Skip to main content

FIRE INSURANCE EXCHANGE v. JENNIFER

Reset A A Font size: Print

Court of Appeal, Second District, Division 6, California.

FIRE INSURANCE EXCHANGE, et al., Petitioners, v. The SUPERIOR COURT of Santa Barbara County, Respondent; JENNIFER O. et al., Real Parties in Interest.

No. B070722.

Decided: January 14, 1993

Tharpe & Howell, Santa Barbara, Horvitz & Levy, Encino, for petitioner. No appearance for respondent. Ford & Pederson, Los Angeles, Sinsheimer, Schiebelhut & Baggett, San Luis Obispo, for real party in interest.

OPINION AND ORDER FOR PEREMPTORY WRIT OF MANDATE

Here a child molester attempted to thwart his own criminal prosecution by importuning his victim from testifying.   We hold that the molester's homeowner's insurance carrier is not required to provide a defense for claimed negligence and negligent infliction of emotional distress predicated upon the insured's postmolestation acts and statements.   The attempts to thwart the prosecution are excluded from insurance coverage because of the policy's own language, the fair import of J.C. Penney Casualty Ins. Co. v. M.K. (1991) 52 Cal.3d 1009, 278 Cal.Rptr. 64, 804 P.2d 689, and Insurance Code section 533.1  Regardless of how others construe the insured's postmolestation acts and statements, they were wilful and do not give rise to the potential for insurance coverage.

There is no serious factual dispute.   In September 1987, then six-year-old Jennifer O. and her mother moved into the home of Jerome Valenta.   In March 1990, Jennifer O. told her mother that Valenta was molesting her.   The police were notified and Valenta was arrested.   He was charged with violating Penal Code section 288, subdivision (a), but released on bail on the condition that he have no contact with Jennifer O.2

Shortly after his arrest, Valenta sent Jennifer O. three letters.   Valenta wrote that he loved Jennifer O., was sorry to have hurt her, and that he and his chickens missed her.3  Valenta also tried to contact her in the parking lot of the Department of Social Services.   He asked Jennifer O.'s mother to read the police report to her.   On April 11, 1990, Valenta met with Jennifer O. and her mother.   He asked them to pray with him for guidance and not cooperate with the authorities.   On April 12, 1990, Valenta was arrested for intimidating a witness.  (Pen.Code, § 136.1(c);  see People v. Saffle (1992) 4 Cal.App.4th 434, 440, 5 Cal.Rptr.2d 648.)

On April 30, 1990, pursuant to a negotiated disposition, Valenta pled no contest to two counts of violating Penal Code section 288, subdivision (a).   The witness intimidation charge was dismissed and he was sentenced to state prison.

On June 25, 1990, Jennifer O. sued Valenta.   Her complaint alleged sexual molestation and included causes of action for negligence and negligent infliction of emotional distress.

Valenta tendered the lawsuit to his carrier, Fire Insurance Exchange, (Farmers), who issued a Farmers Insurance Group homeowner's policy.   On August 16, 1990, Farmers initially elected to provide a defense with a reservation of rights.   It employed counsel to defend Valenta.   Following its investigation of the claim, and after obtaining a “coverage opinion” from another law firm, Farmers notified Valenta on October 10, 1990 that it was denying coverage and would no longer provide a defense.   One ground cited was that the policy excluded coverage for any occurrence caused by the insured's intentional acts.   The attorney retained by Farmers was allowed to withdraw as Valenta's attorney of record.   Valenta then retained his own counsel.

Jennifer O. initially offered to settle the case for policy limits of $300,000.   Farmers rejected the offer.   In April 1991 she obtained a $7 million judgment ($3 million general damages and $4 million punitive damages) against Valenta.   The jury determined, inter alia, that Valenta had intentionally and negligently inflicted emotional distress on Jennifer O.  Respondent court assigned Valenta's rights against Farmers to Jennifer O.

On September 10, 1991, Jennifer O. filed suit against Farmers alleging breach of contract and breach of the implied covenant of good faith and fair dealing.

The Farmer's policy defines occurrence as follows:  “Occurrence means an accident including exposure to conditions which results during the policy period in bodily injury or property damage.   Repeated or continuous exposure to the same general conditions is considered to be one occurrence.”

While the policy does not expressly define accidental occurrence, the time-honored definition is that to fall into this category, the act must be “․ neither expected nor intended from the standpoint of the insured.  [Citations.]”  (Hurley Construction Co. v. State Farm Fire & Casualty Co. (1992) 10 Cal.App.4th 533, 539, 12 Cal.Rptr.2d 629.)  “ ‘[A]ccidental means ‘arising from extrinsic causes ․ occurring unexpectedly or by chance ․ happening without intent or through carelessness.’  [Citation.]”  (St. Paul Fire & Marine Ins. Co. v. Superior Court (1984) 161 Cal.App.3d 1199, 1202, 208 Cal.Rptr. 5.)  “An intentional act is not an ‘accident’ within the plain meaning of the word.  [Citations.]”  (Royal Globe Ins. Co. v. Whitaker (1986) 181 Cal.App.3d 532, 537, 226 Cal.Rptr. 435, fn. omitted.)

Jennifer O. moved for summary adjudication of issues.   She claimed that, based upon the facts known at the time the claim was first made, Farmers owed Valenta a duty to defend and was liable on the judgment because it rejected the earlier $300,000 offer.  (See Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 276–277, 54 Cal.Rptr. 104, 419 P.2d 168;  Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 659–660, 328 P.2d 198;  CNA Cas. Co. v. Seaboard Sur. Co. (1986) 176 Cal.App.3d 598, 605–606, 222 Cal.Rptr. 276.)   She also claimed that Valenta's postmolestation acts and statements were not intentional, that her complaint alleged a “potential” for insurance coverage, and the jury's finding of negligent infliction of emotional distress estopped Farmers from denying the coverage.

Farmers moved for summary judgment.   It argued that the postmolestation acts and statements were proximately linked to the molestation and, therefore, not covered.  (See Ins.Code, § 533;  J.C. Penney Casualty Ins. Co. v. M.K., supra, 52 Cal.3d 1009, 278 Cal.Rptr. 64, 804 P.2d 689.)

 On September 29, 1992, respondent court denied both motions.   It found a triable fact on the issue of whether “Valenta committed acts independent of sexual molestation that were merely negligent rather than willful in character.”   This finding and the antecedent moving and opposition papers negate Jennifer O.'s procedural claim that Farmers waived or is estopped to argue the “nonaccident” theory on this writ petition.  “Nonaccident” is synonymous with “intentional.”   When coverage was denied, Farmers expressly indicated that there was no coverage for intentional conduct.   It has never waivered from this position even though it may have used other words to make its point.

 We also reject Jennifer O.'s procedural claim that Farmers is estopped from raising the coverage issue by reason of the judgment against Valenta.   By Jennifer O.'s theory, she would only have to plead the judgment and Farmers would not be able to raise the coverage issue.

Jennifer O. can take no refuge in the prior judgment even though it was based, in part, on findings of negligence and negligent infliction of emotional distress.   A jury in the prior action cannot erase the exclusions in the policy nor Insurance Code section 533.  “[T]he court in the third party suit does not adjudicate the issue of coverage, ․ [t]he only question there litigated is the insured's liability.”  (Gray v. Zurich Insurance Co., supra, 65 Cal.2d 263, 279, 54 Cal.Rptr. 104, 419 P.2d 168;  see alsoCeresino v. Fire Ins. Exchange (1989) 215 Cal.App.3d 814, 822, 264 Cal.Rptr. 30;  Cal. Practice Guide, Bad Faith, Kornblum, Kaufman, Levine, § 8.113, p. 8.28.3.)

Geddes & Smith, Inc. v. St. Paul Mercury (1959) 51 Cal.2d 558, 334 P.2d 881, does not compel a contrary determination.   There the Supreme Court said at pages 561–562, 334 P.2d 881:  “An insurer that has been notified of an action and refuses to defend on the ground that the alleged claim is not within the policy coverage is bound by a judgment in the action, in the absence of fraud or collusion, as to all material findings of fact essential to the judgment of liability of the insured.   The insurer is not bound, however, as to issues not necessarily adjudicated in the prior action and can still present any defenses not inconsistent with the judgment against the insured.  [Citations.]”   As applied to the instant case, the Geddes rule means that Farmers is estopped to contest Valenta's liability and the amount of damages but not coverage.

 “Where, as here, the facts are not in dispute, it is the appellate court's duty to make an independent determination of insurance coverage.  [Citations.]”  (Hurley Construction Co. v. State Farm Fire & Casualty Co., supra, 10 Cal.App.4th at p. 538, 12 Cal.Rptr.2d 629.)  “ ‘The duty to defend is broader than the duty to indemnify and is measured by the reasonable expectation of the insured.  [Citations.]’ ”  (Fire Ins. Exchange v. Jiminez (1986) 184 Cal.App.3d 437, 441, 229 Cal.Rptr. 83.)   An insurer is obliged to defend an action when “it ascertains facts which give rise to the potential of liability under the policy.”  (Gray v. Zurich Insurance Co., supra, 65 Cal.2d at p. 277, 54 Cal.Rptr. 104, 419 P.2d 168.)   An insurer's duty to defend “depends upon facts known to the insurer at the inception of the suit.”  (Hurley Construction Co. v. State Farm Fire & Cas. Co., supra, 10 Cal.App.4th at p. 538, 12 Cal.Rptr.2d 629.)  “In determining whether there is a duty to defend, an insurer is not limited to the facts alleged in the underlying complaint, but may make the determination ‘from the total facts it learns from all sources.’  [Citations.]   Where those facts reveal that potential liability does not exist under the policy, the insurer, at its own risk, may refuse to defend the suit.  [Citation, fn. omitted.]”  (Saylin v. California Ins. Guarantee Assn. (1986) 179 Cal.App.3d 256, 263, 224 Cal.Rptr. 493.)  “ ‘[A]n insurer that wrongfully refuses to defend is liable on the judgment against the insured.  [Citations.]’ ”  (Samson v. Transamerica Ins. Co. (1981) 30 Cal.3d 220, 237, 178 Cal.Rptr. 343, 636 P.2d 32.)   The key word here is wrongfully.  (Ceresino v. Fire Ins. Exchange, supra, 215 Cal.App.3d at p. 822, 264 Cal.Rptr. 30.)   Where there is no coverage as a matter of law, refusal to defend is not wrongful.

 Here, no insured could reasonably expect coverage for attempting to obstruct the orderly process of a criminal prosecution.  (Fire Ins. Exchange v. Jiminez, supra, 184 Cal.App.3d at p. 441, 229 Cal.Rptr. 83;  see also Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1265, 10 Cal.Rptr.2d 538, 833 P.2d 545.)   These acts were not only criminal (Pen.Code, § 136.1, subd. (c);  People v. Saffle, supra, 4 Cal.App.4th 434, 440, 5 Cal.Rptr.2d 648), but contempts of court.  (Pen.Code, §§ 166, subd. 4, 1318, subd. (a)(2).)

Six of the causes of action in Jennifer O.'s complaint against Valenta sought actual and punitive damages based on intentional torts, i.e. assault, battery, false imprisonment, slander, invasion of privacy and intentional infliction of emotional distress.   There is no serious contention about coverage for damages arising out of these six causes of action.

 We turn to the remaining two causes of action.   The sixth cause of action for “negligence” alleged that, for a period of two and one-half years, Valenta stood “․ in loco parentis to plaintiff” and breached his duty to Jennifer O. by “․ molesting her and by engaging in a course of conduct both before and following the disclosure to authorities of his molesting Plaintiff, which resulted in further physical and emotional harm to Plaintiff.”

The eighth cause of action for negligent infliction of emotional distress alleged that “․ Valenta knew, or should have known, that failure to exercise due care, by attempting to convince Plaintiff to retract [on several occasions] her reports of sexual molestation to authorities would cause Plaintiff severe emotional distress.”   This cause of action included a claim for punitive damages.

Some of the acts which form the basis for the sixth and eighth causes of action, e.g., Valenta's letters to Jennifer O., perhaps in another context and if viewed in isolation, might not have constituted intentional acts.   However, these acts should not be viewed in isolation.   Because of the proximity in time of Jennifer O.'s repeated molestation and the pending criminal prosecution, the postmolestation acts and statements are inextricably linked thereto.   The allegations of attempts to dissuade and entice Jennifer from cooperating with the authorities, although not sexual in their character, directly stem from the molestation.   In layman's terms, the claimed negligent acts were, in essence, an attempt to “cover up” the child molestation.

 There is no duty to defend or provide coverage for “․ an intentional and wrongful act if the harm is inherent in the act itself.”  (J.C. Penney Casualty Ins. Co. v. M.K., supra, 52 Cal.3d at p. 1025, 278 Cal.Rptr. 64, 804 P.2d 689;  Fire Ins. Exchange v. Altieri (1991) 235 Cal.App.3d 1352, 1358, 1 Cal.Rptr.2d 360.)  “[I]nsurers are not required to indemnify their insureds for damages caused by an insured's sexual molestation of a child.  Insurance Code section 533 precludes coverage.”  (J.C. Penney Casualty Ins. Co. v. M.K., supra, 52 Cal.3d 1009, 1014, 278 Cal.Rptr. 64, 804 P.2d 689.)   After it conducted its own investigation and learned of the facts and circumstances surrounding the witness intimidation charge, Farmers reasonably determined that it had no duty to defend.   Valenta's criminal and contemptuous post-molestation acts and statements struck at the victim's psychological well-being, the peace of the People of the State of California, and the heart of the judicial process.   They were themselves, intentional, wrongful, and inherently harmful.4

As aptly stated by Farmers in its petition, “[o]ne cannot importune another unintentionally.”   Once the molestation was completed and Valenta was arrested, his interest shifted from pedophilia to self-preservation.  (See People v. Saffle, supra, 4 Cal.App.4th 434, 440, 5 Cal.Rptr.2d 648.)   Common sense compels the conclusion that his post molestation acts and statements were intended to dissuade Jennifer O. from testifying against him.   As indicated, they were intentional, wrongful, inherently harmful and thus outside the scope of coverage.   A contrary conclusion would permit an “end run” around common sense and the rule established in J.C. Penney Casualty Ins. Co. v. M.K., supra.

At oral argument, counsel for Jennifer O. submitted that the J.C. Penney holding was a narrow one and that the California Supreme Court cautioned that it not be extended beyond its specific and narrow holding.   Counsel for Jennifer O. is partially correct.   The J.C. Penney court did expressly note the “narrowness of the question” before it but also said:  “Whether other types of wrongdoing are also excluded from coverage as a matter of law by section 533 is not before us.”  (J.C. Penney Casualty Ins. Co. v. M.K., supra, 52 Cal.3d at p. 1028, 278 Cal.Rptr. 64, 804 P.2d 689, fn. omitted.)   The Supreme Court's observations do not foreclose the Court of Appeal from considering whether “other types of wrongdoing” are excluded from coverage by Insurance Code section 533.

The California Supreme Court's opinions “․ are binding upon and must be followed by all state courts of California.”  (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937.)   One of the institutional functions of the California Supreme Court is to articulate general rules for future cases.   That court then applies its pronouncements to the specific case before it.   It cannot definitively say how it would apply its pronouncements to the myriad of situations not yet before it.

One of the institutional functions of the Court of Appeal is to apply the Supreme Court's pronouncements to the specific case then before it.   In performing this function, the Court of Appeal must apply the Supreme Court's statements of law “․ wherever the facts of a case are not fairly distinguishable from the facts of the case in which ․ [the California Supreme Court] has declared the applicable principle of law.”  (People v. Triggs (1973) 8 Cal.3d 884, 891, 106 Cal.Rptr. 408, 506 P.2d 232.)   This is a judgment call for the Court of Appeal.  (See, e.g., Fire Ins. Exchange v. Altieri, supra, 235 Cal.App.3d at p. 1357, 1 Cal.Rptr.2d 360.)

Here, the facts are “fairly distinguishable” from those presented in J.C. Penney Casualty Ins. Co. v. M.K., supra, because the postmolestation acts and statements were not, per se, sexual molestations.   Nevertheless, the California Supreme Court's statement of law in J.C. Penney, and its rationale compel us to conclude that the J.C. Penney principle should be extended to include the insured's postmolestation acts and statements.  “Where the reason is the same, the rule should be the same.”  (Civ.Code, § 3511.)

Our holding is consistent with a recent opinion of the Minnesota Court of Appeal.   In Houg v. State Farm Fire and Cas. Co. (Minn.App.1992) 481 N.W.2d 393, 397, a church pastor abused his position of trust while counseling a parishioner.   During the course of the counseling, the pastor seduced the parishioner and coerced her into sexual relations.  (Id. at p. 395.)   When the pastor was sued, he tendered the defense to the carrier for the church.   The carrier denied coverage and the pastor brought an action for declaratory relief.  (Id. at p. 394.)   The Court of Appeal rejected the negligence claim because it was not an “occurrence” within the meaning of the policy.   The court held that the carrier had no duty to defend where the allegations of a pastor's negligent counseling were “so intertwined ․ with [his] sexual exploitation of a psychologically dependent person as to be inseparable.”  (Id., at p. 397.)

Valenta's acts were no less intertwined.   His postmolestation acts and statements cannot reasonably be deemed to be accidental.   No triable issue of material fact was presented because Farmers had no duty to defend Valenta.   Respondent court erroneously denied Farmers' motion for summary judgment.

Let a writ of mandate issue directing respondent court to set aside its September 28, 1992 order denying Farmers motion for summary judgment and to enter an order granting the motion.

FOOTNOTES

1.   Insurance Code section 533 provides:  “An insurer is not liable for a loss caused by the wilful act of the insured;  but he is not exonerated by the negligence of the insured, or of the insured's agents or others.”

2.   Penal Code section 288, subdivision (a) provides:  “Any person who shall willfully and lewdly commit any lewd or lascivious act including any of the acts constituting other crimes provided for in Part 1 of this code upon or with the body, or any part or member thereof, of a child under the age of 14 years, with the intent of arousing, appealing to, or gratifying the lust or passions or sexual desires of that person or of the child, shall be guilty of a felony and shall be imprisoned in the state prison for a term of three, six, or eight years.”

3.   Valenta apparently raised chickens and Jennifer O. was fond of them.

4.   The insured's postmolestation acts and statements were part of a continuous course of pedophilia.   Pedophilia is an “․ abnormal sexual desire in an adult for children.”  (Webster's New World Dict. (2d college ed. 1980) p. 1047.)  “The essential feature is the act or fantasy of engaging in sexual activity with prepubertal children as a repeatedly preferred or exclusive method of achieving sexual excitement.”  (Diagnostic and Statistical Manual of Mental Disorders (3d ed.) (DSM–III), American Psychiatric Assn. 1980, § 302.20, p. 271.)Psychological domination of the victim is common among child molesters who occupy positions of authority.  (E.g., see Evans v. Eckelman (1990) 216 Cal.App.3d 1609, 1615–1616, 265 Cal.Rptr. 605 [parental figures who molest often demand secrecy from their victims];  People v. Thompson (1984) 160 Cal.App.3d 220, 226, 206 Cal.Rptr. 516 [“Both the victim [sic] of spousal and of child abuse are likely to be unwilling to report their abuse to the authorities due to fear of physical and/or emotional retaliation on the part of the attackers.”];   see also Scull v. Superior Court (1988) 206 Cal.App.3d 784, 793, fn. 2, 254 Cal.Rptr. 24 [victims of sexual abuse feel shame and rarely report the abuse to the authorities].)

YEGAN, Associate Justice.

STONE, P.J., and GILBERT, J., concur.

Copied to clipboard