May 23, 2016

 The homeowners insurer filed a petition against the insured daycare providers, the child, and the child's parents for a declaratory judgment that the policy excluded coverage for the insureds' liability for negligent supervision of the child allegedly subjected to sexual contact by the insured's eleven-year-old son. This case is American Family Mutual Insurance Company v. Parnell, 478 S.W.3d 489 (2015).

 The Parnells operated a daycare business in their home. A seven year old in their care was allegedly subjected to intentional unwanted sexual contact by the Parnells' son on multiple occasions. The mother of the seven year old filed a lawsuit against the Parnells for negligent supervision, alleging that the Parnells breached the duty to use ordinary care to protect the child against unreasonable risks of harm and this breach was the proximate cause of the child's injuries.

 The Parnells requested the homeowners insurer, American Family Mutual, to provide defense and indemnification. The insurer responded by filing a declaratory judgment action, asserting that the intentional injury and abuse exclusion excluded coverage. The Circuit Court entered summary judgment against the insurer and the insurer appealed.

 The Missouri Court of Appeals noted that in its sole point on appeal, American Family contended that the intentional injury and abuse exclusion excluded coverage and the concurrent proximate cause rule does not apply. The court said that it would address only whether the concurrent proximate cause rule applies since it is dispositive of the case. The court found that the concurrent proximate cause rule states that an insurance policy will be construed to provide coverage where an injury was proximately caused by two events—even if one of these events was subject to an exclusion—if the differing allegations of causation are independent and distinct. In other words, for the rule to apply, the injury must have resulted from a covered cause that is truly independent and distinct from the excluded cause. So, if the excluded cause is merely incidental to the covered cause, that is, if the covered cause could occur without the excluded cause, then the two causes are independent and distinct and the concurrent proximate cause rule applies.

 The court said that the distinction between an excluded cause that is merely incidental to the negligence claim and an excluded cause that is essential to the negligence claim is readily apparent in claims involving the negligent supervision of a minor, which is the claim asserted against the Parnells. To establish a claim for negligent supervision of a minor, a plaintiff must plead and prove the following: the defendant had a legal duty to use ordinary care to protect the minor against unreasonable risks of harm; the defendant breached that duty; proximate cause between the breach and the resulting injury; and, actual damages. The gravamen of the cause is the supervisor's obligation and ability to control the child and not the supervisor's control over the instrumentality that causes the harm.

 In this instance, the court found that the Parnells' obligation and ability to supervise and control the child are the decisive factors in the negligent supervision claim against them. That the child's harm was caused by the alleged intentional, unwanted sexual contact by the son of the Parnells is only incidental to the claim. The claim for negligent supervision of a minor is unrelated to and can occur without intentional injury or sexual abuse. Thus, the claim of negligent supervision is a separate and non-excluded cause of the child's injuries, apart from the intentional sexual abuse.

 The court ruled that the exclusion does not apply and American Family is obligated to defend and indemnify the Parnells. The judgment of the circuit court was affirmed.

 Editor's Note: The Missouri Court of Appeals, Western District, holds that the concurrent proximate cause rule applied to afford coverage to the insureds despite the intentional injury and abuse exclusion. The court found an independent and distinct cause of injury existed between the claim of negligent supervision of a minor and the physical abuse of the child.