# IMT Insurance Co. v. Crestmoor Golf Club

> Supreme Court of Iowa · August 19, 2005 · 702 N.W.2d 492

URL: https://www.frixlaw.com/law-library/cases/9742230

## Case

- **Full name:** IMT INSURANCE COMPANY, Appellant, v. CRESTMOOR GOLF CLUB, D/B/A Crestmoor Country Club, Galen Krieger and Tabitha Lynnae Cottrell, Appellees
- **Court:** Supreme Court of Iowa
- **Decided:** August 19, 2005
- **Citations:** 702 N.W.2d 492; 23 I.E.R. Cas. (BNA) 586; 2005 Iowa Sup. LEXIS 113; 2005 WL 1993931
- **Precedential status:** Published
- **Opinion:** Dissent by Cady
- **Judges:** Wiggins, Cady
- **Cited by:** 6 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9742230

## How later opinions describe it (automated extraction)

- holding that the severability-of-interest clause does not affect the denial of coverage when a criminal acts exclusion refers to “any insured”

## Opinion text

CADY, J.
(dissenting).
I respectfully dissent. I disagree with the holding by the majority that damages in an action for negligent supervision and retention arise out of “the liability of the insured for the wrongful conduct of [the employee].” I would hold the exclusion in the insurance policy does not apply.
It is fundamental that a claim for negligent supervision and retention arises out of the employer’s own conduct. Kiesau v. Bantz, 686 N.W.2d 164, 173 (Iowa 2004). The tort does not, in any way, impose liability on the employer for misconduct of the employee. See 27 Am.Jur.2d Employment Relationship § 390, at 842 (2004) (“The theory of direct liability [for negligent hiring, supervision, or retention] is completely separate from the respondeat superior theory of vicarious liability because the cause of action is premised on the wrongful conduct of the employer, such that the employer’s negligence was the proximate cause of the plaintiffs injuries.”); 30 C.J.S. Employer-Employee § 189, at 268 (1992) (“Aside from respon-deat superior, or where the doctrine of respondeat superior is inapplicable, an employer may be liable to a third person for its negligence in the training and supervision of, its employees. The basis of the employer’s liability for negligent supervision is direct, not vicarious, liability.”); see also 7A Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 103:31, at 103-74 (1997) (distinguishing between the insured’s liability for negligent supervision and “legal responsibility for the third party’s act (vicarious liability)”). Such a proposition ignores the fundamental premise of the tort and creates a legal fiction that serves only to permit an insurer to avoid its obligation to an insured under a contract of insurance.
Of course, we have said that the wrongful conduct of the employee is an element *499 of the tort of negligent supervision and retention. Kiesau, 686 N.W.2d at 172 . We have also said that a plaintiff must prove the wrongful conduct of the employee was a cause of the damages. Id. at 173 . However, neither of these propositions supports the conclusion that an employer in a negligent supervision and retention action is liable for the wrongful conduct of the employee.
Our observation in Kiesau that the wrongful conduct of the employee is an element of the tort of negligent supervision and retention does not mean that the tort imposes liability on the employer for the employee’s wrongful conduct. Liability is imposed under the tort of negligent supervision and retention essentially for the failure of the employer to prevent the wrongful conduct by the employee. See Godar v. Edwards, 588 N.W.2d 701, 709 (Iowa 1999) (employer has a duty to use care in hiring, supervising, and retaining people who may present a threat of harm to others). The tort requires an employer to protect others from its employee’s wrongful misconduct if the employee fore-seeably posed an unreasonable risk of harm to others. Id. at 708-09 . Thus, to impose liability on the employer, the plaintiff must necessarily show the presence of wrongful misconduct by the employee that should have been prevented. See 30 C.J.S. Employer-Employee § 186, at 262-63 (“In order to impose liability on an employer for negligent hiring of an employee, the plaintiff must first establish liability on the part of the employee by virtue of the employee’s wrongful act against the plaintiff, and no liability attaches to the master by reason of hiring incompetent or otherwise unfit servants unless their incompetence or unfitness was the proximate cause of the injury.”). Only in this way is the underlying misconduct a part of the tort. However, the wrongful conduct is not that part of the tort that gives rise to liability. Liability arises from the failure of the employer to prevent the wrongful conduct. See 27 Am.Jur.2d Employment Relationship § 390, at 842 (noting that liability imposed in negligent hiring, supervision, and retention cases is direct liability for the employer’s own conduct, not vicarious liability for the conduct of the employee); 30 C.J.S. Employer-Employee § 189, at 268 (same).
Our statement in Kiesau that a plaintiff must prove that the wrongful conduct of the employee was a cause of the plaintiffs damages also does not support the majority’s position. Kiesau cited Schoff v. Combined Insurance Co., 604 N.W.2d 43, 53 (Iowa 1999), for this proposition. Kiesau, 686 N.W.2d at 173 (citing Schoff, 604 N.W.2d at 53 ). However, Schoff merely indicated that an employer cannot be liable if the employee’s conduct, the act the employer had a duty to prevent, was “not actionable against the employee.” Schoff, 604 N.W.2d at 53 . Schoff did not hold that in negligent hiring, supervision, and retention cases, liability is imposed on the employer for the misconduct of the employee, but merely said the conduct that the employer was obligated to prevent must be wrongful or tortious. See id. Thus, Schoff instructs that wrongfulness of the employee’s conduct is necessary to make the employer’s conduct actionable, and our decision had nothing to say about injecting proof of causation between the wrongful conduct of the employee and the damages, as an element of the tort. Instead, like any other tort, the torts of negligent hiring, supervision, and retention require the plaintiff to show the defendant’s breach proximately caused the plaintiffs damages. See 30 C.J.S. Employer-Employee § 186, at 262-63 (“In order to impose liability on an employer for negligent hiring of an employee, the plaintiff must first establish liability on the part of the employee by virtue of the employee’s wrongful act *500 against the plaintiff, and no liability attaches to the master by reason of hiring incompetent or otherwise unfit servants unless their incompetence or unfitness was the proximate cause of the injury.”). Properly read, Schoff only holds that the employer’s duty under the tort does not extend to protect others from conduct that was not wrongful or tortious.
Accordingly, the damages in an action for negligent hiring, supervision, or retention arise out of the liability of the employer for the misconduct of the employer, not the misconduct of the employee. As applied to the insurance policy at issue in this case, this means “liability of the insured” is not imposed “for the misconduct of [the employee],” and the exclusion does not apply.
I recognize we recently held in American Family Mutual Insurance Co. v. Corrigan, 697 N.W.2d 108, 114 (Iowa 2005), that injuries to a child inflicted by the son of an operator of an in-house day care in an action for negligent supervision against the homeowner-operator were excluded from coverage under the homeowner’s insurance policy because such “damages [arose] out of ... a violation of criminal law.” I do not take issue with Corrigan , or the proposition that damages, detached from liability, arise from the acts of someone other than the defendant in an action for negligent supervision. However, the exclusion in this ease does not deal with damages arising out of the misconduct of another, but those arising out of liability for misconduct of another. If the concept of liability was excluded from the insurance policy in this case, I would have no objection to the result reached by the majority. But liability was not excluded, and this is what makes all the difference. The insurance policy in this case is much more narrowly drawn than the policy in Corri-gan and should be interpreted to recognize this important distinction.
The whole focus of the tort of negligent hiring, supervision, and retention is to make the employer liable based upon its individual and separate obligation to step in and prevent the wrongful acts, so that the employer cannot avoid responsibility by pointing the finger at the employee who committed the wrongful acts. Yet, the majority interprets the amendatory endorsement exclusion to allow the insurer to avoid responsibility for coverage for damages from the employer’s act by pointing the finger at the employee. The insurance contract should not be interpreted to permit the tortfeasor’s insurer to do what the law forbids the tortfeasor to do, without clear language to support that interpretation.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9742230. Public record. Not legal advice.