Argonaut Great Cent. Ins. Co. v. Valley Vill., LLC
| Decision Date | 25 February 2013 |
| Docket Number | Case No. 4:10CV2247 CDP |
| Parties | ARGONAUT GREAT CENTRAL INSURANCE COMPANY, Plaintiff, v. VALLEY VILLAGE, LLC, d/b/a COMFORT INNS & SUITES CHESTERFIELD, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This is an insurance coverage declaratory judgment case. E.N. is a minor who brought suit in state court against Valley Village, LLC d/b/a Comfort Inns and Suites Chesterfield, and Nasser Bainsaeid. E.N. was staying at Valley Village's Comfort Inn hotel when Bainsaeid statutorily raped her on two separate occasions. In the state court case, E.N. sues Bainsaeid for the sexual assault, and she sues the hotel for various negligent acts, including failing to have sufficient security and failing to supervise Bainsaeid.
The hotel had two insurance policies with Argonaut Great Central Insurance Company: a Commercial General Liability (CGL) policy and a Commercial Umbrella (CU) policy. Argonaut brought this declaratory judgment case asserting that the claims are not covered by either policy. Argonaut and E.N. both havemoved for summary judgment, and the hotel filed a brief supporting E.N.'s position that coverage exists.
I conclude that E.N.'s claims against Bainsaeid's are not covered by either policy. I further conclude that the CGL policy excludes coverage for all of plaintiff's claims against the hotel because all seek to impose liability "arising out of" the sexual misconduct. I conclude that the CU policy excludes coverage regarding plaintiff's claims against Comfort Inn with regard to the first incident, but that there is a genuine issue of material fact as to whether Bainsaeid was employed by Comfort Inn during the second incident. I will therefore grant Argonaut's motion for summary judgment in all respects except whether the Comfort Inn's alleged negligence related to the December 2008 incident is covered by the CU policy.
E.N., a minor, was a resident at Comfort Inn's Chesterfield, Missouri location in late 2008. On October 1, 2008 and December 2, 2008, she was statutorily raped by Nasser Bainsaeid, an employee of Comfort Inn. E.N. filed a lawsuit against Comfort Inn and Bainsaeid in the Circuit Court of St. Louis County. E.N. alleged that Comfort Inn was negligent for breaching various duties to her regarding foreseeable criminal acts, safety, security, security cameras, patrol, dangerous condition of premises, and hiring, supervising, training, and monitoringof Bainsaeid. E.N. alleged that she suffered severe injuries to her body and mind, suffered from post-traumatic stress disorder, anxiety, severe emotional distress, pain and suffering, loss of enjoyment of life, and that her future earnings capacity and future ability to enjoy life have been restricted as a result of these incidents. In the underlying suit, E.N. seeks actual and punitive damages against both Bainsaeid and Comfort Inn.
Argonaut issued a Commercial General Liability Policy, Policy #HM9126562, and a Commercial Umbrella Policy, Policy #UMB9126562, to Comfort Inn for the period of September 1, 2008 to September 1, 2009. The CGL policy covered "bodily injury" or "property damage" only if the bodily injury or property damage was caused by an "occurrence." The policy defined "bodily injury" as "bodily injury, sickness or disease sustained by a person, including death." An "occurrence" was defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The CGL policy also contained an exclusion for:
Any liability arising out of actual or alleged sexual misconduct, sexual abuse, licentiousness and/or sexual molestation, whether or not expected or intended, including without limitation, claims resulting from or arising out of negligent hiring, supervision, or transfer of, failure to supervise, or failure to dismiss any officer, "employee" or volunteer worker alleged to have committed any act of sexual misconduct, sexual abuse, licentiousness, or sexual molestation, nor do we have any duty to defend an insured in any "suit" seeking damages on account of such liability.
The CU policy also limited coverage to "bodily injury" or "property damage" caused by an "occurrence." Like the CGL policy, the CU policy defined an "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The CU policy did not have any reference to sexual misconduct, but it did have an exclusion for "'Bodily injury' or 'property damage' expected or intended from the standpoint of an insured."
In determining whether summary judgment should issue, I must view the facts and inferences from the facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The moving party has the burden to establish both the absence of a genuine issue of material fact, and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in its pleadings but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists. Fed. R. Civ. P. 56(e).
Under Missouri law, which applies to this diversity case, the rules governing the interpretation of insurance polices are well settled. Columbia Mut. Ins. Co. v.Schauf, 967 S.W.2d 74, 77 (Mo. 1998). A court must apply the general rules of contract construction when interpreting an insurance policy, because insurance policies are contracts. Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 160 (Mo. 2007). When interpreting a contract, a court must give the contract's terms their plain and ordinary meaning, unless a term is ambiguous. Farmland Indus., Inc. v. Republic Ins. Co., 941 S.W.2d 505, 508 (Mo. 1997)); Peters v. Emp'rs Mut. Cas. Co., 853 S.W.2d 300, 301 (Mo. 1993). A term's plain and ordinary meaning is the meaning that an average layperson would give the term. Farmland Indus., Inc., 941 S.W.2d at 508. In addition, a court "should not interpret policy provisions in isolation but rather evaluate policies as a whole." Ritchie v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132, 135 (Mo. 2009). Finally, in interpreting an insurance contract, the court must "endeavor to give each provision a reasonable meaning and to avoid an interpretation that renders some provisions useless or redundant." Dibben v. Shelter Ins. Co., 261 S.W.3d 553, 556 (Mo. Ct. App. 2008). The burden of proving coverage is on the insured, but the burden of proving that a claim falls within an exclusion is on the insurance company. State Farm Fire & Cas. Co. v. D.T.S., 867 S.W.2d 642, 644 (Mo. Ct. App. 1993).
A term is ambiguous only if the terms are "reasonably and fairly open to different constructions, and there is duplicity, indistinctness, or uncertainty of meaning." Miller's Classified Ins. Co. v. French, 295 S.W.3d 524, 526 (Mo. Ct.App. 2009) (citations and internal quotation marks omitted). When an ambiguity exists in an insurance policy, the court must interpret the policy in favor of the insured. Todd, 223 S.W.3d at 160. If, however, the policy is unambiguous, the court must enforce the contract's terms as written. Id.
Argonaut argues that the sexual assault is not an "occurrence" under either policy because it was an intentional act, and therefore cannot be classified as an "accident." It further argues that the CGL policy specifically excludes any claims "arising out" of sexual misconduct, and that the CU policy excludes claims for injuries that are expected or intended. E.N argues, on the other hand, that her claims against Bainsaeid are not for injuries that were "intended" and that her claims of negligence against the hotel are distinct from the sexual assault claims, and are therefore covered.
Both the CGL policy and the CU policy cover damages for "bodily injury" caused by an "occurrence." As set out above, both policies define "occurrence" as an "accident." The term "accident" is not defined in either policy, so it must be given its ordinary meaning. In discussing this definition in a different context, the Missouri Court of Appeals recently defined "accident" to mean:
An event that takes place without one's foresight or expectation; an undesigned, sudden and unexpected event. Hence, often, an undesigned and unforeseen occurrence of an afflictive or unfortunate character; a mishap resulting in injury to a person or damage to athing; a casualty; as, to die by an accident. . . . An 'accident' is not necessarily a sudden event; it may be the result of a process. . . . The determinative inquiry into whether there was an 'occurrence' or 'accident' is whether the insured foresaw or expected the injury or damages.
Assurance Co. of America v.Secura Ins. Co., 384 S.W.3d 224, 234 (Mo. Ct. App. 2012) (quotations and citations omitted).
Bansaeid's actions cannot be considered an "accident" under any normal definition of the word. His acts, and the injury resulting from them, cannot have been unexpected. The Missouri Supreme Court has not decided a case presenting this precise issue. The Missouri Court of Appeals, however, has applied the "inferred-intent" standard to conclude that in the context of sexual molestation of a minor, the harm is intended as a matter of law. State Farm Fire & Cas. Co. v. D.T.S., 867 S.W.2d 642, 645 (Mo. Ct. App. 1993)1 ; see also M.A.B. v. Nicely, 911 S.W.2d 313 (Mo. Ct. App. 1995). The Eighth Circuit has predicted that Missouri would adopt the inferred-intent standard for cases involving child sexual abuse. See B.B. v. Cont'l Ins. Co., 8 F.3d 1288, 1292 (8th Cir. 1993). I therefore agree with Argonaut that the intentional tort claims against Bainsaeid resulting...
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