United Ohio Insurance Company (UOI) denied a homeowner claim on a policy it issued to Sandra Myers. Former house guests of Myers sued her for negligent supervision. At the time of the loss, Myers was the court-appointed guardian of her grandson. She was caring for the grandson under specific orders prohibiting him from unsupervised contact with legal minors.

Myers failed to supervise her grandson while two young children and their parents (the Fry family) were houseguests in January and March, 2000. Myers also failed to warn her guests that her grandson was a juvenile delinquent, convicted of a sexual-related violation. Her minor-aged guests allege that they were molested by the grandson and, via their parents, sued both Myers and her grandson under separate actions. UOI, after denying the claim, asked the lower court for a declaratory judgment that the company had no obligation to indemnify or defend the insured household. The Frys appealed after the trial court ruled in favor of UOI.

The Frys asked the higher court to review one issue, whether UOI was obligated to defend and, if necessary, respond to damages caused by Myers’ negligent supervision. The Frys based their argument on two points: that public policy created a duty for the insurer and that the homeowner policy was ambiguous. Upon reviewing relevant cases, the court did find precedents that would allow coverage based on negligent supervision. The court did not find support for UOI’s counter-argument that Myers failure to supervise her grandson (ignoring a court order) constituted a separate, intentional act.

The court then considered the issue of ambiguity. No party argued with the wording of either the basic policy’s liability section insuring agreement or exclusion. The language appeared to clearly prohibit coverage for a number of acts, including damages related to sexual molestation and negligent supervision. However, the Frys pointed out that the basic policy was amended with a provision that was changed by a "Replacement Plus" form. The endorsement included wording that expanded coverage to apply to "Personal Injury." The form also defined the term and gave exceptions to coverage. The Frys contended that the wording of the endorsement either superseded or conflicted with the basic policy. The higher court saw things differently. In its reading of the policy and its endorsement, it determined that the latter merely introduced additional coverage that did not effect nor contradict the former’s exclusions (except regarding Personal Injury).

Based upon its finding that the policy language clearly excluded damage related to sexual molestation as well as negligent supervision, as well as finding the policy wording, including the endorsement, to be unambiguous, the lower court’s decision was affirmed in favor of UOI.

United Ohio Insurance Company, Plaintiff-Appellee v. Sandra Myers et al., Defendants-Appellees and Chase Fry, a minor, by and through Jsannon and Robert Fry, his next friends and parents et at., Defendants-Appellants. Ohio Court of Appeals, Third Appellate District. No. 11-02-08. Filed December 4, 2003. 2002 Ohio App. LEXIS 6391. Affirmed. CCH Paragraph 6888