Horace Mann Ins. Co. v. Analisa N.

• Decision Date: 12 October 1989
• Docket Number: No. D008794,D008794
• Citation: 263 Cal.Rptr. 61,214 Cal.App.3d 850
• Court: California Court of Appeals Court of Appeals
• Parties: , 56 Ed. Law Rep. 250 HORACE MANN INSURANCE COMPANY, Plaintiff and Respondent, v. ANALISA N., Defendant and Appellant.

Page 61

263 Cal.Rptr. 61

214 Cal.App.3d 850, 56 Ed. Law Rep. 250

HORACE MANN INSURANCE COMPANY, Plaintiff and Respondent, v. ANALISA N., Defendant and Appellant.

No. D008794.

Court of Appeal, Fourth District, Division 1, California.

Oct. 12, 1989.

Thorsnes, Bartolotta, McGuire & Padilla and Daral B. Mazzarella, San Diego, for defendant and appellant.

Neil, Dymott, Perkins, Brown & Frank and James A. McFall, for plaintiff and respondent.

INTRODUCTION

BENKE, Associate Justice.

In this case a third-grade teacher sexually abused one of his pupils. In an underlying proceeding a $350,000 judgment was entered against him. At the time of the abuse the teacher was covered by an "Educators Employment Liability Policy." The policy covers events which occur in the course of activities performed by the teacher pursuant to the express or implied terms of his employment. We find as a matter of law sexual abuse is unrelated to a teacher's employment and hence not within the coverage provided by the policy. Accordingly we affirm the trial court's order granting his insurer's motion for summary judgment.

FACTUAL SUMMARY

Between January and March 1979 Analisa N. was sexually abused by her third-grade teacher Carl A. Pejsa. The abuse occurred in Pejsa's classroom, during lunch breaks and after school. According to Analisa she was subjected to 20 separate incidents which included fondling, exhibitionism and masturbation. Prior to the molestations Analisa had been confiding in Pejsa about family problems she was experiencing. She had found him easy to talk to and she trusted him because he was her teacher.

On February 6, 1986, Analisa, by and through a guardian ad litem, filed a first amended complaint against Pejsa in which she sought damages for Pejsa's negligence and intentional misconduct. Pejsa tendered the defense of Analisa's claim to the Horace Mann Insurance Company (Horace Mann), which had issued him an Educators Employment Liability Policy.

Horace Mann provided Pejsa with a defense but reserved its right to contest its obligation to indemnify him. On September 25, 1987, Horace Mann filed a declaratory relief action against Analisa and Pejsa in which it sought a judgment determining it had no obligation to pay any judgment entered against Pejsa.

On October 8, 1987, Analisa dismissed all of her intentional tort claims against Pejsa with prejudice. On February 10, 1988, Analisa was awarded a $350,000 judgment against Pejsa.

Thereafter Horace Mann moved for summary judgment in the declaratory relief action. The company argued Pejsa's conduct is not within the coverage provided by the policy and that, in any event, coverage of sexual abuse is barred by a policy exclusion for intentional acts and Insurance Code section 533. ¹ The trial court agreed with the company on both grounds and entered a judgment in its favor on July 6, 1988. Analisa filed a timely notice of appeal.

ISSUES ON APPEAL

As one might expect on appeal Analisa argues Pejsa's conduct falls within the coverage provided by Horace Mann's policy and was not, as a matter of law, intentional or wilful conduct within the meaning of the policy exclusion or Insurance Code section 533. Because we find Pejsa's conduct was not a risk covered by the terms of the policy we affirm the judgment without considering the applicability of the policy exclusion or the Insurance Code.

DISCUSSION

Horace Mann's policy provided the following coverage: "The Company agrees to pay all damages which the insured shall become legally obligated to pay as a result of any claim arising out of an occurrence in the course of the insured's educational employment activities, and caused by any acts or omissions of the insured or any other person for whose acts the insured is legally liable." The policy defines an occurrence as "an event which results in damages to someone other than the [insured.]" Educational employment activities are defined as activities performed: "1. Pursuant to the express or implied terms of his/her employment by an [italics ours] educational unit, or

"2. At the express request or with the express approval of his/her supervisor, provided that, at the time of such request or approval, the supervisor was performing what would appear to be his/her educational employment activities within the meaning of [part 1.]." In sum coverage in this case depends upon whether Pejsa's acts occurred in the course of activities performed pursuant to the express or implied terms of his employment as a teacher.

In answering this question our initial response is the one our Supreme Court recently articulated in a factually similar context: "The question before us here is whether an employer (specifically, a school district) can be held for a sexual assault committed by an employee (here, a teacher) on another person (particularly, on a student committed to that teacher's supervision). The natural, initial reaction is 'No! Of course not!' A more personal escapade less related to an employer's interests is difficult to imagine." (John R. v. Oakland Unified School Dist. (1989) 48 Cal.3d 438, 447, 256 Cal.Rptr. 766, 769 P.2d 948, emphasis added.) However, as in John R., the question before us is not so easily disposed of. Like the issue of respondeat superior liability decided in John R., the question here "is closer than might appear upon first examination." (Ibid.) Nonetheless, similar to the result reached in John R., we ultimately conclude sexual abuse was not a risk covered by Horace Mann's policy.

First we note Analisa argues Pejsa's conduct was "within the scope of his employment" as that phrase has been used in imposing vicarious liability on employers under the doctrine of respondeat superior. If his conduct "was within the scope" of his employment, she asserts, it was also "in the course" of his employment activities within the meaning of the policy. In light of John R., this avenue of argumentation is no longer available to her. In John R. the Supreme Court held that a school district is not vicariously liable for the sexual misconduct of its teachers. After considering the rationale underlying the respondeat superior doctrine and the detriment which would be caused by imposing vicarious liability, the Supreme Court found: "[T]he connection between the authority conferred on teachers to carry out their instructional duties and the abuse of that authority to indulge in personal, sexual misconduct is simply too attenuated to deem a sexual assault as falling within the range of risks allocable to a teacher's employer. It is not a cost this particular enterprise should bear, and the consequences of imposing liability are unacceptable." (John R. v. Oakland Unified School Dist., supra, 48 Cal.3d at p. 452, 256 Cal.Rptr. 766, 769 P.2d 948.)

Our inquiry, however, does not end with John R. The social costs of imposing vicarious liability on an employer, which the court considered in John R., are of little assistance in interpreting the terms of an insurance policy. Rather the rules which govern the interpretation of insurance policies call for a discrete analysis of the insured's reasonable expectations. "In determining what benefits or duties an insurer owes his insured pursuant to a contract of ... insurance, the court may not look to the words of the policy alone, but must also consider the reasonable expectations of the public and the insured as to the type of service which the insurance entity holds itself out as ready to offer. [Citation.] Stated in another fashion, the provisions of the...