Coverage and Liability Issues in Sexual Misconduct Claims

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NORTH CAROLINACoverage Trigger & Number ofOccurrencesIntentional Acts ExclusionsPerpetrator:Non-perpetrator:Sexual Misconduct ExclusionsStatute of LimitationsNot addressed in sexual misconduct setting.Courts have upheld policy exclusions for expected or intended bodilyinjury to claims against perpetrators of childhood sexual abusebased on the “inferred intent” doctrine. Nationwide Mutual Ins. Co.v. Abernathy, 445 S.E.2d 618 (N.C. Ct. App. 1994); Allstate Ins. Co.v. Lahood, 2004 WL 2792037 (N.C. Ct. App. 2004). Intent to harmis also inferred in acts of sexual harassment of adults. Russ v. GreatAmerican Ins. Cos., 464 S.E.2d 723 (N.C. Ct. App. 1995).Exclusions for intentional conduct do not preclude coverage foran employer’s alleged negligent hiring and supervision of anemployee-perpetrator because the employer’s liability is predicatedon negligence, not intentional or criminal acts. Durham Board ofEducation v. National Union Fire Ins. Co. of Pittsburgh, 426 S.E.2d 451(N.C. Ct. App. 1993).Court upheld sexual molestation exclusion in homeowner’s policy topreclude coverage to insured music teacher who sexually molestedminor student. Nationwide Mutual Ins. Co. v. Abernethy, 445 S.E.2d618 (N.C. Ct. App. 1994).Claims for assault, battery, injury to the person or rights of anothermust be brought within three years. 2001 N.C. Sess. Laws 175.There is a statutory discovery rule which provides that a personalinjury cause of action shall not accrue until bodily harm becomesapparent or reasonably should have been apparent; however, nocause of action shall accrue more than 10 years from the last act oromission which gives rise to the cause of action. N.C. Gen. Stat. § 1-52(16).Allegations of mental illness or post-traumatic stress disorder fromchildhood sexual abuse may present evidence of adult incompetenceto toll the limitations period, but such allegations can be defeatedwith evidence from a mental health professional that the claimant’semotional distress could have been diagnosed within three yearsof manifestation. Soderlund v. Kuch, 546 S.E.2d 632 (N.C. Ct.App. 2001); See also Leonard v. England, 445 S.E.2d 50 (N.C. Ct.App. 1994), review denied, 455 S.E.2d 663 (N.C. 1995) (Claimant’salleged post traumatic stress disorder and repressed memory as aresult of grandmother’s sexual abuse of her 28 years prior to filingsuit constituted evidence that claimant was rendered “incompetent,”thereby tolling the statute of limitations).Reporting LawsOtherN.C. Gen Stat. §7B-101 et. seq.In a case alleging negligent retention and supervision against churchorganizations arising out of sexual misconduct by a church minister,the court found that the First Amendment prohibited inquiry into thereligious organizations’ hire or discharge decisions but that courtsmay resolve claims of negligent retention and supervision since theyneed only inquire into whether the church knew or had reason to knowof a minister’s propensity to engage in sexual misconduct. Smith v.Privette, 495 S.E.2d 395 (N.C. Ct. App. 1998).– 48 –
NORTH DAKOTACoverage Trigger & Number ofOccurrencesIntentional Acts ExclusionsPerpetrator:Non-perpetrator:Sexual Misconduct ExclusionsStatute of LimitationsNot addressed in sexual misconduct setting.An insured’s sexual molestation of a child is precluded from coverageunder public policy and intentional act exclusions of insurance policiesbecause an intent to harm is inferred from the act. See Nodak Mut.Ins. Co. v. Heim, 559 N.W.2d 846 (N.D. 1997).Not addressed in sexual misconduct setting.Sexual misconduct exclusion precluded coverage for negligenceclaims against the perpetrator’s wife because the claims arose out ofthe sexual molestation. Northwest G.F. Mut. Ins. Co. v. Norgard, 518N.W.2d 179 (N.D. 1994).There is a two-year statute of limitations for assault and battery and asix-year statute of limitations for actions for injury to the person whennot otherwise expressly provided. N.D. Cent. Code § 28-01-16 and18.The discovery rule applies to sexual abuse claims so that thelimitations period does not begin to run until the claimant knows, orwith reasonable diligence should know, that a potential claim exists.See Peterson v. Huso, 552 N.W.2d 83 (N.D. 1996) (Held two-yearstatute of limitations period did not run until the claimant discoveredher injury from the abuse); Osland v. Osland, 442 N.W.2d 907 (N.D.1989).Reporting LawsOtherN.D. Cent. Code §50-25.1.01 et. seq.An employer may be held liable for the sexual misconduct of anemployee. Nelson v. Gillette, 571 N.W.2d 332 (N.D. 1997) (Factquestions existed as to whether social worker’s alleged sexual abuseof a child in foster care was within the scope of his employment);McLean v. Kirby Co., 490 N.W.2d 229 (N.D. 1992) (Employervicariously liable for rape of customer by salesman where there wasa foreseeable risk of physical harm to customers when salesman’sbackground was not investigated); Cromp v. Greyhound Lines,Inc. 2003 WL 23008977 (D. N.D. Dec. 12, 2003) (Fact questionexisted as to whether sexual assault by bus driver was within scopeof employment where assault occurred in hotel room provided byemployer and where perpetrator met victim on the job).– 49 –
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Coverage and Liability Issues in Se
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Part I.Claim Trends and Changes in
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Part II.(2) The negligent:(a) Emplo
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Page 55 and 56: NEW MEXICOWhere no physical injury
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Page 79 and 80: WASHINGTONOtherAn employer is not s
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Coverage and Liability Issues in Sexual Misconduct Claims

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