West Virginia Fire & Cas. Co. v. Stanley

• Decision Date: 21 May 2004
• Docket Number: No. 31230, 31532.,31230, 31532.
• Citation: 602 S.E.2d 483,216 W.Va. 40
• Court: West Virginia Supreme Court
• Parties: WEST VIRGINIA FIRE & CASUALTY COMPANY, Plaintiff Below, Appellee, v. Cass-Sandra Marko Gene STANLEY, Sandra Stanley, Roxanna Holcomb, Glen Stanley, Helen Stanley and Jesse Stanley, Defendants Below. Cass-Sandra Marko Gene Stanley and Sandra Stanley, Defendants Below, Appellants and West Virginia Fire & Casualty Company, Plaintiff Below, Appellee, v. Cass-Sandra Marko Gene Stanley, Sandra Stanley, Roxanna Holcomb, Glen Stanley, Helen Stanley and Jesse Stanley, Defendants Below Gene Stanley, Helen Stanley and Jesse Stanley, Defendants Below, Appellants.

602 S.E.2d 483

216 W.Va. 40

WEST VIRGINIA FIRE & CASUALTY COMPANY, Plaintiff Below, Appellee, v. Cass-Sandra Marko Gene STANLEY, Sandra Stanley, Roxanna Holcomb, Glen Stanley, Helen Stanley and Jesse Stanley, Defendants Below.

Cass-Sandra Marko Gene Stanley and Sandra Stanley, Defendants Below, Appellants and West Virginia Fire & Casualty Company, Plaintiff Below, Appellee, v. Cass-Sandra Marko Gene Stanley, Sandra Stanley, Roxanna Holcomb, Glen Stanley, Helen Stanley and Jesse Stanley, Defendants Below

Gene Stanley, Helen Stanley and Jesse Stanley, Defendants Below, Appellants.

No. 31230, 31532.

Supreme Court of Appeals of West Virginia.

Submitted February 24, 2004.

Decided May 21, 2004.

Concurring Opinion of Justice Starcher July 8, 2004.

Catherine D. Munster, Esq., Debra Tedeschi Herron, Esq., James A. Varner, Esq., McNeer, Highland, McMunn & Varner, Clarksburg, West Virginia, Attorneys for West Virginia Fire & Casualty Company.

Gary S. Wigal, Esq., Gianola, Barnum & Wigal, Morgantown, West Virginia, Attorney for Cass-Sandra Marko Gene Stanley and Sandra Stanley.

Raymond G. Musgrave, Esq., Musgrave Law Office, Point Pleasant, West Virginia, Attorney for Glen Stanley, Helen Stanley and Jesse Stanley.

MAYNARD, Chief Justice:

In this appeal from the Circuit Court of Mason County, we are asked to review an order granting summary judgment to an insurance company in a declaratory judgment action. Specifically, the circuit court found that the insurance company has no duty to its insureds in an action arising from the alleged sexual misconduct of an insured minor because coverage is precluded by the "accident" requirement and "intentional-injury" exclusion in the pertinent insurance policy. For the reasons that follow, we affirm.

I. FACTS

Glen and Helen Stanley, defendants below in the underlying sexual abuse lawsuit, purchased a homeowner's insurance policy¹ issued by West Virginia Fire & Casualty Company (hereafter "W.Va. Fire & Casualty") with an effective policy period of February 7, 1987, to February 7, 1994. They also purchased a Personal Catastrophe Liability Supplement which was in effect from February 7, 1987, to February 7, 1992.

The primary policy contained the following provisions in the Liability Coverage section:

We will pay any amount up to your Limit of Coverage for which a Covered Person becomes legally liable as a result of bodily injury or property damage that is caused by an accident. Continuous or repeated exposure to the same conditions is considered a single accident. We will not cover bodily injury or property damage that is expected or intended by a Covered Person.

By amendment effective February 7, 1993, specifically excluded from coverage was liability "[a]rising out of any sexual molestation, corporal punishment, or physical or mental abuse." Finally, the Personal Catastrophe Liability Supplement incorporated all of the above-stated provisions of the primary policy and added exclusions from coverage "for any fines, penalties, punitive or exemplary damages."

On or about December 30, 1998, Cass-Sandra Marko Gene Stanley (hereafter "Cass-Sandra Stanley") and her mother, Sandra Stanley, filed a complaint in the Circuit Court of Mason County against Glen and Helen Stanley and their son Jesse Stanley.² Glen and Helen Stanley are the paternal grandparents of Cass-Sandra, and Jesse Stanley is her uncle. The complaint alleges that Cass-Sandra Stanley was "sexually abused and sexually exploited" by Jesse Stanley from the time she was seven years of age³ until she was sixteen years of age with the full knowledge of Glen and Helen Stanley who intentionally failed to disclose the acts to Cass-Sandra Stanley's parents or law enforcement authorities. The complaint further alleges that Glen, Helen, and Jesse Stanley placed Cass-Sandra Stanley under a constant threat of bodily harm, "and she was subjected to threats, intimidation, coercion and acts of violence" to prevent her disclosure of the sexual abuse. In addition, the complaint avers that Sandra Stanley, after she discovered her daughter's sexual abuse, was also subjected to threats, intimidation, coercion, and acts of violence to prevent disclosure of the abuse.

Based on these allegations, Cass-Sandra and Sandra Stanley asserted causes of action for negligence, intentional and negligent infliction of emotional distress, breach of duty in "loco parentis," civil conspiracy, and civil assault against Glen, Helen, and Jesse Stanley; and battery against Jesse Stanley. Sandra Stanley also asserted a claim for loss of services, comfort, and society against Glen, Helen, and Jesse Stanley. In their answer to the complaint, Glen, Helen, and Jesse Stanley denied the allegations in the complaint.

In deposition testimony, Cass-Sandra Stanley stated that the alleged sexual abuse began on Easter Sunday of 1986 when she was six years old⁴ and Jesse Stanley was eleven or twelve, and that it occurred two or three times a week when she and her parents visited Glen and Helen Stanley's house. She further testified that the first time that Jesse Stanley forced her to engage in vaginal intercourse with him she repeatedly screamed. Shortly thereafter, Jesse Stanley forced her to have anal sex during which she kicked and cried.

Based on its insurance policy with Glen and Helen Stanley, W.Va. Fire & Casualty initially assumed the defense of Glen, Helen, and Jesse Stanley subject to a reservation of its rights. However, it thereafter became the position of W.Va. Fire & Casualty that the claims set forth in the sexual abuse complaint are not covered by its policy, and that it therefore had no duty to indemnify or further defend. Accordingly, it filed a complaint for declaratory judgment in the Circuit Court of Mason County seeking a declaration of its rights, liabilities, and obligations in the sexual abuse action. It also filed a motion for declaratory and summary judgment alleging that it had no duty to defend nor indemnify the defendants.

The circuit court granted W.Va. Fire & Casualty's motion for summary judgment in its thorough and well-reasoned April 18, 2002, order in which it concluded, as a matter of law, in part, as follows:

5. West Virginia Fire is entitled to summary judgment as to Counts I, IV, V, VI, VII and VIII of Cass-Sandra Stanley's Complaint under the insuring clause and intentional acts exclusion of the pertinent insuring agreements, as well as the fact that claims are derivative of excluded sexual abuse claims.

6. West Virginia Fire is entitled to summary judgment as to Counts II and III of Cass-Sandra Stanley's Complaint as intent to cause injury is inferred as a matter of law under Horace Mann Ins. Co. v. Leeber, 180 W.Va. 375, 376 S.E.2d 581 (1988).

7. The insuring clause and the intentional acts exclusion contained within the Stanley insurance policy is not ambiguous.

8. Under the provisions of the pertinent insurance agreements... the causes of action contained within Cass-Sandra Stanley's complaint ... [do not] constitute an "accident" as required for recovery under the policy and West Virginia Fire is entitled to summary judgment on the same.

9. The term "accident" as contained within the Stanley insurance policy is not ambiguous.

10. The intentional acts exclusion and the "accident" requirement of the pertinent insurance policy preclude coverage for all other acts and/or omissions contained within the underlying suits, since the other claims are derivative of the excluded sexual misconduct and are therefore excluded from coverage. See Smith v. Animal Urgent Care, 208 W.Va. 664, 542 S.E.2d 827 (2000)

.

11. The negligence claims of the underlying plaintiffs [and] Sandra Stanley ... arise out of, and are therefore derivative of, the excluded sexual misconduct and are therefore excluded from coverage under the pertinent insurance policy as a matter of law. See Smith v. Animal Urgent Care, 208 W.Va. 664, 542 S.E.2d 827 (2000)

.

12. The efficient proximate cause of all of the injuries which are the subject of the underlying suits was excluded misconduct, entitling West Virginia Fire to summary judgment regarding the same. See Murray v. State Farm Fire and Casualty Company, 203 W.Va. 477, 509 S.E.2d 1 (1998)

.

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14. The Personal Catastrophe Liability Supplement (umbrella policy) of Glen and Helen Stanley contained an exclusion for "any fines, penalties, punitive or exemplary damages," punitive damages being sought from the Stanley defendants[.]

15. West Virginia Fire is entitled to summary judgment with respect to the underlying plaintiffs' claims for punitive damages under the umbrella policy as the underlying plaintiffs' claims for punitive damages are specifically excluded from said insurance coverage by the terms of the pertinent insurance agreement and West Virginia law.

16. To the extent that the underlying plaintiffs allege conduct that happened outside the primary policy period, the underlying plaintiffs' claims are not covered by the pertinent insurance policy and West Virginia Fire is entitled to summary judgment on this issue.

* * * * * *

20. West Virginia Fire is entitled to summary judgment as to Count IX of Cass-Sandra Stanley's Complaint as Sandra Stanley's Claims are wholly derivative of Cass-Sandra's claims and precluded from coverage under the insuring clause and intentional acts exclusion of the insurance policy. See Davis v. Foley, 193 W.Va. 595, 457 S.E.2d 532 (1995)

.

21. There is neither a duty to defend an insured in an action for, nor a duty to pay for, damages allegedly caused by the sexual misconduct of an insured, when the liability insurance policy contains an "intentional-injury" exclusion. Horace Mann Ins. Co. v. Leeber, 180 W.Va. 375, 376 S.E.2d 581 (1988).

Cass-Sandra and Sandra Stanley, and Glen, Helen, and Jesse Stanley, now appeal this order.

II. STANDARD OF REVIEW

As this Court often has set forth, we apply a plenary review to a circuit court's entry of summary judgment. "A ...