Allstate Ins. Co. v. Roelfs

• Decision Date: 14 August 1987
• Docket Number: No. A87-061 Civil.,A87-061 Civil.
• Citation: 698 F. Supp. 815
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff, v. Raymond L. ROELFS; Evelyn H. Roelfs; Raymond E. Roelfs; and Connie Phillips, individually, and as parent of April Dawn McShane and Melodie Christine McShane, minors, Defendants.
• Court: U.S. District Court — District of Alaska

698 F. Supp. 815

ALLSTATE INSURANCE COMPANY, Plaintiff, v. Raymond L. ROELFS; Evelyn H. Roelfs; Raymond E. Roelfs; and Connie Phillips, individually, and as parent of April Dawn McShane and Melodie Christine McShane, minors, Defendants.

No. A87-061 Civil.

United States District Court, D. Alaska.

August 14, 1987.

Douglas Davis, Bradbury, Bliss & Riordan, Anchorage, Alaska, for plaintiff.

Helen Simpson, Dan Dennis, Dennis, Kibby & Moss, Anchorage, Alaska, for defendants.

OPINION AND ORDER

FITZGERALD, Chief Judge.

Allstate Insurance Company has brought a declaratory judgment action against Raymond L. Roelfs, Evelyn H. Roelfs, and Raymond E. Roelfs, their son, who have purchased an Allstate homeowners insurance policy, and against Connie Phillips, individually and as the parent of April McShane and Melodie McShane, two minor girls who were sexually molested by Raymond E. Roelfs. This court has diversity jurisdiction. 28 U.S.C. § 1332. Connie Phillips has filed a complaint in state court against the Roelfs on her own behalf and as representative of the two minors for damages stemming from the sexual molestation. In her state court complaint, Phillips asserts claims for assault, battery, and punitive damages against Raymond E. Roelfs, and claims for negligence against his parents Raymond L. and Evelyn Roelfs. Allstate seeks summary judgment on its claims in this court that under the terms of the homeowners policy issued to the Roelfs it is not liable to defend or indemnify the Roelfs against any claims filed by Phillips in state court. Phillips in turn seeks summary judgment, claiming that Allstate provides coverage under its policy for the claims made against Roelfs in state court. I conclude Allstate's policy provides no coverage for Phillips' claims.

It is agreed by all parties that there remains no genuine dispute as to any material fact and that entry of summary judgment is appropriate. Resolution of these motions has been facilitated by the parties' stipulation, for purposes of summary judgment, that Raymond E. Roelfs "willfully and intentionally committed various acts of sexual assault and molestation against April Dawn McShane and Melodie Christine Mcshane, minors, without their consent." The record indicates that the McShane girls periodically stayed at the Roelfs' home and that on at least two occasions they were sexually assaulted by Raymond E. Roelfs. At the time of the molestations Raymond was 16 years old and April and Melodie were 10 and 8 years of age. The molestations were discovered when April told a school friend and a teacher overheard the conversation. Raymond E. Roelfs was questioned by the police, admitted having performed sexually abusive acts with the minors, and was later adjudicated under the juvenile justice system. Following the complaint the girls were examined by a physician who concluded that each had been sexually abused and that the physical symptoms of each were consistent with penile penetration.

The summary judgment motions raise several issues. First is whether the terms of the Roelfs' homeowners policy require Allstate to defend or indemnify Raymond E. Roelfs against Phillips' claims for assault and battery. Second is whether the terms of the policy oblige Allstate to defend or indemnify Raymond L. and Evelyn Roelfs against Phillips' claims of negligence. If Allstate is required to defend Raymond E. Roelfs, a third issue is whether Allstate must also indemnify him for any punitive damages awarded in a judgment against him.

I. Whether the claims against Raymond E. Roelfs based upon the sexual assault of two minor girls are covered by the Allstate homeowners policy issued to the Roelfs.

The duty of an insurer to defend its insured is separate from and broader than its obligation to indemnify the insured. Afcan v. Mutual Fire, Marine and Inland Ins. Co., 595 P.2d 638, 645 (Alaska 1979). The insurer's duty to defend arises whenever a complaint is "sufficient on its face to create an issue of liability covered by the policy" even if the allegations of the complaint are false or groundless. Id. The allegations made in the complaint determine the insurer's duty to defend, and, so long as the claim alleged is for a loss covered by the policy, the insurer must defend. The Roelfs' homeowners policy provides that Allstate will defend an insured "if an insured person is sued for covered damages." Policy, Part I, Coverage X, Family Liability Protection, at 17, Exhibit A to Complaint. Covered damages are "all sums arising from the same loss which an insured person becomes legally obligated to pay as damages because of bodily injury ... covered by this part of the policy." Id. This coverage is, however, subject to an exclusion which provides that Allstate does not cover "bodily injury ... intentionally caused by an insured person." Id. The claims against Raymond E. Roelfs are two: Count I states a claim for assault and battery and requests compensatory damages for Raymond E. Roelfs' "intentional acts"; Count II states that Raymond E. Roelfs intentionally and recklessly sexually assaulted the two girls and requests punitive damages.

A. Scope of the Basic Coverage Provision

Allstate first argues that the claims alleged against Raymond E. Roelfs are not within the basic scope of the homeowners policy because "the average person purchasing homeowners insurance would cringe at the very suggestion" that he was purchasing insurance to cover liability for sexual assault and molestation of a child. Rodriquez v. Williams, 42 Wash.App. 633, 713 P.2d 135, 137 (1986), aff'd en banc 107 Wash.2d 381, 729 P.2d 627 (1986). Phillips argues that the claims alleged are for bodily injury and the policy expressly provides that Allstate will pay all sums an insured becomes obligated to pay as damages because of bodily injury.

The general rule is that insurance contracts are construed liberally against the insurer and doubtful language is resolved in favor of the insured. Starry v. Horace Mann Ins. Co., 649 P.2d 937, 939 (Alaska 1982). This rule does not necessarily apply, however, when the party urging a particular construction is not a party to the contract. Flexi-Van Leasing, Inc. v. Aetna Casualty & Surety Co., 822 F.2d 854, 856 (9th Cir.1987). Because Phillips is not a party to the Allstate insurance policy, I conclude that she "is not entitled to a strict construction in her favor." Id. (quoting Travelers Indemnity Co. v. U.S., 543 F.2d 71, 74 (9th Cir.1976)).

In Alaska, provisions of coverage should be construed broadly. Starry, 649 P.2d at 939. An insurance contract is construed to provide the coverage that a layperson would have reasonably expected, given a lay interpretation of the policy language. Id.; Stordahl v. Government Employees Ins. Co., 564 P.2d 63, 66 (Alaska 1977). This standard is an objective standard, based on the expectations of a hypothetical layperson. Deland v. Old Republic Life Ins. Co., 758 F.2d 1331, 1335 (9th Cir.1985). The reasonable expectations of the insured are determined from the language of the policy itself and from any representations made by the insurer to the insured. Id. at 1336 (quoting INA Life Ins. Co. v. Brundin, 533 P.2d 236, 242 (Alaska 1975)).

As there is no contention here that Allstate made any representations to the Roelfs as to whether their policy would cover bodily injury resulting from sexual assault, the reasonable expectations of the Roelfs must be ascertained from the words appearing on the face of the policy. The policy provides that 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 ... covered by this part of the policy." Policy, supra, at 17. I conclude that the coverage provided by this section is broad enough to include the claims asserted here. Although I agree that most people would "cringe" at the notion that an insurance policy would provide coverage for bodily injury caused by sexual assault, a layperson reading this particular policy language would reasonably expect the policy to protect him or her from liability for bodily injury, however caused.

Allstate relies on three cases for its argument that there can be no reasonable expectation of coverage for bodily injury caused by sexual assault: Vermont Mutual Ins. Co. v. Malcolm, 517 A.2d 800 (N.H. 1986); Rodriguez v. Williams, 42 Wash. App. 633, 713 P.2d 135 aff'd en banc, 107 Wash.2d 381, 729 P.2d 627 (1986); Western Nat. Assur. Co. v. Hecker, 43 Wash.App. 816, 719 P.2d 954 (1986). In Vermont Mutual and Hecker, however, the policies only covered bodily injury "caused by an occurrence" and defined an occurrence as an "accident". Each court found that acts of sexual assault could not reasonably be viewed as an accident or occurrence within the basic coverage provision of the policy. The Allstate policy at issue here, however, contains no such limiting language. The policy in Rodriguez also did not contain such a limitation, and there is language in the lower court's opinion in Rodriguez which suggests that the court found acts of sexual assault not within the basic coverage provision of the policy. The court finally reasoned, however, that there was no coverage because the exclusion for bodily injury expected or intended by an insured applied. On appeal, the Washington Supreme Court affirmed based solely on its conclusion that the exclusionary clause applied to preclude coverage. Rodriguez, 729 P.2d at 630-31. Thus, if the Allstate policy does not cover the claims alleged by Phillips against the Roelfs, it must be because an exclusion removes such claims from the scope of the basic coverage provision.

B. Exclusion for Acts "Intentionally Caused"

Allstate argues that the claims for damages alleged by Phillips are not losses covered by the policy because the acts of sexual molestation were "bodily injury intentionally caused" by Raymond E. Roelfs, an insured, within the meaning...