a strong public policy in favor of compensating the victims of road accidents. In considering the public policy of the FRA, we are bound by Wiscomb, 97 Wn.2d 203. In Wiscomb the court considered two consolidated cases, each involving a wife’s claim against her husband’s automobile insurance company following an accident in which the wife was injured. The insurance policies in question had clauses excluding coverage for injuries to family or household members. Id. at 205.

The court held that the exclusion clauses violated the public policy that victims of negligent driving should be compensated, as manifested in the FRA. The court stated, “Quite simply, the statute creates a strong public policy in favor of assuring monetary protection and compensation to those persons who suffer injuries through the negligent use of public highways by others.” Id. at 206.

The court found that the family members exclusion clauses struck “at the heart” of that public policy, id. at 208, because the exclusions focused upon who was injured and not upon the risk to the insurance company presented by the decision to insure a particular person against particular kinds of conduct. Id. at 209. See also Tissell, 115 Wn.2d at 112 (family member exclusion clause of underinsured motorist policy void as against public policy). Wiscomb is on point with the case currently before us.

In the present case, the insurance policy excludes liability for use of the vehicle in “any felony,” which includes vehicular homicide and vehicular assault. These crimes are both defined with reference to the injury sustained by the victim.

RCW 46.61.520(1) (“When the death of any person ensues within three years as a proximate result of injury proximately caused by the driving of any vehicle by any person, the driver is guilty of vehicular homicide if . . . .”); RCW 46.61.522(2) (referring to driving which causes “serious bodily injury,” which is defined as “bodily injury which involves a substantial risk of death, serious permanent disfigurement, or protracted loss or impairment of the function of any part or organ of the body”).

As a result, the exclusion at issue in this case is not based on the conduct of the driver but on the injuries suffered by the victim— the greater the injury, the more likely the exclusion. Thus this exclusion, as applied in the factual context of the case at bar, focuses upon the victim of the accident in the same way as the family exclusion which was found to violate public policy in Wiscomb. And, as in Wiscomb, this “exclusion far exceeds the evil which it is designed to protect against” (Wiscomb, 97 Wn.2d at 210), i.e., operating a motor vehicle in a manner unique to the commission of a felony.

In contrast to Wiscomb, which invalidated a “family members” exclusion clause, other Washington cases which have considered insurance exclusion clauses in light of the FRA have held that there has been no violation of public policy. See, e.g., Progressive Cas. Ins. Co. v. Jester, 102 Wn.2d 78, 683 P.2d 180 (1984); Public Employees Mut. Ins. Co. v. Hertz Corp., 59 Wn. App. 641, 800 P.2d 831 (1990); Greer v. Northwestern Nat’l Ins. Co., 36 Wn. App. 330, 674 P.2d 1257 (1984), aff’d in part, rev’d in part on other grounds by 109 Wn.2d 191, 743 P.2d 1244 (1987).

These cases have upheld exclusion clauses based on two broad rationales: the exclusion clause was specifically bargained for or increased the risk to the insurer. A. Exclusions which are bargained for. An exclusion which is specifically bargained for will not violate the public policy of the FRA. In Jester, 102 Wn.2d 78, this court declined to strike down a provision in a motorcycle insurance policy which excluded liability coverage for claims made by passengers on the motorcycle as violating the public policy of the FRA.

The rationale of this decision was that the coverage in question had been specifically rejected by the insured. Jester is easily distinguishable from the case presently before us where there has been no argument that the exclusion was specifically bargained for, and there is no indication in the record that this is the case. Clerk’s Papers at 333 (felony exclusion clause in insurance policy is in standard print which is used throughout the rest of the document). B. Increased risk to the insurer.

Other cases have upheld exclusion clauses in insurance policies on the basis that the activity excluded increased the risk to the insurer. The principle underlying these cases was expressed in Eurick v. Perneo Ins.

Co., 108 Wn.2d 338, 343-44, 738 P.2d 251 (1987), where we explained that “exclusions that have been held violative of public policy generally have been those manifesting no relation to any increased risk faced by the insurer, or when innocent victims have been denied coverage for no good reason.” The following types of clauses in automobile insurance policies have been determined by Washington courts not to violate public policy: exclusion of coverage when vehicle was used by anyone under the influence of alcohol (PEMCO, 59 Wn.

App. 641); exclusion of coverage for passengers on motorcycle (e.g., Jester, 102 Wn.2d 78; Greer, 36 Wn. App. 330); exclusion of coverage for drivers other than those named in the insurance policy (e.g., Planet Ins. Co. v. Wong, 74 Wn. App. 905, 877 P.2d 198 (1994)); exclusion of coverage for drivers under a certain age (e.g., Wong, 74 Wn. App. 905); exclusion of coverage for an unlicensed driver (Continental Cas. Co. v. Weaver, 48 Wn. App. 607, 739 P.2d 1192 (1987)); .exclusion of coverage if the insured vehicle was taken out of a certain territorial area (Lovato v. Liberty Mut. Fire Ins.

Co., 109 Wn.2d 43, 742 P.2d 1242 (1987)); and exclusion of motorcycle use for the purposes of an underinsured motorist clause in an automobile insurance policy (Eurick, 108 Wn.2d 338). In each of these cases the activities excluded constitute an increased risk to the insurer, coverage for which would justify an increase in insurance premium. Many of these cases specifically discuss the increased risk. Greer, 36 Wn.

App. at 342 (“A myriad of additional risks and exposures [from carrying a passenger] are apparent to anyone familiar with the operation of motorcycles not the least of which is the fact that in any motorcycle accident the passenger is almost certainly going to be thrown violently from the vehicle .... Hence, the carrying of passengers on a motorcycle substantially increases the nature of the insurer’s risks.”); Wong, 74 Wn.

App. at 911 (“[T]here is evidence in the record that where a driver who has not received prior authorization obtains custody of one of Thrifty’s rental cars, there is an increased risk of theft, of the car not being returned, of the car being taken to an unauthorized location — which places the automobile at greater risk — and of the car being used for unauthorized purposes.”); Eurick, 108 Wn.2d at 344 (“Because motorcycles clearly represent an additional risk to the insurer [of an automobile], the exclusion is valid.”).

The cases upholding exclusion clauses against public policy challenges are all distinguishable from the case at bar for at least two reasons. First, the exclusion clause in the case at bar operates retrospectively. Second, the exclusion clause in the case at bar strikes at the heart of the public policy of the FRA in a way that the other exclusion clauses do not. 1.

Exclusion of “any felony” results in retrospective determination of risk to the insurer This exclusion clause currently before the court pertains to no inherent and foreseeable increased risk to the insurer: a determination of whether the felonies of vehicular homicide or vehicular assault have occurred cannot be made until after injuries to the victim have been assessed. This assessment must necessarily occur after an accident and cannot be made in advance, at the time the insurance policy is purchased.

Insurance is by its nature prospective and not retrospective, as can be seen from the statutory definition of an insurance contract as “a contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies.” RCW 48.01.040 (emphasis added). See also State ex rel. Fishback v. Universal Serv. Agency, 87 Wash. 413, 424, 151 P. 768 (1915) (including as part of the definition of an insurance contract “a hazard or peril insured against whereby the insured or his beneficiary may suffer loss or injury” (emphasis added)); 1 Eric Mills Holmes & Mark S.

Rhodes, Holmes’s Appleman on Insurance, 2d § 1.3, at 13 (1996) (“An insurance agreement is an aleatory contract. Aleatory is derived from the Latin ‘alea’ meaning dice. An insurer’s promise is conditioned upon the occurrence of an uncertain, fortuitous event, that is, a chance event.”). Insurable events are contingent and uncertain precisely because they are future and not past events. Thus the present case is distinguishable because the exclusion clause operates, at least with respect to felony homicide and felony assault, in a retroactive manner.

In other words, the exclusion is only operable after the injuries of the victims have been assessed as severe enough to warrant a felony conviction. 2. The felony exclusion is not finked to the insurer’s risk, but to the victim’s injuries The felony exclusion clause in the instant case strikes at the heart of the public policy of the FRA and the mandatory liability insurance act in a way that the clauses in cases where exclusions have been upheld do not. The objective of obtaining insurance coverage is to “protect the public from the ravages of the negligent and reckless driver.” Touchette v. Northwestern Mut.

Ins. Co., 80 Wn.2d 327, 332, 494 P.2d 479 (1972). This is reflected in the policy of the FRA and the mandatory liability insurance act. But this felony exclusion has the potential to release an insurance company from liability solely because injuries to an accident victim are severe enough to warrant felony proceedings against the accused for vehicular homicide or vehicular assault. This is because the crimes of vehicular homicide and vehicular assault are predicated upon injuries to the victim.

Vehicular homicide occurs “[w]hen the death of any person ensues within three years as a proximate result of injury proximately caused by the driving of any vehicle by any person” if the driver is legally intoxicated, reckless or driving “[w]ith disregard for the safety of others.” RCW 46.61.520(l)(c). Vehicular assault occurs when “bodily injury which involves a substantial risk of death, serious permanent disfigurement, or protracted loss , or impairment of the function of any part or organ of the body” (serious bodily injury) is proximately caused by reckless driving or driving while legally intoxicated.

RCW 46.61.522(2). Reckless driving does not always result in death or serious injury; even when reckless driving results in an accident, there may be no injuries or those injured may have only minor injuries. Under RCW 46.61.500 reckless driving is a gross misdemeanor and the Leader National insurance policy felony exclusion would not apply. Similarly, driving while under the influence does not always result in death or serious injury to victims and the crime is a gross misdemeanor (RCW 46.61.502) to which the felony exclusion in the Leader National policy also does not apply.

Therefore, the feature that distinguishes vehicular homicide or vehicular assault from reckless driving or driving under the influence is the extent of the injuries of the victims. As a result, the felony exclusion in the Leader National insurance policy which excludes coverage for victims of vehicular homicide or vehicular assault but does not exclude coverage for victims of reckless driving or driving under the influence, operates to exclude coverage solely because of the extent of the injuries to the victims.

When viewed in light of the policy of the FRA and the mandatory liability insurance act to compensate victims, the result of this exclusion is perverse: victims who are less seriously injured would be covered, but those who are badly injured or killed would be excluded from coverage. But it is precisely in cases where victims are badly injured or killed where the public policy that victims of negligent driving should be compensated is most applicable.

The overly broad focus of the exclusion in Leader National’s insurance policy on all felonies, including felonies predicated on the injuries of accident victims, therefore strikes at the heart of the FRA’s public policy. Cf. Wiscomb, 97 Wn.2d at 210 (“[T]he exclusion far exceeds the evil which it is designed to protect against. . . .”). Leader National argues that “[Regardless of the severity of the injuries an insurer’s risk is increased by the use of the insured vehicle in the commission of a felony.” Reply to Br. of Amicus Curiae at 16.

Although this argument has emotional appeal (commission of a “felony” sounds dangerous and risky), it misses the crucial point: it fails to identify why participation in the broad group of activities defined by law as felonies inherently involves risk to the insurer. In essence, the phrase “any felony” encompasses a wide range of activities and is overbroad. As Leader National has itself conceded, a “felony per se may not affect the ability to drive.” Resp’t/Cross-Appellant’s Reply Br. at 8.

In the present case, the quality of driving (and hence risk to the insurer) is not the issue on which conviction of vehicular homicide and vehicular assault turns. Rather, the distinguishing element of the felonies of vehicular homicide and vehicular assault is the extent of the victim’s injuries. For example, reckless driving which does not result in severe injury may be no less “reckless” than reckless driving which does result in severe injury.

The risky behavior is the same in both instances (and hence the risk to the insurer is the same), yet because of the injuries of the victim, the latter can produce a conviction for felony vehicular assault. In these circumstances exclusion of coverage because of the felony conviction is inherently and exclusively based upon the injuries to the victim and, following Wiscomb, clearly violates public policy. Arguing the court should find the felony exclusion clause to be consistent with the public policy of the FRA, Leader National relies heavily on the Court of Appeals, Division One, case PEMCO v.

Hertz Corp., 59 Wn. App. 641, 800 P.2d 831 (1990). In PEMCO the court upheld an insurance provision which excluded coverage for anyone who drove the vehicle while intoxicated. PEMCO is distinguishable because the exclusion in PEMCO was contained in the automatic insurance provisions of a car rental agreement (PEMCO, 59 Wn. App. at 642) to which the court in PEMCO specifically noted the FRA does not apply. PEMCO, 59 Wn. App. at 644 (citing Continental Cas. Co. v. Weaver, 48 Wn. App. 607, 613, 739 P.2d 1192 (1987)).

PEMCO is therefore distinguishable from the case at bar, where the public policy as expressed by the FRA (and the mandatory liability insurance act) is applicable. IV Conclusion In conclusion, the case before the court is governed by application of the Wiscomb rule that exclusions which turn on victims and not on the risk to the insurer violate public policy. The broad felony exclusion at issue in the present case violates the Wiscomb rule because crimes such as vehicular homicide and vehicular assault are predicated upon the injuries sustained by the victim.

Therefore, the Court of Appeals was correct in holding that the Leader exclusion violated public policy, and we remand to the trial court for further proceedings consistent with this opinion. The Mendozas shall recover their statutory costs on appeal. Smith, Johnson, Alexander, Ireland, and Bridge, JJ., concur.