Allstate Ins. Co. v. JACK S

• Decision Date: 21 March 1989
• Docket Number: No. CV S-87-221 RDF.,CV S-87-221 RDF.
• Citation: 709 F. Supp. 963
• Parties: ALLSTATE INSURANCE COMPANY, a foreign corporation, Plaintiff, v. JACK S and Joyce S, individually and as natural parents and guardians of KS, a minor; Michael V and Cynthia V, individually and as natural parents and guardians of RV, a minor; Does I through X, inclusive, Defendants. MICHAEL V and Cynthia V, individually and as natural parents and guardians of RV, a minor, Counterclaimants, v. ALLSTATE INSURANCE COMPANY, a foreign corporation; and Does I through X, inclusive, Counterdefendants.
• Court: U.S. District Court — District of Nevada

709 F. Supp. 963

ALLSTATE INSURANCE COMPANY, a foreign corporation, Plaintiff, v. JACK S and Joyce S, individually and as natural parents and guardians of KS, a minor; Michael V and Cynthia V, individually and as natural parents and guardians of RV, a minor; Does I through X, inclusive, Defendants.

MICHAEL V and Cynthia V, individually and as natural parents and guardians of RV, a minor, Counterclaimants, v. ALLSTATE INSURANCE COMPANY, a foreign corporation; and Does I through X, inclusive, Counterdefendants.

No. CV S-87-221 RDF.

United States District Court, D. Nevada.

March 21, 1989.

Rawlings, Olson & Cannon by Walter R. Cannon, Las Vegas, Nev., for plaintiff.

Michael Peters, of Morse & Mowbray, Las Vegas, Nev., for defendants.

REVISED ORDER

ROGER D. FOLEY, Senior District Judge.

This matter is before the court on crossmotions for summary judgment. The parties dispute whether an insurance policy covers the insureds under the facts as presented herein. This court has jurisdiction under 28 U.S.C. § 1332 (1982).

I. Facts

The parties have stipulated to the admission for this court's review of several police statements, a report from a sexual abuse therapist, the insurance policy issued by Allstate Insurance Company, and a state court complaint filed prior to the filing of the instant case. Doc. # 19, Exhs. A, B, C, D, E, and F. Based upon the submitted exhibits and during the time of the incident in question, the following facts are undisputed.

Jack S and Joyce S are the parents of KS, a fourteen-year-old girl. Michael V and Cynthia V are the parents of RV, a three-year-old boy. The two families live near each other and the teenage girl frequently babysits the little boy.

On May 27, 1985 KS agreed to babysit RV at the boy's home for a few hours between approximately 11:45 a.m. and 3:30 p.m. At some point during this period, the teenager sexually molested the little boy. Specifically, the girl undressed herself, removed the boy's pants, and placed the boy's penis into her mouth.

Later that evening, the little boy informed his parents of what his babysitter had done. The boy's parents contacted the Las Vegas Metropolitan Police Department, the police investigated the complaint, and then referred the matter to the Clark County Juvenile authorities for prosecution. Subsequently, the teenage girl pleaded no contest in a juvenile court proceeding charging sexual assault. Doc. # 19 at 5; Doc. # 20 at 3.

At the time of this incident, a homeowner's liability insurance policy (# XXX-XXX-XXX) was in effect. The policy was issued by Allstate Insurance Company (Allstate) and the insureds were Jack S and Joyce S, and their daughter.

The Allstate policy states:

LOSSES WE COVER

We Allstate will pay all sums arising from the same 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.

....

EXCLUSIONS-LOSSES WE DO NOT COVER

1 We do not cover bodily injury or property damage intentionally caused by an insured person.

Doc. # 19, Exh. E at 17 (emphasis in original).

II. Procedural History

On May 27, 1987 the boy's parents filed a complaint in the Eighth Judicial District Court for the State of Nevada seeking damages from KS and her parents for physical and emotional suffering incurred by the boy. The complaint seeks damages from KS predicated on negligent infliction of emotional distress, gross negligence, and wanton and reckless misconduct. In addition, the complaint seeks damages from Jack S and Joyce S for negligence based on failure to properly supervise their daughter and failure to warn of their daughter's "deviant sexual tendencies". The complaint also seeks damages from the girl's parents for conduct of their daughter as imputed to the parents pursuant to NRS 41.470. Doc. # 19, Exh. F.

After receiving the complaint, Jack S and Joyce S notified Allstate that they were making a claim on their homeowner's policy to cover litigation costs and any damages which may be awarded. Allstate accepted the claim with a reservation of right to disclaim any obligation under the policy based upon the intentional acts exclusion clause referenced above. Allstate obtained counsel who filed an answer dated October 9, 1987. Doc. # 19, Exh. H.

On March 27, 1987 Allstate filed a complaint with this court seeking declaratory relief. Doc. # 1. Allstate seeks a determination of its obligations to the insured vis-a-vis the homeowner's policy. Both parties now move for this court's determination of the meaning of the insurance policy's exclusion clause.

III. Whether the Allstate homeowner's insurance policy covers claims for sexual misconduct by the insured's minor child against the minor child of Michael V and Cynthia V

The Allstate insurance policy excludes from its coverage "bodily injury ... intentionally caused...." Doc. # 19, Exh. E at 17. This clause is ambiguous. It could mean either an intent to commit the act or cause the harm. In resolving this ambiguity, courts have construed the clause against the insurance provider and ruled that for the exclusion clause to take effect, both an intent to commit the act and cause the harm must be proven. E.g., Allstate Ins. Co. v. Thomas, 684 F.Supp. 1056, 1057 (W.D.Okl.1988); Illinois Farmers Ins. Co. v. Judith G., 379 N.W.2d 638, 641 (Minn.Ct.App.1986). The parties in this action agree that both requirements must be met before coverage is excluded. Doc. # 19 at 8; Doc. # 20 at 7-8.

The parties do not dispute that KS intentionally placed the little boy's penis into her mouth and sucked it. Rather, the parties disagree whether the second requirement, an intent to harm, is proven. Michael V and Cynthia V argue that KS did not subjectively intend to harm or injure the little boy. Doc. # 20 at 7-8. Allstate proposes that this court find as a matter of law an intent to harm based upon the nature of the act committed. Doc. # 19 at 8.

In diversity cases, a federal court is bound to apply the substantive law of the state in which it sits. Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Strassberg v. New England Mutual Life Ins. Co., 575 F.2d 1262 (9th Cir.1978). There is no reported Nevada case law construing the exclusion clause at issue in this case. In the absence of controlling state law, this court must use its own best judgment in predicting how Nevada's Supreme Court would decide the substantive issue. See Dimidowich v. Bell & Howell, 803 F.2d 1473, 1482 (9th Cir. 1986), modified, 810 F.2d 1517 (1987). In performing that function, this court may be aided by reviewing well-reasoned decisions from other jurisdictions. Takahashi v. Loomis Armored Car Service, 625 F.2d 314, 316 (9th Cir.1980).

Most courts have held that when adults have sexual relations with minors, an intent to harm the children will be inferred as a matter of law so that an exclusion clause will prevent recovery under a homeowner's insurance policy. Some courts measure the intent of the insured by the objective reasonable person standard. E.g., Linebaugh v. Berdish, 144 Mich.App. 750, 376 N.W.2d 400 (1985) (twenty-one-year-old disc jockey engaged in sexual activity with fourteen-year-old girl); CNA Ins. Co. v. McGinnis, 282 Ark. 90, 666 S.W.2d 689 (1984) (stepfather sexually abused his stepdaughter). The majority of courts find that the express language of the exclusion clause refers to the subjective intent of the insured. E.g., Allstate Ins. Co. v. Thomas, 684 F.Supp. 1056 (W.D. Okl. (1988) (male bus driver for day care center fondled a young girl); Rodriquez v. Williams, 107 Wash.2d 381, 729 P.2d 627 (1986) (stepfather had intercourse with his fifteen-year-old stepdaughter). This court is persuaded by the language of the exclusion clause in the instant case that a subjective intent to injure must be proven.

Nevertheless, most courts which require a subjective intent to injure have inferred a specific intent to injure to an adult from the act of sexual conduct with a minor. E.g., Fire Ins. Exchange v. Abbott, 204 Cal.App.3d 1012, 251 Cal.Rptr. 620, 629 (1988); Illinois Farmers Ins. Co. v. Judith G., 379 N.W.2d 638, 641-642 (Minn.App. 1986); Rodriquez v. Williams, 107 Wash. 2d 381, 729 P.2d at 630-631. A minority of courts have refused to infer intent to harm to an adult, but require actual proof of the adult's subjective intent. State Auto Mut. Ins. Co. v. McIntyre, 652 F.Supp. 1177 (N.D.Ala.1987); MacKinnon v. Hanover Ins. Co., 124 N.H. 456, 471 A.2d 1166 (1984).

The parties have cited and the court has found only one case where a court interpreted an exclusion clause after a claim had been made under the homeowner's policy for injury resulting from sexual acts between minors. In Illinois Farmers Ins. Co. v. Judith G., 379 N.W.2d 638 (Minn.Ct. App.1986), a teenage boy periodically babysat two sisters and another little girl who lived in his neighborhood. Over a period of time, between the boy's thirteenth and sixteenth years and the girls' sixth and ninth years, the boy, while babysitting, performed "various acts of sexual contact and penetration" against all three girls. Id. at 639.

Farmers Insurance sought summary judgment arguing that an intent to harm should be inferred as a matter of law from the nature of the acts performed against the girls. The parents of the children argued that the boy's age and immaturity prevented him from forming the requisite intent to injure the girls. Id. The court held that whenever sexual contact is perpetrated against a child, an intent to cause harm will be inferred. Id. at 642. The Minnesota court explicitly stated that the boy's "alleged lack of subjective intent to injure is irrelevant." Id. The court based its decision on three Minnesota Supreme Court cases which inferred intent to harm where adults sexually assaulted another person. Id. at 641-642. See State Farm Fire and Casualty Co. v. Williams, 355 N.W.2d 421 (Minn.1984) (college professor...