RSUI Indemnity Co. v. New Horizon Kids Quest, Inc., No. 17-3567 (8th Cir. 2019)
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After the jury awarded damages to a sexual assault victim who was under the care of New Horizon, RSUI filed this action seeking a declaratory judgment that the policy's "Sexual Abuse or Molestation" exclusion barred coverage for the underlying damage award above Travelers' policy limits. The district court granted summary judgment for New Horizon.
The Eighth Circuit held that RSUI, an excess liability insurer that did not control the defense of its insured in the underlying suit, must be afforded an opportunity to prove in a subsequent coverage action that the jury award included damages for uncovered as well as covered claims. If the insurer sustains that burden, the court held that the district court must then allocate the award between covered and uncovered claims. Therefore, the court reversed and remanded.
Court Description: Loken, Author, with Colloton and Kelly, Circuit Judges] Civil case - Insurance. RSUI, an excess liability insurer that did not control the defense of its insured in the underlying suit, must be afforded an opportunity to prove in a subsequent coverage action that the jury award in the underlying suit included damages for uncovered as well as covered claims; if RSUI can sustain that burden, the district court must allocate the award between covered and uncovered claims. Reversed and remanded for further proceedings.
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