INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
No coverage for abuse
Between 2007 and 2009, Susan McCarthy’s minor child, M, was in the care of McCarthy’s friend, Glynis McCormack, at McCormack’s home. During this time, McCormack’s minor nephew, Z, who also lived there, physically, sexually, and emotionally abused M, resulting in ongoing mental health issues for M. McCormack was insured under a homeowners policy issued by Metropolitan Property and Casualty Insurance Company (Metropolitan). McCarthy obtained a consent judgment against McCormack, agreeing to recover a limited amount directly from McCormack and seek the remainder from Metropolitan as McCormack’s insurer.
In May 2012, McCarthy, on behalf of herself and M, filed a complaint in the Superior Court against McCormack, individually and as guardian of Z. The complaint was later amended to allege six counts: negligence (Count 1), negligent infliction of emotional distress (Count 2), assault and battery (Count 3), intentional infliction of emotional distress (Count 4), breach of fiduciary duty (Count 5), and premises liability (Count 6). McCarthy agreed that there was no coverage for Counts 2, 3, and 4.
In November 2015, Metropolitan filed in the Superior Court a complaint for declaratory judgment that was the subject of this appeal. The complaint alleged that, for several reasons, Metropolitan had no duty to indemnify McCormack for the consent judgment, the most pertinent reason being Metropolitan’s assertion that application of the policy’s “intentional loss” and “abuse” exclusions meant there was no coverage for McCarthy’s claims.
McCarthy responded with a three-count counterclaim, asserting breach of contract (Count 1); application of section 2904 to reach McCormack’s coverage (Count 2); and unfair claims settlement practices (Count 3), alleging that Metropolitan “without just cause failed to effectuate a prompt, fair and equitable settlement of [McCarthy’s] claims submitted, upon which liability had become reasonably clear.”
In July 2022, the court held a bench trial on Metropolitan’s complaint and Counts 1 and 2 of McCarthy’s counterclaim; trial on Count 3 of the counterclaim was scheduled to be heard separately at a later date.
In September 2022, the court entered judgment for Metropolitan on all counts of its complaint and on Counts 1 and 2 of McCarthy’s counterclaim, concluding that “the bodily injuries sustained by [M] are not covered by the insurance policy under both the intentional loss and abuse exclusions, and [consequently] Metropolitan has no duty to indemnify for the Consent Judgment.”
The Superior Court of York County declared that Metropolitan had no duty to indemnify McCormack for the consent judgment. McCarthy appealed.
Previously, Metropolitan had
filed a complaint for declaratory judgment in the United States District Court, asserting no duty to defend or indemnify McCormack because of policy exclusions. The district court declared that Metropolitan had a duty to defend McCormack but could not litigate its duty to indemnify until McCormack’s liability was determined. The First Circuit affirmed this decision. Subsequently, McCarthy and McCormack settled, and the Superior Court entered a consent judgment.
The Maine Supreme Judicial Court reviewed the case and affirmed the Superior Court’s judgment. The court held that the “intentional loss” and “abuse” exclusions in McCormack’s policy barred coverage for McCarthy’s claims. The court concluded that both McCormack and Z fell within the policy definition of “you,” and thus Z’s intentional acts of abuse, which were excluded from coverage, also excluded McCormack from coverage. Consequently, Metropolitan had no duty to indemnify McCormack for the consent judgment.
The Judicial Supreme Court held that the trial court did not err in its conclusions.
Metropolitan Property and Casualty Insurance Company v. Susan McCarthy et el.—Maine Supreme Judicial Court—No. Yor-23-413—December 31, 2024.
