Allstate Ins. Co. v. Gilbert

• Decision Date: 19 July 1988
• Docket Number: No. 87-6204,87-6204
• Citation: 852 F.2d 449
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff-Counter-Defendant-Appellee, v. Albert Joseph GILBERT; Defendant-Appellant, Margaret E. Gilbert, Defendant-Counter-Claimant-Appellant, and Douglas Bryant; Linda Bryant; and Jennifer Stangle, a minor, Defendants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 449

852 F.2d 449

ALLSTATE INSURANCE COMPANY, Plaintiff-Counter-Defendant-Appellee, v. Albert Joseph GILBERT; Defendant-Appellant, Margaret E. Gilbert, Defendant-Counter-Claimant-Appellant, and Douglas Bryant; Linda Bryant; and Jennifer Stangle, a

minor, Defendants.

No. 87-6204.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 6, 1988.

Decided July 19, 1988.

Dorette S. Feit, Irell and Manella, Los Angeles, Cal., for plaintiff-counter-defendant-appellee.

Robert S. Gianelli, Gianelli and Morris, Los Angeles, Cal., for defendants-appellants.

Appeal from the United States District Court for the Central District of California.

Before BRUNETTI, KOZINSKI and THOMPSON, Circuit Judges.

DAVID R. THOMPSON, Circuit Judge:

Albert Gilbert ("Albert") and Margaret Gilbert ("Margaret"), husband and wife, appeal from a summary judgment in favor of Allstate Insurance Company ("Allstate"). Allstate filed a complaint for declaratory relief seeking a determination that it had no duty, under a homeowner's insurance policy, to defend or indemnify either Albert or Margaret against claims for damages caused by Albert's alleged sexual molestation of a minor. In granting Allstate's motion for summary judgment, the district court concluded that, as a matter of law, acts of child molestation demonstrated an intent to harm and were therefore excluded from insurance coverage. With respect to Margaret, the district court concluded that the policy excluded coverage for claims against her for damages resulting from her husband's intentional acts. We affirm.

I FACTS

Albert Gilbert was charged with six felony counts of child molestation under California Penal Code section 288 (West Supp.1988) ("[l]ewd or lascivious acts with child under age 14"). All counts were with respect to Jennifer Stangle, a child under fourteen years of age. Albert pleaded nolo contendere to one of the counts. He was convicted pursuant to that plea.

Jennifer Stangle and her parents, Douglas and Linda Bryant, then filed a civil action for damages against Albert and Margaret Gilbert. The Bryants' complaint contained five causes of action. All of the causes of action were based on allegations that Albert sexually molested Jennifer Stangle over a two-year period beginning when Jennifer was eight years old and ending August 1, 1985. ¹ Specifically, the Bryant complaint alleged that Albert repeatedly sexually assaulted Jennifer Stangle by "fondling her breasts and genital area, and attempting other sexual acts, including but not limited to oral copulation, and attempted sexual intercourse." The complaint also alleged that both Albert and Margaret negligently cared for and supervised Jennifer, and that Margaret was negligent in failing to take steps to prevent Albert's acts of sexual molestation upon Jennifer when she knew that he had a propensity for committing, and intended to commit such acts.

During the relevant two-year period when the acts of molestation allegedly took place, the Gilberts were covered by two successive Allstate homeowner's insurance policies. The "first policy" covered the Gilberts for successive one-year periods. The last period of this policy began November 19, 1983 and ended November 19, 1984. On November 19, 1984, Allstate issued a new policy to the Gilberts covering the period from November 19, 1984 to November 19, 1985 (the "second policy").

The insuring clause of the first policy provides, in relevant part: "[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." The first policy contains an exclusionary clause which specifically excludes from coverage: "Bodily injury or property damage intentionally caused by an insured person." The second policy provides, in relevant part: "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." The second The Gilberts tendered the defense of the Bryant lawsuit to Allstate. Allstate refused to defend Albert, or to indemnify him in the event he was found liable. Allstate agreed to defend Margaret under a reservation of rights. Allstate then brought this declaratory judgment action to determine whether it had a duty to defend or indemnify either of the Gilberts in connection with the Bryant lawsuit. The Gilberts answered Allstate's complaint. Margaret Gilbert filed a counterclaim against Allstate for breach of contract, breach of the duty of good faith and fair dealing and violation of Cal.Ins.Code Sec. 790.03(h). The district court granted summary judgment in favor of Allstate, and the Gilberts appeal. We have jurisdiction under 28 U.S.C. Sec. 1291.

policy specifically excludes: "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."

II ANALYSIS

A. Standard of Review

The district court's grant of a motion for summary judgment is reviewed by this court de novo. Aetna Cas. & Sur. Co. v. Centennial Ins. Co., 838 F.2d 346, 350 (9th Cir.1988). Our review is governed by the same standard used by the district court under Fed.R.Civ.P. 56(c). Under Rule 56(c), summary judgment is proper when the pleadings and discovery, read in the light most favorable to the non-moving party, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Id.

In this diversity of citizenship insurance case, California law governs the substantive issues of state law. American States Ins. Co. v. Borbor, 826 F.2d 888, 890 n. 2 (9th Cir.1987).

B. Duty to Defend Albert Gilbert

Both the first and second insurance policies issued to the Gilberts by Allstate exclude coverage for intentional acts. In addition, Cal.Ins.Code Sec. 533 (West 1972) provides in relevant part: "[a]n insurer is not liable for a loss caused by the willful act of the insured." Under California law, section 533 is a part of every insurance contract and is equivalent to an exclusionary clause in the contract itself. Borbor, 826 F.2d at 891); Evans v. Pacific Indem. Co., 49 Cal.App.3d 537, 540, 122 Cal.Rptr. 680, 682 (1975).

The California Supreme Court has stated that "willfulness" within the meaning of Insurance Code section 533 requires a "preconceived design to inflict injury," Clemmer v. Hartford Ins. Co., 22 Cal.3d 865, 887, 151 Cal.Rptr. 285, 297, 587 P.2d 1098, 1110 (1978), and that an act is not willful under section 533 if it is "performed without intent to harm." Peterson v. Superior Court, 31 Cal.3d 147, 159, 181 Cal.Rptr. 784, 790, 642 P.2d 1305, 1311 (1982). See also Allstate Ins. Co. v. Overton, 160 Cal.App.3d 843, 850, 206 Cal.Rptr. 823, 828 (1984) ("willfulness" under Cal.Ins.Code Sec. 533 requires specific intent to injure). As we recently stated in State Farm Fire and Cas. Co. v. Bomke, 849 F.2d 1218, 1219 (9th Cir.1988), "[t]he insurance company bears the burden of proving intent to harm, Clemmer, 22 Cal.3d at 879-80, 587 P.2d at 1105, 151 Cal.Rptr. at 292, [but] this intent can be inferred as a matter of law by the nature of some acts, such as sexual assault." (citing Allstate Ins. Co. v. Kim W., 160 Cal.App.3d 326, 333, 206 Cal.Rptr. 609, 613 (1984)).

The facts of the present case closely parallel those of Kim W. In Kim W., a minor child filed a complaint through her guardian ad litem against the insured seeking damages for injuries resulting from acts of sexual assault. The insured was covered under a homeowner's insurance policy which expressly excluded coverage for "bodily injury or property damage intentionally caused by an insured person" (an exclusionary clause identical to the clause in the Gilberts' first policy). Allstate brought a declaratory relief action seeking a determination that the policy provided no coverage for the acts alleged in Kim W.'s complaint. The court concluded that an act of sexual molestation of a child is a "willful" act within the meaning of section 533, and is therefore exempted from insurance coverage. Id. at 332, 206 Cal.Rptr. at 613. In reaching this conclusion the court stated:

In construing exclusionary clauses similar to that in this case, some courts have held that under certain circumstances, the nature of the intentional act of the insured is such that an intent to cause at least some harm can be inferred as a matter of law, and that as long as some harm is intended, it is immaterial that harm of a different magnitude from that contemplated actually resulted.... We conclude that an act which constitutes a violation of Penal Code Section 288 [prohibiting the sexual molestation of a child] is such an act.

Id. (citations omitted). See also Borbor, 826 F.2d at 891 (violation of Cal.Penal Code Sec. 288 is willful act within meaning of section 533). The acts alleged in the Bryant complaint would constitute, if true, a violation of Penal Code section 288. The alleged acts are therefore willful acts within the ambit of Insurance Code section 533. Borbor, 826 F.2d at 891.

Albert argues on appeal that Allstate was obligated to defend him despite the fact that the Bryants' complaint was based upon alleged acts of child molestation. According to Albert, the complaint merely raised legal theories of recovery that were not determinative of the acts alleged or of their willfulness. In support of this argument, Albert relies upon several cases in which California courts have held that the insurer must defend a suit which potentially seeks damages within the coverage of the policy. For example, in Overton the insured was sued for assault and battery. The court held that although the insured may have acted with a general intent to commit the battery, in the absence of evidence that he...