Allstate Ins. Co. v. McCranie

• Citation: 716 F. Supp. 1440
• Decision Date: 12 June 1989
• Docket Number: No. 87-1510 CIV.,87-1510 CIV.
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff, v. Richard McCRANIE, et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

716 F. Supp. 1440

ALLSTATE INSURANCE COMPANY, Plaintiff, v. Richard McCRANIE, et al., Defendants.

No. 87-1510 CIV.

United States District Court, S.D. Florida.

June 12, 1989.

Lori J. Caldwell, Rumberger, Kirk, Caldwell, Cabaniss & Burke, Orlando, Fla., for plaintiff.

Robert A. Lazenby, High, Stack, Lazenby Palahach & Goldsmith, Lewis N. Jack, Jr., Haddad, Josephs & Jack, Coral Gables, Fla., for defendants.

MEMORANDUM OPINION

HOEVELER, District Judge.

This cause came for consideration before this court upon the plaintiff's motion for summary judgment on the determination of insurance coverage. The plaintiff, Allstate Insurance Company, the insurer, brings an action for declaratory judgment pursuant to 28 U.S.C. sec. 2201(a) to determine its rights and obligations under two homeowner insurance policies covering both Richard McCranie and Virginia McCranie, the defendants and insureds. Jurisdiction is based on diversity of citizenship. Allstate Insurance Company (Allstate) moves for summary judgment and a declaration that it is not obligated to indemnify or defend the insureds in connection with a personal injury lawsuit brought by third parties in state court. The state suit involves an action brought against the insureds, Richard and Virginia, for damages allegedly resulting from Richard's sexual molestation of a minor. The court heard oral argument on the motion for summary judgment on February 23.

I. FACTS

In March, 1986 Richard McCranie, the brother-in-law of Virginia McCranie, was arrested and charged with sexual battery upon Paul Manning in connection with incidents which occurred between January 1, 1984 and February 9, 1986. Richard resided at the home of Virginia, who operated a child care center out of her home. Paul Manning was one of the children she watched over. Richard fondled and had oral sex with Paul. Richard pled no contest and was found guilty of the charge of attempted sexual battery, a first-degree felony. Fla.Stat. § 794.011. He was sentenced to ten years in prison.

In state circuit court, Howard Manning and Diane Manning, as guardians of their minor son Paul Manning, brought a civil action against Richard and Virginia McCranie for the sexual molestation of Paul. Manning v. Richard McCranie, Case No. 86-45822. The Mannings allege that Richard McCranie assaulted, battered, and sexually abused Paul by performing various sexual acts upon and with Paul. The sexual acts, as shown by discovery, consisted of Richard's having oral sex with and fondling Paul on several occasions from 1982 to 1986. The Mannings further allege that Virginia McCranie breached her duty to supervise and care for Paul Manning while he was a guest in her house, that she was aware of Richard's conduct, and that she took no action to prevent the abuse.

Richard McCranie has a history of child molestation. He had been convicted of a sexual crime involving minor children in 1979. Dr. Seth Krieger, a Ph.D. in clinical psychology who treated Richard, testified that Richard is a pedophile. Pedophilia is an illness or mental disorder resulting in those affected desiring sexual involvement with children. Pedophiles believe that sexual contact with a child is not wrong and think that they are giving pleasure to the young victim. See Deposition of Dr. Krieger at page 6.

The defendants, Virginia McCranie and Richard McCranie, were insured by Allstate under two homeowner insurance policies. From January 15, 1984 through January 14, 1985, the McCranies were insured by Allstate under form AU409. Beginning on January 15, 1985, they were insured by Allstate under form AU9601. Form AU9601 of the policy provides:

Losses We Cover:

Allstate will pay all sums arising from an accidental loss which an insured person becomes legally obligated to pay as damages because of bodily injury or property damage covered by this part of the policy. Form AU9601 at 23.

Form AU409 has similar coverage, but lacks the language on "accidental loss." Form AU409 at 17.

The policy excludes coverage for intentional acts of the insureds. Form AU409 provides: "We do not cover bodily injury intentionally caused by an insured person." Form AU9601 provides:

We do not cover any bodily injury or property damage which may reasonably be expected to result from the intentional or criminal acts of an insured person or which are in fact intended by an insured person.

The policy AU9601 defines bodily injury as follows: "bodily injury, sickness or disease, including required care, loss of services and resulting death." Form AU9601 at 3. Form AU409 contains a similar definition of bodily injury.

As stated, Allstate seeks a summary adjudication that the policies do not provide coverage for the injury caused by the sexual molestation of Paul Manning by Richard McCranie. Allstate asserts that the policies specifically excludes coverage on three separate grounds: the injury was emotional and psychological and not bodily; the sexual abuse was not accidental; and the sexual acts of Richard were intentional. Allstate further argues that as to Virginia McCranie the policy does not provide coverage since the underlying acts of her brother Richard were intentional and, therefore, excluded from coverage.

The motion for summary judgment presents several issues for the court's consideration in determining coverage under the policy:

A. Whether having oral sex and fondling the genitals of a minor is bodily injury, where the minor has asserted the activities of Richard McCranie caused him pain and where the complained of injury is essentially emotional and psychological.

B. Whether the sexual molestation was an accident, when Richard McCranie had psychological problems and may not have determined that he was hurting Paul, and conversely, under the other provision of the policy, whether the sexual molestation was intentional, where Richard McCranie had psychological problems and may not have considered that he was hurting Paul.

C. Whether Virginia McCranie is excluded from coverage if the acts of her brother co-insured, Richard, which were the underlying bases for the complained of injury, are found to be intentional and where the claim against her is for negligent supervision.

DISCUSSION

Summary judgment is appropriate only where there is no genuine issue as to any material fact, and where the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). The party who moves for summary judgment bears this exacting burden. Adickes v. S.H. Kress & Co., 398 U.S. 144, 156, 90 S.Ct. 1598, 1607, 26 L.Ed.2d 142 (1970). The court must not decide any material factual issues it finds in the record. If such are present, the court must deny the motion and proceed to trial. Environmental Defense Fund v. Marsh, 651 F.2d 983, 991 (5th Cir.1981).

A. Bodily injury coverage

The plaintiff Allstate argues that the injuries sustained by Paul Manning were emotional and psychological and not physical bodily injury. The policy covers "bodily injury," which is defined as "bodily injury, sickness or disease, including required care, loss of services and resulting death." The plaintiff cites cases for the proposition that the term "bodily injury" limits harm covered by the policy to physical injury, sickness or disease. See Rolette County v. Western Casualty & Surety Co., 452 F.Supp. 125, 130 (D.N.D.1978) (coverage did not include emotional harm resulting from seizure of mobile home); West American Insurance Co. v. Bank of Isle of Wight, 673 F.Supp. 760 (E.D.Va. 1987) (coverage did not include emotional distress resulting from wrongful termination of employment).

These cases, however, do not involve initial physical contact or sexual molestation in particular. Most of Paul's injury is alleged to be psychological and emotional. He has nightmares; he is afraid of the dark. His grades in school are poor. He suffers from depression. The sexual abuse of Paul, however, entailed physical contact with Richard McCranie, which resulted in the emotional injury because of the abuse. The resulting emotional injuries can be traced to the sexual abuse, which was the result of physical contact. Mrs. Manning, Paul's mother, stated in her deposition that Paul complained that his penis hurt because of the frequency of contact with McCranie. In any event, the activities perpetuated on Paul were against his person and not against his property. Paul had been hospitalized for 24-hour periods and received outpatient treatment throughout the litigation, all of which presumably grew out of physical contact with Richard. Paul's injuries are, therefore, bodily.

B. Accidental loss and Intentional Acts

The plaintiff asserts that injury caused by the sexual molestation is not covered because the policies cover only disability from an "accidental loss." Only policy AU9601 explicitly limits coverage to occurrences of "accidental loss." Although the earlier policy, Form AU409, does not include such language, the plaintiff properly asserts that the requirement of an accidental loss restricts coverage in both policies. Indeed, an implied restriction on coverage for accidental losses is warranted, for "an insurance contract, by its nature, is a contract in which one undertakes to indemnify another against damage arising from a contigent or unknown event." Allstate Insurance Company v. Talbot, 690 F.Supp. 886 (N.D.Cal.1988). The Florida courts have adopted the following definition of accident:

In legal parlance an accident under the terms of an insurance policy, such as we have here, is variously defined as an unusual and unexpected event, happening without negligence; an undesigned, sudden, and unexpected event; chance or contingency; happening by chance or unexpectedly; an event from an unknown cause or an unexpected event from a known cause.

Christ v. Progressive Fire Ins. Co., 101 So.2d 821, 822 (Fla. 2d DCA 1958). In a case dealing with child molestation, a Florida court held:

Regardless of the molester's

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