Coverage and Liability Issues in Sexual Misconduct Claims
Coverage and Liability Issues in Sexual Misconduct Claims
Coverage and Liability Issues in Sexual Misconduct Claims
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CALIFORNIA<strong>Coverage</strong> Trigger & Number ofOccurrencesWhere a child care worker’s husb<strong>and</strong> molested three children overa period of many months <strong>and</strong> the policy provided that “repeatedexposure” to the same “general conditions” is one occurrence, thecourt found that there was one occurrence for each child that wasabused. State Farm Fire <strong>and</strong> Casualty Co. v. Elizabeth N., 12 Cal.Rptr. 2d 327 (Cal. Ct. App. 1992).Where a foster parent negligently failed to stop her husb<strong>and</strong> frommolest<strong>in</strong>g a child over a three-year period <strong>and</strong> the policy providedcoverage for “act(s), errors or omissions . . . occurr<strong>in</strong>g dur<strong>in</strong>g thepolicy period” with limits of $500,000 each claim, the court found therewas $1.5 million <strong>in</strong> <strong>in</strong>surance coverage available. National Union FireIns. Co. v. Lynette C., 33 Cal. Rptr.2d 496 (Cal. Ct. App. 1994).Intentional Acts ExclusionsPerpetrator:Non-perpetrator:<strong>Sexual</strong> <strong>Misconduct</strong> ExclusionsThe California courts have applied the <strong>in</strong>ferred <strong>in</strong>tent rule to <strong>in</strong>stancesof child abuse <strong>and</strong> held there is no coverage for a perpetratorbecause molestation constitutes an <strong>in</strong>tentional act caus<strong>in</strong>g <strong>in</strong>tentionalharm. J.C. Penny Cas. Ins. Co. v. M.K. 278 Cal. Rptr. 2d. 64 (Cal.1991); Quan v. Truck Ins. Exchange, 79 Cal. Rptr. 2d 134 (Cal. Ct.App. 1998); Farmer v. Allstate Ins. Co., 311 F. Supp. 2d 884 (C.D.Cal. 2004); Cf. State Farm Fire & Cas. Co. v. Nycum, 943 F.2d 1100(9th Cir. 1991(Cal.)) (Where allegations did not raise to conclusivepresumption that touch<strong>in</strong>g was <strong>in</strong>tentional child molestation.) Wheredamages are sought for a perpetrator’s sexual as well as separablenon-sexual conduct, an <strong>in</strong>surer may owe a duty to defend. HoraceMann Ins. Co. v. Barbara B., 17 Cal. Rptr. 210 (Cal. 1993).Negligence-based claims brought aga<strong>in</strong>st supervisory defendant areexcluded from coverage if the policy precluded coverage for acts of“any” <strong>in</strong>sured as opposed to “the” <strong>in</strong>sured. See Allstate Ins. Co. v.Gilbert 852 F.2d 449 (9th Cir. 1988); American States Ins. Co. v.Borbor, 826 F.2d 888 (9th Cir. 1987); Farmer v. Allstate, 311 F. Supp.2d 884 (C.D. Cal. 2004).The California courts have generally upheld sexual misconductexclusions. See Farmer v. Allstate Ins. Co., 311 F. Supp. 2d 884 (C.D.Cal. 2004) (no coverage for actions by day care center employeewho sexually abused child or for day care center operator’s negligentsupervision of employee where policy excluded coverage for bodily<strong>in</strong>jury “aris<strong>in</strong>g out of sexual molestation … <strong>in</strong>flicted upon any person byor at the direction of an <strong>in</strong>sured person [or] an employee of an <strong>in</strong>suredperson. …”); Northl<strong>and</strong> Ins. Co. v. Briones, 97 Cal. Rptr. 2d 127(Cal. Ct. App. 2000) (No coverage where <strong>in</strong>structor allegedly raped,assaulted <strong>and</strong> stalked female student <strong>and</strong> policy did not apply to <strong>in</strong>juryaris<strong>in</strong>g out of “physical abuse, sexual abuse, sexual molestation orsexual harassment by anyone. . .”); Jane D. v. Ord<strong>in</strong>ary Mutual, 38 Cal.Rptr. 2d. 131 (Cal. Ct. App. 1995) (No coverage where adult femalewas <strong>in</strong>duced by priest to engage <strong>in</strong> sexual relations dur<strong>in</strong>g counsel<strong>in</strong>g<strong>and</strong> policy excluded “licentious, immoral, or sexual behavior <strong>in</strong>tendedto lead to or culm<strong>in</strong>ate <strong>in</strong> sexual act” because any allegations of nonsexualconduct were “<strong>in</strong>separably <strong>in</strong>tertw<strong>in</strong>ed” with the excludedsexual misconduct); Cf. National Union Fire Ins. Co. v. Lynette C.,279 Cal. Rptr. 394 (Cal Ct. App. 1991), modified on rem<strong>and</strong>, 33 Cal.Rptr. 2d 496 (Cal. Ct. App. 1994) (<strong>Coverage</strong> found for foster motherwho negligently failed to protect foster child from molestation wherepolicy excluded coverage if <strong>in</strong>sured acted with actual lasciviousness orimmoral purpose <strong>and</strong> <strong>in</strong>tent).– 6 –