IN THE MISSOURI COURT OF APPEALS WESTERN DISTRICT. No. WD American Family Mutual Insurance Company. Appellant, Stephen Parnell, et al.

Transcription

1 IN THE MISSOURI COURT OF APPEALS WESTERN DISTRICT No. WD American Family Mutual Insurance Company Appellant, v. Stephen Parnell, et al. Respondents, Appeal from the Circuit Court of Boone County, Missouri 13 th Judicial Circuit The Honorable Jody Asel RESPONDENTS BRIEF ENG & WOODS Jonathan D. McQuilkin MO Bar No East Ash Street Columbia, MO Phone: (573) Fax: (573) ATTORNEY FOR RESPONDENTS K.L., and M.S., a minor, by and through her natural mother and Next Friend, K.L.

2 TABLE OF CONTENTS TABLE OF CONTENTS TABLE OF AUTHORITIES STATEMENT OF THE CASE..6-8 ARGUMENT I. RESPONSE TO APPELLANT S POINT RELIED ON I. : The Parnell s son, C.P. is an insured The Intentional Injury exclusion does not apply to C.P. s conduct because there is no evidence indicating that C.P. intended to cause injury to M.S. and the inferred-intent doctrine is inapplicable when applied to an 11 year old child The Abuse exclusion does not apply because it fails to expressly exclude negligent supervision from coverage in the Abuse section, but expressly excludes negligent supervision in its Vehicles, Aircraft, and Watercraft exclusions, and the arising out of language used in the Abuse section is ambiguous as to whether it excludes a negligent supervision claim The concurrent proximate cause rule applies because the Parnell s negligent supervision is an independent and distinct covered cause of M.S. s injuries a) Some Missouri case law states that an insured cause is covered under a policy so long as it was a contributing factor to the person s injuries b.) Some Missouri case law states that an insured cause is covered under a policy so long as the insured cause is independent and distinct from the excluded cause CONCLUSION

3 CERTIFICATE PURSUANT TO RULE CERTIFICATE OF SERVICE

4 TABLE OF AUTHORITIES CASES: Allstate Ins. Co. v. Jack S., 709 F.Supp. 963(D.Nev.1989)..14 Am. Family Mut. Ins. Co. v. Copeland-Williams, 941 S.W.2d 625 (Mo.App. E.D. 1997) 17 Am. Family Mut. Ins. Co. v. Co Fat Le, 439 F.3d 436 (8th Cir. 2006) 27, 30 Am. Family Mut. Ins. Co. v. Pacchetti, 808 S.W.2d 369 (Mo. 1991) 10 Argonaut Great Cent. Ins. Co. v. Valley Vill., LLC, 4:10CV2247 CDP, 2013 WL (E.D. Mo. Feb. 25, 2013)...20 Atl. Employers Ins. Co. v. Tots & Toddlers Pre-Sch. Day Care Ctr., Inc., 239 N.J. Super. 276 (App. Div. 1990) Braxton v. United States Fire Ins. Co., 651 S.W.2d 616 (Mo. App. 1983) 24, 25 Brown v. Morris, 365 Mo. 946 S.W.2d 160 (1956)...21 Byars v. St. Louis Pub. Serv. Co., 66 S.W.2d 894 (Mo. 1933).26 Centermark Properties, Inc. v. Home Indemnification Co., 897 S.W.2d 98 (Mo. App. 1995).26 Columbia Mutual Insurance Company v. Neal, 992 S.W.2d 204 (Mo. App.1999)...10, 21, 22, 29, 31 Dibben v. Shelter Ins. Co., 261 S.W.3d 553(Mo. App. 2008) 21, 22 Dutton v. Am. Family Mut. Ins. Co., 454 S.W.3d 319 (Mo. 2015) Fire Ins. Exch. v. Diehl, 450 Mich. 678 (1996)..14, 15 Gateway Hotel Holding, Inc. v. Lexington Ins. Co., 4

5 275 S.W.3d 268 (Mo. App. 2008).24, 26, 31 In the Interest of J.A.H., 293 S.W.3d 116 (Mo. App. E.D. 2009)...12, 17 Intermed Ins. v. Hill, D.O., 367 S.W.3d 84 (Mo. App. 2012)...27, 30, 31 N. Sec. Ins. Co. v. Perron, 172 Vt. 204 (2001) 15, 16 O.L. v. R.L., 62 S.W.3d 469 (Mo. App. 2001).27, 30 Shelby Cas. Ins. Co. v. H.T., 391 N.J. Super. 406 (App. Div. 2007)...13, 14 St. Paul Fire & Marine Ins. Co. v. Schrum, 149 F.3d 878 (8th Cir. 1998)...27, 28, 29 State Farm Mut. Auto. Ins. Co. v. Partridge, 514 P.2d 123 (1973).24, 25 5

6 STATEMENT OF THE CASE Stephen and Deanna Parnell (hereinafter Parnells ) operated a daycare business in their home during the summers of 2009 and (L.F. 17) Beginning the summer of 2009, M.S., a seven year old minor, attended the daycare and was subject to repeated, unwanted sexual contact by the Parnells eleven year old son, C.P. (L.F. 17) Suit filed against the Parnells alleged that the Parnells, as daycare providers, had a duty to use ordinary care to protect M.S. against unreasonable risks of harm, and the Parnells breached that duty by not supervising M.S. at the daycare. (L.F. 17) The Parnells breach of said duty of care was the proximate cause of M.S. s injuries and she suffered damages as a result of this breach. (L.F. 17) At the time of the events alleged in the lawsuit, the Parnells were insured under policies of insurance issued by American Family Insurance Company (hereinafter Appellant ). (L.F. 21, 47) Both insurance policies issued by Appellant provide Personal Liability Coverage which states: We will pay, up to our limit, compensatory damages for which any insured is legally liable because of bodily injury or property damage caused by an occurrence covered by this policy. (L.F. 31, 57) Bodily injury is defined by the policies to mean bodily harm, sickness or disease. It includes resulting loss of services, required care and death. (L.F. 23, 49) Occurrence is defined by the policies to mean an accident, including exposure to conditions, which results during the policy period, in: a. bodily injury; or b. property damage. (L.F. 24, 49) 6

7 M.S., by and through her next friend, K.L., brought suit against the Parnells in Boone County, Missouri in the case of M.S., a minor, by and through her Next Friend, K.L. v. Stephen Parnell and Deanna Parnell, case no. 12BA-CV03350 seeking damages and alleging that the Parnells were negligent in their supervision of M.S. at the daycare. (L.F ) The Parnells requested that Appellant provide defense and indemnity for any judgment rendered against them in the liability suit. (L.F. 12) On October 4, 2012, Appellant filed its petition for declaratory judgment requesting the trial court to determine if two homeowners policies it issued to the Parnells afforded coverage and whether it had a duty to defend and indemnify the Parnells with respect to a liability case filed by M.S. (L.F ) On July 2, 2014, the trial court entered final judgment in the above stated declaratory judgment action brought by Appellant. (L.F ) The court denied Appellant s motion for summary judgment and granted the cross-motion for summary judgment filed by Respondents. (L.F ) The court ruled that Respondents met all conditions precedent to coverage, and satisfied their burden of proving that coverage exists under the policies of insurance at issue herein. (L.F. 296) Furthermore, the court ruled that Appellant failed to carry its burden of demonstrating that either the Intentional Injury or the Abuse exclusion applied to exclude coverage for the claims of Negligent Supervision of a Minor brought against the Parnells, and even if the exclusions did apply, the Court would still determine that the negligent supervision by the Parnells was a separate and distinct cause of the injury to M.S., thus the concurrent proximate cause rule 7

8 operated to establish coverage. (L.F. 294) The trial court ultimately held that Appellant is obligated to defend and indemnify the Parnells as to any judgment entered or settlement reached in the liability case. (L.F. 296) Following entry of final judgment, Appellant appealed. (L.F ) 8

9 ARGUMENT I. RESPONSE TO APPELLANT S POINT RELIED ON I.: For its only Point Relied On, Appellant argues as follows: The trial court erred in entering summary judgment in favor of M.S. and against American Family because the court misapplied the law in finding the American Family policies afforded coverage and a duty to defend and indemnify in that M.S. was injured by the intentional and unwanted sexual contact by the Parnell s son, C.P. and under the unambiguous policy language: 1) the Parnell s son, C.P. is an insured; 2) the Intentional Injury exclusion expressly excludes from coverage bodily injury caused intentionally by or at the direction of any insured, which under the inferred intent doctrine applies to C.P. s acts and because the policy states any insured applies to bar coverage as to the Parnells; 3) the Abuse exclusion expressly excludes from coverage bodily injury arising out of or resulting from any actual or alleged sexual molestation or contact and it is undisputed by the parties that M.S. s injuries arose from the intentional and unwanted sexual contact from C.P.; and 4) the concurrent proximate cause rule does not apply because there is no independent and distinct covered cause of M.S. s injuries. (App. Brief P. 11) 1) The Parnell s son, C.P. is an insured. Respondents do not dispute that C.P. is an insured under Appellant s policy. 2) The Intentional Injury exclusion does not apply to C.P. s conduct because there is no evidence indicating that C.P. intended to cause injury to M.S. and the inferred-intent doctrine is inapplicable when applied to an 11 year old child. 9

10 When an insurance company relies upon a policy exclusion to deny coverage, the burden is on the insurance company to prove the facts which make the exclusion applicable. When reviewing the policy, "we will construe the exclusion clause strictly against the insurer. Columbia Mutual Insurance Co. v. Neal, 992 S.W.2d 204, 207 (Mo. App. E.D. 1998) (internal citations omitted). To meet its burden, the insurance company must show not only that the insured intended the acts causing the injury, but that injury was intended or expected from these acts. Am. Family Mut. Ins. Co. v. Pacchetti, 808 S.W.2d 369, 371 (Mo. 1991). Appellant argues that the trial court misapplied the law in finding that the intentional injury exclusion did not apply, but has failed to provide any evidence that M.S. s injuries were intended or expected from C.P. s conduct. The lack of any evidence to support Appellant s position is fatal to their claim on this point. The only real description of the events that occurred over those two summers is contained in the Hotline investigation report from Rainbow House (Sup. L.F ), and the counseling records of M.S (Sup. L.F ). Given the young age of the children, no depositions were ever taken, nor were any witnesses called to testify regarding the events of this case. The record is devoid of any factual information regarding the events that occurred at the Parnells daycare. The record contains no evidence from or about C.P. demonstrating an intention or expectation of injury from his conduct. Because there is no evidence of these events, Appellant is forced to rely on the inferred-intent standard in order to meet their burden that their exclusion applies in this case. Because the inferredintent standard should not apply to a juvenile, Appellant is left without evidence of an intent to harm, and therefore has failed to carry their burden on this exclusion. 10

11 Appellant asserts that this Court should apply an inferred-intent standard to C.P. s conduct, notwithstanding the fact that applying this standard to a minor perpetrator is illogical. When considering the ages of the victim and perpetrator in this case, there is a question as to whether an eleven year old child would understand the consequences of his actions, such that a presumption of intent is not appropriate in the current case. The events which are the subject of the underlying lawsuit occurred over two summers, 2009 and In 2009 M.S. was slightly over seven and one-half years old and C.P. had turned 11 in late spring of 2009 [At the Court s request, specific dates of birth will be provided; pursuant to local rule, counsel is attempting to avoid including the children s dates of birth in a public record the children are just over 3 years and 5 months apart in age, C.P. being the older of the two]. (L.F. 88) During the summer of 2010 the children would be 8 and 12 years old. The rule of presumed intent to cause harm is a sound one, when applied to an adult perpetrator, but loses the basis of its reasoning when applied to a child perpetrator. There is no Missouri case on point in the context of an insurance exclusion. However, case law outside of Missouri has indicated that the inferred-intent standard should not apply in this instance. Moreover, it is unlikely that a policyholder reading the intentional-acts exclusion would reasonably expect that an insured child's actions would be judged by an objective adult standard. A reasonable expectation is for a child to be held to a standard based on a child of like age, ability, intelligence, and experience. 11

12 In a criminal/juvenile court proceeding, the age of the perpetrator is certainly a factor in determining intent. In the case of In the Interest of J.A.H., 293 S.W.3d 116 (Mo. App. E.D. 2009) the burden was on the Juvenile Officer to prove that the Juvenile committed the alleged acts for the purpose of sexual arousal or gratification. In that case, a juvenile court proceeding, the juvenile was charged with statutory sodomy for acts that occurred when the juvenile was eleven or twelve years old, and the victim was eight or nine years old (the petition alleged the act occurred During the summer of 2003 or summer of ) Id. at 122. The court in J.A.H. rejected the argument of the juvenile officer that there was no other discernible reason for the conduct alleged. Id. No direct evidence was presented as to the intent of the juvenile in committing the alleged acts. Id. Specifically, we find that the ages of Juvenile and T.H. at the time of the incident are relevant to a determination of intent. For this reason, we are not persuaded by Juvenile Officer s argument that intent is inferred from the act alone. Id. Respondents recognize the different standard used in a criminal/juvenile court proceeding than the case at hand. However, the facts of the case are strikingly similar, and the J.A.H. court s analysis contains insight on why the inferred-intent rule is not serving its proposed rationale. Missouri case law does not contain precedent regarding the sexual molestation of a minor by a minor perpetrator in an insurance context. Other 12

13 states though have addressed this issue and determined that the inferred-intent doctrine is illogical and inapplicable when the perpetrator is a minor. 1 Under a similar set of facts, the Superior Court of New Jersey held that for a sexual offender under the age of fourteen, the inferred intent doctrine does not apply, and the offender's subjective intent must be determined on a case by case basis. Shelby Cas. Ins. Co. v. H.T., 391 N.J. Super. 406, 408 (App. Div. 2007). In that case, an insurance company sought a declaratory judgment in their favor, claiming that its intentional injury exclusion barred liability coverage for a thirteen-year-old insured's sexual assault of a child. Id. The issue to the court was whether the inferred intent rule applies when the sexual assault is committed by a minor under fourteen years of age. Id. The court in H.T. analyzed that the underlying rationale for the inferred intent rule with respect to insurance coverage for sexual assaults is that an adult of ordinary 1 For additional out of state case law, see Allstate Ins. Co. v. Patterson, 904 F.Supp. 1270, 1284 (D.Utah 1995) ( the Utah Supreme Court would not automatically infer an intent to harm in the case of a minor who sexually assaults other minors but would look at all the surrounding facts and circumstances, including the parties' ages, the nature of their relationship and their past experience ); N. Sec. Ins. Co., Inc. v. Stanhope, 188 Vt. 520, 14 A.3d 257, 265 (2010) (in the case of a minor perpetrator, a subjective test applies, requiring the trier of fact [to] examine the facts and circumstances of the case before it, including the circumstances surrounding the sexual conduct, as well as the minor's age, ability, intelligence, and experience ) (internal quotations and citation omitted); Country Mut. Ins. Co. v. Hagan, 298 Ill.App.3d 495, 232 Ill.Dec. 433, 698 N.E.2d 271, 277 (1998) ( Although there are sound reasons for inferring that an adult who abuses a minor intends the injury caused by the abuse, extending a blanket presumption of intent to all minor perpetrators will lead to absurd results in some cases. ); United Servs. Auto Ass'n v. DeValencia, 190 Ariz. 436, 949 P.2d 525, 529 (Ariz.Ct.App.1997) ( Just as our criminal law does not presumptively attribute to minors an adult's understanding of sexual matters, neither should our civil law. Accordingly, we follow those cases that decline to extend the presumption of injurious intent to minors. ). 13

14 intelligence and experience would undoubtedly know that he would and should expect some physical or psychological injury or both, to result from such acts. Id. at 415 (citing Atl. Employers Ins. Co. v. Tots & Toddlers Pre-Sch. Day Care Ctr., Inc., 239 N.J. Super. 276 at 283). Thus, insistence on universal application of the inferred intent rule, without regard to the age of the wrongdoer, substitutes arbitrariness for fidelity to the rationale underlying the rule. Id. at 417. Although it may be understandable for a court to find as a matter of law that an adult intended to harm a child by sexually abusing that child, it is too broad a leap in logic to find that a minor intended to injure another minor by engaging in sexual acts. Id. at (citing Allstate Ins. Co. v. Jack S., 709 F.Supp. 963, 966 (D.Nev.1989). Additionally, the Supreme Court of Michigan held that applying the inferredintent rule to a minor is inappropriate because children, as a group, do not have the capacity to understand the consequences of their sexual acts. Fire Ins. Exch. v. Diehl, 450 Mich. 678, 545 N.W.2d 602 (1996). In Diehl, a child perpetrator requested the victim to perform fellatio and the victim complied. Id. at 681. At the time of the first incident, the child [perpetrator] was about six or seven years old. Id. At the time of the second incident, the child [perpetrator] was nine years old. Id. Neither party disputed that the child perpetrator intended the act; however, the child s testimony indicated that he was unaware that the acts could hurt. Id. Subsequently, the victim s mother brought suit and the insurance company who covered the actor s parents under a homeowner s policy filed action seeking a declaratory judgment that the company was under no duty 14

15 either to defend or indemnify the assailant or the assailant's parents in the action arising from the sexual assaults. Id. at 682. The Court in Diehl addressed the issue of whether the inferred-intent rule must be inferred as a matter of law. Id. at 690. The court held that the inference was inappropriate because it defies the reasonable expectation of the insured parents to suggest that their insurance policies could not cover the harm from certain sexually motivated acts undertaken by their children. Id. The court reasoned that parents and television often have a major effect on children's lives, this child found himself in a position in which he was exposed to media images of sexual conduct, in which he was himself exploring sexual conduct, and yet in which he was uninformed of the potential consequences of such conduct. Id. at 691. Because of a child's developmental status, it is likely that many minors may be exposed to aspects of sexual activity, attempt to experiment with such activity, and yet not have the capacity to understand the consequences of their sexual acts. Id. Ultimately, the court held that the inference of an intent to injure as a matter of law when a child is sexually assaulted should not apply to child assailants. Id. In another factually similar case, the Supreme Court of Vermont held that the inferred-intent rule is inapplicable in cases where it is alleged that a minor has sexually abused another minor. N. Sec. Ins. Co. v. Perron, 172 Vt. 204, 218 (2001). In Perron, Rose Perron ran a daycare business from her house and entered into an agreement with the Dubes family for Rose to perform daycare services of their children. Id. at 206. Subsequently, the Dubes filed suit alleging that Kyle Perron, Rose s seven year old son, 15

16 sexually, physically and emotionally abused the Dubes children. Id. The Perron s insurance carrier filed a declaratory judgment action asking for a ruling that the Perrons' insurance policy does not provide coverage for any of the allegations. Id. at 207. Initially, the trial court held that there was no coverage under the policy for any insured because the inferred intent rule precluded a finding of an occurrence. Id. at 214. The Supreme Court of Vermont reversed the trial court s ruling, holding that the inferred-intent rule does not apply when the alleged perpetrator is a minor, and that whether a minor who molests another minor intends injury should be determined on a case-by-case basis. Id. at 215. The court noted that during the formative years of childhood and adolescence, minors often lack the experience, perspective, and judgment to recognize and avoid choices that could be detrimental to them. Id. at 216 (citation omitted). Thus, if minors cannot appreciate the nature and consequences of, and therefore lack the ability to consent to, sexual activity for purposes of Vermont criminal law, it would be inconsistent to hold that, for purposes of Vermont civil law, when minors engage in sexual acts, as a matter of law, they intend the consequences of their acts. Id. In the case at bar, Appellant relies upon a legal presumption that sexual molestation is an intentional act falling within the intended or expected exclusion in general liability insurance cases. Appellant must rely on this inference, as no evidence was presented to support Appellant s claim that the child in this case intended harm to M.S. For instance, C.P. was not deposed and asked whether he knew his conduct was harmful or if he understood the consequences of his actions. Respondents do not believe 16

17 that such a presumption should be extended to an eleven or twelve year old child. Based upon the similar reasoning in J.A.H., Diehl, H.T., and Perron, Appellant s appeal should be denied as to this point because they have failed to present evidence of the intent of C.P. to cause harm, which is required to establish the Intentional Injury exclusion. Appellant relies on Am. Family Mut. Ins. Co. v. Copeland-Williams for the proposition that sexual molestation is an intentional act falling within the intended or expected exclusion in general liability insurance cases. 941 S.W.2d 625, 628 (Mo.App. E.D. 1997). However, Copeland-Williams involved sexual molestation by an adult perpetrator, thus the court used an inferred-intent standard to determine the perpetrator s intent. As stated above, the rule of presumed intent to cause harm is a sound one, when applied to an adult perpetrator, but loses the basis of its reasoning when applied to a child perpetrator. Even if the presumption did apply to C.P., such that it is inferred that he intended to commit harm to M.S., the underlying claims against Appellant s insureds do not arise out of an intentional act or tort, but arise out of the negligence of the insureds in failing to supervise M.S. Appellant argues that M.S. s negligent supervision claim against the Parnells is excluded because C.P. is an insured under this policy, and if one insured s conduct is excluded, all other insureds are barred from coverage also. However, this argument neglects the well-established doctrine of concurrent proximate causation, which will be discussed at greater length in a succeeding section. 17

18 Finally, there is also an issue as to whether this exclusion applies given the purchase by the Parnells of a daycare rider to their insurance policy. (L.F. 21, 47). This issue will be addressed in detail in the following section. 3) The Abuse exclusion does not apply because it fails to expressly exclude negligent supervision from coverage in the Abuse section, but expressly excludes negligent supervision in its Vehicles, Aircraft, and Watercraft exclusions, and the arising out of language used in the Abuse section is ambiguous as to whether it excludes a negligent supervision claim. Appellant next argues that coverage is excluded under the Abuse exclusion of its insurance contract. (L.F. 32, 58) Appellant recognizes that Respondents claims in the underlying suit are for the negligent supervision of M.S., and attempts to argue that the arising out of language in its policy precludes coverage for these claims. The term arising out of is not defined by the policy. For the reasons set forth below, the arising out of language does not exclude coverage for these claims. The underlying lawsuit alleges that the Parnells accepted custody and control of M.S., and created a relationship sufficient to support a duty of care. (L.F. 17) It was further alleged that the Parnells had a duty to properly supervise M.S. and protect her against all unreasonable harm, and failed said duty by not supervising M.S. while she was at the daycare. (L.F. 17). 18

19 Respondents claims are for negligent supervision of a minor, a separate and distinct tort than that which might be excluded under the Abuse exclusion. Had Appellant intended to exclude the tort of negligent supervision it could have done so by including more specific language in its policy. For example, Appellant s policy contains an exclusion titled 16. Vehicles. In that exclusion, the policy states We will not cover bodily injury or property damage arising out of the ownership, supervision, entrustment, maintenance, operation, use of any type of motor vehicle (L.F. 33, 59) Likewise, exclusion 3. Aircraft states a. We will not cover bodily injury or property damage arising out of the ownership, supervision, entrustment, use, of any type of aircraft. (L.F. 32, 59). Exclusion 19. Watercraft. also states We will not cover bodily injury or property damage arising out of the ownership, supervision, entrustment, use, of a watercraft (L.F. 34, 60). If the language arising out of was sufficient to exclude a negligent supervision claim for each exclusion, then why does Appellant specifically list supervision in its vehicles, aircraft and watercraft exclusion, but not in its Abuse exclusion. Appellant specifically lists supervision in three of its exclusions, but then asks this court to infer the exclusion of a supervision claim under its Abuse exclusion. The lack of a specific reference to supervision under the Abuse exclusion demonstrates the intent of the drafter to not exclude negligent supervision claims under the Abuse clause. At the very least, it demonstrates an ambiguity in the policy, and any ambiguity in the policy must be construed in favor of the insured to allow coverage. See Dutton v. Am. Family Mut. Ins. 19

20 Co., 454 S.W.3d 319, 322 (Mo. 2015) ( In construing the terms of the policy, this Court applies the meaning an ordinary person of average understanding would attach if purchasing insurance and resolves ambiguities in favor of the insured. ) Other courts have upheld sexual abuse exclusions that made specific references to negligent supervision. For example, in Argonaut Great Central Insurance Company v. Valley Village LLC, the court upheld an exclusion that expressly excluded coverage for negligent supervision of employees who engaged in sexual misconduct: Any liability arising out of actual or alleged sexual misconduct, sexual abuse, licentiousness and/or sexual molestation, whether or not expected or intended, including without limitation, claims resulting from or arising out of negligent hiring, supervision, or transfer of, failure to supervise, or failure to dismiss any officer, employee or volunteer worker alleged to have committed any act of sexual misconduct, sexual abuse, licentiousness, or sexual molestation, nor do we have any duty to defend an insured in any suit seeking damages on account of such liability. Argonaut, No. 4:10CV2247 CDP, 2013 WL at *5 (E.D. Mo. Feb. 25, 2013). The court distinguished that policy from another policy that did not include any explicit references excluding claims of negligent hiring and supervision. Id. 20

21 In interpreting an insurance contract, the court should give each provision a reasonable meaning and avoid an interpretation that renders some provisions meaningless. Dibben v. Shelter Ins. Co., 261 S.W.3d 553, 556 (Mo. App. 2008). If Appellant intended that its arising out of the use of the vehicle/aircraft/watercraft language also excluded negligent supervision claims then Appellant would have no need to expressly exclude negligent supervision in those exclusions. So a broad interpretation of arising out of the use of the vehicle/aircraft/watercraft that would encompass a negligent supervision claim would render Appellant s vehicle/aircraft/watercraft exclusions specific reference to supervision meaningless. Thus, the court should give meaning to every word in the policy by concluding that Appellant intended that the language arising out of the use of the vehicle/aircraft/watercraft without a specific reference to negligent supervision was not broad enough to cover negligent supervision claims. While Appellant s Abuse and vehicle/aircraft/watercraft exclusions all use the same arising out of language, only the latter three make any express reference to supervision claims. Of course, Appellant could have included the same reference to supervision in the abuse exclusion but chose not to do so. In construing written documents, the courts have often held that the express mention of one thing implies the exclusion of another. Brown v. Morris, 290 S.W.2d 160, 166 (1956); see e.g. Columbia Mutual Insurance Company v. Neal, 992 S.W.2d 204, (Mo. App. 1999). Given the express reference to supervision in the vehicle/aircraft/watercraft exclusions, the court 21

22 should assume that Appellant made a conscious decision to omit that reference in the abuse exclusion. Thus, the court should conclude that Appellant did not intend for its abuse exclusion to apply to negligent supervision claims. At the very least, however, Appellant s insurance policy is ambiguous on whether or not arising out of is broad enough to include negligent supervision claims. Of course, the court should construe any ambiguity against Appellant and in favor of coverage. Dibben v. Shelter Ins. Co., 261 S.W.3d 553, 556 (Mo. App. 2008). This analysis is consistent with Columbia Mutual Insurance Company v. Neal, 992 S.W.2d 204, (Mo. App. 1999). In that case, the plaintiff sued the insured for negligent supervision. Id. In Neal, however, the homeowners policy excluded coverage for injuries only for negligent entrustment of the vehicle. Id. Based on the policy language that excluded negligent entrustment cases but did not reference negligent supervision cases, the court construed the exclusion clause against the insurance company and concluded that the insurance policy covered the plaintiff s negligent supervision case. Id. It should also be noted that the Parnells purchased a daycare rider to their insurance policy. (L.F. 21, 37, 47, 63). This rider creates additional ambiguity in the Appellant s policy, in that it extends additional coverage without clearly stating what exclusions apply to that additional coverage. Furthermore, that rider does contain a provision that excludes negligent supervision, but only as it applies to certain activities. The rider states in part: 22

23 This coverage does not apply to bodily injury or property damage arising out of the supervision, entrustment, maintenance, use, loading or unloading of: (1) Saddle animals and vehicles for use with them; (2) Any type of aircraft, glider, balloon, parachute or other air conveyance; (3) Any type of motor vehicle or motorized land conveyance; or (4) Watercraft of all types; owned, operated, or hired by or for the Insured or employee or used by the Insured for the purpose of instruction in their use. (L.F. 37, 63) Again, the policy lists a host of activities for which a negligent supervision claim will not be covered, but does not list abuse. The policy is unclear as to whether or not the other exclusions still apply, or if this is now the list of exclusions to the business/daycare rider. This ambiguity must be resolved in favor of the insured and against the insurer. For these reasons, this court should give effect to the different language in the exclusions by concluding that Appellant s abuse exclusion does not exclude negligent supervision claims. 4) The concurrent proximate cause rule applies because the Parnell s negligent supervision is an independent and distinct covered cause of M.S. s injuries. Respondents believe that for the foregoing reasons the exclusions cited by Appellant do not apply. Even if this Court were to determine that one or both of these exclusions do apply, the doctrine of concurrent proximate cause supports the trial court s ruling to be affirmed. 23

24 Appellant, in its brief, alleges that C.P. s sexual conduct was the cause of M.S. s bodily injury. While this is true, it does not change the fact that the Parnells negligent supervision was also a separate and distinct cause of M.S. s injuries. In Missouri, an insurance company is liable for coverage under an insurance policy if an insured cause and an excluded cause constitute concurrent proximate causes of an accident. Gateway Hotel Holding, Inc. v. Lexington Ins. Co., 275 S.W.3d 268, 278 (Mo. App. 2008). Missouri refers to this principle as the concurrent proximate cause doctrine. Id. The courts appear to have many definitions of the concurrent proximate cause doctrine. Respondent s underlying claim meets all of them. a.) Some Missouri case law states that an insured cause is covered under a policy so long as it was a contributing factor to the person s injuries. In Braxton, the court of appeals acknowledged the concurrent proximate cause rule by stating that, [a]lthough no Missouri cases are precisely on point, it is widely accepted that where an insured risk and an excluded risk constitute concurrent proximate causes of an accident, a liability insurer is liable so long as one of the causes is covered by the policy. Braxton v. United States Fire Ins. Co., 651 S.W.2d 616, 619 (Mo. App. 1983). In support of that rule, the court cited a California case, State Farm Mutual Auto. Insurance Company. v. Partridge, 514 P.2d 123, (1973). In Partridge, the court conceded that the insured cause and excluded cause were joint causes of the victim s injuries and that the injury would not have occurred but for both causes. State Farm Mut. Auto. Ins. Co. v. Partridge, 514 P.2d 123, (1973). 24

25 Nevertheless, the court held that the concurrent proximate cause doctrine provided coverage for the injury because the insured cause contributed to the injury: The Partridge court questioned whether either of the two causes in that case could be properly characterized as the prime, moving or efficient cause of the accident, but believed that coverage under a liability insurance policy is equally available to an insured whenever an insured risk constitutes simply a concurrent proximate cause of the injuries. That multiple causes may have effectuated the loss does not negate any single cause; that multiple acts concurred in the infliction of injury does not nullify any single contributory act. Id. Based on Partridge and several other state court cases, the Braxton court determined that the concurrent proximate cause doctrine provided coverage because the insured's negligence (the insured cause) was a factor in causing the plaintiff s injury even though the insurance policy excluded another concurrent cause. Braxton, 651 S.W.2d at 619. The Braxton court s definition of the concurrent proximate cause doctrine is consistent with the Missouri Supreme Court s definition of concurrent causes. Id. The Missouri Supreme Court has defined concurrent proximate causes as two causes that cause an injury that would have not resulted in the absence of either cause: Where several causes producing an injury are concurrent and each is an efficient cause without which the injury would not have happened, the injury may be attributed to all or any of the causes, and recovery may be had against either or all of the responsible persons, although one of them was more culpable, and the duty owed by them to the 25

26 injured person was not the same. And concurrent causes are defined to be causes acting contemporaneously and which together cause the injury, which injury would not have resulted in the absence of either Byars v. St. Louis Pub. Serv. Co., 66 S.W.2d 894, 900 (Mo. 1933) (citation omitted). Respondents in the case at bar meet this test because the cause of action asserted by Respondents is for the negligent supervision of a minor. b.) Some Missouri case law states that an insured cause is covered under a policy so long as the insured cause is independent and distinct from the excluded cause. Other courts have held that an insured cause and an excluded cause are concurrent proximate causes when the two causes are independent and distinct. In a context of negligent supervision claim, the courts determine the applicability of the concurrent proximate cause rule by determining whether or not the plaintiff s negligent supervision claim alleges that the defendant had a duty to control the instrumentality that caused the plaintiff s harm. Gateway Hotel Holdings, Inc. v. Lexington Ins. Co., 275 S.W.3d 268, 280 (Mo.App. E.D. 2008) (interpreting Centermark Properties, Inc. v. Home Indemnification Co., 897 S.W.2d 98 (Mo. App. 1995)). If the plaintiff s negligent supervision claim depends on the defendant having a duty to control the instrumentality that caused the harm then the insured cause and the excluded cause are not independent 26

27 and distinct. Id. But, if the plaintiff s negligent supervision claim does not depend on whether or not the defendant controlled or should have controlled the instrumentality then the insured cause and excluded cause are independent and distinct. Id. The central issue in a negligent supervision of a minor claim is the defendant s obligation and ability to supervise and control the child rather than the instrumentality that caused the harm. O.L. v. R.L., 62 S.W.3d 469, 474 (Mo. App. 2001). In this sense, negligent supervision of a minor is the exact opposite of the doctrine of negligent supervision of an adult, which emphasizes the supervisor's (whether employer, entrustor, etc.) right and ability to control the activity of the wrongdoer rather than to control the injured victim. Id. Negligent supervision of a minor, therefore, is a concurrent cause of a minor s injuries regardless of the instrumentality that actually caused the harm. American Family Mut. Ins. Co. v. Co Fat Le, 439 F.3d 436, 441 (8th Cir. 2006). Respondents argument is consistent with two cases interpreting Missouri law on the issue of negligent supervision, which leads to sex abuse: Intermed Ins. v. Hill, D.O., 367 S.W.3d 84, 86 (Mo. App. 2012) and St. Paul Fire & Marine Ins. Co. v. Schrum, 149 F.3d 878, 879 (8th Cir. 1998). In Intermed, the victim sued a physician s assistant for sexual assault and the hospital for negligent hiring, supervision, and retention of the assistant. 367 S.W.3d at 86. The insurance company filed a declaratory judgment petition in which it sought a declaration that the insurance policy s sexual assault exclusion, violation of law exclusion, and intentional action exclusion excluded coverage 27

28 for any judgment entered for the victim. Id. at 87. The circuit court entered judgment for the insurance company on the basis of these exclusions. Id. at On appeal, the court reversed the circuit court s judgment because the insurance policy covered the insured s actions under the concurrent proximate cause doctrine. Id. at 89. The court first noted that the victim s injuries were proximately caused by the hospital s negligent supervision of the assistant. Id. at 90. The court found that as a matter of law the hospital s negligent supervision was independent and distinct from the assistant s sexual assault. Id. Thus, the court concluded that the victim s claim against the hospital was covered under the insurance policy even though the insurance policy excluded injuries arising from sexual assault. Id. at Similarly, in St. Paul Fire & Marine Ins. Co. v. Schrum, the 8 th Circuit Court of Appeals held that a similar exclusion for sexual molestation did not bar coverage for the plaintiff s judgment for negligent supervision. 149 F.3d 878, 879 (8 th Cir. 1998). In Schrum, the plaintiff filed a petition in which they claimed that the insurance company s insured s negligent supervision allowed a third party to abuse them sexually. Id. The insurance company filed a declaratory judgment petition in federal court in which it argued that the insurance policy s exclusion, which excluded coverage for damages arising out of any sexual act, barred coverage for the plaintiff s claims of negligent supervision. Id. at The insurance company argued that the sexual act exclusion applied because the third party s act of sexual molestation was an essential element of the plaintiff s negligent 28

29 supervision claims. Id. at The 8 th Circuit Court of Appeals noted that Missouri law clearly holds that the central issue in a negligent supervision of a minor case is the defendant s obligation and ability to supervise and control the child, not the defendant s obligation or ability to control instrumentality that caused the harm. Id. Under Missouri law, the instrumentality that caused the harm is merely incidental to the defendant s negligent supervision of the minor. Id. Thus, the 8 th Circuit Court of Appeals concluded that the insurance company s sexual act exclusion did not bar coverage for the plaintiff s negligent supervision claim because the third party s act of sexual molestation was merely incidental to the plaintiff s claims of negligent supervision. Id. The 8 th Circuit Court of Appeals, therefore, concluded that the plaintiff s injuries did not arise out of the sexual act. Id. These cases are consistent with other Missouri cases interpreting the concurrent proximate cause doctrine in other issues. For example, in Neal, the court concluded that the concurrent proximate cause doctrine applied to a plaintiff s claim for negligent supervision of a minor. Neal, 992 S.W.2d at 211. In Neal, the decedent was killed when a person backed a vehicle over him. Id. The decedent s grandparent owned the vehicle. The decedent s mother filed a wrongful death petition against the grandparents on a negligent supervision theory. Id. The insurance company filed a declaratory judgment petition in which it claimed that the insurance policy s motor vehicle exclusion, which excluded coverage for bodily injuries arising out of the ownership, maintenance, use, 29

30 loading, or unloading of motor vehicles owned or operated by an insured, barred coverage for the mother s lawsuit. Id. at On appeal, the court of appeals held that the exclusion did not apply because the mother s negligent supervision claim was a negligent supervision claim of a minor and, thus, centered on the grandparent s obligation and ability to control and supervise the decedent. Id. at The court held that the mother s negligent supervision claim did not center on the grandparent s obligation and ability to control the vehicle or driver of the vehicle. Thus, the driver s use of the grandparent s vehicle was incidental to the mother s claim of negligent supervision of the minor. Id. The court, therefore, held that the insurance policy did not exclude coverage for plaintiff s claim of negligent supervision. Id. These cases establish that the central issue in a negligent supervision of a minor claim is the defendant s obligation and ability to supervise and control the child, and the central issue is not the defendant s obligation or ability to control instrumentality that caused the harm. O.L. v. R.L., 62 S.W.3d at 474. Under both Intermed and Shrum, negligent supervision of a minor, therefore, is a concurrent cause of a minor s injuries regardless of the instrumentality that actually caused the harm. Intermed, 367 S.W.3d at 86; Schrum, 149 F.3d at 879; see also Co Fat Le, 439 F.3d at 441. In applying these principles to this case, this Court should conclude that M.S. s claim against the Parnells is focused on the Parnell s obligation and ability to supervise M.S. Thus, M.S. s negligent supervision claim did not depend on the Parnell s having a 30

31 duty to control the instrumentality (C.P.) that caused the harm. Under the concurrent proximate cause doctrine, therefore, the insured cause (the Parnell s lack of supervision of M.S.) and the excluded cause (the conduct of C.P.) are independent and distinct. Intermed, 367 S.W.3d at 90; Schrum, 149 F.3d at 879; see also Gateway, 275 S.W.3d at 278; Neal, 992 S.W.2d at 205. Under Missouri law, Appellant insurer is liable for coverage under the policy because, at the very least, the Parnells negligent supervision constitutes a concurrent proximate cause of M.S. s injuries. 31

32 CONCLUSION For the foregoing reasons, Respondents respectfully requests that this Court affirm the decision of the trial court, affirming the ruling that the homeowners policies issued by Appellant (Policy 24-RN and subsequent Policy No. 24-RN ) do provide coverage for the claims of negligent supervision asserted against the Parnells in Case No. 12BACV03350 and that Appellant is obligated to defend and indemnify the Parnells as to any judgment entered or settlement reached in the claims against them for negligent supervision asserted by M.S., a minor, by and through her next friend, K.L. Respectfully submitted, /s/ Jonathan D. McQuilkin Jonathan D. McQuilkin MO Bar No East Ash Street Columbia, MO Phone: (573) Fax: (573) jmcquilkin@engandwoods.com Attorney for Respondents K.L., and M.S., a minor, by and through her natural mother and Next Friend, K.L. 32

33 IN THE MISSOURI COURT OF APPEALS WESTERN DISTRICT American Family Mutual Insurance Company ) ) Appellant, ) ) v. ) ) Stephen Parnell, et al. ) ) Respondents. ) CERTIFICATE PURSUANT TO RULE Respondents K.L., and M.S., a minor, by and through her natural mother and Next Friend, K.L., by and through their attorney, Jonathan D. McQuilkin, certifies to the Court that the foregoing brief of Respondent complies with the limitations contained in Missouri Rule of Civil Procedure 84.06(b); that the number of words in the brief is 7,653; that all contentions and arguments contained in the Brief of Respondents are not presented for improper purpose and are warranted by existing law; and that all allegations and factual contentions in the Brief of Respondent have evidentiary support. Respectfully submitted, 33 /s/ Jonathan D. McQuilkin Jonathan D. McQuilkin MO Bar No East Ash Street Columbia, MO Phone: (573) Fax: (573) jmcquilkin@engandwoods.com Attorney for Respondents

34 Certificate of Service K.L., and M.S., a minor, by and through her natural mother and Next Friend, K.L. The undersigned hereby certifies that a copy of the foregoing was submitted to the court and counsel electronically this 22 nd day of July 2015, and that paper copies will follow pursuant to local rule. To: Susan Ford Robertson 1903 Wyandotte, Suite 200 Kansas City, MO /s/ Jonathan D. McQuilkin Jonathan D. McQuilkin Attorney for Respondents K.L., and M.S., a minor, by and through her natural mother and Next Friend, K.L. 34