Sexual Abuse of a Child is, by Definition, an Intentional Act
Gustavo Beltran, Alma Beltran, and child A.B. appealed the district
court's pretrial adjudication of their counterclaims against Farmers
Insurance Exchange (Farmers).
In. A.B., Gustavo Beltran, and Alma Beltran v. Agave Health, Inc.; et.
al.; Farmers Insurance Exchange, et al., No. A-1-CA-39620, Court of
Appeals of New Mexico (August 1, 2023) the Court of Appeals resolved the
dispute by considering whether the acts alleged were fortuitous.
BACKGROUND
The Appellants sued Manuel and Delfina Preciado (the Preciados) alleging
that Manuel sexually abused A.B. and that Delfina negligently failed to
supervise A.B. while he was in the Preciados' foster care service. The
Preciados stipulated to the entry of money judgments, and Farmers- which
insured the Preciados with a homeowner's insurance policy-filed a
complaint in intervention for declaratory judgment seeking a
determination of no indemnity coverage under the policy for the claims
against the Preciados.
The district court granted the summary judgment motion, finding that the
insurance policy did not cover the claims based on Manuel's intentional
conduct.
DISCUSSION
The district court granted Farmers' motion to dismiss for failure to
state a claim pursuant to the finding that Appellants lacked standing to
bring their countercomplaint against Farmers and that the acts
complained of were intentional.
The Court of Appeal concluded that Farmers had a right to refuse the
insurance claim without exposure to a bad faith claim because it
successfully challenged the coverage of Appellants' claim in its motion
for summary judgment. In the order granting summary judgment, the
district court found that the policy at issue was "an occurrence policy,
which applies, for coverage purposes, only to accident and
non-intentional behavior."
The insurance policy had an unambiguous exclusion to the insurance
policy. The exclusion stated that the policy does not cover "bodily
injury, property damage, or personal injury arising from, during the
course of or in connection with the actual, alleged, or threatened
molestation, abuse or corporal punishment of any person by anyone,
including . . . any insured."
Any injuries or damages arising from Delfina's negligent supervision
stemmed from the uninsured risk of sexual misconduct, and thus there
was no duty to defend a claim for negligent supervision.
The district court properly found that the policy's unambiguous
exclusion precluded coverage for claims against the Preciados, including
for the acts of Manuel and the negligent supervision against Delfina,
thus Farmers had the right to refuse to settle the claim without
exposure to a bad faith claim.
ZALMA OPINION
Liability insurance is, by definition, a contract of indemnity for
unintentional and fortuitous acts. Allowing coverage for intentional
conduct, like the abuse of a child, would encourage people to commit
such evil conduct because there would be no financial effect to the
abuser.
(c) 2023 Barry Zalma & ClaimSchool, Inc.