Doe v. Shaffer

[Cite as Doe v. Shaffer, 90 Ohio St.3d 388, 2000-Ohio-186.]

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), 90 Ohio St.3d 388.]

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.

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.

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

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

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pertinent time frame. The policies provided liability indemnity coverage in excess

of the limits of coverage afforded by a number of underlying insurance policies.

The Diocese and Griffin filed an answer that included a counterclaim for

declaratory judgment that Interstate possessed a duty to defend and indemnify

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.

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. This case presents the issue of whether the public policy

precluding liability insurance coverage for acts of sexual molestation also prohibits

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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

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 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

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.

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

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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.

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 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

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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.

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.

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

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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.

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.

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.)

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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.

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.

This is so because the intentions of the molester are immaterial to

determining whether the allegedly negligent party has coverage. Silverball

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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

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

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recognize that employers who make negligent hiring decisions clearly do not

intend the employees to inflict harm.” Id. at 1163.

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 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”).

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,

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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

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

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

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

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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.

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

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.

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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.

FOOTNOTES:

1. This individual’s name has been changed.

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.

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.

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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.

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, 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. 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

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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. 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.

__________________

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

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.

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.

15

(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.

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 related to

the underlying act of sexual molestation, not the intentional act itself. Because this

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

interpretation prospectively only.

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.

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