United States District Court, D. Minnesota
Metropolitan Property and Casualty Insurance Company, Plaintiff,
Jill Adamez ex rel. Alayna Rae Adamez; Kelly McConnach, individually and d/b/a A Barrol of Fun Daycare; and Gary McConnach, Defendants
For plaintiff: Timothy J. O'Connor, Esq. and Lind, Jensen, Sullivan & Peterson, PA, Minneapolis, MN.
For defendants: Isaac I. Tyroler, Esq. and TSR Injury Law, Bloomington, MN.
David S. Doty, United States District Judge.
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.
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 Jill Adamez's daughter, Alayna Adamez, attended the daycare. Adamez paid McConnach $130 per week for daycare services. On July 13, 2012, Alayna Adamez was injured by another child when playing on the trampoline in the backyard of the daycare. She required surgery and incurred substantial medical bills. McConnach sought coverage for the accident under the Policy. Metropolitan denied coverage under the business exclusion set forth above. Answer & Countercl., Ex. A.
On July 11, 2014, McConnach and Adamez executed a Miller-Shugart agreement and corresponding assignment under which McConnach assigned her claims against Metropolitan to Adamez and Adamez agreed not to seek damages from McConnach. Compl. Ex. 2 ¶ 18(a), Ex. 3 ¶ 1. 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 a counterclaim seeking a declaration that the accident is covered under the Policy. Metropolitan now moves for judgment on the pleadings.
I. Standard of Review