Tara N. by Kummer v. Economy Fire & Cas. Ins. Co.

Decision Date27 September 1995
Docket NumberNo. 94-3131,94-3131
Citation540 N.W.2d 26,197 Wis.2d 77
PartiesTARA N., by her Guardian ad Litem, Lee KUMMER, and Donna N., Plaintiffs-Appellants, d v. ECONOMY FIRE & CASUALTY INSURANCE COMPANY and David and Mary N., Defendants-Respondents.
CourtWisconsin Court of Appeals



During a divorce action between her parents, Tara N., a minor, was sexually assaulted by her father during a visitation period at the home of the father's parents. Tara and her mother, Donna N., brought this civil action against the parents and their homeowner's insurer, Economy Fire & Casualty Insurance Company, alleging that the parents had negligently failed to supervise the visitation. Tara sought damages for her physical and psychological injuries, and Donna sought damages for her derivative claims of loss of consortium, medical expenses for Tara's treatment and loss of earning capacity.

The issue on appeal is whether Economy's policy covers the claims. We affirm the trial court's ruling that coverage was barred under the policy's sexual assault exclusion provision. We therefore affirm the judgment dismissing the action against Economy. 1


Following the father's criminal conviction for the sexual assault, Tara and Donna commenced this action against the father's parents and Economy. The complaint alleges the following facts. Tara was born in 1986. Donna filed for divorce from Tara's father in December 1990. During the divorce proceedings, Donna suspected that her husband had been sexually abusing Tara. As a result, Donna obtained an order from the family court directing that all visitations between Tara and her father be supervised by appropriate persons. The court designated the father's parents as appropriate supervisors of any visitations between Tara and her father.

The parents agreed to supervise a visitation between Tara and her father on August 14, 1991, and to be present at all times. During the visit, the parents failed to supervise the visitation and left Tara alone with her father, who subsequently sexually abused her. As a result, Tara suffered physical and psychological damages. The complaint alleged that the parents were negligent in their supervision of the father's visit with Tara.

Tara sought damages, inter alia, for her physical and psychological injuries and for her future medical and psychological treatment costs. Donna sought damages for her derivative claims, including the medical costs relating to Tara's past treatment, loss of earning capacity, and loss of Tara's consortium, society and companionship.

Economy defended on the grounds that its policy did not provide coverage for Tara's and Donna's claims. Economy sought a summary judgment declaratory ruling, arguing that it had no duty to defend the father's parents because the policy specifically excluded coverage for bodily injury arising out of a sexual act which is "expected, anticipated, foreseeable or intended by an insured." 2

In making its ruling, the trial court first considered the coverage provisions of the policy, although Economy had not relied upon those provisions in denying coverage.

The trial court determined that the provisions covered only bodily injury damages. Thus, the court held that Donna's derivative claims were barred since she had not suffered any bodily injury.

It is not clear to us, however, whether the trial court's bench decision was also addressing Tara's claim for psychological damage. 3 However, on appeal, Economy interprets the court's ruling as also covering this aspect of Tara's claim, and Economy defends the court's ruling on this basis. We therefore address the court's ruling on the premise that the court was speaking to Tara's claim for psychological damage.

Despite our uncertainty regarding the foregoing point, it is clear that the trial court's coverage ruling did not bar Tara's bodily injury claim. Therefore, the court went on to address Economy's argument that the sexual assault exclusion provisions of the policy barred coverage of all the claims asserted by both Tara and Donna. The court held that the policy excluded liability for bodily injury arising out of a sexual act. The court therefore dismissed Economy from the action. Tara and Donna appeal.

Standard of Review

The trial court's grant of summary judgment presents an issue of law which we review de novo by applying the same methodology as the trial court. See Taryn E.F. v. Joshua M.C., 178 Wis.2d 719, 722, 505 N.W.2d 418, 420 (Ct.App.1993). Summary judgment is properly granted when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Section 802.08(2), STATS.

Here, the facts are undisputed. Thus, the issue narrows to the interpretation of Economy's policy and the application of the policy to the undisputed facts. The interpretation of an insurance contract is a question of law for our independent review. See Taryn E.F., 178 Wis.2d at 722, 505 N.W.2d at 420.

Coverage Provisions 4

We begin with the coverage provisions of the Economy policy:

COVERAGE E--Personal Liability

If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, we will:

1. pay up to our limit of liability for the damages for which an insured is legally liable....

In addition, the policy defines "bodily injury" as "bodily harm, sickness or disease, including required care, loss of services and death that results."

Economy argues that this coverage provision clearly and unambiguously covers only Tara's bodily injury--not her psychological injury. The parties have not cited to any reported Wisconsin case which has determined whether the nonphysical damage claims of a person who has suffered physical injury are included within the concept of "bodily injury." 5 Nor has our own research uncovered such a case.

However, we find persuasive the reasoning of the Court of Appeal of Louisiana when it considered the issue of whether bodily injury encompassed emotional harm:

We attach significance to the fact that the policy defines bodily injury to mean "sickness or disease" in the instant case. These broad terms must include mental distress which persists over a period of time and necessitates the taking of some medication and interferes with one's performance at work. In this regard, the policy ... seems to be broader than it would have been had that definition not included the words "sickness or disease." ...

We are unable to separate a person's nerves and tensions from his [or her] body. It is common knowledge that worry and anxiety can and often do have a direct effect on other bodily functions.

Levy v. Duclaux, 324 So.2d 1, 10 (La.Ct.App.1975).

We also note that in Wisconsin, bodily injury has been considered to be broader than physical injury, although not in situations directly considering the issue in this case. In Acharya v. Carroll, 152 Wis.2d 330, 337, 448 N.W.2d 275, 279 (Ct.App.1989), the court stated, "[t]he term 'injuries to the person' connotes bodily injuries, whether physical or emotional." (Emphasis added.) We further observe that in the criminal restitution statute, a showing of bodily injury allows the court to require the defendant to pay an amount equal to the cost of "necessary medical and related professional services and devices relating to physical, psychiatric and psychological care and treatment." Section 973.20(3)(a), STATS.

While the resolution of this issue has received varied treatment in different jurisdictions, we deem it more reasonable that the term "bodily injury" encompasses claims for emotional or psychological harm. See State Farm Fire & Casualty Co. v. Pickard, 849 F.2d 1220, 1221-22 (9th Cir.1988) (comparing cases which have included nonphysical harm with those that have excluded such harm in construing "bodily injury" in an insurance policy). See generally Gregory G. Sarno, Annotation, Homeowner's Liability Insurance Coverage of Emotional Distress Allegedly Inflicted on Third Party by Insured, 8 A.L.R.5th 254 (1994).

Mental, emotional or psychological conditions are commonly considered as sickness or disease by both lay persons and medical professionals. Such conditions are routinely treated by medical personnel employing medical procedures. A reasonable insured would understand such conditions to be included within the concepts of "sickness or disease" which the policy uses to define "bodily injury." See School Dist. of Shorewood v. Wausau Ins. Cos., 170 Wis.2d 347, 367, 488 N.W.2d 82, 88-89 (1992). Thus, we conclude that Tara's psychological injury was covered as a "bodily injury" under the policy.

We reject Economy's coverage argument on a further basis which impacts the claims of both Tara and Donna. The coverage provision is broken out into two segments. The first segment reads, "If a claim is made ... for damages because of bodily injury...." (First emphasis added.) This clause does not require Economy to pay for bodily injury. Rather, it requires a bodily injury as a condition of Economy's coverage. This is a subtle, but important, distinction.

If this condition of coverage is satisfied, then the second segment of the provision comes into play. This segment recites Economy's payment obligation: "we will ... pay up to our limit of liability for the damages for which an insured is legally liable." (Emphasis added.) Notably, this segment does not limit Economy's obligation to pay only bodily injury damages....

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