Sexual Assault Excluded
Sexual Assaulat Excluded
Barry Zalma
Sep 26, 2023
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A coverage dispute arose from the sexual assault of a special needs student aboard her school bus. National Liability and Fire Company sought a declaration that it had no duty to defend or indemnify the bus company or its school district client in a state court action brought by the student and her mother because its policy did not cover the incident alleged in their complaint. The District Court erroneously held that National had to defend both entities and later concluded it also had to indemnify them.
In National Liability & Fire Insurance Co. v. Brimar Transit, Inc. Pittsburgh Public School District, No. 22-2565, United States Court of Appeals, Third Circuit (September 22, 2023) the dispute was resolved.
FACTS
Brimar Transit, Inc. transported students for the Pittsburgh School District under a multi-year contract. National insured the vehicles in Brimar’s fleet. Among the students Brimar transported to and from school were children with special needs. One of those students-an adolescent girl named K.M.-had developmental challenges known to Brimar and the District. Traveling on the bus with her each day was a 12-year-old boy with similar challenges who had sexually assaulted K.M. multiple times, including a groping incident during gym class. The gym incident led the District and Brimar to craft a specific plan to separate K.M. from the male student on the bus: K.M. sat right behind the driver, while the male student sat in the rear. The regular bus driver followed the plan. And when she took maternity leave, her first replacement did too.
A second substitute driver took over the route without following the plan and sat K.M. next to the male student. Their proximity allowed the male student to use his body weight to pin K.M. to the seat. With K.M. trapped, the male student pulled down both their pants and assaulted her from behind. Despite being only several feet away during the assault, and despite the cries of other children, the driver did not intervene or even acknowledge the attack on K.M. K.M. managed to push the male student off her a short time later, though he assaulted her again by slapping her backside as she exited at her stop.
K.M. and her mother sued Brimar and the District alleging Brimar failed to tell the driver about the plan and failed to train and supervise her properly. They similarly alleged the District was negligent and should have ensured K.M.’s safety on the bus. National defended Brimar in the state court action after issuing a reservation of rights letter but declined to defend the District.
National sued seeking declaratory judgment and later moved for judgment on the pleadings, urging that it had no duty to defend the defendants for two reasons. First, it had no duty to defend Brimar because K.M.’s alleged injuries did not result from the “use” of the bus and there was an abuse and molestation exclusion that should apply. Second, it had no duty to defend the District as a non-insured.
The District Court disagreed with National on both counts. While this action was pending, National paid more than $500,000 to settle the plaintiffs suit.
National moved for summary judgment yet the trial Court held that because National’s act of settling the state court claim before critical facts and evidence developed kept the District Court from making nuanced decisions about its duties to defend and indemnify, it would need to indemnify Brimar and the District.
THE APPEAL - Discussion
Pennsylvania law imposes separate, though related, duties on insurers to defend and indemnify their insureds. Pennsylvania courts analyze those allegations using the “four-corners” rule: if the allegations even “potentially could support recovery under the policy,” then the insurer has a duty to defend its insured in the case.
The Policy determines whether National had a duty to defend.
Based on that provision, National offers two ways in which the District Court erred in holding it had a duty to defend. First, the complaint pleads injuries “resulting from” the sexual assault, not the “use” of Brimar’s bus. And second, sexual assaults like K.M.’s are excluded by the Policy’s “Abuse or Molestation Exclusion.”
National argued the District Court erred and urged instead that, to trigger coverage, the underlying bodily injury must be causally connected to the use of the insured vehicle as a motor vehicle.
The male student’s previous assaults confirm the bus was merely incidental to the sexual assault-i.e., as the situs of the attack.
Because the allegations in the complaint do not forge a strong enough link between the use of the school bus and K.M.’s injuries, the Third Circuit concluded that the District Court erred in finding National had a duty to defend Brimar and the District.
ZALMA OPINION
The injuries suffered by KM were horrific but they were not, under any definition of the term, a result of the use of the school bus. The driver erred but the driver, nor the use of the bus, caused her injury. National should now seek to recover the money it paid, under a reservation, on behalf of the defendants.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Happy Law Day
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Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-1-2026-barry-zalma-esq-cfe-2tywc, see the video at at and at https://zalma.com/blog plus more than 5300 posts.
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
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Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
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A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured ...
