Teti v. Huron Ins. Co.

• Decision Date: 29 January 1996
• Docket Number: Civil Action No. 95-1315.
• Citation: 914 F. Supp. 1132
• Parties: Robert J. TETI and Francine Teti, Plaintiffs, v. HURON INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

914 F. Supp. 1132

Robert J. TETI and Francine Teti, Plaintiffs, v. HURON INSURANCE COMPANY, Defendant.

Civil Action No. 95-1315.

United States District Court, E.D. Pennsylvania.

January 29, 1996.

Jonathan Krinick, Sagot, Jennings, & Sigmond, Philadelphia, PA, for Plaintiffs.

Paul F.X. Gallagher, Richard K. Hohn, Maryellen Conroy, Gallagher Reilly & Lachat, P.C., Philadelphia, PA, for Defendant.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

Plaintiffs Robert J. Teti ("Teti") and Francine Teti seek a declaratory judgment concerning the obligations of Huron Insurance Company ("Huron"), an insurance carrier, to defend and indemnify them in an underlying civil action under the terms of a Huron-issued homeowner's insurance policy. The underlying suit involves a claim by a sixteen year-old female student at a Philadelphia high school that Teti, a teacher at the high school, had sexual intercourse with her. Huron denied Teti's claims for coverage on the basis of a policy exclusion for injuries or damages which are "expected or intended by the insured." See Memorandum of Law in Support of Defendant Huron Insurance Company's Motion for Summary Judgment, doc. no. 6, Exhibit 1, at 9, Section II — Exclusions, subsection 1a.

The parties have filed cross-motions for summary judgment. Summary judgment is appropriate if the moving party can "show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). Since both parties agree to all material facts, the only question before the Court is the legal one of entitlement to a declaratory judgment.

Defendant's motion will be granted in accordance with the following: First, Pennsylvania law applies to this case. Second, all the charges by the student against Teti constitute allegations of intentional conduct. Third, the inferred intent doctrine is inapplicable to this case because the sixteen year-old student was legally capable of consenting to sexual intercourse. Finally, the Court holds that an insurance contract which provides for the defense and indemnification of a public school teacher, who has been charged with having sexual intercourse with a student, is void and unenforceable because it violates a defined and dominant public policy of Pennsylvania.

I. FACTUAL AND PROCEDURAL BACKGROUND

Teti and his wife, co-owners of the Huron-issued homeowner's insurance policy, are New Jersey residents. The underlying civil action against Teti is pending in Pennsylvania. All events described in the underlying action also occurred in Pennsylvania. Teti was criminally prosecuted for his alleged conduct in Pennsylvania, but was acquitted by a jury. The minor involved is a Pennsylvania resident.

Huron contends that Pennsylvania law applies to this matter. According to Huron, Pennsylvania law mandates the inference of intended harm when an adult has sexual intercourse with a minor. Therefore, Huron argues, Teti's alleged conduct is excluded from coverage under the policy. See Wiley v. State Farm Fire & Casualty Co., 995 F.2d 457, 464-65 (3d Cir.1993) (predicting that the Pennsylvania Supreme Court "would adopt the inferred intent rule in liability insurance cases involving an insured adult's intentional sexual abuse of a thirteen year-old child to raise a conclusive presumption of the insured's intent to harm the victim"). Alternatively, should New Jersey law apply, Huron proposes the same result, since, according to Huron, New Jersey law provides that sexual conduct between a minor and an adult constitutes an intentional act by the adult. See Atlantic Employers Ins. Co. v. Tots & Toddlers Pre-School Day Care Center, Inc., 239 N.J.Super. 276, 571 A.2d 300, 304 (App.Div.) (finding requisite level of intent if insured were guilty of child molestation and concluding, "it is simply against public policy to indemnify a person for a loss incurred as a result of his own willful wrongdoing"), cert. denied, 122 N.J. 147, 584 A.2d 218 (1990).

Teti disagrees, contending that New Jersey law applies and that New Jersey has "not adopted the strict Pennsylvania test of the `inferred intent doctrine.'" Memorandum of Law in Support of Plaintiffs' Motion for Summary Judgment, doc. no. 8, at 4. Instead, Teti argues, under New Jersey law, the intent to injure may be presumed only "when the insured's actions are particularly reprehensible" in the underlying case. Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 607 A.2d 1255, 1265 (1992) (holding that statements of insured parent at public meeting questioning competency of teacher, albeit "unquestionably intentional," could not trigger presumption of "intent to injure" because parent's conduct was not "particularly reprehensible"). Teti submits that this case does not rise to the level of "particularly reprehensible" conduct, not only because the sixteen year-old girl consented to the intercourse, but also because Teti is not alleged to have used force or the threat of force to compel her to have intercourse with him.

II. DISCUSSION

A. Choice of Law

This case is before the Court pursuant to its diversity of citizenship jurisdiction. 28 U.S.C. § 1332(a). In a diversity action, "the choice of law rules of the forum state determine which state's law will be applied." Shuder v. McDonald's Corp., 859 F.2d 266, 269 (3d Cir.1988) (citing Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941)). Accordingly, the Court will apply Pennsylvania's choice of law rules.

In Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (1964), the Pennsylvania Supreme Court abandoned the traditional lex loci delicti doctrine which dictated application of the law of the place of injury in tort cases. Instead, the court opted for "a more flexible rule which permits analysis of the policies and interests underlying the particular issue before the court." Id. 203 A.2d at 805. This method of analysis involves a hybrid approach that "combines the approaches of both Restatement II (contacts establishing significant relationships) and `interest analysis' (qualitative appraisal of the relevant States' policies with respect to the controversy)." Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 (3d Cir.1991) (quoting Melville v. American Home Assurance Co., 584 F.2d 1306, 1311 (3d Cir.1978)).¹ "Although the Griffith case involved a tort action, subsequent cases have extended the same rationale and approach to contract cases involving a choice of law question." Gould, Inc. v. Continental Casualty Co., 822 F.Supp. 1172, 1175 (E.D.Pa.1993) (Yohn, J.) (citations omitted); see also United Servs. Auto. Ass'n v. Evangelista, 698 F.Supp. 85, 87 (E.D.Pa.1988) (Giles, J.) (citing Melville, 584 F.2d at 1313, and applying the Griffith analysis "generally to contract actions and specifically to insurance contracts"), aff'd, 872 F.2d 414 (3d Cir.1989).² In this case, the two-pronged contacts and interests analysis compels application of Pennsylvania law.

With respect to the contacts prong of the Griffith analysis, the actions of Teti and the minor, the underlying civil litigation, and the criminal prosecution of Teti occurred in Pennsylvania. Moreover, the minor resides in Pennsylvania. By contrast, the only contact with New Jersey is the plaintiffs' residence.

As to the governmental interests at stake, the interests of Pennsylvania and those of New Jersey in protecting minors from sexual activity with adults are substantially similar. Pennsylvania's policy is to shield minors from sexual contacts with adults in general, Wiley, 995 F.2d at 464-65, and with teachers in particular, see discussion infra part II.B.3. New Jersey's public policy has the same effect. See Tots & Toddlers, 571 A.2d at 303-04; accord Morton Int'l, Inc. v. Gen. Accident Ins. Co., 134 N.J. 1, 629 A.2d 831, 879 (1993) ("We cited Tots & Toddlers ... as illustrative of conduct that was so inherently injurious as to warrant the conclusion that intent to injure could be presumed."), cert. denied, ___ U.S. ___, 114 S.Ct. 2764, 129 L.Ed.2d 878 (1994); see also Atlantic Employers Ins. Co. v. Chartwell Manor Sch., 280 N.J.Super. 457, 655 A.2d 954 (App.Div. 1995) (condemning sexual abuse of student by teacher); A.C.R. v. Vara, 264 N.J.Super. 565, 625 A.2d 41 (Law Div.1992) (holding that sexual molestation of students by teacher is presumed to result in physical injury).

Because the contacts in this case overwhelmingly favor Pennsylvania and the governmental interests to be protected under Pennsylvania law are substantially similar to those under New Jersey law, Pennsylvania is the jurisdiction with the greater interest in having its law applied. Thus, the Court shall apply Pennsylvania law to this case.

B. The Claims Involved

Having determined that Pennsylvania law applies, the Court now addresses the question of whether Huron properly denied Teti's claims. The following claims have been alleged against Teti: negligent infliction of injuries, negligent infliction of emotional harm, negligent infliction of physical and emotional harm, punitive and exemplary damages, and assault and battery.³ See Complaint, doc. no. 1, Exhibit 2, at 4-8. The factual basis for all claims is the alleged sexual intercourse between Teti and the sixteen year-old student. Id.

1. Exclusionary clauses under Pennsylvania law

Under Pennsylvania law, an exclusionary clause, such as that contained in Huron's insurance policy, "applies only when the insured intends to cause a harm." Aetna Life and Casualty Co. v. Barthelemy, 33 F.3d 189, 191 (3d Cir.1994) (citing United Servs. Auto. Ass'n v. Elitzky, 358 Pa.Super. 362, 517 A.2d 982, 987 (1986), appeal denied, 515 Pa. 600, 528 A.2d 957 (1987)). The intentional nature of the insured's actions alone is not enough: the insured must also have intended the resultant damage. Id. The mere fact that the insured "should reasonably have foreseen the injury which his actions caused"...