Analysis The issue presented in this case is whether Illinois Farmers has a duty to defend or indemnify R.H. and J.S. against M.S.'s and A.A.'s claim that R.H. negligently supervised J.S. Illinois Farmers contends that it has no such duties based upon the Policy's molestation and intentional act exclusions. It principally relies on three cases, Allstate Insurance Co. v. Steele, 74 F.3d 878 (8th Cir. 1996) (applying Minnesota law),Redeemer Covenant Church v. Church Mutual Insurance Co., 567 N.W.2d 71 (Minn.Ct.App. 1997), and Amos v. Campbell, 593 N.W.2d 263 (Minn.Ct.App. 1999). But before considering these cases, it is necessary to first examine the development of the law regarding insurance policy exclusions and negligent supervision claims, starting with a 1973 decision of the Minnesota Supreme Court.

The burden of establishing an exclusion that defeats coverage is held by the insurer. Amos by Amos v. Campbell, 593 N.W.2d 263, 266 (Minn.Ct.App. 1999).

The criminal-acts exclusion bars coverage "when there is a causal connection between the excluded conduct and the injuries, even if negligence by the insured also contributed to the injuries." N. Star, 2023 WL 125852, at *6 (citing SECURA, 755 N.W.2d at 322, 327 and Amos ex rel. Amos v. Campbell, 593 N.W.2d. 263, 267, 269 (Minn. Ct. App. 1999)); Am. Fam. Mut. Ins. Co. v. Donaldson, No. 12-cv-2855 (PAM/FLN), 2015 WL 366433, at *3 (D. Minn. Jan. 27, 2015) (noting the "abundance of Minnesota case law upholding exclusions based on negligent criminal conduct"); Scottsdale Ins. Co. v. RiverBank, 815 F. Supp. 2d 1074, 1081 (D. Minn. 2011) ("In general, [Minnesota] courts have focused on the substance of the underlying conduct, rather than on whether the victim's subsequent cause of action for damages sounded in negligence."). That negligence may have contributed to Ms. McClurg's injuries does not bring those injuries within the scope of coverage of the Policy.

The reasoning behind this rule is that "the exception ‘restores’ coverage, and the insured bears the ultimate burden of proving coverage." Amos ex rel. Amos v. Campbell , 593 N.W.2d 263, 266 (Minn. Ct. App. 1999). Third, the way in which the particular IVI provision at issue in this case was written reinforces this conclusion.

Meadowbrook, Inc. v. Tower Ins. Co., 559 N.W.2d 411, 415 (Minn. 1997); Amos v. Campbell, 593 N.W.2d 263, 268 (Minn.Ct.App. 1999) ("The duty to defend is much broader than the duty to indemnify." (citations omitted)).

; Amos ex rel. Amos v. Campbell, 593 N.W.2d 263, 267, 269 (Minn.App. 1999) (excluding negligent-hiring, negligent-supervision, and negligent-retention claims from coverage because of the "causal connection" between the injuries and excluded conduct).

2015 WL 9392727, at *8 (Mich. Ct. App.). See also Amos ex rel. Amos v. Campbell, 593 N.W.2d 263, 266 (Minn.Ct.App. 1999)("The term 'wrongful act' has ordinarily been understood to encompass intentional as well as negligent misconduct."). Godiva further contends that the "knowing or willful" language is inapplicable here because the case does not involve civil money penalties.

Ill. Farmers Ins. Co. v. Duffy, 618 N.W.2d 613, 615 (Minn. App. 2000). If the insurance company meets their initial burden, the insured must then establish an exception to the exclusion. Amos v. Campbell, 593 N.W.2d 263, 266 (Minn. App. 1999). ECI claims the district court erred by concluding that their operations caused the damage and that Western National cannot sustain its burden of establishing the applicability of the exclusion because the actual cause of the grout infiltration remains unknown.

Padilla contends that the district court erred by placing the burden on the defendants to prove the existence of an exclusion. See Amos v. Campbell, 593 N.W.2d 263, 266 (Minn.App. 1999) (placing the burden on the insurer to establish the applicability of an exclusion, which is strictly interpreted against the insurer). But "[i]f the insurer demonstrates the applicability of an exclusion, then the insured bears the burden of proving an exception to the exclusion."

The policy definition of an insured contract requires the insured to "assume the tort liability of another to pay for bodily injury." Citing Amos v. Campbell, 593 N.W.2d 263, 269 (Minn.App. 1999), where this court defined "bodily injury" in a wrongful-act policy to mean "a physical manifestation caused by an external act," Progressive argues that the insured-contract exemption covers — and it is therefore only liable for — the value of the physical manifestation that flows from the tort. Because Soo Line sought legal expenses and not a value attributed to an actual physical manifestation, Progressive contends that the indemnification agreement is not an insured contract.