Metropolitan Property and Casualty Insurance Company v. Adamez et al
Filing
31
ORDER granting 13 Motion for Judgment on the Pleadings (Written Opinion). Signed by Senior Judge David S. Doty on 4/9/2015. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 14-3430(DSD/FLN)
Metropolitan Property and
Casualty Insurance Company,
Plaintiff,
ORDER
v.
Jill Adamez ex rel. Alayna
Rae Adamez; Kelly McConnach,
individually and d/b/a A
Barrol of Fun Daycare; and
Gary McConnach,
Defendants.
Timothy J. O’Connor, Esq. and Lind, Jensen, Sullivan &
Peterson, PA, 901 Marquette Avenue South, Suite 1300,
Minneapolis, MN 55402, counsel for plaintiff.
Isaac I. Tyroler, Esq. and TSR Injury Law, 7760 France
Avenue South, Suite 820, Bloomington, MN 55435, counsel
for defendants.
This matter is before the court upon the motion for judgment
on the pleadings by plaintiff Metropolitan Property and Casualty
Insurance Company (Metropolitan).
Based on a review of the file,
record, and proceedings herein, and for the following reasons, the
court grants the motion.
BACKGROUND
This insurance-coverage dispute arises out of Metropolitan’s
denial of the claim for losses resulting from an accident at its
insured’s daycare.
Defendant Kelly McConnach operates a licensed
daycare, A Barrol of Fun Daycare, out of her home in Cottage Grove,
Minnesota.
McConnach and her husband, Gary McConnach have a
homeowner’s policy with Metropolitan (Policy).
See Compl. Ex. 1.
The McConnachs do not have a separate insurance policy covering the
daycare.
The Policy contains the following exclusions:
4.
Business.
We do not cover bodily injury or
property damage arising out of or in connection
with your business activities.
This exclusion
applies but is not limited to an act or omission,
regardless of its nature or circumstance, involving
a service or duty rendered, promised, owed or
implied to be provided because of the nature of the
business....
5.
Care of Persons.
We do not cover your legal
liability to any person resulting from your regular
care of one or more persons anywhere for economic
gain and regardless of whether such care or
premises is licensed....
Id. at 33-34.
The
relevant
facts
are
not
in
dispute.
Defendant
Adamez’s daughter, Alayna Adamez, attended the daycare.
paid McConnach $130 per week for daycare services.
Jill
Adamez
On July 13,
2012, Alayna Adamez was injured by another child when playing on
the trampoline in the backyard of the daycare.
surgery and incurred substantial medical bills.
coverage for the accident under the Policy.
She required
McConnach sought
Metropolitan denied
coverage under the business exclusion set forth above.
Countercl., Ex. A.
2
Answer &
On July 11, 2014, McConnach and Adamez executed a MillerShugart1
agreement
and
corresponding
assignment
under
which
McConnach assigned her claims against Metropolitan to Adamez and
Adamez agreed not to seek damages from McConnach.
¶ 18(a), Ex. 3 ¶ 1.
Compl. Ex. 2
In the Miller-Shugart agreement, McConnach
expressly acknowledged that she, doing business as A Barrol of Fun
Daycare, would very likely be found liable for Alayna Adamez’s
injuries.
Id. Ex. 2 ¶ 4.
The parties also acknowledged that the
accident occurred while Adamez was attending the daycare. Id. ¶ 2.
McConnach agreed not to oppose liability and stipulated to the
entry of liability by default.
Id. ¶ 13.
The parties agreed to
submit the issue of damages to an arbitrator, but it is unclear
whether any such arbitration has taken place.
Id. ¶ 14.
On September 11, 2014, Metropolitan filed this action seeking
a declaration that it owes no duty to defend or indemnify under the
Policy or under Minn. Stat. § 65A.30, subd. 1.
Metropolitan named
Jill Adamez, McConnach, individually and doing business as A Barrol
of Fun Daycare, and Gary McConnach as defendants. Defendants filed
1
In a Miller-Shugart agreement, an insured may stipulate to
a money judgment in favor of the injured party and, in return, the
injured party releases the insured from personal liability and
agrees to seek recovery directly from the insurer.
Miller v.
Shugart, 316 N.W.2d 729 (Minn. 1982); Corn Plus Coop. v. Cont’l
Cas. Co., No. 04-4270, 2007 WL 107676, at *1 (D. Minn. Jan. 9, 2007).
3
a counterclaim seeking a declaration that the accident is covered
under the Policy.
Metropolitan now moves for judgment on the
pleadings.
DISCUSSION
I.
Standard of Review
The same standard of review applies to motions under Federal
Rules of Civil Procedure 12(c) and 12(b)(6). Ashley Cnty., Ark. v.
Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009).
Thus, to survive
a motion for judgment on the pleadings, “a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.”
Braden v. Wal–Mart Stores,
Inc., 588 F.3d 585, 594 (8th Cir. 2009) (citation and internal
quotation marks omitted).
“A claim has facial plausibility when
the plaintiff [has pleaded] factual content that allows the court
to draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009).
Although a complaint need not contain detailed factual
allegations, it must raise a right to relief above the speculative
level.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
“[L]abels and conclusions or a formulaic recitation of the elements
of a cause of action” are not sufficient to state a claim.
Iqbal,
556 U.S. at 678 (citation and internal quotation marks omitted).
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II.
Policy Coverage
In Minnesota the interpretation of an insurance policy is a
question of law.
Am. Family Ins. Co. v. Walser, 628 N.W.2d 605,
609 (Minn. 2001).
The court interprets an insurance policy in
accordance with general principles of contract construction, giving
effect to the intent of the parties.
Thommes v. Milwaukee Ins.
Co., 641 N.W.2d 877, 879 (Minn. 2002). The court gives unambiguous
language its plain and ordinary meaning, and construes ambiguous
language against the drafter and in favor of the insured.
Id. at
880; Nathe Bros., Inc. v. Am. Nat’l Fire Ins. Co., 615 N.W.2d 341,
344 (Minn. 2000).
Language is ambiguous if it is “reasonably
subject to more than one interpretation.” Columbia Heights Motors,
Inc.
v.
Allstate
Ins.
Co.,
275
N.W.2d
32,
34
(Minn.
1979).
However, the court “guard[s] against invitations to find ambiguity
where none exists.” Metro. Prop. & Cas. Ins. Co. v. Jablonske, 722
N.W.2d 319, 324 (Minn. Ct. App. 2006) (citation and internal
quotation marks omitted).
The
coverage.
insured
must
first establish
a prima
facie
case
of
SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 311
(Minn. 1995), overruled on other grounds by Bahr v. Boise Cascade
Corp.,
766
N.W.2d
910,
919
(Minn.
2009).
If
coverage
is
established, the burden shifts to the insurer to prove that a
policy
exclusion
applies.
Id.
at
313.
The
court
strictly
construes exclusions against the insurer, in light of the insured’s
5
expectations.
Thommes,
641
N.W.2d
at
880.
If
the
insurer
demonstrates that an exclusion applies, the insured bears the
burden of proving an exception to the exclusion.
N.W.2d at 314.
SCSC Corp., 536
Here, the parties dispute the application of the
business exclusion and care-of-persons exclusion as set forth
above.
A.
In
Business Exclusion
relevant
part,
the
business
exclusion
provides
that
Metropolitan does not cover bodily injury “arising out of or in
connection with your business activities.”
Compl. Ex. 1, at 33.
The business exclusion is designed “to confine the homeowner’s
policy coverage to nonbusiness risks and to relegate business
coverage to a commercial policy.” Erickson v. Christie, 622 N.W.2d
138, 140 (Minn. Ct. App. 2001).
Defendants argue that the injury did not “arise out” daycare
activities, and thus is covered under the Policy.2
disagrees.
The term “arising
The court
out of” is broadly construed and
“generally connotes originating from, growing out of, or flowing
from.”
Capitol Indem. Corp. v. Ashanti, 28 F. Supp. 3d 877, 883
(D. Minn. 2014) (citation and internal quotation marks omitted).
Although “arising out of” requires “but-for” causation rather than
proximate causation, “something more than literal but-for causation
2
Defendants do not argue that any exception to the exclusion
applies.
6
is necessary to find that an injury ‘arose out of’ a particular
event or circumstance.”
Id.
There must be a showing that there is
a “causal relationship between the place covered by insurance and
the acts giving rise to legal liability.” Murray v. Greenwich Ins.
Co., 533 F.3d 644, 650 (8th Cir. 2008); cf. Ashanti, 28 F. Supp. 3d
at 885 (finding that the business exclusion did not apply because
the fact that the injured person was a “daycare worker rather than
simply a visitor to the home did not contribute in any way to her
injury”).
Here, the daycare, as a business, is central to the injury
sustained by Alayna Adamez.
Alayna Adamez was a client of the
daycare when injured by another child on daycare premises at a time
when McConnach was responsible for providing daycare services.
Indeed, in the Miller-Shugart agreement, McConnach acknowledged her
liability, not individually, but “d/b/a A Barrol of Fun Daycare.”
Compl. Ex. 2 ¶ 4.
risk
associated
Moreover, the accident is precisely the kind of
with
operating
a
daycare,
and
appropriately
addressed through a commercial rather than homeowner’s policy. See
Erickson, 622 N.W.2d at 141 (“Premiums for homeowner’s policies
would be inflated unreasonably if the homeowner’s insurance pool
were
required
ventures.”).
to
assume
risks
attendant
upon
commercial
Under these circumstances, Alayna Adamez’s injury
bears a direct relation to the daycare as a business and thus
arises out of that business within the meaning of the Policy.
7
Defendants argue that discovery is required to reveal certain
facts about the accident.
Defendants specifically contend that
they need to explore whether McConnach’s teenage daughter was
watching Alayna Adamez and the other daycare clients at the time of
the accident.
If so, defendants argue that McConnach was not
providing daycare services at the time of the accident because her
daughter was not a daycare employee. Discovery on this issue would
not affect the outcome, however.
First, defendants, including the
McConnachs, have direct and exclusive access to the facts they
claim to be lacking.
Defendants could have submitted an affidavit
detailing the alleged missing facts in response to Metropolitan’s
motion, but failed to do so.3
Second, coverage does not turn on
who was watching Alayna Adamez.
The undisputed facts are that
Adamez was a daycare client when injured at the daycare.
Even if
McConnach delegated her daughter to supervise Alayna Adamez, her
status as a daycare operator did not change.
Nor did the home’s
status as a daycare facility disappear.
B.
Care-of-Persons Exclusion
Metropolitan also argues that coverage is precluded under the
care-of-persons exclusion.
This exclusion provides, in relevant
part, that the Policy does not cover “liability to any person
3
If additional facts had been provided, the court would have
converted the motion into one for summary judgment. See Fed. R.
Civ. P. 12(d).
8
resulting from [the insured’s] regular care of one or more persons
anywhere for economic gain.”
Compl. Ex. 1, at 34.
The exclusion
does not apply to “occasional care or babysitting.”
Id.
Defendants argue that this provision does not apply because
the accident occurred on a trampoline not “needed or required” for
the daycare.
Although true, this fact is immaterial and does not
render the provision inapplicable.
Defendants also argue that if
McConnach’s daughter was responsible for daycare clients at the
time of the accident, her supervision constituted “occasional care
or babysitting” because she was not employed by the daycare.
As
noted, the Policy language applies even if McConnach’s daughter was
in charge at the time of the accident.
defendants
hope
to
exclusion applies.
develop,
the
court
Even assuming the facts
is
satisfied
that the
McConnach operated a daycare, was paid for her
services by Jill Adamez, and Alayna Adamez was injured during her
time as a daycare client on daycare premises. Additional discovery
will not yield material contrary facts.
As a result, judgment on
the pleadings is warranted.
III.
Statutory Exclusion
Metropolitan argues that its decision to deny coverage is also
supported
by Minn.
Stat.
precludes
coverage
“under
§
a
65A.30,
day
subd.
care
1,
which
provider’s
expressly
homeowner’s
insurance for losses or damages arising out of the operation of day
care services” unless specifically included in the policy or rider
9
for business coverage.
Defendants respond that the statute does
not apply because the accident did not “arise of out” the operation
of the daycare.
As discussed above, defendants’ argument in this
regard is without merit.
As a result, the statute also prohibits
coverage and judgment on the pleadings is warranted on this basis
as well.
CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that:
1.
The motion for judgment on the pleadings [ECF No. 13] is
granted; and
2.
The case is dismissed with prejudice.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated:
April 9, 2015
s/David S. Doty
David S. Doty, Judge
United States District Court
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