Amos ex rel. Amos v. Campbell

• Decision Date: 11 May 1999
• Docket Number: No. CX-98-1921,CX-98-1921
• Citation: 593 N.W.2d 263
• Parties: 134 Ed. Law Rep. 580 Robert AMOS, a minor, by his mother and natural guardian, Patricia AMOS, and Patricia Amos, individually, Appellants, v. Torrence Wendell CAMPBELL, et al., Defendants, and National Union Fire Insurance Company of Pittsburgh, PA, garnishee, Respondent.
• Court: Minnesota Court of Appeals

Page 263

593 N.W.2d 263

134 Ed. Law Rep. 580

Robert AMOS, a minor, by his mother and natural guardian, Patricia AMOS, and Patricia Amos, individually, Appellants, v. Torrence Wendell CAMPBELL, et al., Defendants, and National Union Fire Insurance Company of Pittsburgh, PA, garnishee, Respondent.

No. CX-98-1921.

Court of Appeals of Minnesota.

May 11, 1999.

Syllabus by the Court

Claims based on a sexual assault by a school district employee were properly excluded Richard W. Hechter, Thill Law Firm, P.A., St. Louis Park, MN (for appellants)

from coverage under an insurance policy that denied coverage for claims arising out of either an assault or battery or bodily injury.

William M. Hart, Elizabeth A. Foley, Meagher & Geer, P.L.L.P., Minneapolis, MN (for respondent)

Considered and decided by AMUNDSON, Presiding Judge, CRIPPEN, Judge, and ANDERSON, Judge.

OPINION

G. BARRY ANDERSON, Judge.

Appellants challenge the district court judgment awarding to respondent insurance carrier declaratory relief based on policy exclusions. Because the district court correctly ruled that the policy's assault or battery exclusion barred coverage, we affirm.

FACTS

The present action was commenced to enforce a Miller-Shugart style agreement. The material facts are undisputed.

In 1990, the Minneapolis Public School District (school district) hired teacher Torrence Wendell Campbell. After further investigation, conducted from the time Campbell began work until an earlier lawsuit, it was discovered that Campbell's credentials and history, less than exemplary, included a conviction for contributing to the delinquency of a minor, suspension from a previous teaching position, and involvement in a homosexual stabbing. After employment by the school district, Campbell was transferred from school to school because of his abusive conduct towards students and teachers, which included an assault on a third-grade special-education student for which he was charged with fifth-degree assault. Campbell was assessed only one- and three-day suspensions as an immediate response to his prior behavior.

In 1991, Campbell was placed at Morris Park Elementary School. In late 1991, Campbell sexually assaulted appellant Robert Amos. In 1993, Campbell was charged with three counts of criminal sexual conduct, which included his assault on appellant. In December 1993, Campbell pleaded guilty to one count of second-degree criminal sexual conduct.

In July 1993, Robert Amos and his mother, appellant Patricia Amos, both as guardian and individually, commenced a lawsuit against Campbell, the school's principal, and the school district. Appellants asserted, against the district, claims for negligent hiring, negligent supervision, negligent retention, and violation of constitutional rights, all of which resulted in bodily injuries and emotional distress. The district tendered its defense to its insurer, respondent National Union Fire Insurance Company. Respondent refused the tender. In July 1995, the district court approved a Miller v. Shugart type settlement between the school district and appellants for $250,000.

In September 1997, appellants commenced the present garnishment action against respondent. Respondent moved for summary judgment, which was granted based on exclusions in the policy.

The school district's errors and omissions insurance policy covered

any Wrongful Act * * * of the Insured or of any other person for whose actions the Insured is legally responsible, but only if such Wrongful Act first occurs * * * in the performance of duties for the School District.

A "wrongful act" is defined in the policy as "any actual or alleged breach of duty, neglect, error, misstatement, misleading statement or omission committed solely in the performance of duties for the School District." But the policy excluded the following claims:

(a) to any claim involving allegations of * * * criminal acts or omissions * * *;

(b) to any claims arising out of * * * assault or battery * * *;

(c) to any claim arising out of bodily injury * * * Based on the "assault or battery" exclusion and the fact that all of appellants' claims were based on an assault, the district court dismissed appellants' garnishment action with prejudice and on the merits.

ISSUE

Do respondent's insurance policy exclusions bar coverage for the employee's assault?

ANALYSIS

On appeal from summary judgment, a reviewing court must determine whether the district court erred in its application of the law and whether there are any genuine issues of material fact. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). In so doing, a reviewing court views "the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993).

This case focuses on the interpretation of an insurance policy. Under Minnesota law, on established facts, insurance 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); Haarstad v. Graff, 517 N.W.2d 582, 584 (Minn.1994). This court is not bound by a district court's decision on a question of law. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn.1984).

The analysis of the parties' arguments requires this court to begin with a review of their agreement - the insurance policy. "An insurance policy provision is to be interpreted according to both its plain, ordinary meaning and what a reasonable person in the position of the insured would have understood it to mean." Retail Sys., Inc. v. CNA Ins. Cos., 469 N.W.2d 735, 737 (Minn.App.1991) (citing Farmers Home Mut. Ins. Co. v. Lill, 332 N.W.2d 635, 637 (Minn.1983)), review denied (Minn. Aug. 2, 1991). Unambiguous language in an insurance policy must be accorded its plain and ordinary meaning. SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 311 (Minn.1995). Moreover, a court "must not create an ambiguity where none exists in order to afford coverage to the insured." Progressive Cas. Ins. Co. v. Metcalf, 501 N.W.2d 690, 692 (Minn.App.1993).

Appellants challenge the district court's order as to the application of the policy's exclusions. The burden is on the insurer to establish the applicability of an exclusion. SCSC Corp., 536 N.W.2d at 311-14. Exclusions are strictly interpreted against the insurer. Hennings v. State Farm Fire & Cas. Co., 438 N.W.2d 680, 683 (Minn.App.1989), review denied (Minn. June 9, 1989). If the insurer demonstrates the applicability of an exclusion, then the insured bears the burden of proving an exception to the exclusion. SCSC, 536 N.W.2d at 314. The reasoning is that the exception "restores" coverage, and the insured bears the ultimate burden of proving coverage. Id.

The policy issued by respondent provided basic errors and omissions coverage for a "wrongful act" of the school district. The term "wrongful act" has ordinarily been understood to encompass intentional as well as negligent misconduct. Independent Sch. Dist. No. 697, Eveleth v. St. Paul Fire & Marine Ins. Co., 515 N.W.2d 576, 579 (Minn.1994) (citing Black's Law Dictionary 1612 (6th ed.1990)). The policy at issue similarly defined a wrongful act as "any actual or alleged breach of duty, neglect, error * * * in the performance of duties for the School District."

Appellants argue that, because the general intent of the policy was to provide coverage for wrongful acts of administrative employees of the school district, including the superintendent, assistant superintendent, and principals, this court should focus on the conduct of such employees and how the exclusions apply to that conduct. Appellants reason that respondent should provide coverage because the school district's administrative employees were negligent in both hiring and retaining the assailant, Campbell, who was not a covered employee under the disputed policy. Appellants argue that, under the policy, the exclusions do not apply, because the negligent hiring and retention did not result in either an assault or battery or bodily injury.

Appellants' suggested analysis is without support in Minnesota law. While this court has explained that when reviewing an insurance policy the court's function is to ascertain and give effect to the intentions of the parties, Kabanuk Diversified Invs., Inc. v. Credit Gen. Ins. Co., 553 N.W.2d 65, 70 (Minn.App.1996) (deferring to assault or battery exclusion), review denied (Minn. Oct. 28, 1996), we have also reiterated that unambiguous language must be given its plain and ordinary meaning. Metcalf, 501 N.W.2d at 692. Respondent's policy terms, particularly the exclusions, have received a consistent and unambiguous reading by Minnesota courts confirming that summary judgment for respondent was properly granted.

The district court concluded that coverage did not exist for appellants' settlement because of the policy's exclusions. The policy excluded coverage for any claims "arising out of * * * assault or battery," and "arising out of bodily injury." Despite appellants' attempt to focus this case on the alleged negligence of the school district, the policy's "arising of out" language requires this court to instead focus on the direct cause of appellants' original claim - the sexual assault.

In earlier cases interpreting the meaning of "arising out of," the supreme court looked for an "actual or necessary causal connection" between that which is covered and the injury. Engeldinger v. State Auto. & Cas. Underwriters, 306 Minn. 202, 207, 236 N.W.2d 596, 599 (1975) (interpreting the phrase as a coverage trigger under an automobile insurance policy). In concluding that courts must determine coverage "upon the particular facts presented," the Engeldinger court focused on the "primary negligence" to determine whether a policy's "arising out of" language provided coverage. Id. at 207-08, 236 N.W.2d at 599-600. Appellants ask this...