469_C305
SEXUAL
MISCONDUCT CLAIM DENIED
|
Homeowners |
Sexual Molestation |
|
Intentional Act |
Negligent Supervision |
J.G., a minor, and her
mother, R.G., filed a civil lawsuit against Steven Wangard,
alleging that he had sexually assaulted J.G. at two residences that Wangard shared with his wife, Deborah. The complaint also
alleged that Deborah negligently failed to prevent the abuse. Wangard eventually pled guilty to second-degree sexual
assault of a child.
One of the residences where
the assaults occurred was insured by Great Northern Insurance Company, and the
other was insured by Pacific Indemnity Insurance Company. The relevant language
of both homeowners policies provided: "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
term "occurrence" was defined as "a loss or accident to which
this insurance applies occurring within the policy period." Wangard was the named insured in the policies, but in the
Coverage Summary of both policies a "covered person" included
"you or a family member." The policies also contained severability clauses that read: "Coverage applies
separately to each covered person. However, this provision does not increase
the amount of coverage for any one occurrence." Both policies excluded
damage caused by the intentional acts of the insureds.
On July 20, 2005, Great
Northern and Pacific Indemnity asked the lower court to declare that the homeowners policies did not cover the losses alleged in the
complaint. The court agreed with the insurers and dismissed the case. That
decision was appealed to the circuit court, which affirmed the lower court's
decision. Deborah then petitioned the Wisconsin Supreme Court for review.
On appeal, Deborah argued
that she was entitled to coverage under both policies. She claimed that the
intentional acts exclusion did not apply to her, and that the application of
that provision to bar coverage violated her reasonable expectations of
coverage. She also argued that the severability
clauses of the policies could not be reconciled with the intentional acts
exclusions, that their interaction created "contextual ambiguity,"
and that these two provisions must be resolved in favor of coverage.
The Supreme Court addressed
each of these arguments in light of previously decided cases and found that
Deborah was not entitled to coverage under the policies. In reaching this
decision, the court noted that the use of the phrase "any covered
persons" in the intentional acts exclusions unambiguously precluded
coverage for all insureds and that the exclusion
"plainly" barred coverage as to Steven and Deborah because the
damages arose out of Steven's intentional acts.
The court also noted that
the existence of a severability clause did not change
the result. In sum, the court found that the intentional acts exclusion in the Wangards' homeowners policies
excluded coverage for damages "arising out of an act intended by any
covered person to cause personal injury." Steven Wangard
was a "covered person" under the policies, and J.G.'s
and R.G.'s injuries allegedly were the result of his
intentional acts. Finally, the court found that Deborah had no reasonable
expectation of coverage for damages arising out of Steven Wangard's
intentional acts.
The decision of the court
of appeals was affirmed.
J.G. and
R.G. vs. Wangard-No. 2006AP818-Supreme Court of
Wisconsin-July 16, 2008-753 North Western Reporter 2d 475