Natiownide v. Frye, Holt | Insurance Coverage for Acts of Child Abuse | Definition of Insured | Co-insured exclusion
In Natiownide Mut. Fire Ins. Co. v. Frye (MDNC Dec. 2, 2013), the federal court addressed coverage for a child who was injured by an insured in a home, under a homeowners insurance policy. The case raised an issue as to an exclusion for a "co-insured," which stated that that the policy excluded bodily injury cuased by one insured against another insured. It also raised an issue of the intentional acts exclusion, and an exclusion for "bodily injury . . . arising out of sexual molestation, corporal punishment or physical or mental abuse." Natiownide brought a DJ action against the tortfeasors and the claimant for a determination of coverage.
In this case, the Named insured had several others living at her residence. This included Marcus Holt (19 years old), who was the NI's daughter's boyfriend, and Jennifer Hooker, who was the NI's daughter's friend, and Jennifer's minor child (2 years old). On the date in question, the child had been left in the care of Marcus. Marcus became aggravated with the child and threw the chld into a "wood frame loveseat," causing brain injury to the child. The child brought claims against Marcus and the NI.
The policy covered the NI, and also "other persons under the age of 21 and in the care of any person named above." The court first concluded that Marcus was an insured, because essentially the NI was providing for his needs (food, lodging). Marcus was "primarily dependent" on the NI for food and shelter, and the court found him to be an insurd. The court also found, however, that the minor was an "insured." ("[NI] clearly provided life's basic necessities to [Jennifer] and minor Defendant." The court thus held that the "co-insured" exclusion applied.
The court also concluded that the intended or expected injury exclusion applied. Marcus testified that he knew that it was possible that he would injure the minor. The court ruled that Marcus could foresee some injury, even if it was greater than that expected. Of some note is that Marcus was found not guilty of felony child abuse. The court nevertheless held that the exclusion applied as a matter of law. The court also found that the "physical abuse" exclusion applied. The court found that Marcus' conduct was not acceptable or reasonable in society, and constituted physical abuse. Of perhaps some interest is that the court presumably held that Marcus' intentional conduct barred coverage for the named insured, homeowner, who presumably did not intend the injury. The exclusion at issue stated that it excluded BI "which may reasonably be expected to result from the intentional acts or omissions ... of one or more insuerd persons .. even if --- the bodily injury ... is of a different kind ... than intended." There are several cases addressing whether the acts of one insured operate to preclude coverage for another insured. These cases should be decided based on the precise policy langauge at issue; but some cases in North Carolina seem to adopt a more "equitable" approach (e.g. applying the "innocent spouse doctrine").
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John Kirby has represented many parties in insurance cases, including those involving the intentional acts and other exclusions.