Doe v. Shaffer

[This opinion has been published in Ohio Official Reports at 90 Ohio St.3d 388.]

DOE ET AL.; INTERSTATE FIRE AND CASUALTY COMPANY, APPELLEE, v.

SHAFFER ET AL.; DIOCESE OF COLUMBUS ET AL., APPELLANTS.

[Cite as Doe v. Shaffer, 2000-Ohio-186.]

Insurance—Ohio public policy permits a party to obtain liability insurance

coverage for negligence related to sexual molestation when that party has

not committed the act of sexual molestation.

Ohio public policy permits a party to obtain liability insurance coverage for

negligence related to sexual molestation when that party has not committed

the act of sexual molestation. (Gearing v. Nationwide Ins. Co. [1996], 76

Ohio St.3d 34, 665 N.E.2d 1115, paragraph two of the syllabus, construed;

Cuervo v. Cincinnati Ins. Co. [1996], 76 Ohio St.3d 41, 665 N.E.2d 1121,

and Westfield Cos. v. Kette [1996], 77 Ohio St.3d 154, 672 N.E.2d 166,

modified.)

(No. 99-1986—Submitted September 13, 2000—Decided December 20, 2000.)

APPEAL from the Court of Appeals for Hamilton County, No. C-980729.

__________________

{¶ 1} John Doe1 was a mentally retarded man who, until 1992, had resided

for over twenty years in Pike County at the Good Shepherd Manor (“Manor”), a

residential care facility for the mentally retarded. The Manor was formerly

operated by a Roman Catholic religious order known as the Little Brothers of the

Good Shepherd (“the Brothers”). In 1985, following allegations that there had been

incidents of financial mismanagement and sexual abuse at the Manor, the Brothers

were removed from the Manor by order of the Superior General of the Brothers,

who was based in New Mexico.

1. This individual’s name has been changed.

SUPREME COURT OF OHIO

{¶ 2} In late 1992, after Doe was diagnosed as having contracted the human

immunodeficiency virus (“HIV”), he moved from the Manor to his parents’

residence in Hamilton County. Doe and his parents, acting individually and on his

behalf, filed suit in 1993 against the Brothers, individual employees of that order,

the Catholic Diocese of Columbus (“the Diocese”), Bishop James A. Griffin, and

others,2 alleging that Doe had been sexually molested and infected with HIV by

Manor employees under the control of the Diocese and Griffin. The Does alleged

several causes of action against the various parties, including negligent hiring,

transmission of a communicable sexually transmitted disease, fraud, and sexual

molestation.3 During the pendency of this suit, Doe died of complications related

to acquired immune deficiency syndrome.4

{¶ 3} Doe’s parents settled with Griffin and the Diocese. Prior to

settlement, however, appellee Interstate Fire & Casualty Company (“Interstate”)

intervened, seeking a declaratory judgment that it had no duty to defend or

indemnify the Diocese or Griffin under three separate insurance policies in effect

during the pertinent time frame. The policies provided liability indemnity coverage

in excess of the limits of coverage afforded by a number of underlying insurance

policies.

{¶ 4} The Diocese and Griffin filed an answer that included a counterclaim

for declaratory judgment that Interstate possessed a duty to defend and indemnify

2. The Roman Catholic Church of the Archdiocese of Santa Fe and related parties were dismissed

with prejudice following a stipulation by the Does that these parties had resolved the dispute.

3. The second amended complaint filed by the Does alleged the following causes of action and

claims against the Diocese and Griffin: fraud; negligent and/or reckless supervision and/or retention;

violation of statutory duty of care; negligent or reckless and wanton failure to warn; respondeat

superior and agency; misrepresentation with negligent, reckless, and wanton retention and

supervision; loss of society; fraud in inducement of contract; breach of implied contract and

warranty; breach of contract with damages to third-party beneficiary; breach of fiduciary duty;

punitive damages; and wrongful death.

4. Doe’s father also died while the suit was pending

2

January Term, 2000

them. Interstate then moved for summary judgment. The trial court denied the

motion, but then granted judgment for Interstate upon reconsideration. The court

entered summary judgment for Interstate on the grounds that public policy barred

coverage both for intentional acts of sexual molestation and for negligence claims

that flowed from the molestation. The court of appeals affirmed, holding that,

because intentional acts of sexual molestation and negligence claims that are

derived from such acts are uninsurable pursuant to Ohio public policy, Interstate

was entitled to summary judgment as a matter of law.

{¶ 5} The cause is before this court upon allowance of a discretionary

appeal.

__________________

Reminger & Reminger, Clifford C. Masch and David Ross, for appellee.

Kegler, Brown, Hill & Ritter, Thomas W. Hill, Robert G. Schuler and Paul

D. Ritter, Jr., for appellants.

__________________

COOK, J.

{¶ 6} This case presents the issue of whether the public policy precluding

liability insurance coverage for acts of sexual molestation also prohibits coverage

for a nonmolester for related claims alleging negligent supervision, negligent

retention, and negligent failure to warn. Because we conclude that such coverage

does not violate public policy, we reverse the judgment of the court of appeals and

remand this cause for further proceedings.

I. Standard of Review

{¶ 7} We review the grant of summary judgment de novo. Grafton v. Ohio

Edison Co. (1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241, 245. Therefore,

Interstate may prevail under Civ.R. 56(C) only if “(1) there is no genuine issue of

material fact; (2) the moving party is entitled to judgment as a matter of law; and

(3) it appears from the evidence that reasonable minds can come to but one

3

SUPREME COURT OF OHIO

conclusion when viewing evidence in favor of the nonmoving party, and that

conclusion is adverse to the nonmoving party.” Id., citing State ex rel. Cassels v.

Dayton City School Dist. Bd. of Edn. (1994), 69 Ohio St.3d 217, 219, 631 N.E.2d

150, 152.

II. Application of Ohio Public Policy

{¶ 8} We now consider whether, as a matter of law, Ohio public policy

precludes insurance coverage for the negligence alleged here. We conclude that it

does not.

{¶ 9} As early as 1938, this court found that it was “well settled from the

standpoint of public policy that the act of intentionally inflicting an injury cannot

be covered by insurance in anywise protecting the person who inflicts such injury.”

Rothman v. Metro. Cas. Ins. Co. (1938), 134 Ohio St. 241, 246, 12 O.O. 50, 52, 16

N.E.2d 417, 420. See, also, Commonwealth Cas. Co. v. Headers (1928), 118 Ohio

St. 429, 161 N.E. 278. Accordingly, we have long adhered to the view that Ohio

prohibits insuring against liability for one’s own intentional torts. See Buckeye

Union Ins. Co. v. New England Ins. Co. (1999), 87 Ohio St.3d 280, 283, 720 N.E.2d

495, 498; Gearing v. Nationwide Ins. Co. (1996), 76 Ohio St.3d 34, 38, 665 N.E.2d

1115, 1118; Wedge Products, Inc. v. Hartford Equity Sales Co. (1987), 31 Ohio

St.3d 65, 67, 31 OBR 180, 181, 509 N.E.2d 74, 76 (no coverage for tort where

employer was substantially certain that employees would be injured); Preferred

Mut. Ins. Co. v. Thompson (1986), 23 Ohio St.3d 78, 81, 23 OBR 208, 210, 491

N.E.2d 688, 691.

{¶ 10} Application of this public policy has not always been absolute. In

Harasyn v. Normandy Metals, Inc. (1990), 49 Ohio St.3d 173, 551 N.E.2d 962, for

example, we addressed whether the general public policy precluding insuring

against liability for intentional torts prevented an employer from procuring

insurance for a tortious act performed not with purpose to injure but with the

4

January Term, 2000

knowledge that injury was substantially certain to occur. We concluded that it did

not.5 We reasoned:

“It is often said that public policy prohibits liability insurance for intentional

torts. This statement is based on ‘the assumption that such conduct would be

encouraged if insurance were available to shift the financial cost of the loss from

the wrongdoer to his insurer. * * *’ Farbstein & Stillman, Insurance for the

Commission of Intentional Torts (1969), 20 Hastings L.J. 1219, 1245-1246.

However, this blanket prohibition ‘makes no distinctions as to the various forms of

intentional wrongdoing and does not admit the possibility that some torts might not

be particularly encouraged if insurance were available for them.’ Id. at 1251. The

better view is to prohibit insurance only for those intentional torts where ‘the fact

of insurance coverage can be related in some substantial way to the commission of

wrongful acts of that character. * * *’ Isenhart v. General Cas. Co. (1962), 233

Ore. 49, 52-53, 377 P.2d 26, 28.” (Citations omitted.) Id. at 176, 551 N.E.2d at

965.

{¶ 11} In Gearing, we then analyzed the general public policy in the context

of sexual molestation claims. There, this court was asked to decide whether courts

should infer intent to injure as a matter of law from the sexual abuse of a child. We

held, as have the overwhelming majority of other jurisdictions, that courts should

infer such intent. Gearing, 76 Ohio St.3d at 37-38, 665 N.E.2d at 1118. As a result,

we concluded that public policy precluded the issuance of coverage for this

intentional tort. Id. at 40, 665 N.E.2d at 1119.

5. We recognize that there is debate within this court concerning the current state of the law on

whether “substantial-certainty” torts fall within the public policy exclusion for insurance coverage.

See Buckeye Union Ins. Co. v. New England Ins. Co. (1999), 87 Ohio St.3d 280, 288, 720 N.E.2d

495, 502 (Cook, J., dissenting). In this case, however, this question is not implicated. Rather, this

court’s explication of the public policy in Harasyn is used only to inform today’s decision as to

whether the purpose of the public policy extends to negligent conduct.

5

SUPREME COURT OF OHIO

{¶ 12} We issued our decision in Gearing on the same day that we issued

Cuervo v. Cincinnati Ins. Co. (1996), 76 Ohio St.3d 41, 665 N.E.2d 1121. In

Cuervo, this court addressed whether a father could be indemnified under his

homeowner’s policy for claims of negligence brought because his son, who was

also an insured on the policy, molested a child. After first deciding that Gearing

forbids indemnification of the son, this court went on to hold that public policy also

forecloses indemnification of the father, saying:

“Similarly, the damages for which the Cuervos seek compensation flow

from [the son’s] intentional acts of sexual molestation of a minor. Thus, and on

this record, the obligation of Cincinnati to pay the judgment entered against his

father * * * is precluded as well.” Id. at 44, 665 N.E.2d at 1122-1123.

{¶ 13} The Diocese and Griffin interpret the Cuervo holding to say that the

negligent insured is foreclosed from indemnification only when the intentional

tortfeasor is an insured under the policy through which the negligent insured claims

coverage. They assert that, unless the intentional tortfeasor is on the same policy

as the negligent insured, insurance extends to negligence related to sexual

molestation.

{¶ 14} This court’s opinion in Cuervo did not, however, analyze the

language of the Cuervos’ insurance policy. So, says Interstate, Cuervo cannot stand

for the rule that coverage is denied only when the sexual molester is an insured on

the same policy. Rather, Interstate argues, Cuervo stands for the proposition that

“insurance to anyone for injuries flowing from sexual molestation is against public

policy.”6 (Emphasis added.)

6. Support for this interpretation lies in this court’s only application of Cuervo. In Westfield Cos. v.

Kette (Mar. 29, 1996), Erie App. No. E-95-051, unreported, 1996 WL 139636, the Sixth District

found that coverage for the wife of an alleged molester existed under a homeowner’s policy that

provided coverage for an insured’s negligence, “irrespective of whether a co-insured’s intentional

acts give rise to an exclusion for him.” Id. at 9, 1996 WL 139636, at *4. We summarily reversed,

6

January Term, 2000

{¶ 15} In order to resolve this debate between the parties, we reevaluate the

Cuervo judgment that imputes the sexual molester’s intent to one whose conduct is

only negligent with regard to the sexual molestation. In so doing, we continue to

adhere to Cuervo’s holding that public policy precludes liability insurance coverage

for intentional acts of sexual abuse. For the following reasons, however, we decline

to adhere to that portion of Cuervo that precludes insurance coverage for a

nonmolester’s negligence related to sexual molestation.

{¶ 16} In Gearing, we stated that “[l]iability insurance does not exist to

relieve wrongdoers of liability for intentional, antisocial, criminal conduct.”

Gearing, 76 Ohio St.3d at 38, 665 N.E.2d at 1118. We also opined that “[s]exual

abuse of children constitutes conduct so reprehensible that the General Assembly

has categorized such conduct as felonious upon commission of the proscribed acts

themselves[.]” Id. at 38-39, 665 N.E.2d at 1119, citing R.C. 2907.05. The express

societal condemnation that animates the public policy forbidding insurance for the

intentional tort of sexual molestation, however, does not exist for the tort of

negligence. Many of the claims against the Diocese and Griffin sound in

negligence, and to deny them coverage as an extension of this public policy would

be untenable.

{¶ 17} This is so because the intentions of the molester are immaterial to

determining whether the allegedly negligent party has coverage. Silverball

Amusement, Inc. v. Utah Home Fire Ins. Co. (W.D.Ark.1994), 842 F.Supp. 1151,

1160, affirmed (C.A.8, 1994), 33 F.3d 1476 (permitting coverage for alleged

negligent hiring and supervision by an insured despite molestation by another

insured), citing Sena v. Travelers Ins. Co. (D.N.M.1992), 801 F.Supp. 471, 475. In

reaching this conclusion, we find the rationale employed in Silverball informative.

While acknowledging that jurisdictions have arrived at different conclusions as to

based on the authority of Cuervo. Westfield Cos. v. Kette (1996), 77 Ohio St.3d 154, 672 N.E.2d

166. To the extent that Cuervo is modified this day, so too is Westfield modified.

7

SUPREME COURT OF OHIO

whether alleged negligence related to sexual molestation can constitute a policy

occurrence, the Silverball court reasoned that the intentions or expectations of the

negligent insured must control the coverage determination, and not the intentions

or expectations of the molester. Id. at 1160. The court explained that a contrary

practice would be unreasonable, saying:

“The ultimate effect of [those opinions denying coverage] leads to a

metamorphosis in which certain negligent actions are transformed by the court into

intentional actions for the purposes of deciding negligent hiring cases involving

sexual abuse. Such a decision effectively dissolves the distinction between

intentional and negligent conduct, allowing the intentional act to devour the

negligent act for the purpose of determining coverage. The correct method of

analyzing this issue in cases with the factual setting and insurance policy provisions

involved * * * would deal with each act on its own merits and recognize that

employers who make negligent hiring decisions clearly do not intend the

employees to inflict harm.” Id. at 1163.

{¶ 18} A contrary interpretation that refuses to distinguish between the

abuser’s intentional conduct and the insured’s alleged negligence would

impermissibly ignore the plain language of an insurance policy that excludes from

coverage bodily injury that was expected or intended from the standpoint of the

insured. See United States Fid. & Guar. Co. v. Open Sesame Child Care Ctr.

(N.D.Ill.1993), 819 F.Supp. 756, 760.7 Here, Interstate does not dispute that neither

7. See, also, Evangelical Lutheran Church in Am. v. Atlantic Mut. Ins. Co. (C.A.5, 1999), 169 F.3d

947 (finding that a duty to defend insured existed under policy excluding bodily injuries expected

or intended by the insured, because the negligence alleged was not an intentional tort, and the

molester’s acts should not be considered the insured’s acts); St. Paul Fire & Marine Ins. Co. v.

Schrum (C.A.8, 1998), 149 F.3d 878, 881 (holding that molestation by third party is “merely

incidental” to claim of negligent supervision despite exclusion for bodily injury “arising out of any

sexual act, including but not limited to molestation”); Am. States Ins. Co. v. Borbor (C.A.9, 1987),

826 F.2d 888, 895 (permitting coverage because, under California law, allegedly negligent,

separately insured wife of molester was an “innocent” insured and “[l]iability insurance policies are

typically sold and purchased to provide indemnification for liability which may be imposed as a

result of negligence”).

8

January Term, 2000

the Brothers nor the individual members of the Brothers against whom claims were

brought qualify as insureds under the terms of the involved policies. Accordingly,

concluding that the Diocese or Griffin, the actual insureds, expected or intended the

injuries that Doe sustained would not only be a tortured interpretation of the facts

of this case, but an inherently illogical interpretation as well. See Silverball, 842

F.Supp. at 1158 (“It would require a tortured interpretation of this case to decide

that when Silverball hired [the molester] it intended or expected that he would

molest children”).

{¶ 19} Further, unlike in instances of sexual molestation, permitting

coverage for the type of conduct alleged here does not “ ‘subsidiz[e] the episodes

of child sexual abuse of which its victims complain, at the ultimate expense of other

insureds to whom the added costs of indemnifying child molesters will be passed.’

” Gearing, 76 Ohio St.3d at 39, 665 N.E.2d at 1119, quoting Horace Mann. Ins.

Co. v. Fore (M.D.Ala.1992), 785 F.Supp. 947, 956. Rather, the critical issue is the

nature of the intent—inferred or otherwise—of the party seeking coverage. Cf.

Preferred Mut. Ins. Co., 23 Ohio St.3d at 81, 23 OBR at 210, 491 N.E.2d at 691,

and Transamerica Ins. Group v. Meere (1984), 143 Ariz. 351, 356, 694 P.2d 181,

186 (both finding the public policy precluding liability insurance for intentional

torts inapplicable to self-defense because the concern over indemnifying wrongful

action is negated by the purpose of the actor). Society does not want to encourage

or indemnify the wrongful conduct of the molester, but precluding coverage for a

negligent party would not further this goal. See Silverball, 842 F.Supp. at 1164

(“This public policy [against coverage] does not apply when the wrongdoer is not

helped and an insured who did not commit the wrong receives the protection of the

insurance contract”). Instead, precluding coverage would risk preventing the

victim from obtaining a fair and adequate recovery, in contravention of the purpose

of modern tort law. See Harasyn, 49 Ohio St.3d at 176, 551 N.E.2d at 965

9

SUPREME COURT OF OHIO

(explaining that “public policy [has come] to favor liability insurance for negligent

acts as a means of assuring that innocent persons are made whole”).

{¶ 20} Finally, here, unlike in Gearing, we do not believe that “ ‘the average

person purchasing homeowner’s insurance would cringe at the very suggestion that

he was paying for such coverage * * * [a]nd certainly * * * would not want to share

that type of risk with other homeowner’s policyholders.’ ” Gearing, 76 Ohio St.3d

at 39, 665 N.E.2d at 1119, quoting Rodriguez v. Williams (1986), 42 Wash.App.

633, 636, 713 P.2d 135, 137-138. While it is indeed true that the average person

would likely find liability coverage for the intentional tort of sexual molestation

loathsome, the same rationale cannot extend to negligence. The average person

would no doubt find such coverage to be the purpose for which he obtained

insurance.

{¶ 21} Accordingly, we modify Cuervo and Westfield to hold that Ohio

public policy permits a party to obtain liability insurance coverage for negligence

related to sexual molestation when that party has not committed the act of sexual

molestation. In light of this holding, we find that the court of appeals erred in

holding that the acts of negligence alleged here could not constitute occurrences

under an insurance policy as a matter of law.

III. Conclusion

{¶ 22} Because we now hold that coverage under the Interstate policies

would not violate public policy, we reverse the court of appeals’ judgment in favor

of Interstate that was based on our prior holdings in Gearing and Cuervo. The

cause is remanded for further proceedings consistent with this opinion.8

Judgment reversed

and cause remanded.

8. Because other issues argued by the parties in the proceedings below are either not before this

court or are not material to the issue of whether public policy precludes coverage of the sort sought

here, we express no opinion as to these issues and their effect on whether indemnification is

warranted under the facts of this case.

10

January Term, 2000

MOYER, C.J., F.E. SWEENEY and PFEIFER, JJ., concur.

DOUGLAS and RESNICK, JJ., concur in judgment only.

LUNDBERG STRATTON, J., concurs in part and dissents in part.

__________________

LUNDBERG STRATTON, J., concurring in part and dissenting in part.

{¶ 23} While I agree with the majority’s conclusion that it is not against

public policy to allow a person to insure against liability for negligence related to

sexual molestation, I believe this holding should be applied prospectively only.

{¶ 24} The law in Ohio has been that negligent acts that are associated with

intentional acts of sexual molestation or other intentional harms do not constitute

“occurrences” under a policy of liability insurance. Cuervo v. Cincinnati Ins. Co.

(1996), 76 Ohio St.3d 41, 44, 665 N.E.2d 1121, 1122-1123. Insurance has not been

available to indemnify damages that flow from intentional torts. Gearing v.

Nationwide Ins. Co. (1996), 76 Ohio St.3d 34, 38, 665 N.E.2d 1115, 1118. This

has included the denial of coverage for damages from the intentional acts as well

as from the negligent acts that are associated with the intentional acts because

“incidents of intentional acts of sexual molestation of a minor do not constitute

‘occurrences’ for purposes of determining insurance coverage.” Cuervo, 76 Ohio

St.3d at 43, 665 N.E.2d at 1122-1123. We previously held that an act committed

with an intent to harm is inconsistent with an insurance policy’s definition of

“occurrence” that is based upon the concept of an accident. Thus, an intentional

harm is not even an “occurrence.” Likewise, in Cuervo, we extended this reasoning

to include negligent acts where the damages flow from an intentional tort. The

alleged negligence of the parents of a minor who committed acts of sexual abuse in

Cuervo was not an “occurrence” within the meaning of a liability insurance policy.

{¶ 25} Now this court has reevaluated its interpretation of public policy.

The new interpretation rests on the conclusion that the “occurrence” for purposes

of liability insurance coverage can be the alleged negligence of the insured that is

11

SUPREME COURT OF OHIO

related to the underlying act of sexual molestation, not the intentional act itself.

Because this reverses our previous position on this legal issue, I believe we should

apply this interpretation prospectively only.

{¶ 26} Therefore, while I believe that the negligence related to intentional

acts of sexual molestation could be insurable, such a change should apply only to

future incidents.

__________________

12