American Commerce Ins. Co. v. Porto

• Decision Date: 26 December 2002
• Docket Number: No. 2001-80-Appeal.,2001-80-Appeal.
• Parties: AMERICAN COMMERCE INSURANCE COMPANY v. Sebastian M. PORTO et al.
• Court: Rhode Island Supreme Court

811 A.2d 1185

AMERICAN COMMERCE INSURANCE COMPANY v. Sebastian M. PORTO et al.

No. 2001-80-Appeal.

Supreme Court of Rhode Island.

December 26, 2002.

Present: WILLIAMS, C.J., LEDERBERG, FLANDERS, and GOLDBERG, JJ.

Mark J. Faria, Carol Nicholson Glick, Providence, for Plaintiff.

James T. Murphy/Frederic A. Marzilli/Jeffrey D. Sowa, Joel K. Gerstenblatt/Gregory A. Carrara/Andrew J. Murray, Sarah McConnell Dubois, for Defendant.

OPINION

FLANDERS, Justice.

This is an insurance-coverage dispute concerning the scope of a policy provision excluding coverage for bodily injury claims arising out of "the actual, alleged or threatened sexual molestation of a person." The defendants, Sebastian M. Porto (Porto), the Boy Scouts of America, Narragansett Council (BSA),¹ and a member of the BSA troop who was a minor when the alleged sexual molestation occurred (fictitiously referred to herein as "Jimmy") and his parents (collectively, the family), appeal from a grant of summary judgment in favor of the plaintiff insurer, American Commerce Insurance Company (ACIC). The Superior Court entered summary judgment for ACIC in response to a declaratory-judgment action that ACIC brought against the defendants. In that case, ACIC sought a declaration that it did not have a duty to defend or to indemnify its insured, Porto, in connection with the underlying negligence action that the family had filed against Porto and others after a Boy Scout troop leader that Porto supervised allegedly sexually molested Jimmy when he was a member of the troop.

Facts and Travel

Beginning on September 8, 1994, ACIC insured Porto under a contract of insurance entitled "Home-Master Policy." While ACIC insured him, Porto was a Boy Scout leader with Troop 7 in East Providence, where he allegedly supervised another troop leader, defendant Marc K. Abbott (Abbott). Jimmy, then a minor, was a member of the troop.

On August 19, 1999, Jimmy and his parents filed a Superior Court complaint against defendants BSA, Porto, and Abbott. They alleged that Jimmy's troop leader, Abbott, sexually assaulted Jimmy while Abbott was under Porto's supervision, thereby causing Jimmy to suffer damages for, inter alia, bodily injuries. His parents sought damages for their alleged loss of consortium.

The complaint also alleged that Porto and BSA were negligent in hiring and supervising Abbott. The family asserted that Porto knew or should have known of Abbott's propensity for engaging in inappropriate sexual contact with boys such as Jimmy, and that Porto and BSA owed them a duty to prevent such misconduct. The family also alleged that Porto should have used reasonable care in the selection of troop leaders and that he was under a duty to reject individuals such as Abbott who might engage in inappropriate sexual conduct with Scouts under their supervision. Additionally, the family alleged that, as a Scout leader, Porto had a duty to educate his troop members, including Jimmy, about how to avoid or to cope with inappropriate situations of a sexual nature, such as those alleged in this case. The family also averred that Porto failed to provide such education to Jimmy and to the other members of Troop 7. Porto, through his attorney, sought to have ACIC defend and indemnify him with respect to those allegations in the family's complaint that pertained to him.

In a separate Superior Court action filed on March 1, 2000, ACIC sought declaratory relief concerning whether it was obliged to cover Porto under the liability provisions of the policy and whether it was required to defend or to indemnify Porto against the family's claims in the underlying lawsuit. In due course, ACIC obtained summary judgment and a declaratory judgment entered granting the motion "against the defendants as to all counts." The motion justice concluded that ACIC had no duty to defend or to indemnify Porto because the policy excluded coverage for a bodily injury claim that "arises out of * * * the actual, alleged or threatened sexual molestation of a person."² The trial justice found that "this complaint plainly alleges injury, bodily injury, flowing from a sexual molestation and the incidents that are related to that."

On appeal, defendants argue that the trial justice erred in granting summary judgment in favor of ACIC. Porto contends that the policy's exclusion for a bodily injury claim arising from the "actual, alleged or threatened sexual molestation of a person" is inapplicable to his situation. He maintains that his potential liability to the family arises from his alleged negligent failure to properly supervise Abbott — but not from Abbott's sexual assault against Jimmy. The BSA argues that the motion justice erred in failing to adhere to the "pleadings test" and in concluding that all the family's damages arose out of the alleged sexual assault. It suggests that the insurance policy's exclusion does not prohibit coverage for the non-physical injuries alleged by the family, such as those claims against Porto for injuries to the family arising from his alleged negligence in failing to educate Jimmy about how to avoid attempted sexual molestation and cope with exposure to pornography and live sexual acts. These occurrences, BSA avers, do not include physical contact between Abbott and Jimmy, and thus cannot be considered "sexual molestation" under the policy.

The family also argues that the motion justice's interpretation of the insurance policy was erroneous. They maintain that this Court has not yet rendered an opinion concerning whether a sexual-molestation exclusion prohibits coverage for claims against alleged negligent supervisors of sexual molesters. The family argues that public policy favors coverage in this situation to prevent ACIC from escaping liability for its insured's negligence simply because the injuries at issue involve another individual's alleged sexual abuse.

ACIC agrees that an insurer's duty to defend its insured is determined by the pleadings test. It argues, however, that this Court has recognized an exception to that rule in cases involving civil actions for damages flowing from an alleged sexual molestation. If Porto had been the perpetrator of the alleged molestation, ACIC argues, there would clearly be no coverage for Porto under the holdings in Peerless Insurance Co. v. Viegas, 667 A.2d 785, 789 (R.I.1995) and Craven v. Metropolitan Property and Casualty Insurance Co., 693 A.2d 1022, 1022-23 (R.I. 1997) (mem.). It also suggests that, under the plain language in its insurance policy, the sexual-molestation exclusion from the definition of covered bodily injury claims applies to this case. Specifically, ACIC argues that the policy's definition of bodily injury excludes coverage for bodily harm that arises out of "the actual, alleged or threatened sexual molestation of a person." Relying on numerous cases from other jurisdictions, it maintains that we should afford a broadinterpretation to the policy term "arising out of," thereby precluding coverage in this case. It also contends that the family's claims for bodily injury, whether allegedly resulting from physical contact or not, "arise out of" Jimmy's sexual molestation and fall within the plain meaning of "sexual molestation" as that term is commonly understood. Without Jimmy's alleged bodily injuries from Abbott's actual, alleged, or threatened sexual molestation of him, ACIC argues, there would be no bodily injuries whatsoever and, therefore, no basis for these claims. ACIC also posits that public-policy considerations do not require it to provide coverage in this type of case.

Summary Judgment

When we review the grant of a summary judgment motion, we examine all the pleadings, memoranda, and evidence presented in the light most favorable to the nonmoving party to determine whether an issue of material fact exists and whether the moving party was entitled to judgment as a matter of law. Progressive Casualty Insurance Co. v. Narragansett Auto Sales, 764 A.2d 722, 724 (R.I.2001) (per curiam). "In general, the duty to defend an insured in this jurisdiction is determined by applying the `pleadings test.'" Peerless Insurance Co., 667 A.2d at 787 (citing Employers' Fire Insurance Co. v. Beals, 103 R.I. 623, 240 A.2d 397 (1968)).

"That test requires the trial court to look at the allegations contained in the complaint, and `if the pleadings recite facts bringing the injury complained of within the coverage of the insurance policy, the insurer must defend irrespective of the insured's ultimate liability to the plaintiff.' Beals, 103 R.I. at 632, 240 A.2d at 402. That duty, when blindly applied, may certainly result in the defense of `groundless, false or fraudulent' suits, but the insurer is duty bound nonetheless." Peerless Insurance Co., 667 A.2d at 787.

In determining whether ACIC had a duty to defend its insured, Porto, in the underlying lawsuit, the motion justice examined the insurance policy and its relevant sections and comparedthe potential coverage and exclusion provisions therein to the allegations in the complaint. The relevant policy provisions were as follows:

"Coverage L — Personal Liability — We pay, up to our limit, all sums for which an insured is liable by law because of bodily injury or property damage caused by an occurrence to which this coverage applies. We will defend a suit seeking damages if the suit resulted from bodily injury or property damage not excluded under this coverage.

* * * * * *

"Bodily injury means bodily harm to a person and includes sickness, disease or death. This also includes required care and loss of services. Bodily injury does not mean bodily harm, sickness, disease or death that arises out of:

"a. a communicable disease; or

"b. the actual, alleged or threatened sexual molestation of a person."

Here, the motion justice did in fact employ the "pleadings test" in examining the allegations contained in the complaint,³ and in comparing them to the relevant...