The district court decision that a defense was owed for claims that included sexual abuse was affirmed by the First Circuit. Metropolitan Property and Cas. Ins. Co. v. McCarthy, 2014 U.S. App. LEXIS 10622 (1st Cir. June 5, 2014).
The insured was sued when one of her wards allegedly sexually and physically abused a younger boy. The district court determined that Metropolitan had a duty to defend.
The First Circuit affirmed. Metropolitan argued that the only abuse alleged in the underlying complaint was either sexual in nature or intended to conceal sexual abuse. Hence, the alleged action was excluded by the policy's definition of bodily injury. The complaint, however, included allegations of physical abuse that were not limited to physical contact related to sexual abuse. For example, it was alleged that the victim was "repeatedly sexually and otherwise physically abused." Elsewhere, the complaint alleged that the victim was "violently and forcefully struck" in the abdomen.
Metropolitan also argued the abuse exclusion barred coverage. But the exclusion could be reasonably read to preclude coverage only for abuse inflicted or directed by an insured rather than by any individual. Otherwise, the provision was ambiguous. Therefore, the conduct of a non-insured individual was interpreted as outside the scope of the abuse exclusion.
The court next considered whether the allegations allowed the possibility that the perpetrator was a non-insured. "You" was defined as a person who was "a resident of the same household." The complaint established that the alleged abuser was a minor ward of the insured, but it did not state that he resided with her. Rather, the allegations could be interpreted to mean that the alleged abuser stayed only temporarily, though repeatedly, at the insured's home. Given this inference, the youth would be a non-insured whose conduct would be outside the abuse exclusion.
Accordingly, the complaint raised the possibility that the insured's ward was not a resident of her household and that he inflicted physical, non-sexual abuse on the younger boy. Under these facts, there was coverage and Metropolitan had a duty to defend.
