Kansas State Bank & Trust, as Conservator of the Estate of Abc, a Minor v. Midwest Mutual Insurance Company and Preferred Risk Mutual Insurance Company
Docket: 93-3066
Court: Court of Appeals for the Tenth Circuit; May 13, 1994; Federal Appellate Court
Unpublished opinions from the Tenth Circuit may now be cited if they have persuasive value on a material issue, provided a copy is attached or furnished to the Court and all parties. Kansas State Bank, Trust (KSB), as conservator for a minor (ABC), appeals a summary judgment in a declaratory judgment action against Midwest Mutual Insurance Company (MMI) and Preferred Risk Mutual Insurance Company (PRM) regarding insurance coverage under policies for Holy Cross Evangelical Lutheran Church and School (HCELC). This action arose from a state tort case where allegations were made that a teacher sexually molested ABC, and that school officials failed to prevent or report the misconduct. While the liability aspect of the state case was settled, the insurance coverage issues remained unresolved.
KSB claims entitlement to $500,000 in coverage, while defendants acknowledge $100,000 under the general liability policy. A stipulation in the settlement agreement accepted KSB's assertions in prior legal documents as true for the purposes of this case. The court must determine whether the district court correctly ruled that a sexual misconduct exclusion in the general liability policy limits KSB's recovery and whether KSB established liability within a single policy period. The court reviews summary judgment orders de novo.
The district court concluded that MMI's primary and PRM's umbrella coverage included the same exclusions, which apply only to "bodily injury" or "property damage" occurring during the policy period. The policies specifically exclude coverage for any injuries stemming from sexual misconduct. Therefore, the basic general liability coverage does not cover claims of negligence against HCELC and its officials. However, MMI's policy does include a sexual misconduct coverage form that covers legal liability for damages due to bodily injury resulting from sexual misconduct occurring within the policy period.
All acts of sexual misconduct, whether by one individual or multiple individuals acting together, or any violation of duty that contributes to such acts, will be treated as a single occurrence for liability assessment under the insurance policy. The policy limits liability to $100,000 per occurrence and $300,000 per policy period, explicitly excluding coverage for individuals who participated in or permitted the misconduct. While claims of derivative negligence against the HCELC school are covered, the teacher's own misconduct is not.
The plaintiff argues for a total coverage of $300,000 based on three policy periods or alternatively $500,000 by asserting that the negligence of the HCELC and school officials constitutes a separate occurrence from the teacher's misconduct. However, the district court ruled that unless the negligence claims are proven to be independent from the teacher's misconduct, they are part of the same occurrence and subject to the $100,000 limit per occurrence per policy period.
The court determined that coverage was only available for the 1990-91 policy year since the stipulated documents presented specific allegations of misconduct only for that period, and the plaintiff failed to provide evidence of misconduct in 1990. Under Kansas law, the plaintiff must demonstrate that an injury incurred falls under the provided coverage. The court concluded there was no evidence of misconduct in the years preceding 1990-91, thus limiting the plaintiff's recovery to $100,000 for each of the three relevant policy years. Additionally, the court found that expanded claims made after the initial settlement were not part of the original stipulations, affirming its focus solely on the 1990-91 misconduct claims.
The court reviewed the plaintiff's arguments and relevant trial transcript portions, agreeing with the district court that the insurance policy language is clear and has been enforced correctly. The findings of fact are supported by the record, and the law was applied properly. The court affirms the district court's summary judgment for the reasons outlined in its previous orders. The defendants' motion to strike the plaintiff's supplemental appendix is denied. The order and judgment do not establish binding precedent, except under specific doctrines, and the court generally discourages citation of such orders unless conditions from a General Order are met. The case involves MMI and PRM, affiliated insurance companies providing coverage to Holy Cross Evangelical Lutheran Church. The court grants KSB's motion to seal the file and refers to the conservatee as ABC.
