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STATE FARM FIRE AND CAS. CO. v. DOE9/8/1997
The Court's Prior Opinion Dated January 3, 1997, is Hereby Withdrawn.
This is an appeal from a declaratory judgment issued by the district court holding that applicable insurance policies do not provide coverage for injuries sustained by a minor child as a result of sexual contact with a minor child of the insured. Jane and John Roe, individually and as guardian ad litem for their minor child, appeal the district court's declaratory judgment, asserting that this conduct is not excluded from coverage by the insurance policies.
I.
BACKGROUND AND PRIOR PROCEEDINGS
John and Jane Doe operated a day care business in their residence in Boise from
1973 through August 1991. The facility operated under both city and state licenses authorizing care for up to twelve (12) children per day. The three year-old daughter of Jane and John Roe attended the day care from March 1988 to July 1991. She was never at the residence other than as a client of the day care.
The Does' thirteen year-old son helped out at the day care. He acknowledged that sexual conduct with the Roes' daughter occurred in the downstairs bathroom of the facility between late 1990 and July 1991. The Does' son told the Roes' daughter that a "green monster" would get her if she told anyone. In July 1991 she told her mother what had happened to her at the day care. State Farm Fire and Casualty Company (State Farm) insured the Does under succeeding homeowners and umbrella insurance policies. Homeowners Policy No. 12-15-0041-8 ("Homeowners I") ran from April 11, 1989, through April 10, 1990. It was renewed for an additional year from April 11, 1990, through April 10, 1991. It was renewed in amended form ("Homeowners II") for a third year from April 11, 1991, through April 10, 1992. State Farm also provided the Does with liability umbrella coverage under Policy No. 12-27-1823-3 from June 12, 1989 through June 11, 1992.
The Roes brought suit against the Does alleging the legal theories of assault, breach of contract, negligent entrustment, negligent supervision, negligent misrepresentation, negligent failure to notify a business invitee of a dangerous condition, failure to report child abuse under section 16-1619 of the Idaho Code and civil claims for commission of a criminal act of lewd conduct, sexual abuse, sexual exploitation, or injury to a child (I.C. Section 6-1701). State Farm provided a defense for this action under a reservation of rights. The Roes' action was grounded on the sexual abuse of their daughter and the alleged accompanying failure of John and Jane Doe to identify and to prevent their son's conduct.
State Farm brought this declaratory judgment action seeking a determination that the sexual abuse is outside its policy coverage, asserting that the policies do not obligate it to defend or indemnify the Does against the allegations and claims in the Roes' action. The Roes petitioned to intervene in the action, alleging that the Does did not have sufficient assets to cover the cost of defense or pay any judgment.
The district court granted summary judgment for State Farm, relying on Mutual of Enumclaw v. Wilcox, 123 Idaho 4, 843 P.2d 154 (1992). The district court held that the sexual abuse was not an "accident" or "occurrence" under the policy. The court cited Wilcox for the legal definition of "accident" as it is used in insurance policies:
An accident within accident insurance policies is an event happening without any human agency, or if happening through such an agency, an event which, under the circumstances, is unusual and not expected by the person to whom it happens. A more comprehensive term than "negligen
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