Avoiding the Pyrrhic Victory:
How to Draft a Complaint to Trigger Insurance Coverage

Attorneys are taught in law school that two things matter in a plaintiff’s case: liability and damages. But those of us in the real world know you also need a third ingredient--insurance coverage.

This is particularly true where an intentional tortfeasor harms your client, but the tortfeasor’s employer, supervisors, or organization failed to take reasonable steps to prevent the harm. In the present climate, it is wise to draft a complaint thoughtfully, and to show that the intentional tort could not have happened but for the prior negligence of the insured defendant, and to trigger coverage.

To illustrate these doctrines, let’s take a hypothetical. Joanna Jones is a 10-year-old girl. Darryl Smith assaults her. We’ll analyze the ways to plead against Darryl’s supervisors, teachers, and/or parents to pick up coverage, considering Darryl as a child, an adult, a staff member, and even as an intruder.

Negligent Hiring
Let’s first suppose that Darryl was a school bus driver employed by a private company when he assaulted Joanna. If the tort was committed by an employee, allege that the employer committed negligent hiring and/or supervision.

The employer will, of course, argue that tortuous conduct was not reasonably foreseeable, particularly if a crime was involved. Allege that the negligence occurred as early in time as possible, so you can establish that the intentional tortfeasor should never have had access to the victim.

Before you start drafting, do an intensive search for prior criminal conduct, particularly violent or menacing conduct. If you find it, allege failure to conduct a reasonable pre-employment investigation, background check, or reference check.

In Carlsen v. Wackenhut, 73 Wn. App. 247, 868 P.2d 882 (1994), a rock concert security company failed to investigate an applicant’s inconsistent and sketchy application, and he raped a patron under the bleachers at a stadium show. The court held: “If, however, the work is likely to subject third persons to serious risk of great harm, there is a special duty of investigation.” If the school bus company chronically fails to investigate employees, the school district also may be liable for negligently hiring or supervising the bus company.

In every case where I have alleged an employer failed to discover prior criminal history, I was able to find the history myself on the Web in less than two hours, at a cost of less than $100. Employers almost never perform this minimal investigation, and this is negligence.

This special duty of investigation is a duty owed directly to the plaintiff. Scott v. Blanchet High School, 50 Wn. App. 37, 747 P.2d 1124 (1987). In Scott, the court announced this test for negligent hiring in a case involving a teacher: “An employer may be liable to a third person for the employer’s negligence in hiring or retaining a servant who is incompetent or unfit. Such negligence usually consists of hiring or retaining the employee with knowledge of his unfitness, or of failing to use reasonable care to discover it before hiring or retaining him.

The theory of these decisions is that such negligence on the part of the employer is a “wrong to such third person, entirely independent of the liability of the employer under the doctrine of respondeat superior.”

Special Relationship in a Custodial Setting
Now let’s suppose that Joanna Jones lived at a group home for children, and Darryl Smith was an adult staff member when he assaulted her.

If plaintiff was comparatively helpless in a residential or custodial setting, you should also plead that defendant had a special relationship to plaintiff and a heightened duty of care.

This test has been clarified in the case of Niece v. Elmview Group Home. In Niece, a group home staff member repeatedly raped an incompetent resident, causing her to give birth in a toilet. The court held: “Given Niece’s total inability to take care of herself, Elmview was responsible for every aspect of her well being. This responsibility gives rise to a duty to protect Niece and other similarly vulnerable residents from a universe of possible harms. This duty is limited only by the concept of foreseeability.”

The court stated that this holding does not stem from the defendant’s duty under respondeat superior to supervise the employee, but rather the special relationship the group home had directly with the plaintiff to protect her from all harms due to her helplessness, unless those harms were unforeseeable. The court held that sexual assault by a staff member is not unforeseeable as a matter of law.

This duty to protect residents includes the duty to protect them from staff (Niece), other residents, and even visitors Shepard v. Mielke, 75 Wn. App. 201, 877 P.2d 220 (1994). It also requires the facility to protect them from themselves, where they are disturbed Hunt v. King County, 4 Wn. App. 14, 481 P.2d 593, 597 (1971).

Whether Darryl assaulted Joanna as a staff member, a roommate, or an intruder, the group home has exposure. If Joanna is disturbed (say, hyperactive or autistic) and injures herself, the group home will also be liable for negligence if you plead properly.

Negligent Supervision of Children
Let’s say Darryl is a child when he assaults Joanna, while they’re playing in Darryl’s back yard. A parent may be liable of negligent supervision of children, and may be liable for intentional torts committed by the children. “Under the doctrine of negligent supervision, parents are liable for the intentional torts of their minor children when: (1) the child has a dangerous proclivity; (2) the parents know of the child’s dangerous proclivity; and (3) they fail to exercise reasonable care in controlling that proclivity.” Barrett v. Pacheco, 62 Wn. App. 717, 815 P.2d 834 (1991).

If her counsel pleads intelligently, Darryl’s parents’ homeowners’ coverage will be at issue. Frequently, homeowners’ policies have surprisingly high limits for the value of the residence involved, often because the lender requires it. Because of the large wave of refinancing which just concluded, many homeowners’ insurance policy limits are particularly high at the present.

This duty of supervision applies to residential programs acting in the stead of parents. See Eldredge v. Kamp Kachess Youth Servs., Inc., 90 Wash.2d 402, 408, 583 P.2d 626 (1978). If Darryl assaulted Joanna while living in a group home, where he had been placed because of his violent behavior towards other children, the group home will face liability. It’s a little-known fact that most residential programs contracting with DSHS now must carry liability policies of at least $1 million per occurrence.

A school also has a duty to supervise children in its care, and may be liable for negligent supervision resulting in intentional criminal conduct. The initial question considers whether the tort was committed within the school’s “scope of authority.” See Rhea v. Grandview School Dist. No. JT 116-200, 39 Wash. App. 557, 560, 694 P.2d 666 (1985).

However, a school may be liable for intentional torts such as rape committed on school grounds by students, during school hours, even where the school’s negligence appears limited to leaving the door to a darkened room unlocked. See McLeod v. Grant Co. School District, 42 Wn.2d 316, 255 P.3d 360 (1953). The court held in McLeod: “It is not a voluntary relationship. The child is compelled to attend school...The result is that the protective custody of teachers is mandatorily substituted for that of the parent.” McLeod at 319.

The school’s duty extends to protecting students from students, teachers, or other third persons. See Peck v. Siau, 65 Wn. App. 285, 827 P.2d 1108 (1992); J.N. v. Bellingham School District, 74 Wn. App. 49, 871 p.2d 1106 (1994). The duty also may extend to on-site extracurricular activities, or even off-site activities that are sanctioned by the school.

Negligent Placement
Let’s say DSHS places Joanna in a group home with Darryl, and he’s a co-resident child. Darryl abuses Joanna after placement begins. Both Joanna and her parents may have a cause of action against DSHS for negligently investigating the placement. See Tyner v. Dep’t of Soc. & Health Servs., 141 Wn.2d 68, 79-81, 1 P.3d 1148 (2000); M.W. v. Department of Social and Health Services 149 Wn.2d 589, 70 P.3d 954, (2003).

Joanna may also have a claim against the group home operator for negligent supervision of Darryl.

Finally, Joanna may have a claim for negligent supervision of her. This really gains traction where Darryl is an adult, because the group home operator has a duty to supervise children to keep them from being hurt, not just to keep them from hurting others.

Negligent Misrepresentation
Last, if the defendant negligently made false statements in a transaction where the defendant stands to gain financially, consider pleading negligent misrepresentation. Let’s say that Joanna’s parents enrolled her in a private-pay after-school recreation program, in part because the program advertised it was “safe.” Institutions such as daycares, group homes, private schools, nursing homes, and the like constantly advertise themselves as being safe. This kind of evidence taken from the Yellow Pages or the Web can be very persuasive. Defendant’s statement that the program is “safe” is a representation. Joanna and her parents are entitled to rely on it.

If Darryl assaults Joanna at the recreation program, then the provider may be liable for negligent misrepresentation whether Darryl is another child, a staff, or even an intruder. The provider has advertised the program as “safe,” which voluntarily extends the duty of care.

The test for negligent misrepresentation is very fact-intensive. If Joanna’s attorney develops the case correctly, defendant will have a very frustrating time trying to have it dismissed.

The best summary of the test, in ESCA Corp. v. KPMG Peat Marwick, states: “One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.” ESCA Corp. v. KPMG Peat Marwick 135 Wn.2d 820, 959 P.2d 651 (1998). The Washington Supreme Court upheld the following jury instruction setting forth the specific elements:

1. That KPMG supplied information for the guidance of others in their business transactions that was false; and
2. That KPMG knew or should have known that the information was supplied to guide Seafirst in business transactions; and
3. That KPMG was negligent in obtaining or communicating false information; and
4. That Seafirst relied on the false information supplied by KPMG; and
5. That Seafirst’s reliance on the false information supplied by KPMG was justified (that is, that reliance was reasonable under the surrounding circumstances); and
6. That the false information was the proximate cause of damages to Seafirst.

Conclusion
It is crucial to think creatively about these theories of negligence before drafting the complaint. Because, if you prove liability and damages, but your only resource is a convicted sex offender who is incarcerated, your client will learn the real meaning of “Pyrrhic victory.”