Northern Sec. Ins. Co. v. Perron, No. 99-109.

Docket NºNo. 99-109.
Citation777 A.2d 151
Case DateMay 04, 2001
CourtUnited States State Supreme Court of Vermont

777 A.2d 151

NORTHERN SECURITY INSURANCE CO.
v.
Rose, Steven & Kyle PERRON, Susan, Gregory, Timothy & Lindsay Dube, Jesse Durenleau, Susan Durenleau Stanhope, Helene & Augustin Parah, Jr

No. 99-109.

Supreme Court of Vermont.

May 4, 2001.


777 A.2d 152
Keith Aten of Downs Rachlin & Martin, St. Johnsbury, for Plaintiff-Appellee

Christina Reiss, R. Jeffrey Behm and Michael Drescher of Sheehey Furlong Rendall & Behm, P.C., Burlington, for Defendants-Appellants Dube.

Martin A. Maley and Kathleen A. Yarnell of Kissane Associates, St. Albans, for Defendants-Appellants Stanhope, Durenleau and Parah.

Present: AMESTOY, C.J., MORSE, JOHNSON and SKOGLUND, JJ., and JENKINS, Supr. J., Specially Assigned.

SKOGLUND, J.

In this declaratory judgment action, the Washington Superior Court granted summary judgment in favor of Northern Security Insurance Company (Northern Security), holding that Northern Security had no duty to defend or indemnify Rose, Steven, and Kyle Perron against claims brought by the other named defendants. The claims in the underlying action alleged that Kyle Perron, son of Rose and Steven Perron, sexually, physically and emotionally abused Timothy and Lindsay Dube (son

777 A.2d 153
and daughter of Susan and Gregory Dube), Jesse Durenleau (son of Susan Durenleau Stanhope), and Augustin Parah, Jr., son of Helene Parah. We affirm in part, reverse in part, and remand

For purposes of this appeal, the relevant facts are not in dispute. Between 1984 and 1995, Rose Perron ran a day care business from her house. In May 1991, Susan and Gregory Dube entered into a contract with Rose pursuant to which, in exchange for compensation, Rose agreed to provide day care services for the Dubes' children. Timothy, then three years old, and Lindsay, then ten months old. The Perrons' son, Kyle (D.O.B.7/21/83), was seven years old at the time.

In 1996, Susan, Gregory, Timothy, and Lindsay Dube filed suit in Franklin Superior Court against Rose, Steven, and Kyle Perron, alleging: negligent supervision of Kyle against Rose and Steven; liability under 15 V.S.A. § 901 (parents' liability for damages); intentional infliction of emotional distress (IIED) against Rose and Steven; IIED against Kyle; and breach of contract against Rose, all based on alleged abuse of Timothy and Lindsay by Kyle while in the Perrons' day care.

Prior to May 1995, Jesse Durenleau and Augustin Parah, Jr. were, on several occasions, invited to play at the Perrons' house. In 1996, Susan Durenleau Stanhope and Jesse Durenleau filed suit in Franklin Superior Court against Rose, Steven, and Kyle Perron, based on Kyle's alleged sexual assault and abuse of Jesse. The Durenleaus'1 complaint presented counts of negligent supervision against Rose and Steven; sexual assault and false imprisonment against Kyle; IIED against Kyle; and negligence against Kyle. In 1997, Helene Parah and Augustin Parah, Jr. filed suit in Franklin Superior Court against Rose, Steven, and Kyle Perron, based on Kyle's alleged sexual assault and abuse of Augustin. Their complaint presented the same four counts as the Durenleaus' complaint, except that the named victim is Augustin Parah.

Northern Security, the Perrons' homeowner's insurance carrier, filed a declaratory judgment action in Washington Superior Court,2 naming all of the above-mentioned parties as defendants, and asking for a ruling that the Perrons' insurance policy does not provide coverage for any of the allegations. Northern Security raised five defenses to coverage applicable to all three complaints: (1) none of the counts allege an "occurrence," and only occurrences are covered under the policy; (2) the underlying lawsuits allege injuries "expected or intended" by the insureds, and injuries that are "expected or intended" by the insured are not covered under the policy; (3) Steven and Rose breached the terms of the insurance contract by misrepresenting a material fact and making a false statement in the policy application, and thus the policy is unenforceable; (4) Rose breached the insurance contract by failing to timely notify Northern Security of the conduct alleged in the underlying complaints, and therefore the policy is unenforceable; and (5) coverage for the underlying complaints would violate public policy, as the injuries were based on Kyle's intentional acts, and it is against public policy to provide insurance coverage for an insured's own intentional conduct. Further, Northern Security

777 A.2d 154
raised two defenses to coverage applicable solely to the Dubes' complaint: (1) the allegations fall within the policy's business-pursuits exclusion; and (2) the complaint alleges liability assumed by the Perrons under a contract, which is excluded from coverage under the policy

Northern Security moved for partial summary judgment against the Dubes with regard to its defense concerning the business-pursuits exclusion. The Dubes filed an opposition and a cross-motion for summary judgment as to Northern Security's six remaining defenses. The Parahs and Durenleaus each filed a motion for summary judgment as to all of Northern Security's defenses except those applicable solely to the Dubes.

The court found in favor of Northern Security on summary judgment, concluding that Northern Security had no duty to defend or indemnify the Perrons against any of the allegations because the complaints did not allege an "occurrence" under the policy. In deciding the issue, the court held that the inferred-intent rule — under which intent to harm is implied in cases involving sexual abuse of a minor — applied. Therefore, the court concluded, because injuries that are expected or intended cannot be the result of an "occurrence" as defined in the policy, and because all of the claimed injuries stemmed from Kyle's alleged sexual abuse for which intent to harm would be inferred, there was no coverage under the policy for any of the insureds. The court further held that the claims of false imprisonment and assault were excluded by policy language excluding coverage for personal injury "caused by a violation of a penal law committed by an insured." Finally, with regard to the Dubes' complaint, the court concluded that, because both Dube children were at the Perrons' home for day care purposes, and because day care is a business pursuit, the policy's business-pursuits exclusion applied, and, for that independent reason, there was no coverage for any of the allegations in the Dubes' complaint. This appeal followed.

In reviewing a grant or denial of summary judgment, we apply the same standard as the trial court. "Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law, after giving the benefit of all reasonable doubts and inferences to the nonmoving party." City of Burlington v. National Union Fire Ins. Co., 163 Vt. 124, 127, 655 A.2d 719, 721 (1994). Because we decide that, for some of the claims, there is a fact question upon which coverage under the policy may depend, the grant of summary judgment on those claims was improper.

I. Occurrence

As familiar as is the standard for summary judgment, so, too, are the basic rules concerning construction of insurance policy provisions. "An insurance policy must be construed according to its terms and the evident intent of the parties as expressed in the policy language . . . . Disputed terms should be read according to their plain, ordinary and popular meaning." National Union Fire Ins. Co., 163 Vt. at 127-28, 655 A.2d at 721. However, "where a disputed term in an insurance policy is susceptible to two or more reasonable interpretations, the ambiguity must be resolved in favor of the insured." City of Burlington v. Associated Elec. & Gas Ins. Servs., Ltd., 164 Vt. 218, 221, 669 A.2d 1181, 1183 (1995). The insurer bears the burden of showing that the claims are excluded by the policy. See City of Burlington v. Associated Elec. & Gas Ins. Servs., Ltd., 170 Vt. 358, 364, 751 A.2d 284, 289 (2000).

777 A.2d 155
In determining whether Northern Security has a duty to defend the Perrons, we must "compar[e] the allegations in the complaint of the underlying suit to the terms of coverage in the policy." National Union Fire Ins. Co., 163 Vt. at 127, 655 A.2d at 721. "If any claims are potentially covered by the policy, the insurer has a duty to defend . . . . Conversely, where there is no possibility that the insurer might be obligated to indemnify, there is no duty to defend." Id.

The policy in this case provides personal liability coverage for claims or lawsuits "brought against an insured for damages because of bodily injury ... caused by an occurrence."3 "Occurrence" is defined, in relevant part, as:

an accident, including exposure to conditions, which results, during the policy period, in:
a. bodily injury.

Section II of the policy, entitled Exclusions, states, in pertinent part:

1. Coverage E — Personal Liability and Coverage F — Medical Payments to Others do not apply to bodily injury or property damage:
a. which is expected or intended by the insured.

[3] As noted, in this declaratory judgment action, Northern Security argues that there is no coverage under the policy for any of the claims made, either because of the language of the policy itself or because of an exclusionary clause in the policy.4

Coverage under the policy is triggered by an "occurrence." If a claim is made or a suit is brought against an insured for damages because of bodily injury that is caused by an occurrence, there is coverage under the policy, unless an exclusion applies. The insurer does not deny that in the underlying action the plaintiffs have alleged that the children sustained "bodily injury." Therefore, the threshold issue of coverage in this proceeding is whether the assaults that allegedly caused the injury were an "occurrence."

A bit of history is enlightening. Prior to 1966, standard liability policy...

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44 practice notes
  • BP America, Inc. v. State Auto Property & Casualty Insurance Company, 2005 OK 65 (OK 9/20/2005), No. 102299
    • United States
    • Supreme Court of Oklahoma
    • 20 Septiembre 2005
    ...Stearns-Roger Corp. v. Hartford Accident & Indemnity Co., see note 17, supra.. 21. Northern Security Ins. Co. v. Perron, 172 Vt. 204, 777 A.2d 151, 164 (2001). 22. VBF, Inc. v. Chubb Group of Ins. Cos., see note 2; Max True Plastering Co. v. United States Fidelity & Guaranty, see note 2, su......
  • Safeco Ins. Co. of Am. v. White, No. 2008-0304.
    • United States
    • United States State Supreme Court of Ohio
    • 4 Agosto 2009
    ...also Tri-S Corp. v. W. World Ins. Co. (2006), 110 Hawai`i 473, 492, 135 P.3d 82; N. Sec. Ins. Co. v. Perron (2001), 172 Vt. 204, 219-222, 777 A.2d 151; Morgan v. Cincinnati Ins. Co. (1981), 411 Mich. 267, 307 N.W.2d {¶ 62} The phrase "any insured," however, makes the exclusion applicable to......
  • State Farm Fire & Cas. Co. v. Tully, No. 19600.
    • United States
    • Supreme Court of Connecticut
    • 23 Agosto 2016
    ...respect to whether inferred intent rule applies when victim is adult); see also Northern Security Ins. Co. v. Perron, 172 Vt. 204, 214–15, 777 A.2d 151 (2001) (discussing split of authority with respect to whether inferred intent rule should apply when perpetrator is minor, rather than adul......
  • Bp America v. State Auto Property & Cas., No. 102,299.
    • United States
    • Supreme Court of Oklahoma
    • 20 Septiembre 2005
    ...Stearns-Roger Corp. v. Hartford Accident & Indemnity Co., see note 17, supra. 21. Northern Security Ins. Co. v. Perron, 172 Vt. 204, 777 A.2d 151, 164 22. VBF, Inc. v. Chubb Group of Ins. Cos., see note 2; Max True Plastering Co. v. United States Fidelity & Guaranty, see note 2, supra. 23. ......
  • Request a trial to view additional results
44 cases
  • BP America, Inc. v. State Auto Property & Casualty Insurance Company, 2005 OK 65 (OK 9/20/2005), No. 102299
    • United States
    • Supreme Court of Oklahoma
    • 20 Septiembre 2005
    ...Stearns-Roger Corp. v. Hartford Accident & Indemnity Co., see note 17, supra.. 21. Northern Security Ins. Co. v. Perron, 172 Vt. 204, 777 A.2d 151, 164 (2001). 22. VBF, Inc. v. Chubb Group of Ins. Cos., see note 2; Max True Plastering Co. v. United States Fidelity & Guaranty, see note 2, su......
  • Safeco Ins. Co. of Am. v. White, No. 2008-0304.
    • United States
    • United States State Supreme Court of Ohio
    • 4 Agosto 2009
    ...also Tri-S Corp. v. W. World Ins. Co. (2006), 110 Hawai`i 473, 492, 135 P.3d 82; N. Sec. Ins. Co. v. Perron (2001), 172 Vt. 204, 219-222, 777 A.2d 151; Morgan v. Cincinnati Ins. Co. (1981), 411 Mich. 267, 307 N.W.2d {¶ 62} The phrase "any insured," however, makes the exclusion applicable to......
  • State Farm Fire & Cas. Co. v. Tully, No. 19600.
    • United States
    • Supreme Court of Connecticut
    • 23 Agosto 2016
    ...respect to whether inferred intent rule applies when victim is adult); see also Northern Security Ins. Co. v. Perron, 172 Vt. 204, 214–15, 777 A.2d 151 (2001) (discussing split of authority with respect to whether inferred intent rule should apply when perpetrator is minor, rather than adul......
  • Bp America v. State Auto Property & Cas., No. 102,299.
    • United States
    • Supreme Court of Oklahoma
    • 20 Septiembre 2005
    ...Stearns-Roger Corp. v. Hartford Accident & Indemnity Co., see note 17, supra. 21. Northern Security Ins. Co. v. Perron, 172 Vt. 204, 777 A.2d 151, 164 22. VBF, Inc. v. Chubb Group of Ins. Cos., see note 2; Max True Plastering Co. v. United States Fidelity & Guaranty, see note 2, supra. 23. ......
  • Request a trial to view additional results

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