JESSICA MF v. Liberty Mut. Fire Ins. Co.

SCHUDSON, J.

(concurring). I further acknowledge that the parties have vigorously argued public policy. Although the panel disagrees over whether it is necessary to address these arguments, I believe it *61 appropriate to do so because the case law guiding our resolution of this appeal is based, in part, on related public policy considerations. Moreover, although at summary judgment courts rarely resolve cases on the basis of public policy, sometimes they deem it appropriate to do so, particularly where insurance coverage is at issue. As this court recently explained in a child sexual abuse case involving a woman's potential liability (and her homeowner insurance coverage) for her alleged negligence in failing to warn of her ex-husband's dangerousness:

"The application of public policy considerations is solely a function of the court, and does not in all cases require a full factual resolution of the cause of action by trial before policy factors will be applied by the court."

Kelli T-G. v. Charland, 198 Wis. 2d 123, 129 , 542 N.W.2d 175, 177 (Ct. App. 1995) (quoting Hass v. Chicago & N.W. Ry., 48 Wis. 2d 321, 326-327 , 179 N.W.2d 885, 888 (1970)).

The appellants express understandable concern for the opportunity of sexually-abused children to gain compensation for their injuries. They also express alarm over the possibility that the person they term an "innocent" grandmother ultimately may be held financially accountable for her husband's actions. The respondents counter not only with case law demarcating the lines of a policyholder's reasonable expectations, but also with public policy arguments intimating that our decision's impact on sexually-abused children may not be as the appellants suppose. Indeed, the respondents implicitly contend, denying coverage under the circumstances of this case may be more likely to aid children than granting coverage.

*62 In all likelihood, relatively few homeowners actually contemplate the precise parameters of their coverage. Notwithstanding the case law's conclusions about what reasonable policyholders expect, relatively few homeowners consider whether their insurance covers sexual misconduct. A parent or grandparent confronting the horror of sexual abuse by his or her spouse, or denying knowledge even though he or she should have known, or deciding whether to intervene, rarely would resolve these excruciatingly painful problems on the basis of anticipated insurance coverage.

Still, to acknowledge the remoteness of the possibility that one's decision to confront sexual abuse by one's spouse would ever be determined by insurance coverage is not to say that the decision would never be influenced by such considerations. While improbable in most cases, such a factor is not impossible in all. Therefore, at least in some cases, homeowner's coverage for the so-called "non-offending" spouse would militate against that spouse intervening to prevent abuse.

Thus, it is noteworthy that in assessing the reasonable expectations of "a person purchasing homeowner's insurance," Hagen declared "that this person would not want to remove any deterrence that the threat of a money judgment provides." Hagen, 151 Wis. 2d at 7, 442 N.W.2d at 573 (emphasis added). Moreover, what now may seem a remote possibility could become far less remote should courts ever conclude that the so-called "non-offending" spouse could receive homeowner insurance coverage for the offender's abuse. Not only would prevention, intervention, and deterrence of sexual abuse decline, but collusion could increase as sexually-abusive families *63 discovered they could not only assault children, but gain insurance recoveries as well.

Recently, an Illinois court considering an intentional-acts exclusion came to the intersection of several of the insurance law principles and public policy arguments present in this appeal. Although addressing a case in which coverage for the offender, not the offender's spouse, was at issue, the court's words are instructive:

[The children] raise the argument that denial of coverage will result in innocent victims going uncompensated. Courts ... "have determined that [the] benefit [of compensating sexual abuse victims with insurance proceeds] is outweighed by the effect of allowing sexual offenders to escape having to compensate minors for the harm that the courts have established is inherent in such offense [s]." Furthermore, economic liability should be placed with the same precision as moral liability is placed — squarely on the shoulders of the abuser. "Any other result subsidizes the episodes of child sexual abuse ... at the ultimate expense of other insureds to whom the added costs of indemnifying child molesters will be passed."

Western States Ins. Co. v. Bobo Ins. Co., 644 N.E.2d 486, 491-492 (Ill. App. Ct. 1994) (first brackets and ellipses added; second and third brackets added; second ellipses in Bobo); see also N.N., 153 Wis. 2d at 95, 450 N.W.2d at 449 (1990) (This benefit of making possible another potential source of compensation for victims' injuries " 'is outweighed by the effect of allowing sexual offenders to escape having to compensate minors for the harm that the courts have established is inherent in such offenses.'") (quoting *64 Whitt v. DeLeu, 707 F. Supp. 1011, 1016 (W.D. Wis. 1989)).

Thus, I also conclude that although in most cases any impact is remote, in some situations the unavailability of coverage will prevent abuse and, where abuse has occurred, will motivate the "non-offending" spouse to intervene on behalf of the victims.