Todd v. Missouri United School Ins. Council

Decision Date29 May 2007
Docket NumberNo. SC 88020.,SC 88020.
Citation223 S.W.3d 156
PartiesHolly TODD and Kodey Todd, by and through Next Friend Holly Todd, Appellants, v. MISSOURI UNITED SCHOOL INSURANCE COUNCIL, Respondent.
CourtMissouri Supreme Court

Seth D. Shumaker, Kirksville, for appellants.

Margaret A. Hesse, Phyleccia Reed Cole, St. Louis, for respondent.


Holly and Kodey Todd brought an action against the Missouri United School Insurance Council ("MUSIC") seeking payment of a $100,000 judgment entered against James Patterson, a substitute teacher in the Clark County R-1 school district ("district"). The trial court granted MUSIC's motion for summary judgment and denied the Todds' motion for summary judgment.

The Court holds that the language of the 1998 plan document issued by MUSIC is not ambiguous and that the definition of "Occurrence" bars coverage for Patterson's assault on Kodey Todd. The judgment of the trial court is affirmed.

I. Facts

Kodey Todd was an elementary school student in the district.1 James Patterson was a substitute teacher in the district and was assigned to teach Kodey's classroom. While on school premises and while serving in his capacity as substitute teacher, Patterson physically assaulted Kodey, grabbing him by the neck and lifting him off the ground. Patterson subsequently pleaded guilty to one count of third degree criminal assault and one count of endangering the welfare of a child.

At the time of Patterson's assault, the district was a member of MUSIC, a self-insured pool of Missouri school districts. MUSIC provided liability insurance coverage to the district under the terms of its 1998 plan document (the "policy") that was in effect at the time of Patterson's assault on Kodey.

The Todds filed suit against Patterson, the district and the acting school board members. The suit contained a claim against the district for negligent hiring and retention and a claim against the district and the board members for negligent supervision. It contained a claim for assault and battery against Patterson.

The Todds settled their claim against the district and the acting board members for $20,000. Patterson was specifically exempted from that settlement. On April 16, 2001, the Todds entered into an agreement with Patterson in which Patterson consented to the entering of a judgment against him in the amount of $100,000. The agreement further provided that the Todds would not attempt to collect any amount of the judgment from Patterson. Rather, they would seek payment from any insurance coverage in place for the benefit of the district.

The Todds brought an action against MUSIC seeking payment of the $100,000 judgment. MUSIC declined to pay on behalf of Patterson, citing policy language. The trial court found that in an action against Patterson the policy did not cover Patterson's assault of Kodey and entered judgment in favor of MUSIC. The Todds claim that the trial court erred in entering judgment in favor of MUSIC because the policy was ambiguous in that the terms "Occurrence," "Damages" and "Bodily injury" provide coverage for intentional acts of employees in one section and take the coverage away in another section. The Todds assert when read as a whole the policy provides coverage for Patterson's intentional act and that the alleged ambiguity requires the Court to construe the policy in favor of the Todds.

II. Standard of Review

The decision of whether or not it is proper to grant summary judgment is a question of law that is reviewed de novo. ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Summary judgment is appropriate when a party establishes "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Rule 74.04(c)(6).

III. Insurance Law and the Policy
A. Contract Interpretation

"The general rules for interpretation of other contracts apply to insurance contracts as well. The key is whether the contract language is ambiguous or unambiguous." Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300, 301-02 (Mo. banc 1993). When there is ambiguity in an insurance policy, the Court must interpret the policy in favor of the insured. Bellamy v. Pacific Mut. Life Ins. Co., 651 S.W.2d 490, 496 (Mo. banc 1983). However, "where insurance policies are unambiguous, they will be enforced as written." Rodriguez v. Gen. Accident Ins. Co. of Am., 808 S.W.2d 379, 382 (Mo. banc 1991). "Whether an insurance policy is ambiguous is a question of law." Martin v. U.S. Fidelity and Guar. Co., 996 S.W.2d 506, 508 (Mo. banc 1999).

B. Elements of Insurance Policies

There are a number of provisions that are essential to an insurance policy. The policy must identify: the "insured," the individual or entity with the interest at risk; the "coverage" or "insuring agreement," the subject matter and the contingency insured against;2 the "period," the dates prescribing the duration of the risk or contingency insured against; and the "limits," the amount the insurer is liable to pay for any given risk up to a specified amount. The essential terms are usually stated in abbreviated form on a declarations page.

Insurance policies also usually include a number of other categories of terms. "Definitions" are usually provided for key terms. "Conditions" are usually specified regarding the parties' respective obligations. "Exclusions" are usually stated that limit risks that otherwise might have been covered, and "Endorsements" are often made adding coverage of risks that otherwise might not have been covered.

C. Ability to Bargain for Terms

Insurance companies may compete for business by coverage terms, by price, or by both. The parties may bargain and agree to such terms and provisions as they see fit subject only to the requirements that the contract is lawful and reasonable. Williams v. National Cas. Co., 132 S.W.3d 244, 246 (Mo. banc 2004). The ability to uniquely define the risks insured against and to prescribe exclusions or add endorsements allows insureds to choose the coverage they desire at the lowest possible price. See Drug Mart Pharmacy Corp. v. American Home Products Corp., 472 F.Supp.2d 385 (E.D.N.Y.2007).

D. The District's Policy
i. Coverage

The Policy in this case provides two separate types of coverage. The coverage language reads:


1. COVERAGE A: Occurrence Coverage—Bodily Injury—Property Damage—Personal Injury. We will pay on behalf of a Covered Party all Damages up to the Limit of Liability as a result of an Occurrence in the Covered Territory.

2. COVERAGE B: Claims-made Coverage—School Board Legal Liability/Wrongful Acts. We will pay on behalf of a Covered Party all Damages up to the Limit of Liability as a result of a Wrongful Act after the Date of First Coverage to which this Coverage Agreement applies and for which a Claim is first made against the Covered Party in the Coverage Territory during the Coverage Period and reported to us as soon as reasonably practicable but not later than 60 days after the end of the Coverage Period.

ii. Definitions

The relevant portions of the "Definitions" section of the policy read as follows:


5. This Coverage Agreement is subject to the following definitions:

. . .

Bodily Injury means physical injury, sickness, disease, disability or death sustained by a person and includes any resulting mental injury, emotional distress or shock.

. . .

Damages means money compensation that a Covered Party becomes legally obligated to pay to an injured party under Coverage A for Bodily Injury, Property Damage or Personal Injury.

. . .

Covered Organization means:

a. the Member School District;

. . .

Covered Party means, whether in the singular or plural, the Covered Organizations and the Covered Persons or any of them.

Covered Persons means:

. . .

b. at the option of the Member School District, and except as otherwise provided in this definition, any employee . . . while acting at the direction or performing services for or on behalf of the Member School District with its knowledge and consent.

. . .

Occurrence means an accident during the Coverage Period, an event that first occurs during the Coverage Period, or continuous, intermittent or repeated exposure to conditions that commence during the Coverage Period that causes Bodily Injury, Personal Injury or Property Damage neither expected nor intended by the Covered Party.

. . .

For the purpose of this Policy:

Bodily Injury or Property Damage that results from an act that is intended by the Covered Party ... to cause Bodily Injury, Personal Injury or Property Damage . . . is not injury or damage "neither expected nor intended."

. . .

Humiliation, defamation or other Personal Injury that is continuous or repeated shall be considered a single Occurrence.

. . .

Incidents of sexual assault, sexual or physical abuse or Sexual Molestation against more than one victim, regardless of the number of incidents, perpetrators or injuries . . . shall be treated as a single Occurrence.

. . .

Personal Injury means injury unintended by the Insured that a person may suffer to his reputation, character or feelings resulting from ... humiliation.

iii. Exclusions

The relevant portions of the "Exclusions" section of the policy read as follows:


19. This Coverage Agreement does not apply and we are not liable for:

n. liability of an Insured who knowingly committed an unlawful act; or who committed sexual assault, sexual abuse or Sexual Molestation; or who intentionally caused damage, harm or injury; to any claim arising out of any sexual assault, sexual or physical abuse or sexual molestation, involving the same individual or individuals, which initially occurred after knowledge of any actual or alleged wrongful act by said individual(s) is received by the Member School District.

IV. Discussion

It is undisputed that "Coverage A" applies to the Todds'...

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