Northern Security Insurance Co. v. Perron

Annotate this Case
Northern Security Insurance Co. v. Perron  (99-109); 172 Vt. 204; 777 A.2d 151

[Filed 4-May-2001]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision  before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions, 
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that  corrections may be made before this opinion goes
  to press.


                                 No. 99-109


Northern Security Insurance Co.	                 Supreme Court

                                                 On Appeal from
     v.	                                         Washington Superior Court


Rose, Steven & Kyle Perron, Susan, Gregory, 
Timothy & Lindsay Dube, Jesse Durenleau, 
Susan Durenleau Stanhope, 
Helene & Augustin Parah, Jr.	                 December Term, 1999



Matthew I. Katz, J.

       Keith Aten of Downs Rachlin & Martin, St. Johnsbury, for
  Plaintiff-Appellee.

       Christina Reiss, R. Jeffrey Behm and Michael Drescher of Sheehey
  Furlong Rendall & Behm, P.C.,  Burlington, for Defendants-Appellants Dube.

       Martin A. Maley and Kathleen A. Yarnell of Kissane Associates, St.
  Albans, for Defendants-Appellants Stanhope, Durenleau and Parah.


PRESENT:  Amestoy, C.J., Morse, Johnson, Skoglund, JJ., and Jenkins,
          Supr. J., Specially Assigned



       SKOGLUND, J.  In this declaratory judgment action, the Washington
  Superior Court  granted summary judgement in favor of Northern Security
  Insurance Company (Northern Security),   holding that Northern Security had
  no duty to defend or indemnify Rose, Steven, and Kyle Perron  against
  claims brought by the other named defendants.  The claims in the underlying
  action alleged  that Kyle Perron, son of Rose and Steven Perron, sexually,
  physically and emotionally abused  Timothy and Lindsay Dube (son and
  daughter of Susan and Gregory Dube), Jesse Durenleau (son 

 

  of Susan Durenleau Stanhope), and Augustin Parah, Jr., son of Helene Parah. 
  We affirm in part,  reverse in part, and remand.

       For purposes of this appeal, the relevant facts are not in dispute. 
  Between 1984 and 1995,  Rose Perron ran a day care business from her house. 
  In May 1991, Susan and Gregory Dube entered  into a contract with Rose
  pursuant to which, in exchange for compensation, Rose agreed to provide 
  day-care services for the Dubes' children, Timothy, then three years old,
  and Lindsay, then ten  months old.  The Perrons' son, Kyle (D.O.B.
  7/21/83), was seven years old at the time.

       In 1996, Susan, Gregory, Timothy, and Lindsay Dube filed suit in
  Franklin Superior Court  against Rose, Steven, and Kyle Perron, alleging: 
  negligent supervision of Kyle against Rose and  Steven; liability under 15
  V.S.A. § 901 (parents' liability for damages); intentional infliction of 
  emotional distress (IIED) against Rose and Steven; IIED against Kyle; and
  breach of contract against  Rose, all based on alleged abuse of Timothy and
  Lindsay by Kyle while in the Perron's day care.

       Prior to May 1995, Jesse Durenleau and Augustin Parah, Jr. were, on
  several occasions,  invited to play at the Perrons' house.  In 1996, Susan
  Durenleau Stanhope and Jesse Durenleau filed  suit in Franklin Superior
  Court against Rose, Steven, and Kyle Perron, based on Kyle's alleged 
  sexual assault and abuse of Jesse.  The Durenleaus' (FN1) complaint
  presented counts of negligent  supervision against Rose and Steven; sexual
  assault and false imprisonment against Kyle; IIED  against Kyle; and
  negligence against Kyle.  In 1997, Helene Parah and Augustin Parah, Jr.
  filed suit  in Franklin Superior Court against Rose, Steven, and Kyle
  Perron, based on Kyle's alleged sexual  assault and abuse of Augustin. 
  Their complaint presented the same four counts as the Durenleaus' 

 

  complaint, except that the named victim is Augustin Parah.

       Northern Security, the Perrons' homeowner's insurance carrier, filed a
  declaratory judgment  action in Washington Superior Court,(FN2) naming all
  of the above-mentioned parties as defendants,  and asking for a ruling that
  the Perrons' insurance policy does not provide coverage for any of the 
  allegations.  Northern Security raised five defenses to coverage applicable
  to all three complaints:   (1) none of the counts allege an "occurrence,"
  and only occurrences are covered under the policy; (2)  the underlying
  lawsuits allege injuries "expected or intended" by the insureds, and
  injuries that are  "expected or intended" by the insured are not covered
  under the policy; (3) Steven and Rose  breached the terms of the insurance
  contract by misrepresenting a material fact and making a false  statement
  in the policy application, and thus the policy is unenforceable; (4) Rose
  breached the  insurance contract by failing to timely notify Northern
  Security of the conduct alleged in the  underlying complaints, and
  therefore the policy is unenforceable; and (5) coverage for the underlying 
  complaints would violate public policy, as the injuries were based on
  Kyle's intentional acts, and it is  against public policy to provide
  insurance coverage for an insured's own intentional conduct.   Further,
  Northern Security raised two defenses to coverage applicable solely to the
  Dubes' complaint:  (1) the allegations fall within the policy's
  business-pursuits exclusion; and (2) the complaint alleges  liability
  assumed by the Perrons under a contract, which is excluded from coverage
  under the policy. 
 
       Northern Security moved for partial summary judgment against the Dubes
  with regard to its  defense concerning the business-pursuits exclusion. 
  The Dubes filed an opposition and a cross-

 

  motion for summary judgment as to Northern Security's six remaining
  defenses.  The Parahs and  Durenleaus each filed a motion for summary
  judgment as to all of Northern Security's defenses  except those applicable
  solely to the Dubes.

       The court found in favor of Northern Security on summary judgment,
  concluding that  Northern Security had no duty to defend or indemnify the
  Perrons against any of the allegations  because the complaints did not
  allege an "occurrence" under the policy.  In deciding the issue, the  
  court held that the inferred-intent rule-under which intent to harm is
  implied in cases involving  sexual abuse of a minor-applied.  Therefore,
  the court concluded, because injuries that are expected  or intended cannot
  be the result of an "occurrence" as defined in the policy, and because all
  of the  claimed injuries stemmed from Kyle's alleged sexual abuse for which
  intent to harm would be  inferred, there was no coverage under the policy
  for any of the insureds.  The court further held that  the claims of false
  imprisonment and assault were excluded by policy language excluding
  coverage  for personal injury "caused by a violation of a penal law
  committed by an insured."  Finally, with  regard to the Dubes' complaint,
  the court concluded that, because both Dube children were at the  Perrons'
  home for day care purposes, and because day care is a business pursuit, the
  policy's  business-pursuits exclusion applied, and, for that independent
  reason, there was no coverage for any  of the allegations in the Dubes'
  complaint.  This appeal followed.

       In reviewing a grant or denial of summary judgment, we apply the same
  standard as the trial  court.  "Summary judgment is appropriate where there
  is no genuine issue of material fact and the  moving party is entitled to
  judgment as a matter of law, after giving the benefit of all reasonable 
  doubts and inferences to the nonmoving party."  City of Burlington v.
  National Union Fire Ins. Co.,  163 Vt. 124, 127, 655 A.2d 719, 721 (1994). 
  Because we decide that, for some of the claims, there 

 

  is a fact question upon which coverage under the policy may depend, the
  grant of summary judgment  on those claims was improper.

                               I.  Occurrence
 
       As familiar as is the standard for summary judgment, so, too, are the
  basic rules concerning  construction of insurance policy provisions.	"An
  insurance policy must be construed according to its  terms and the evident
  intent of the parties as expressed in the policy language. . . .  Disputed
  terms  should be read according to their plain, ordinary and popular
  meaning."  National Union Fire Ins.  Co., 163 Vt. at 127-28, 655 A.2d  at
  721.  However, "where a disputed term in an insurance policy is 
  susceptible to two or more reasonable interpretations, the ambiguity must
  be resolved in favor of the  insured."  City of Burlington v. Associated
  Elec. & Gas. Ins. Servs., Ltd., 164 Vt. 218, 221, 669 A.2d 1181, 1183
  (1995).  The insurer bears the burden of showing that the claims are
  excluded by the  policy.  See City of Burlington v. Association of Gas &
  Elec. Ins. Servs., Ltd., 11 Vt. L. W. 64, 66  (2000).

       In determining whether Northern Security has a duty to defend the
  Perrons, we must  "compar[e] the allegations in the complaint of the
  underlying suit to the terms of coverage in the  policy."  National Union
  Fire Ins. Co., 163 Vt. at 127, 655 A.2d  at 721.  "If any claims are
  potentially  covered by the policy, the insurer has a duty to defend. . . . 
  Conversely, where there is no possibility  that the insurer might be
  obligated to indemnify, there is no duty to defend."  Id.

       The policy in this case provides personal liability coverage for
  claims or lawsuits "brought  against an insured for damages because of
  bodily injury . . . caused by an occurrence."(FN3) 

 

  "Occurrence" is defined, in relevant part, as: 

       an accident, including exposure to conditions, which
       results, during  the policy period, in:  
       a.	bodily injury.
 
   Section II of the policy, entitled Exclusions, states, in pertinent part:

       1.	Coverage E - Personal Liability and Coverage F -
       Medical  Payments to Others do not apply to bodily injury or
       property  damage: 
                a.	which is expected or intended by the insured.

       As noted, in this declaratory judgment action, Northern Security
  argues that there is no  coverage under the policy for any of the claims
  made, either because of the language of the policy  itself or because of an
  exclusionary clause in the policy.(FN4)

       Coverage under the policy is triggered by an "occurrence."  If a claim
  is made or a suit is  brought against an insured for damages because of
  bodily injury that is caused by an occurrence,  there is coverage under the
  policy, unless an exclusion applies.  The insurer does not deny that in the 
  underlying action the plaintiffs have alleged that the children sustained
  "bodily injury."  Therefore,  the threshold issue of coverage in this
  proceeding is whether the assaults that allegedly caused the  injury were
  an "occurrence."

       A bit of history is enlightening.  Prior to 1966, standard liability
  policy language included  coverage for bodily injury or property which was
  "accidental."  In the 1960's, revisions to the  Comprehensive General
  Liability Policy, a standard-form policy for liability coverage,  were made 

 

  by representatives of the insurance industry.  Instead of covering only
  "accidents," a word that  connotes an event causing immediate or
  contemporaneous injury, the standard policy was written to  cover
  "occurrences," a more expansive concept.(FN5)  The revisions also
  attempted to deal with  liabilities for injuries caused over a period of
  time; thus "occurrence" was defined, for example, as  "an accident,
  including injurious exposure to conditions, which results in bodily
  injury."  Vermont  Mut. Ins. Co. v. Malcolm, 517 A.2d 800, 802 (N.H. 1986)
  ("'Occurrence' thus sweeps wider than  'accident,' because 'occurrence' is
  defined to include an injurious exposure to continuing conditions  as well
  as a discrete event.").   The policy under consideration appears to be a
  variant of the standard  form.

       The policy at issue does not specifically define "accident."  Thus,
  the term should be defined  according to the usual understanding of the
  term's significance to the ordinary person.  See USAA  Prop. & Cas. Ins.
  Co. v. Rowland, 435 S.E.2d 879, 881-82 (S.C. Ct. App. 1993) (absent
  prescribed  definition in policy, "accident" must be defined according to
  ordinary and usual understanding).   The  South Carolina Supreme Court has
  interpreted the term "accident" to mean "an effect which the actor  did not
  intend to produce and cannot be charged with the design of producing." 
  Goethe v. New York  Life Ins. Co.,  190 S.E. 451, 458 (S.C. 1937) (internal
  quotations omitted).  An "accident" is  generally understood to be an event
  that is "undesigned and unforeseen."  Webster's New  International
  Dictionary 15 (2d. ed. 1961).  It is an  "an unexpected happening." 
  Association of  Gas  & Elec. Ins. Servs., Ltd., 11 Vt. L. W. at 65. 

       In a case analyzing a policy definition of "occurrence" that is
  identical to the one at issue

 

  here, the New Hampshire Supreme Court wrote "the touchstone of
  interpretation is the definition of  'accident' as a cause of injury, as
  distinct from the injury itself," and selected the following definition: 
  "[A]n accident is an undesigned contingency, . . . a happening by chance,
  something out of the usual  course of things, unusual, fortuitous, not
  anticipated, and not naturally to be expected." Vermont  Mut. Ins. Co., 517 A.2d  at 802 (citing Guerdon Ind. Inc. v. Fidelity & Cas. Co. of New York,
  123 N.W.2d 143, 147 (Mich.1963) (quoting 10 R. Anderson, Couch Cyclopedia
  of Insurance Law § 41.6,  at 27-28 (2d ed. 1962))); see also Allstate Ins.
  Co. v. Freeman, 443 N.W.2d 734, 740 (Mich. 1989).

       While the courts have not agreed on many of the subtle points of
  interpretation in the  definitions and exclusions presented in general
  liability insurance contracts, they have, for the most  part, agreed on one
  point: in policies with insuring and exclusion clauses identical or similar
  to the  ones involved here, there can be coverage for an intentional act
  that results in unintended injury.  As   recently stated by the Supreme
  Court of New Jersey:

       Assuming the wrongdoer subjectively intends or expects
       to cause  some sort of injury, that intent will generally
       preclude coverage.  If  there is evidence that the extent of
       the injuries was improbable,  however, then the court must
       inquire as to whether the insured  subjectively intended or
       expected to cause that injury.  Lacking that  intent, the
       injury was "accidental" and coverage will be provided.

       SL Indus., Inc. v. American Motorists Ins. Co., 607 A.2d 1266, 1278
  (N.J. 1992).  Courts have  consistently held that the term "occurrence" is
  inclusive not only of the commonly understood  meaning of "accident," but
  also of intentional actions.  See Freeman, 443 N.W.2d  at 741 ("[W]e find 
  that ascertaining the insured's 'intent' may determine whether the
  insured's actions constituted an  'accident,' but it does not necessarily
  follow that an insured must act unintentionally for an act to be  an
  'occurrence.'").  The policy under consideration in Freeman defined
  "occurrence" as does the one 

 

  before this Court.  See also Lyons v. Hartford Ins. Group, 310 A.2d 485,
  489 (N.J. Super. Ct. App.  Div. 1973) (overruled on other grounds by SL
  Indus., Inc., 607 A.2d at 1277-78) (if insured intended  to maim or kill
  victim he has no coverage; but if his intent was, as he says, to fire a
  warning shot, and  he unintentionally fired prematurely, coverage exists);
  Otterman v. Union Mut. Fire Ins. Co.,130 Vt.  636, 642, 298 A.2d 547, 551
  (1972) (shooting of police officer by insured was "occurrence" under 
  policy).

       The Montana High Court summarized the issue thus: 

            The word 'occurrence' instead of the word 'accident' in
       the insuring clause  means that the word 'occurrence' is in
       fact broader than the word 'accident' and is so  intended by
       the insurer.  In such case, the intent of the policy is to
       insure the acts or  omissions of the insured, including his
       intentional acts, excluding only those in  which the
       resulting injury is either expected or intended from the
       insured's  standpoint.

            It is clear therefore, that the insured here would be
       debarred from coverage in  those cases where his deliberate
       acts or assaults resulted in injuries which would be 
       expected or intended by him to result from his deliberate
       acts.  But what about  coverage where the results of his acts
       (even though deliberate) are unexpected or not  intended by
       the insured?  The answer . . . is that (1) the event is an
       occurrence; (2)  since it results in bodily injury it is an
       accident under the definition of the policy, and  (3) since
       it is unintended or unexpected, it is within the coverage of
       the policy.

  Northwestern Nat'l Cas. Co. v. Phalen, 597 P.2d 720, 724 (Mont. 1979)
  (emphasis in original).
  
       This Court has had several occasions to interpret the term
  "occurrence" in the context of  insurance policies, though not all policies
  being interpreted defined the term in the same language. In Otterman,
  "occurrence" was defined in the policy under consideration as "an accident
  . . . which  results in . . . bodily injury . . . neither expected nor
  intended from the standpoint of the insured."   130 Vt. at 637, 298 A.2d  at
  548.  The facts in Otterman showed that the insured had no intention to 
  cause the injury claimed when he fired a gun into a darkened building,
  though his act of firing the  gun was intentional.  The facts demonstrated
  that the result of the insured's shot was not expected, 

 

  as he did not know the victim was even in the building.  We held,
  therefore, that the injury resulted  from an "occurrence," it being neither
  expected nor intended by the insured, and there was coverage  under the
  policy.  Id. at 642, 298 A.2d  at 551.  Likewise, in State v. Glens Falls
  Ins. Co., 137 Vt. 313,  317, 404 A.2d 101, 104 (1979), which hinged on a
  definition of "occurrence" identical to the one  found in Otterman, we held
  that the mistaken repossession of the wrong property was an  "occurrence"
  because injury was not intended.  In another case with the same policy
  definition of   "occurrence" as in Otterman, we defined "accident" as "'an
  unexpected happening without intention  and design.'"  National Union Fire
  Ins. Co., 163 Vt. at 128, 655 A.2d  at 721 (quoting Anton v.  Fidelity &
  Cas. Co., 117 Vt. 300, 305, 91 A.2d 697, 700 (1952)).(FN6) 

       In the policy at issue, the definition of "occurrence" differs from
  those that include the  intentional acts exclusionary language within their
  definition of "occurrence."  Here, the limiting  language is found in the
  "Exclusion" section of the policy.  Read in concert, the definition and the 
  exclusion make it clear that if coverage is sought because of an accident
  that has resulted in injury  that was neither expected nor intended, there
  is an "occurrence" and, consequently, there can be  coverage.(FN 7)  

       The determination of whether Kyle's alleged actions constituted an
  occurrence involves an 

 

  inquiry into whether he expected or intended to harm the victims by his
  actions.(FN8)  "[A]n  insured expects an injury if he or she is
  subjectively aware that injury is substantially certain to  result." 
  Espinet v. Horvath, 157 Vt. 257, 262, 597 A.2d 307, 310 (1991) (Allen,
  C.J., dissenting).   Thus, if the insured did not intend to inflict the
  injury on the victim by his intentional act, and the act  was not so
  inherently injurious that the injury was certain to follow from it, the act
  as a contributing  cause of injury would be regarded as accidental and an
  "occurrence."

                            II.  Inferred Intent

       Here, the court decided that there was no coverage under the policy
  for any insured because  the "inferred intent rule" precluded a finding of
  an occurrence.  As we explain below, this was error.

       Whether or not an insured should expect injury from an intentional act
  is generally a question  of fact to be determined from all the surrounding
  facts and circumstances.  Some actions, however,  are so likely to result
  in injury that, as a matter of law, the court will find that the injury did
  not result  from an accident regardless of the actor's subjective intent or
  expectations.  Under the so-called  inferred-intent rule, courts
  conclusively presume intent to harm as a matter of law based on the  nature
  and character of the insured's alleged acts, regardless of whether the
  insured asserts that he or  she had no subjective intent to injure.  

       Ordinarily, sexual molestation of a minor by an adult falls within
  this category of cases.  We  applied the inferred-intent rule in TBH v.
  Meyer, 168 Vt. 149, 151-52, 716 A.2d 31, 33 (1998):  

  

  "[F]or cases involving child sexual abuse, an insured's conduct may fall
  within that class of conduct  that is excluded from coverage if we apply
  the inferred-intent rule to an insured's actions."  Applying  the
  inferred-intent rule in cases where an adult sexually abuses a minor
  "'reflects our enhanced  concern for the protection and well-being of
  minors and the gravity we attach to crimes involving the  exploitation of
  minors.'"  Id. at 152, 716 A.2d  at 33 (quoting State v. Searles, 159 Vt.
  525, 528, 621 A.2d 1281, 1283 (1993)). 

       The trial court applied the inferred intent rule in this case, where a
  minor is accused of  sexually abusing another minor, and held as a matter
  of law that Kyle intended to harm Jesse and  Augustin by his actions.(FN9)
  On this holding, the court found no "occurrence" and thus, no  coverage.  

       While an overwhelming majority of courts in other jurisdictions have
  applied the inferred-intent rule in cases where an adult insured sexually
  abused a minor,  the courts are evenly split with  respect to the extension
  of this inference to minors.  See Allstate Ins. Co. v. Patterson, 904 F. Supp. 1270, 1282 (D. Utah 1995) (citing cases), Country Mut. Ins. Co. v.
  Hagan, 698 N.E.2d 271, 276 (Ill.  App. Ct. 1998) (citing cases).   

       Courts that have applied the inferred-intent rule in cases where a
  minor is accused of sexually  abusing another minor do so based on the
  conclusion that, because the act itself is so inherently  harmful to the
  victim, and because subjective intent is irrelevant in cases involving
  adult alleged  perpetrators, the age of the alleged perpetrator is
  irrelevant.  See, e.g., Allstate Ins. Co. v. Steele, 74 F.3d 878, 880 (8th
  Cir. 1996); State Farm Fire & Cas. Co. v. Watters, 644 N.E.2d 492, 496
  (Ill. App. 

 

  Ct. 1994); Hagan, 698 N.E.2d  at 276.

       Other courts have found that, based on minors' relative lack of
  experience in sexual matters,  it is improper to infer an intent to injure
  in cases where a minor sexually abuses another minor.  See,  e.g., Hagan,
  698 N.E.2d  at 277; United Servs. Auto Ass'n v. DeValencia, 949 P.2d 525,
  529 (Ariz.  1997).  These courts generally note that criminal statutes
  serve to "protect minors from sexual  conduct based on a presumption that
  they are unable to understand the nature and consequences of  sexual acts." 
  Hagan, 698 N.E.2d  at 277.  Therefore, these courts reason, if minors cannot
  understand  the nature and consequences of sexual acts for purposes of
  criminal law, they cannot be presumed to  understand the nature and
  consequences of sexual acts for purposes of civil law.

       We agree with those courts that have held that the inferred-intent
  rule does not apply when  the alleged perpetrator is a minor, and that
  whether a minor who molests another minor intends  injury should be
  determined on a case-by-case basis.  Our conclusion is consistent with the
  treatment  of minors in many related contexts.

       While it is difficult to imagine a predaceous youngster capable of
  such a thing, a child age ten  can be prosecuted for sexual assault under
  our laws.  See 33 V.S.A. §§ 5502(a), 5506(a)(10).   However, before that
  child can have his or her case transferred to criminal court, the juvenile
  court  judge must make findings concerning the child's intent, considering
  such factors as the maturity of  the child and whether the alleged offense
  was committed in a premeditated or willful manner.  The  potential for an
  intention to harm is there, but every child cannot be presumed to have it.  

       The law also protects minors from themselves and their own poor
  choices.  See 13 V.S.A. §  3252(a)(3) (person who engages in sexual act
  with person under age of sixteen guilty of sexual  assault); id. §§ 2822-23
  (proscribing use of child in sexual performance).  In State v. Barlow, 160
  Vt. 

 

  527, 530, 630 A.2d 1299, 1301 (1993), a case that presented a challenge to
  13 V.S.A. § 3252, we  noted that, underlying criminal statutes that serve
  to protect minors from sexual conduct, is the fact  that, "'during the
  formative years of childhood and adolescence, minors often lack the
  experience,  perspective, and judgment to recognize and avoid choices that
  could be detrimental to them.'"   (quoting Bellotti v. Baird, 443 U.S. 622,
  635 (1979)).  Accordingly, the state has an "obligation to  protect its
  children from others and from themselves."  Id. at 528, 630 A.2d  at 1300. 
  Furthermore, in  cases of statutory rape, "consent by a minor is not
  legally possible."  State v. Thompson, 150 Vt. 640,  644, 556 A.2d 95, 98
  (1989).  This Court recently held that, where the alleged perpetrator is
  also a  victim under the age of consent, § 3252(a)(3) is inapplicable.  See
  In re G.T., 11 Vt. L. W. 135, 138  (2000) ("[T]he statute is intended as a
  shield for minors and not a sword against them.").   

       Thus, if minors cannot appreciate the nature and consequences of, and
  therefore lack the  ability to consent to, sexual activity for purposes of
  Vermont criminal law, it would be inconsistent  to hold that, for purposes
  of Vermont civil law, when minors engage in sexual acts, as a matter of 
  law, they intend the consequences of their acts.  Indeed, "courts cannot
  seek to protect naive [minors]  on the one hand, while inferring the most
  degrading and unnatural thoughts to them on the other  hand."  Allstate
  Ins. Co. v. Jack S., 709 F. Supp. 963, 966 (D. Nev. 1989) (holding that
  inferred-intent rule does not apply where a minor sexually abuses another
  minor); see also Patterson, 904 F. Supp.  at 1282 ("The reason a child
  lacks the capacity to consent to sexual activity is because the  child
  cannot fully appreciate the consequences of such activity.  But if a child
  cannot fully appreciate  the consequences of sexual activity, that is
  reason not to hold the child perpetrator to the same  standard as an
  adult."); DeValencia, 949 P.2d  at 529 ("It is contradictory for the law to
  attribute to 

 

  minors a presumptive sexual naivety on the one hand, and to presume their
  sexual sophistication on  the other hand.").  Furthermore, "it is
  inconsistent to rely on the age of the victim in inferring intent,  yet
  ignore the age of the perpetrator."  Hagan, 698 N.E.2d  at 277; see also In
  re G.T., 11 Vt. L. W. at  135 (statutory rape law does not apply to minor
  who engaged in sexual intercourse with another  minor). 

       Applying the inferred-intent rule to minors who engage in sexual
  conduct with other minors  would also be inconsistent with Vermont's law on
  contributory and comparative negligence of  minors, set forth in Johnson's
  Adm'r v. Rutland R.R. Co., 93 Vt. 132, 106 A. 682 (1919).  There we  stated
  that, in some cases, a child may be so young that she or he is
  "conclusively presumed  incapable of judgment and discretion."  Id. at 140,
  106 A.  at 685.  In other cases, a child may be "so  mature in age and
  intelligence that the court should say as [a] matter of law that he is
  capable of  exercising some degree of care for his own safety under
  circumstances like those in question."  Id.   However, "[l]ying between
  these limits, necessarily undefined as to age," are the cases where the 
  contributory and comparative negligence of a minor is a question of fact
  that "depends upon the  circumstances of the particular case, especially
  the mental development and previous training and  experience of the child." 
  Id.  Thus, Vermont law "recognizes that children do not always appreciate 
  dangers as adults do."  Patterson, 904 F. Supp.  at 1283. 

       Moreover, as the Illinois appeals court noted, "extending a blanket
  presumption of intent to  all minor perpetrators will lead to absurd
  results in some cases.  For example, if we were to apply the 
  inferred-intent standard to minors, a six-year-old who engages in sexual
  experimentation with a peer  would be deemed to have intended the same
  injury foreseen and caused by an adult who sexually  molests a child." 
  Hagan, 698 N.E.2d  at 277.

 

       Finally, because the alleged perpetrator is a minor, we do not believe
  that the policy  considerations discussed in Meyer are the same.  There we
  recognized that "application of the  inferred-intent rule [would deny the
  plaintiff] a potential source of compensation for her injuries,"  168 Vt.
  at 154, 716 A.2d  at 35, but concluded that "[e]nsuring compensation of the
  victim . . . is  outweighed by precisely fixing both moral and economic
  liability on defendant."  Id.  However,  "[d]epriving a minor perpetrator
  of insurance coverage can have little deterrent effect on a minor  who
  likely has little understanding of the ramifications of his conduct, much
  less insurance  coverage."  Hagan, 698 N.E.2d  at 278; see also Patterson,
  904 F. Supp.  at 1287 ("there is no evidence  that the juvenile insureds
  even knew of the policies or of their terms").

       We conclude, therefore, that the inferred-intent rule is inapplicable
  in cases where it is  alleged that a minor has sexually abused another
  minor.  Rather, the trier of fact should examine the  facts and
  circumstances of the case before it, including the circumstances
  surrounding the sexual  conduct, as well as the minor's "age, ability,
  intelligence, and experience," Hagan, 698 N.E.2d  at 277,  to determine
  whether the minor alleged perpetrator expected or intended his or her
  actions to result  in harm to the victim.  By declining to apply the
  inferred-intent standard, we do not require insurers  to defend and provide
  coverage whenever a minor sexually abuses another minor.  We merely 
  require that the minor perpetrator's intent be determined on a case-by-case
  basis.  Coverage will be  required only when a trier of fact determines,
  based on the particular characteristics and experience  of the minor, that
  the minor did not intend to injure by his actions.(FN10)

 

       Therefore, the matter must be remanded for a factual inquiry and
  determination of whether  the allegations meet the definition of
  "occurrence," without reliance on the inferred intent  rule.(FN11)
  
                         III.  Negligent Supervision

       Finding no "occurrence" under the policy, the court granted summary
  judgment as to  Northern Security on all issues presented, including the
  question of whether the policy provides  coverage for the claim of
  negligent supervision brought against Kyle's parents.  Because the court 
  erred in deciding the question of whether there was an "occurrence" based
  on the inferred intent rule,  its finding that the claims for negligent
  supervision were precluded on that same reasoning must be  reconsidered as
  well.

       Count I of the Durenleau and Parah complaints allege negligent
  supervision of Kyle  resulting  in the injuries claimed.(FN12)  Northern
  Security posits that in analyzing whether the complaint  alleges an
  occurrence in Count I, it is Kyle's alleged abuse, not the alleged
  negligent supervision of  his parents that controls.  The Durenleaus and
  the Parahs argue that the policy, by its terms, "applies  separately to
  each insured," pointing to the language of the intentional acts exclusion
  of the policy  which denies coverage for bodily injury "which is expected
  or intended by the insured."  (emphasis  added).  Accordingly, they argue,
  even if this exclusion is found to bar coverage for Kyle, it does not  bar
  coverage for the claims of negligent supervision against his parents.  On
  this issue, we agree with  the Durenleaus and the Parahs.  

 

       Northern Security argues that courts draw a distinction between the
  immediate circumstances  which inflict bodily injury and the antecedent
  negligence which sets in motion a chain of events  leading to that injury,
  see Maples v. Aetna Cas. & Sur. Co., 148 Cal. Rptr. 80, 84 (Cal. Ct. App. 
  1978) ("the term 'accident' unambiguously refers to the event causing
  damage, not the earlier event  creating the potential for future injury"),
  and that courts consistently hold that it is the underlying  cause of the
  claimed injury that determines coverage.  For example, in Steele, the
  Eighth Circuit  Court of Appeals upheld a lower court's grant of summary
  judgment to the insurer in a case alleging  wrongful sexual contact between
  children, finding that rape of a twelve-year-old girl by her sixteen-
  year-old stepbrother was an intentional act and, further, that claim of
  negligent supervision against  the parents was not covered due to the
  policy's joint obligations provision.  74 F.3d  at 880-81.  The  court
  further noted that, even if the joint obligations clause did not bar
  claims, other policy language  precluded recovery for negligent
  supervision, noting that the policy did not cover damages "resulting  from"
  intentional misconduct.  The court reasoned that, even if it was assumed
  that the parents failed  to supervise their son adequately, plaintiffs
  would not have been injured but for the son's intentional  misconduct.  The
  court held that the plaintiff "cannot circumvent the policy's intentional
  conduct  exclusion by suing the Steeles for negligent supervision."  Id. at
  881.  Northern Security also cites   American Empire Surplus Lines Ins. Co.
  v. Bay Area Cab Lease, Inc., 756 F. Supp. 1287, 1289-90  (N.D. Cal. 1991)
  (no coverage for claim of negligent hiring against employer of molester;
  hiring of  molester "merely created the potential for injury . . . but was
  not itself the cause of the injury");   Mutual of Enumclaw v. Wilcox, 843 P.2d 154, 159 (Idaho 1992) (in complaint against wife alleging  failure to
  warn of husband's propensity to molest children, wife's conduct was "not an
  'occurrence'  under the policies because it was not the conduct which
  caused injury.  The injury suffered by the 

 

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