J.G. v. Wangard

Decision Date16 July 2008
Docket NumberNo. 2006AP818.,2006AP818.
Citation2008 WI 99,753 N.W.2d 475
PartiesJ.G. and R.G., Plaintiffs-Co-Appellants, v. Deborah S. WANGARD, Defendant-Appellant-Petitioner, Great Northern Insurance Company and Pacific Indemnity Insurance Company, Defendants-Respondents, Steven C. Wangard, John Doe and XYZ Corporation, Defendants.
CourtWisconsin Supreme Court

¶ 1 DAVID T. PROSSER, J

This is a review of an unpublished decision and order of the court of appeals,1 that summarily affirmed a judgment of the Waukesha County Circuit Court, Robert G. Mawdsley, Judge.

¶ 2 The case involves an insurance coverage dispute. The question presented is whether homeowner's insurance policies issued by Great Northern Insurance Company (Great Northern) and Pacific Indemnity Insurance Company (Pacific) to Steven and Deborah Wangard2 provide coverage for the alleged negligence of Deborah in failing to prevent Steven's intentional sexual contact with J.G., a minor. The policies in question cover liability for "damages a covered person is legally obligated to pay for personal injury or property damage," but they contain exclusions that bar coverage for damages arising out of the intentional act of "any covered person."

¶ 3 The court of appeals affirmed the judgment of the circuit court, which held that the homeowner's policies in question do not cover Deborah's alleged negligence. The court of appeals determined that the instant case is controlled by its prior decisions in Jessica M.F. v. Liberty Mutual Fire Insurance Co., 209 Wis.2d 42, 561 N.W.2d 787 (Ct.App.1997) and Taryn E.F. v. Joshua M.C., 178 Wis.2d 719, 505 N.W.2d 418 (Ct.App.1993). The court noted that the intentional acts exclusions in the Wangards' policies preclude coverage for the intentional acts of "any covered person," i.e., any insured. Both Steven and Deborah are insureds under the policies. Since it is undisputed that Steven's sexual contact with J.G. was intentional, and despite the existence of clauses in the policies that apply coverage to each insured separately, the court of appeals found that Deborah's alleged negligence is not covered. We granted Deborah's petition for review.

¶ 4 We conclude that the result in this case is informed by the court of appeals' decisions in Jessica M.F. and Taryn E.F. The intentional acts exclusions in the Wangards' homeowner's policies bar coverage for Deborah's alleged negligence in failing to prevent Steven's intentional sexual contact with J.G. because the plaintiffs' damages—in the language of the Wangards' homeowner's policies—"[arose] out of an act intended by any covered person to cause personal injury." Furthermore, no insured would reasonably expect liability coverage for damages arising out of an act of sexual assault premised upon intentional sexual contact. Accordingly, we affirm the court of appeals.

I. BACKGROUND

¶ 5 The relevant facts are not disputed. On February 23, 2005, plaintiffs J.G., a minor, and R.G., her mother, filed a civil complaint alleging that during a period from 2000 to 2003 Steven Wangard had sexual contact with J.G. at two residences owned by him and his wife Deborah, namely 855 Circle Drive and 14400 Juneau Boulevard, in Elm Grove, Wisconsin. J.G. was between the age of five and eight years old at the time Steven had sexual contact with her.

¶ 6 On October 7, 2004, Steven pled guilty to second-degree sexual assault of a child for having sexual contact with J.G., a violation of Wis. Stat. § 948.02(2).3 The plaintiffs' complaint alleges several claims for relief against Steven that are premised upon his intentional sexual assaults of J.G.4 We assume for purposes of this appeal that Steven's intentional wrongful conduct, which caused the plaintiffs' damages, has been established by his guilty plea as a matter of law.

¶ 7 The plaintiffs' complaint also alleges that Deborah negligently failed to prevent her husband from sexually abusing J.G. Specifically, the complaint's seventh claim for relief alleges that Deborah was negligent in the following ways:

33. That prior to all or some of Steven C. Wangard's sexual contacts with J.G.... Deborah S. Wangard knew or should have known that Steven C. Wangard had intentional sexual contact and/or sexual intercourse with other minors; that she knew or should have known that Steven C. Wangard had a propensity to have intentional sexual contact and/or sexual intercourse with minors; that despite such knowledge, Deborah S. Wangard was negligent in that she, among other things, did not warn J.G. and/or R.G. of such knowledge prior to all or some of Steven C. Wangard's sexual contacts with J.G. as alleged hereinabove; that she did not take any action to prevent Steven C. Wangard from being alone with J.G. prior to all or some of Steven C. Wangard's sexual contacts with J.G. as alleged hereinabove; that at all times material hereto, she negligently supervised J.G. while J.G. was in her care; and was otherwise negligent.

34. That the negligence of Deborah S. Wangard as alleged, was a direct and proximate cause of J.G.'s injuries and damages, as set forth hereinabove, subjecting Deborah S. Wangard to liability for compensatory and punitive damages in an amount to be determined by the trier of fact.

¶ 8 The complaint alleges that the Wangards' acts and omissions harmed J.G. and R.G., namely, that Steven's intentional sexual assaults of J.G. and Deborah's negligence in failing to prevent the assaults allegedly caused J.G. "severe, extreme, disabling and permanent emotional distress, pain, suffering, embarrassment, loss of self esteem, disgrace, humiliation, loss of enjoyment of life, psychological damages, injuries," and continuing expenses for medical and psychological treatment. The complaint also claims that Steven's intentional tortious conduct and Deborah's negligence have caused R.G. to suffer "the loss of J.G.'s society and companionship, past and future pecuniary losses, past and future medical and/or psychological expenses, severe emotional distress," and other injuries.

¶ 9 The residences where Steven sexually assaulted J.G. were insured by Great Northern and Pacific during the relevant time period. Great Northern insured the 14400 Juneau Boulevard residence. Pacific insured the 855 Circle Drive residence. After the plaintiffs filed suit, Great Northern and Pacific initially assumed the defense of Steven and Deborah pursuant to the policies' liability coverage under a reservation of rights. On May 26, 2005, Great Northern and Pacific filed a motion to bifurcate and stay the plaintiffs' case so that the court could determine whether the policies covered the Wangards' potential civil liability.

¶ 10 The relevant language of the Great Northern and Pacific homeowner's policies is identical. The coverage provisions of the policies state: "We cover damages a covered person is legally obligated to pay for personal injury or property damage which take place anytime during the policy period and are caused by an occurrence, unless stated otherwise or an exclusion applies." The policies state that an "[o]ccurrence means a loss or accident to which this insurance applies occurring within the policy period." Although the policies name Steven alone as the insured party in the "Coverage Summary," a "covered person" includes "you or a family member." The policies also include language under the heading "Application of coverage" that reads: "Coverage applies separately to each covered person. However, this provision does not increase the amount of coverage for any one occurrence."5

¶ 11 The liability provisions of the Wangards' policies provide coverage for certain enumerated damages and injuries, while other harms caused by the insureds are excluded from coverage. "Personal injury" is covered by the policies and includes "bodily injury ... shock, mental anguish, or mental injury." "Bodily injury" means "physical bodily harm, including sickness or disease that results from it, and required care, loss of services and resulting death."

¶ 12 The policies exclude damages caused by the intentional acts of insureds. The policies state:

Intentional acts. We do not cover any damages arising out of an act intended by any covered person to cause personal injury or property damage, even if the injury or damage is of a different degree or type than actually intended or expected. An intentional act is one whose consequences could have been foreseen by a reasonable person. But we do cover such damages if the act was intended to protect people or property unless another exclusion applies.

¶ 13 On July 20, 2005, Great Northern and Pacific moved for a declaratory ruling and to dismiss the case against them on grounds that the Wangards' homeowner's policies did not cover the losses alleged in the plaintiffs' complaint. The circuit court heard argument on the motion on December 5, 2005, and issued a written decision in favor of Great Northern and Pacific on February 20, 2006.

¶ 14 The circuit court held that the Wangards' homeowner's policies did not cover any of the claims alleged in the plaintiffs' complaint. With regard to the alleged negligence of Deborah, the court concluded that the intentional acts exclusion in the two policies barred coverage. The court found that "the language contained in the policy is not ambiguous nor is the policy as a whole contextually ambiguous." The court also found that "the language contained in the exclusion bars coverage regardless of the existence of a separation clause." The court cited Hagen v. Gulrud, 151 Wis.2d 1, 6-7, 442 N.W.2d 570 (Ct. App.1989), for...

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