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Judge Rules Insurer May Be Liable for Child Injured Due to “Negligent Supervision”

In Georgia, an employer is normally liable for the tortious acts of its employees. This is known as the doctrine of “respondeat superior.” But what happens when an employee injures someone outside the scope of their employment? A federal judge in Valdosta recently addressed such a situation.

United States Liability Insurance Company v. Jenkins

A couple enrolled their three-year-old child at a daycare center. One day, an employee of the daycare took the child out in her personal vehicle to go on a shopping trip. Neither the parents nor the daycare center owner gave permission for the employee to remove the child from the daycare center. While at a convenience store, the employee hit and injured the child with her personal vehicle.

The parents sued the daycare center owner in Georgia state court. That case remains pending. The daycare owner has a commercial general insurance policy that covers damages arising from “bodily injury” to third parties. But given the parents admitted in their own lawsuit the employee here was acting outside the scope of her employment, the insurance company maintains it is not responsible for any damages recovered in the state lawsuit. To that end, the insurance company sued the parents in federal court, seeking a declaratory judgment to that effect.

The insurance company moved for a judgment on the pleadings, in effect arguing they were entitled to a declaratory judgment as a matter of law. On June 16, U.S. District Judge Hugh Lawson largely denied this motion. Judge Lawson did not rule on the merits of the parents’ state lawsuit, be he did find they presented a plausible claim sufficient to avoid an immediate ruling in favor of the insurance company.

As noted above, the parents are not arguing respondeat superior in this case. Instead, their state-law claims are based on the theory that the daycare center was negligent in its supervision of their child and its employees. Under Georgia law, “a person who undertakes the control and supervision of a child … has the duty to use reasonable care to protect the child from injury.” The parents maintain the daycare owner’s breach of this duty was the proximate cause of their child’s injuries. Similarly, they argue the daycare owner “was aware of the culture at the daycare center resulting from an overwhelming lack of supervision and failure to abide” by industry standards for childcare.

Assuming these allegations are true, as Judge Lawson did for the immediate purposes of the insurance company’s motion, the parents have stated a viable claim against the daycare owner which, in turn, falls within the scope of the commercial general liability policy. That is to say, they stated a claim regarding the negligent acts of the owner, who is unquestionably covered by the policy, as opposed to the employee, who is not.

Judge Lawson did grant the insurance company relief on one issue, however. The daycare owner’s policy expressly disclaims coverage for any “punitive or exemplary damages.” This language is unambiguous, the judge said, and even the parents acknowledged its validity. This means the insurer will only be liable for any compensatory damages recovered by the parents in their state lawsuit, not punitive damages.