Smith v. Liberty Mutual Insruance Company , 201 A.3d 555 ( 2019 )

IN THE SUPERIOR COURT FOR THE STATE OF DELAWARE
SCOTT D. SMITH
Plaintiff,
v. C.A. No. N17C-06-323 DCS
LIBERTY MUTUAL INSURANCE
COMPANY AND THE
NETHERLANDS INSURANCE
COMPANY
v\./VV\./VV\./\./Vv\./
Defendant.
Submitted: January 9, 2019
Decided: January 14, 2019
Upon Joint Motionfor Reargument -
Plaintiff’s Motion for Summary Judgment is GRANTED;
Defendant’s Motion for Summary Judgment is DENIED.
OPINION
Lisa C. McLaughlin, Esquire, Attorney for Plaintiff.
Daniel A. Grifflth, Esquire, Attorney for Defendant.
STREETT, J.
Introduction
On January 22, 2016, a Middletown High School studentl (Who also Worked
as a student aid) filed a complaint (the “Underlying Complaint”) against the Board
of Education of Appoquinimink School District (the “School Board”) and Scott D.
Smith (“Plaintiff”), a gym/health teacher at Middletown High School and an
employee of the School Board.2 The Underlying Complaint alleges that between
2014-2015 the Student Was 17-18 years-old When Plaintiff committed Assault and
Battery, Intentional Infliction of Emotional Distress, Gross Negligent Infliction of
Emotional Distress, and Gross Negligence.
The School Board is insured With the Netherlands Insurance Company
(“Defendant”).3 Plaintiff, in the instant case, seeks to have the Insurance Company
also defend him in the Underlying Complaint.4 Plaintiff asserts that he is an insured
under the School Board’s insurance policy and that Defendant has a duty to defend
him in the underlying action. Defendant contends that it does not have a duty to
1 The plaintiff in the underlying action Will be referred to as “Student” to protect her identity.
2 Case No. N16C-01-198 DCS is pending.
3 Claims against Liberty Mutual Insurance Were dismissed by stipulation on September 26, 2017.
4 Smith v. T he Netherlands Insurance Company involves insurance indemnification and defense,
however, both parties agree that the current Motion concerns only the duty to defend. See
WoodSpring Hotels LLC v. National Um`on Fire Insurance Co. of Pittsburgh, PA, 2018 WL
2085197 at 8 (Del. Super. May 2, 2018) (“In Delaware, [i]t is well settled that an insurer's duty to
defend is broader than its duty to indemnify.”) (internal quotation marks removed).
2
defend because Plaintif`f` is not an insured under the policy definition, the alleged acts
do not meet the policy’s definition of occurrence,5 and, even if Plaintif`f` was covered
under those definitions, the Intentional Acts Exclusion and/or the Sexual Misconduct
Exclusion extinguish its duty to defend since all of the allegations allege sexual
misconduct The parties filed cross-motions for summary judgment. The Court
denied summary judgment as to both parties. Both parties then filed joint motions
for reargument asking the Court to decide as a matter of law whether there is a duty
to defend.6 Upon instruction from the Court, the parties filed simultaneous,
supplemental briefs. Having considered the Joint Motion for Reargument, the briefs,
and a hearing on the matter, Plaintiff"s Motion for Summary Judgment is
GRANTED; Defendant’s Motion of Summary Judgment is DENIED.
5 Section II(5) of the insurance policy defines who is an insured:
5. Any of your “employees”, other than your “executive officers”, but only for acts
within the scope of their employment by you or while performing duties related to
the conduct of your business.
Section V-Definitions:
13. “Occurrence” means accident, including continuous or repeated exposure to
substantially the same general harmful conditions.
6 Delaware Superior Court Civil Rule 59(e) Rearguments. A motion for reargument shall be served
and filed within 5 days after the filing of the Court's opinion or decision. The motion shall briefly
and distinctly state the grounds therefor. Within 5 days after service of such motion, the opposing
party may serve and file a brief answer to each ground asserted in the motion. The Court will
determine from the motion and answer whether reargument will be granted. A copy of the motion
and answer shall be furnished forthwith by the respective parties serving them to the Judge
involved.
Standard of Review
Summary judgment may be granted by the Court if “the pleadings,
depositions, answers to interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to summary judgment as a matter of law.”7 When cross-
motions for summary judgments are filed, Superior Court Civil Rule 56(h) provides:
Where the parties have filed cross motions for summary judgment and
have not presented argument to the Court that there is an issue of fact
material to the disposition of either motion, the Court shall deem the
motions to be the equivalent of a stipulation for decision on the merits
based on the record submitted with the motions.8
“In the event that parties file cross-motions for summary judgment, the parties
implicitly concede the absence of material factual disputes and acknowledge the
sufficiency of the record to support their respective motions.”9
Discussion
By submitting cross motions for summary judgment, “the parties have implied
there is no factual conflict,”10 that the record is sufficient “to support their respective
7 Ford v. Taylor, 2018 WL 6016573 at *2 (Del. Super. Nov. 15, 2018).
8 Delaware Superior Court Civil Rule 56(h).
9 Slaubaugh Farm, Inc. v. Farm Family Cas. Ins. Co., 2018 WL 3559252 at *1 (Del. Super. July
23, 2018) (internal quotation marks removed).
10 See Mass. Elec. Const. C0. v. Siemens Bldg. Technologies Inc., 2010 WL 5551787 at *3 (Del.
Super. Sept. 28, 2010).
”11 and that there is no issue of material fact preventing summary
motions,
judgment12 Moreover, both parties assert that the Court must decide, as a matter of
law, whether there is a duty to defend in this case.13 As such, the parties have asked
the Court to decide whether the factual allegations in the Underlying Complaint
trigger the insurer’s duty to defend.
The Underlying Complaint alleges the following:14
6. At the beginning of her senior year, in late summer 2014, [Student]
began serving as a student aid to [Plaintiff] during the school day
and particularly during her fourth period.
7. It was in connection with her duties as a student aid that she gave
[Plaintiff] her cell phone number.
8. During the fall of 2014 [Plaintiff] began texting [Student] regarding
non-student aid matters. It began as one to two texts per day but
increased to six per day. The texting increased throughout the
Spring of 2015.
9. [Student] stopped aiding [Plaintiff’ s] class in January 2016.15 After
this, [Plaintiff’ s] texts to [Student] increased.
11 Slaubaugh Farm, Inc., 2018 WL 3559252 at *1.
121d
13 Defendant’s Reply Brief in Further Support of its Motion for Reargument, at 1; Plaintiff’s
Opening Brief in Support of the Joint Motion for Reargument, at 3.
14 The following enumerated allegations correspond with the paragraph numbers in the Underlying
Complaint.
15 It appears that this date is an error because the Underlying Complaint refers to the 2014-2015
school year.
10. [Plaintiff] texted [Student] during all times throughout the day,
including during the weekday during his work hours and when he
was on school property.
ll. Another time [Plaintiff] texted [Student] that he wanted to come
over and snuggle with her.
12. During the Spring of 2015, the only access to the weight room was
through [Plaintiff]. Instead of helping the baseball players who he
coached, he focused more on [Student] instead, making her
uncomfortable.
13. [Plaintiff] asked [Student] to come to his office one day and he
pulled out his University of Delaware freshman year school
identification card, showed it to her, and said “See what would be
following you around all day” and gave her a creepy smirk.
14. [Plaintiff] pulled [Student] out of her AP classroom and told her he
had emailed her teachers to see if [Student] could be excused so that
he could give her good luck and give her a hug.
15. [Plaintiff] put his arm around [Student] and touch [sic] her several
times at school and on school property, which was unwanted and
made her feel scare [sic] and uncomfortable.
16. Employees of Appoquinmink School District saw [Plaintiff] put
his arm around [Student].
17. [Plaintiff'] showed up uninvited at [Student’s] house during the
Spring of 2015. He insinuated himself into her family.
18. [Plaintiff’s] entire course of behavior implied sexual innuendo or
directly stated it.
19. [Plaintiff] lied to his wife about being with [Student].
20. As [Student] tried to limit this contact with [Plaintiff'], he became
more insistent and texted [Student] more frequently.
2l. [Plaintiff] waited for [Student] to walk by his classroom in the
mornings, and her friends witnessed this behavior.
22. One time [Student] and her sister were home alone and [Plaintiff]
texted that he was right outside in the front of her house.
23. [Plaintiff'_| would tell [Student] about getting treatment for his
problems with anger.
24. On April 22, 2015 [Student] complained to Appoquinmink School
District employees Miss Tiberi (now Krieger) and Miss Wyndley,
the assistant principal, about the behavior of [Plaintiff] as set forth
above.
25. Between April 27, 2015 and May 2015 [Plaintiff] sent 36 text
messages to [Student].
26. Subsequently, an employee of Appoquinimink School district
reported [Plaintiff’ s] behavior to Middletown Police Department.
27. Upon information and belief, someone from Middletown Police
Department warned [Plaintiff] not to contact [Student] again.
28, However, [Plaintiff'] continued to contact [Student] and her family
until his arrest by Middletown Police Department.16
The Underlying Complaint also alleges that “[Plaintiff] was actuated at least in part
by a purpose to serve the [School] Board.”17
16 Underlying Complaint, at paragraphs 6-28.
17 Id. at paragraph 42.
The issue, whether an insurer has a duty to defend, has been analyzed
previously by Delaware Courts. Generally, the Court has found a duty to defend
unless, as a matter of law, there is “no possible factual or legal basis upon which the
insurer might eventually be obligated to indemnify the insured.”18
“The determination of whether a party has a duty to defend should be made
at the outset of the case.”19 The Court explained that “[a]n early decision provides
the insured with a defense at the beginning of the litigation and permits the insurer
to control the defense strategy.”20
In Tyson Foods. Inc. v. Allstate Ins. Co., the Superior Court stated that “[t]he
Court generally will look to two documents in its determination of the insurer's duty
to defend: the insurance policy and the pleadings of the underlying lawsuit.”21 “The
test is whether the complaint alleges a risk within the coverage of the policy.”22
18 National Union Fire Ins. C0. of Pittsburgh PA. v. Rhone-Poulenc Basic Chemicals Co., 1992
WL 22690 at *8 (Del. Super. Jan. 16, 1992).
19 Ben Hen Mechanical, Inc. v. Atlcmtic States Ins. Co., 2011 WL 1598575 at *3 (Del. Super. Apr.
21, 2011).
20 lar
21 Tyson Foods. Inc. v. Allstate Ins. Co., 2011 WL 3926195 at *6 (Del. Super. Aug. 31, 2011).
22 Continem‘al Casually. Co. v. Alexis I. DuPom‘ School Dist., 317 A.2d 101, 103 (Del. Mar. 4,
1972).
The Delaware Supreme Court, in Continental Casually. C0. v. Alexis 1.
DuPont School Dist., 23 set forth guidelines to apply when “considering whether an
insurer is bound to defend an action against its insured.”24 The Court stated:
(a) Where there exists some doubt as to whether the complaint against
the insured alleges a risk insured against, that doubt should be
resolved in favor of the insured;
(b)Any ambiguity in the pleadings should be resolved against the
carrier;
(c) lf even one count or theory of plaintiff’ s complaint lies within the
coverage of the policy, the duty to defend arises.25
In Rhone-Poulenc Basic Chemicals Co., the Delaware Superior Court
concluded that the “[t]he adoption of [the first] principle in Continental Casually
confirms that in Delaware, an insurer’s duty to defend its insured arises when the
allegations of the underlying complaint show a potential that liability within
coverage will be established.” 26 lt also held that “in determining an insurer’s
obligation to defend, any doubt as to whether the complaint against the insured
alleges a risk insured against should be resolved in favor of the insured.”27 Thus,
“[a]n insurer [. . .] can be excused from its duty to defend only if it can be determined
23 Continental Casually. Co. 317 A.2d 101.
24 Id. at105.
25 Idl
26 Rhone-Poulenc Basic Chemicals Co., 1992 WL 22690 at *7 (emphasis in the original).
27 Id. at 7.
as a matter of law that there is no possible factual or legal basis upon which the
insurer might eventually be obligated to indemnify the insured.”28
Plaintiff contends that he is an insured and entitled to a defense by Defendant
because he acted within the scope of his employment pursuant to Restatement
(Second) of Agency §228.29 Plaintiff claims that the Underlying Complaint reflects
that some of the alleged conduct occurred on school property, during work hours,
and that Plaintiff was actuated, at least in part, by the purpose of serving the School
Board. Plaintiff asserts that “[t]he factual allegations in paragraphs 8, 9, 10, 12, 13,
14, 15, 17, 21 and 25, when viewed in a light most favorable to [Plaintiff], support
the inference that [Plaintiff] was acting within the scope of his employment.”30
Plaintiff then asserts that the Intentional Acts Exclusion and the Sexual
Misconduct Exclusion do not extinguish Defendant’s duty to defend. Plaintiff
argues that the duty to defend exists if any of the alleged acts is covered under the
terms of the policy. Plaintiff also asserts that the factual allegations must be
28 Id. at *8 (emphasis added).
29 Restatement (Second) of Agency §228:
(1) Conduct of a servant is within the scope of employment if, but only if:
(a) it is of the kind he is employed to perform;
(b) it occurs substantially within the authorized time and space limits;
(c) it is actuated, at least in part, by a purpose to serve the master, and
(d) if force is intentionally used by the servant against another, the use of
force is not unexpectable by the master.
30 Plaintiff’ s Opening Brief in Support of the Joint Motion for Reargument, at 8.
10
“liberally construed” in favor of the insured. Thus, according to Plaintiff, because
the Underlying Complaint alleges acts that could be construed as non-sexual and as
supporting the claim of negligence, the Intentional Acts and Sexual Misconduct
Exclusions do not apply.
Lastly, Plaintiff contends that Sherman v. State Dept. of Public Sczfety31, in
adopting Restatement (Second) of Agency §219,32 expanded the scope of
employment test. Plaintiff argues that “[u] nder Sherman, Delaware courts now must
consider §228 in tandem with §219 of the Restatement (Second) of Agency (...)
when determining whether an employee’s conduct falls within the scope of
employment.”33 He argues that “[i]f the employee’s conduct falls under one of the
exceptions enumerated in §219, there is no obligation to satisfy §228 to be
considered within the scope of employment.”34 Here, Plaintiff asserts that he was
31 Shermcm v. State Dept. of Public Safety, 190 A.3d 148 (Del. June 26, 2018).
32 Restatement (Second) of Agency §219:
(2) A master is not subject to liability for the torts of his servants acting outside the
scope of their employment, unless:
(a) the master intended the conduct or the consequences, or
(b) the master was negligent or reckless, or
(c) the conduct violated a non-delegable duty of the master, or
(d) the servant purported to act or to speak on behalf of the principal and
there was reliance upon apparent authority, or he was aided in
accomplishing the tort by the existence of the agency relation.
33 Plaintiff’s Supplemental Brief Addressing the Applicability of Sherman v. State Dept. of Public
Safely, 190 A.3d 148 (Del. 2018), at 2.
34 Id. at 2-3.
ll
acting within the scope of employment under §219(2)(c) because teachers owe a
non-delegable duty to their students and under §219(2)(d) because Plaintiff was
aided in accomplishing the alleged torts by the existence of his agency relation with
the School Board.
Defendant contends that it does not owe Plaintiff a duty to defend because
Plaintiff is not an insured under the policy terms as he was not acting within the
scope of his employment and the alleged acts do not meet the policy’s definition of
an occurrence because the alleged conduct was not an ‘accident.’
Defendant argues that Plaintiff does not satisfy any of the §228 prongs because
“sexually harassing a student is not the kind of conduct he was hired to perform,”
“much of the relevant conduct was alleged to have occurred off property,”35 “the
”36 and “there
conduct was not limited to the time and space limits of the school day,
can be no reasonable argument that Plaintiff’ s sexual harassment of a student was
activated, at least in part, by a purpose to serve the school district.”37 Defendant
characterizes Plaintiff’ s claims as “unfathomable” and challenges Plaintiff’ s
35 Defendant’s Answering Brief in Opposition to Plaintiff’ s Opening Brief in Support of Their
Motion for Summary Judgment, at 7.
36 Id_
37 Id. (internal quotation marks).
12
argument that teacher sexual misconduct toward a student is a ‘foreseeable risk.’
Defendant writes:
[Plaintiff’ s] position [that he was acting within the scope of his
employment] is completely unfathomable, especially in light of the
obvious reality that the vast majority of high school students are minors.
The logical conclusion reached from [Plaintiff’s] argument is that
sexual assault and harassment must be “not unexpectable” for teenage
high school students from their teachers. Stated differently, sexual
assault at the hands of a teacher is a “foreseeable risk” of attending high
school.38
In addition, Defendant contends that Sherman is distinguishable from the
instant case for two reasons: the instant case “is an insurance dispute with an explicit
coverage provision_the Sexual Misconduct Exclusion_that precludes coverage”
and the insurance policy in the instant case explicitly defines “an insured” as “[Y]our
‘employees’ but only for acts within the scope of their employment by you or
while performing duties related to the conduct of your business...”39 Therefore,
Defendant argues, “the Policy actually requires that the employees, in this case,
[Plaintiff], be within the course and scope of employment, for coverage to apply.”4°
Defendant then argues that, even when analyzed under §219, Plaintiff would
not satisfy any exceptions to §228 because none of the allegations supports a finding
38 Id. at 14.
39 Defendant’s Supplemental Submission of Parties’ Cross-Motions for Reargument, at 8_9.
40 Id
13
that Plaintiff acted or spoke on behalf of the school or on behalf of the school district,
that Plaintiff accomplished the torts by the existence of the agency relationship, or
that Student relied on Plaintiff’ s apparent authority. Defendant then asserts that
Plaintif “will not be able to cite legal precedent that extends the Sherman decision,
or its rationale, to high school teachers.”4l
Lastly, Defendant asserts that, even if the Court finds that Plaintiff qualifies
as an insured under the insurance policy terms, the Intentional Acts Exclusion and/ or
the Sexual Misconduct Exclusion in the insurance policy would extinguish
Defendant’s duty to defend Plaintiff in the underlying action because the Underlying
Complaint alleges intentional criminal sexual harassment
In the instant case, this Court is guided by Sherman v. State Dept. of Public
Safely, a recent Delaware Supreme Court case holding that:
Although the question of whether a tortfeasor is acting within the
scope of his employment is fact-specific, and ordinarily, is for the jury
to decide, the question of whether tortious conduct falls within the
scope of employment is decided by the court if the answer is clearly
indicated.42
Thus, in determining whether Defendant owes Plaintiff a duty to defend, the
Court must first find that Plaintiff is an insured under the insurance policy. If the
41Id. at 10.
42 Sherman, 190 A.3d at 170 (internal quotation marks removed).
14
Court finds that Plaintiff has met that threshold, the Court must then determine
whether the Intentional Acts Exclusion and/or Sexual Misconduct Exclusion would
extinguish the duty to defend.
Delaware courts follow the Restatement (Second) of Agency §228 when
determining whether an employee was acting within the scope of employment for
the purpose of employer liability.43 §228 contains four prongs that must be satisfied
to find that an employee was acting within the scope of employment:
(1) Conduct of a servant is within the scope of employment if, but only if:
(a) it is of the kind he is employed to perform;
(b) it occurs substantially within the authorized time and space
limits;
(c) it is actuated, at least in part, by a purpose to serve the master,
and
(d) if force is intentionally used by the servant against another,
the use of force is not unexpectable by the master.44
Sherman v. State Dept. of Publz`c Safety involved a state police officer who
sexually assaulted an arrestee during the time that he was responsible for
transporting the arrestee. That case analyzed §228 and its complement, §219.45 The
Court in Sherman found that the officer satisfied the first two prongs of §228 but
43 C0dy V. Hal”dy, 2017 WL 50755()9 at *3 (Del. Super. OCt. 31, 2017).
44 Restatement (Second) of Agency §228.
43 Sherman, 190 A.3d at 154 (The Court held that §219 is “a complement to §228.”).
15
that the officer did not satisfy the third prong (the Motivation Prong) of §228.46 As
such, the Court held that the State could not be held liable under an isolated analysis
of §22847 even though the Court found that “there is no question of fact” that the
fourth prong (the Foreseeability Prong) was satisfied because there was undisputed
evidence that sexual misconduct by police officers was generally foreseeable.48
Nevertheless, the Court ultimately found that the employer was liable when
Restatement §228 was analyzed with its “complementary” section, Restatement
(Second) of Agency §219.49 The Court held that §228 “should operate within the
context of its Restatement counterpart, §219, as the Restatement intends,”56
46 Id. at 174 (The Court held that the arrestee “never alleged that the Officer’s misconduct was
motivated in any part by a desire to serve the State Police or the State” and the “complaint alleged
that the Officer sought oral sex solely to gratify himself.”).
47 Id. at 174 (Referencing Doe v. State, 76 A.3d 774 (Del. Oct. 8, 2013), where it was alleged that
a police officer committed a sexual assault on an arrestee, the Sherman Court held that “[i]f Doe
was required to satisfy the Motivation Prong of §228, she could not, and judgment was owed to
the State on that ground. That reality underscores why Doe originally argued that §219 relieved
her of the need to satisfy §228, and why we examine §219’s relevance in this decision.”).
48 Ia'. at 154 (The Court explained that under §228’s Foreseeability Prong (the fourth prong), “the
general risk of the wrongdoing, not the specific risk of the employee engaging in that conduct,
[must] be foreseeable.”).
Id. at 175-77 (The Court in Sherman noted that “the parties have assumed that §228’s
Foreseeability Prong, which requires that, “if` force is used, the use of force is not unexpectable,”
applies to this case, likely because [the plaintiff’ s] original complaint sued the State for the torts
of assault and battery.”).
49 Id. at 153 (§219 “is a complement to §228.”).
30 Ia’. (“Section 219 enumerates the situations in which a master may be liable for torts of servants
acting solely for their own purposes and hence not in the scope of employment.”) (intemal
quotation marks removed).
16
explaining that §219 “is referenced as a companion provision in §228, and when
embracing the Restatement, this Court should be inclined to embrace its relevant
provisions in their entirety and not cherry-pick isolated sections.”51 Sherman held
that “[w]hen §219’s exceptions apply, an employer can be held responsible under
respondeat superior even if §228 is not satisfied.”52
The §219 exceptions are:
(2) A master is not subject to liability for the torts of his servants acting
outside the scope of their employment, unless:
(a) the master intended the conduct or the consequences, or
(b) the master was negligent or reckless, or
(c) the conduct violated a non-delegable duty of the master, or
(d) the servant purported to act or to speak on behalf of the
principal and there was reliance upon apparent authority, or he
was aided in accomplishing the tort by the existence of the
agency relation.53
The Court in Sherman instructed that §219 should be used to “bypass” the
requirements of §228 when justified:
By widening our lens to consider §219, which was designed to provide
exceptions to §228 by allowing a plaintiff" s claims to bypass all of
§228’s requirements when justified, we believed we would better
position ourselves to give §228 its most sensible interpretation.54
51 Id. at 177.
52 Id
53 Restatement (Second) of Agency §219 (emphasis added).
54 Sherman, 190 A.3d at 169.
17
In Sherman, the Court focused on Restatement subsections §219(2)(c) and
§219(2)(d). The Court explained that §219(2)(c) provides for respondeat superior
liability outside the scope of employment when the employer owed a non-delegable
duty to the tortfeasor’s victim and §219(2)(d) provides respondeat superior liability
outside the scope of employment when the tortfeasor was aided in accomplishing
the tort by the existence of the agency relationship.55
The Court found that §219(2)(c) was applicable because police departments
owe a non-delegable duty to their arrestees. The Court held that “[w]hen the State
authorizes police officers to take away the liberty of arrestees, it cannot delegate
away its own responsibility to make sure that an arrestee is not harmed by the tortious
conduct of its arresting officers.”56 The Court in Sherman also found that the State
was liable for the police officer’s act under §219(2)(d) because police officers have
“potent coercive power” and “presumptive legal authority to deprive a person of [. . .]
liberty.”57 The Court noted that there are serious consequences for resisting arrest
and explained that an arrestee “would rightly fear that if she refused the Officer, he
would seek to put her in jail.” 58 Moreover, the Court stated that “there is no question
55 Id. at 177-78 (internal quotation marks removed).
56 Id. at 182.
57161'. at 179-81.
58 Ia'. at 181 (“Arrestees are by definition required to surrender their control and autonomy to the
State upon their arrest. The Delaware Criminal Code gives no right to resist an arrest by a police
18
that the Officer was aided in accomplishing the sexual misconduct by his position of
authority, because the wrongful acts flowed from the very exercise of this
authority.”59
Following the same sequence of analysis used by the Supreme Court in
Sherman, this Court will first analyze whether Plaintiff’s alleged acts in the
Underlying Complaint were within the scope of employment under the four prongs
of §228 and then whether any §219 subsection applies. Here, all four prongs in §228
are satisfied and §219 is also satisfied.
In Doe v. State,60 the Delaware Supreme Court analyzed §228’s first and
second prongs together. In that case, the Court held that prong one and two of §228
were satisfied as a matter of law because:
[The Officer] was in uniform, on-duty, carrying out a police duty by
transporting [Doe] to court. The sexual assault took place in the police
car, during the time that [the Officer] was supposed to be carrying out
police duties. These facts would satisfy the first two factors under the
Restatement-_ [the Officer] was doing the kind of work he was
employed to perform, and he was acting within authorized time and
space 1imits.6l
officer, whether or not the arrest was lawful and whether or not the accused knew the arrestor was
a police officer. In fact, it is a class G felony to resist an arrest with force or violence, and a class
A misdemeanor to peacefully resist an arrest.”) (internal quotation marks removed).
59 Id. at 180-81 (“Had [the officer] not been in uniform, in a marked patrol vehicle and effectuating
an arrest, [the tort victim] would not have stopped at his direction and the events that followed
would not have occurred.”) (intemal quotation marks removed).
60 Doe v. State, 76 A.3d 774, 777 (Del. Oct. 8, 2013).
61 Id. at 777; See also, Sherman, 190 A.3d at 159 (The Court in Sherman quoted this paragraph
and did not question the reasoning).
19
In the instant case, the allegations in the Underlying Complaint are similar
(sexual innuendo) and more numerous than the one act of sexual misconduct in Doe
v. State or Sherman v. State Dept. of Public Safety. The Underlying Complaint
alleges that some of the misconduct occurred while Plaintiff was on-duty62 and
carrying out his duties as a teacher;63 on school property;64 and acting during school
hours.65 Therefore, the allegations satisfy prongs one and two of §228.66
Whether the third prong of Restatement §228 is satisfied is less
straightforward As required by the third prong, as in Sherman v. State Dept. of
Public Safety, the Underlying Complaint in the instant case broadly alleges that
“[Plaintiff] was actuated at least in part by a purpose to serve the [School] Board.”67
The Court in Doe v, State held that the third and fourth prongs were to be decided by the jury.
Sherman v. State Dept. of Public Safety later re-examined Doe’s treatment of the third and fourth
and held that these issues can be decided by the Court if the answer is clearly indicated.
62 See Underlying Complaint, at paragraphs 10, 12, 13, 14, 15, and 21.
63 Id. at paragraph 43 (“All of [Plaintiff’s] contacts with [Student] were made pursuant to
[Plaintiff’s] routine and regular job duties”); See also, Id. at paragraphs 6, 12, 13, and 14.
64 Id
65 Id. at paragraphs 10, 12, 13, 14, 15, and 21.
66 Mojzca v. Smyma school District 2015 wL 13697693 at *3 (Del. super. Dec. 17, 2015) (The
first two prongs were satisfied because the teacher/track coach asked the student “to accompany
her to her classroom at the conclusion of track practice, and she performed the tortious act on
school grounds.”).
67 Underlying Complaint, at paragraph 42.
20
Defendant, in opposition, argues that the complaint “is completely untenable”
because Plaintiff alleged a course of conduct of sexual innuendo and several
allegations allege “criminal sexual harassment.”68
The law is clear that if an ambiguity exists where two reasonable
interpretations are possible, “[a]ny ambiguity in the pleadings should be resolved
against the carrier. . .”69 Moreover, in resolving such an ambiguity, “[t]he Court may
review the complaint as a whole, considering all reasonable inferences that may be
drawn from the alleged facts.”70
Here, the Underlying Complaint specifically alleges that Plaintiff was
motivated in part by the purpose to serve his employer and alleges facts that could
potentially support that allegation. Arguably, Plaintiff"s actions of focusing on the
student in the weight room or waiting for the student to walk by Plaintiff’ s classroom
could be actuated in part by Plaintiff’ s desire to supervise the student in carrying out
Plaintiff’s duties to the School Board. So too, it could potentially be argued that
Plaintiff’ s act of pulling Student out of her AP classroom to “give her good luck”
68 Defendant’s Answering Brief in Opposition to Plaintiffs Motion for Reargument, at 11.
69 Continental Casualty. Co., 317 A.2d at 105; See also, St. Anthony’s Club v. Scottsdale Ins. Co.,
1998 WL 732947, at *3 (Dei. super Juiy 15, 1998).
70 United Westlabs, Inc. v. Greenwich Ins. Co., 2011 WL 2623932 at *8 (Del. Super. June 13,
2011).
21
was in part attempting to encourage a student for the purpose of fostering student
self-confidence and optimal student performance, thereby serving the School Board.
The Delaware Superior Court has held that “[t]he duty to defend is not affected
by the validity of the underlying claims.”71 Thus, when read as a whole, the
Underlying Complaint states factual allegations that potentially support the claim
that some of Plaintiff’s alleged conduct was actuated by a purpose to serve the
School Board.
In Sherman the Court explained that the fourth prong, foreseeability, is
satisfied if there is an abuse of authority and “evaluates whether the degree of force
the tortfeasor used is not unexpectable.”72 The Court in Sherman recognized that
police abuse of authority is not unexpectable.
ln the instant case, the Court finds that a teacher has significant authority
entrusted to him or he_r. Here, the Foreseeability Prong, is satisfied because misuse
of authority over minors is not unexpectable and the Underlying Complaint alleges
”73
that “[Plaintiff’s] conduct was not unexpected by the Board. The Delaware
Superior Court specifically held in Mojica v. Smyrna School District, a 2015 case,
711d
72 Sherman, 190 A.3d at 161.
73 Underlying Complaint, at paragraph 42.
22
that abuse by teachers is foreseeable.74 Additionally, the Mojica case does not
appear to be an isolated incident.75 As such, it could not have been unexpectable
that Plaintiff, a teacher, might engage in behavior, such as hugging or touching, that
a student might perceive as sexual innuendo. Plaintiff was clearly in a position of
authority, He was her teacher and she was his student (and his student aid).76
Although Defendant argues that Sherman does not apply to the instant case,
both parties have conceded that the Delaware Supreme Court’s interpretation of
Restatement (Second) of Agency §228 is the proper test to determine whether
74 Mojica, 2015 WL 13697693 at ** 3, 5 (ln a case involving a teacher who pled guilty to raping
a student, the Delaware Superior Court held: “acts of sexual abuse by persons in positions of
authority are foreseeable risks, and therefore must be considered expectable.” The Court also held
that: “The Doe Court's opinion noted that assaults by police officers and others in positions of
authority are foreseeable risks, thus bringing teachers under the purview of Doe.”) (emphasis in
the original). (internal quotation marks removed).
75 See Whitwell v. Archmere Academy, Inc. , 2008 WL 1735370 (allegation that a teacher
continuously sexually abused a student over a 33-month period.); McAlley v. Selective Ins. Co. of
Am., 2011 WL 601662 (Del. Super. Feb. 16, 2011) (a Delaware case cited by Defendant) (where
a teacher was accused of raping a student.); Hecksher v. Fairwinds Baptist Church, Inc. , 1 15 A.3d
1187 (Del. May 21, 2015) (former student sued a small school for gross negligence for falling to
prevent her teacher from sexually abusing her); Fults v. Qualls, 635 Fed.Appx. 316 (6111 Cir. Jan.
22, 2016) (case involving Tennessee teacher who was convicted of raping a student); Stein v.
County of Westchester, N.Y., 410 F. Supp. 2d 175 (S.D.NY Jan. 17, 2006) (case involving New
York teacher who was convicted for sexual behavior involving three of her students).
76 Moreover, 10 Del.C. §8145 creates a civil cause of action for sexual abuse of a minor and 19
Del.C. §711A(g), recently enacted, addresses this issue of sexual misconduct. §711A(g) requires
every Delaware employer having 50 or more employees to provide “interactive training and
education to employees regarding the prevention of sexual harassmen .”
23
Plaintiff is an insured under the insurance policy in the instant case. As such, this
Court must apply §228 in conjunction with §219 as instructed in Sherrnan.77
In Sherman the Court found that under §219(2)(0) the State has a non-
delegable duty to arrestees “[b]ecause under Delaware law it is a crime to resist
arrest, even peaceably, the arrestee has no option but to remain under the arresting
officer’s domain ...”78 The Court in Sherman also cited, as persuasive authority, an
Indiana Court of Appeals case that held that “a non-delegable duty exists as a matter
of law when patrons must surrender their control and autonomy to the entity while
they are in its care.”79
Here, students attending school in the Appoquinimink School District are in
the care of the school and must surrender authority to the adults in charge.
Additionally, students are not free to leave the school after arrival until the end of
the school day unless the student has authorization to leave.80 Students who defy the
77 Sherrnan, 190 A.3d at 161 (§228 “should operate within the context of its Restatement
counterpart, §219, as the Restatement intends.”)
78 Ia'. at 182.
79 Id. (internal quotation marks removed).
80 Appoquinimink School District: 2018-19 Student Code of Conduct, at 40:
LEA VING SCHOOL WITHOUT AUTHORIZATION (S005]).' Once a student
arrives at the school campus he/she may not leave unless authorized to do so, until
the end of the student ’s scheduled day. T he parking lot is of limits during school
hours. Returning to school after leaving without permission may be considered
reasonable suspicion to conduct a search.
24
school’s authority or leave the school without authorization are subject to detention,
suspension, and police intervention.8l Therefore, it appears that schools would owe
a similar duty to students in their custody as the State owes to an arrestee in its
custody.82
In addition, the facts of the instant case satisfy §219(2)(d). As in Sherman,
where the Court held that police have “unique, coercive authority entrusted [to
them],”83 teachers also have unique, coercive authority entrusted to them and
leverage over students. lndeed, a student may face immediate or future substantial
risk for insubordination or challenging a teacher’s authority.84
811d
82 The dissent in Sherman appeared to consider that the holding in Sherrnan could also be construed
as applying to schools:
It also is unclear whether the holding applies only to law enforcement agencies, or
whether every public (and private) employer will now be faced with lawsuits
seeking to extend this ruling even beyond the law enforcement arena. Schools,
daycares, nursing homes, and facilities for our State’s most vulnerable citizens, and
an untold number of other employers (including government agencies) might be
held liable in money damages for the intentional torts committed by rogue
employees with a purpose wholly divorced from the interest of the employee’s
employer.
Sherrnan, 190 A.3d at 203 (Valihura, J. dissenting).
83 Ia'. at 155.
84 Consequences could be punitive or coercive. Punitive consequences might be detention,
suspension, etc., or poor grades. Coercive consequences might be denial of privileges, inability to
participate in programs, or withholding letters of recommendation Hence, a student might
reasonably believe that refusing to submit to a teacher’s authority could have long-ranging and
permanent consequences that could hinder or derail academic success, college admissions,
financial aid, and ultimate career goals.
25
Moreover, the Sherman case concerned coercion upon an adult and held that
the authority that police wield (over an adult) is coercive. The instant case involves
the teacher’s capacity to exercise authority over a more vulnerable person _ a
minor.85 Furthermore, the arrestee in Sher)nan was arguably in police custody as a
result of her own adult conduct, In contrast, a minor’s attendance at school is
compulsory86 and a teacher’s authority begins upon a student’s enrollment and is not
precipitated by any act affirmatively committed by a minor.
Here, it reasonably could have appeared to Student, who was a minor, that
Plaintiff’s exercise of authority, however allegedly alarrning, derived from his
employer and employment status. According to the Underlying Complaint, other
School Board employees aided Plaintiff in interrupting Student’s AP classwork to
85 Miller v. Alabama, 567 U.S. 460, 471-72 (2010) (“developments in psychology and brain
science continue to show fundamental differences between juvenile and adult minds.”) quoted in
Zel)roski v. State, 179 A.3d 855, 861 (Del. Jan. 25, 2018); See also Sherman, 190 A.3d at 203
(Valihura, J. dissenting) (the dissent includes schools in a discussion on facilities for the “State’s
most vulnerable citizens.”).
86 14 Del. C. §2702:
(3) Every student who is enrolled in a public school of this State shall attend the
school each day of the minimum school term and any academic improvement
activities required by § 153 of this title. A student who has been absent from school
without a valid excuse for more than 3 school days in a school year is a truant. A
truant and the parent of a truant are subject to the administrative procedures and
court proceedings set out in subchapter 11 of this chapter.
As such, failure to have a child attend school could result in arrest of the parent. (14 Del. C. §2729).
In addition, the school may file a civil charge of truancy against the student and the Court may
adjudicate the student a truant (14 Del. C. §2730).
26
pull her out for Plaintiff to wish her good luck,87 employees of the school watched
Plaintiff put his arm around Student and did not intervene,88 and the School Board
required Student to give her personal cell phone number to Plaintiff.89 As with the
arrestee in Sherman, it would not be unreasonable for a minor to believe that there
would be adverse consequences and undesirable repercussions if she challenged or
acted insubordinately to Plaintiff’ s authority that was open and apparent to her, other
students (the baseball players whom he allegedly ignored), and other School Board
employees.90
Moreover, under §219(2)(d), it appears that Plaintiff was aided in his alleged
tortious acts by the existence of his agency relation with the school. Student was
evidently instructed to reveal her cell phone number to Plaintiff because she served
as his student aid, which made it possible for Plaintiff to harass Student via text
messages. In addition, Plaintiff used his role as an agent of his employer (which
gave him authority over students and access to school property) to pull Student out
87 The Underlying Complaint, at paragraph 14.
88 Id. at paragraph 16.
89 Id. at paragraph 7.
90 Sherrnan, 190 A.3d at 180 (“Someone in Doe’s position would rightly fear that if she refused
the Officer, he would seek to put her in jail. And if she attempted to tell the magistrate what he
did, she might fear that she would be disbelieved by a magistrate who may have dealt with the
Officer in other cases, and perhaps get even worse treatment for appearing to have falsely accused
a member of law enforcement of wrongdoing. Fear of that kind would be reasonable, as someone
in Doe’s position would assume the Officer would lie to the court.”).
27
of her AP class so that he could hug her, to have her come into his office where he
allegedly made an inappropriate comment to her, to overly focus on her in the weight
room, and to wait for her as she passed by his office. Had Plaintiff not been a teacher,
on school property, and functioning in a supervisory role over minors during school
hours, he would have had no authority or ability to commit some of these alleged
acts and Student would not have been allegedly harmed by him.91
Defendant also has asserted that Plaintiff was not an insured because the
alleged conduct did not constitute an ‘occurrence’ as required by the insurance
policy.92 The insurance policy defines ‘occurrence’ as an ‘accident.’93 The
insurance policy does not define ‘accident.’
The Delaware Superior Court has defined ‘accident’, in the insurance policy
context, “as an event not anticipated or foreseen by the victim, or an outcome not
91 Id. at 180-81 (The Delaware Supreme Court similarly reasoned that: “Had [the officer] not been
in uniform, in a marked patrol vehicle and effectuating an arrest, [the tort victim] would not have
stopped at his direction and the events that followed would not have occurred.”) (internal quotation
marks removed).
92 The School Board’s insurance policy with Defendant states:
(b) This insurance applies to “bodily injury” and “property damage only if:
3
(1) The “bodily injury” or “property damage” is caused by an “occurrence’
that takes place in the “coverage territory”;
931d. at 15:
13. “Occurrence” means an accident, including continuous or repeated exposure to
substantially the same general harmful conditions.
28
intended by the insured.”94 Several Delaware cases have found that an ‘accident’
occurred when the event was not expected by the victim.95 So too, in the instant
case, nothing in the Underlying Complaint suggests that Student anticipated or
foresaw Plaintiff’ s alleged tortious acts. Additionally, at the Summary Judgment
Hearing, Defendant conceded that there are legal theories that state that negligence
can be accidental conduct.96
Moreover, case law suggests that “counts of negligence may count as
“occurrences” as defined in [an insurance] policy.97 ln a 2016 case, Liberty
Insurance Corp. v. Korn, the U.S. District Court of Delaware held that allegations
in the underlying action alleging negligent conduct “satisf[ied] the policy’s
requirement of an ‘occurrence’ causing bodily injury.”98 Here, because the
94 Camac v. Hall, 698 A.2d 394, 396 (Del. Super. Oct. 7, 1996); Liberty Insurance Corp. v. Korn,
210 F. Supp. 3d 612, 617 (D. Del. Sept. 26, 2016).
95 State Farm Fire and Casualty v. Hackendorn, 605 A.2d 3, at *8 (“As to [the shooting victim],
this incident [a shooting] is a happening by chance, unusual, fortuitous and not anticipated.
Consequently, the Court finds that [the insured] has met his burden of proof that an occurrence
took place within the coverage section.”); Camac, 698 A.2d at 397 (an intentional attack was an
accident from the victim’s point of view because “the plaintiff was slugged by the defendant while
at the urinal on personal business. lt is not usual or expected to be struck at such a time.”);
Nationwide Mut. Fire Ins. v. Smith, 1998 WL 433941, *3 (Del. Super. Apr. 2, 1998) (in holding
that there was an ‘occurrence’ the Court reasoned: “from [shooting victim’s] viewpoint, it certainly
would not be usual nor would it be expected that he would be shot by a heretofore loving
relative.”).
96 Summary Judgment Hearing Transcript, at 27.
97 Korn, 210 F. Supp. 3d at 618.
98 Id. at 619.
29
Underlying Complaint alleges negligence, the alleged conduct includes an
‘occurrence.’99
For the foregoing reasons, this Court finds that the Underlying Complaint
establishes that Plaintiff is entitled to a defense by Defendant under the definition of
an insured employee for an occurrence, unless a policy exclusion applies.
Having determined that Plaintiff is an insured, this Court must now determine
whether the lntentional Acts Exclusion and/or the Sexual Misconduct Exclusion
extinguish Defendant’s duty to defend Plaintiff. For the following reasons, neither
the Intentional Acts Exclusion or the Sexual Misconduct Exclusion allow Defendant
to avoid its duty to defend,
The Superior Court has held that “in order to avoid the duty to defend, the
insurer must demonstrate that the allegations of the underlying complaints are solely
and entirely within specific and unambiguous exclusions from coverage.”100 “The
99 Defendant cites McAlley v. Selective Ins. Co. of America, 2011 WL 601662 (Del. Super. Feb.
16, 2011) to support his argument that an ‘accident’ does not include the alleged conduct in the
instant case. In McAlley, the Delaware Superior Court held that an accident did not occur because
the alleged acts were intentional However, McAlley is distinguishable from the instant case
because in McAlley the insurance policy defines ‘occurrence’ as: “an accident, including
continuous or repeated exposure to conditions which results in bodily injury or property damage
neither expected nor intended from the standpoint of the insured” (emphasis added). The Court in
McAlley was precluded from taking the victim’s viewpoint into account if the insured intended or
expected the injury. In the instant case, there is no language in the definition of ‘occurrence’ that
requires that the bodily injury not be intended by the insured.
100 Rhone-Poulenc Basic Chemicals Co., 1992 WL 22690 at *8 (internal quotation marks
removed).
30
burden is on the insurer to establish that policy exclusions or exemptions apply in a
particular case, and that they are subject to no other reasonable interpretation.”10l
Moreover, under Delaware law, “if even one count or theory of plaintiff’ s complaint
lies within the coverage of the policy, the duty to defend arises.”102
Although the Underlying Complaint alleges negligence (Gross Negligent
Infliction of Emotional Distress and Gross Negligence), Defendant contends that the
Intentional Acts Exclusion should extinguish its duty to defend because those
allegations of negligence in the Underlying Complaint are merely “clever pleading”
intended to trigger the duty to defend and that “every single one of the factual
allegations allege criminal, intentional sexual harassment.”103 Defendant asserts
that McAlley v. Selective Ins. Co. of Am. 104 is “[d]ispositive on this issue”105 because
that case held that “[t]he coverage determination must be made based on the facts
alleged in the Complaint, not the manufactured claims of a Plaintiff seeking to
implicate coverage by clever pleading.”106 As such, Defendant argues that even if
101 Id_
102 WoodSpring Hotels LLC 2018 WL 2085197 at *8.
103 Defendant’s Answering Brief in Opposition to Plaintiff’s Motion for Reargument, at 16
(emphasis in original).
104 McAlley v. selective Ins. Co. ofAm., 2011 WL 601662 at *3 (Del. supor. Feb. 16, 2011).
105 Defendant’s Answering Brief in Opposition to Plaintiff’s Motion for Reargument, at 16.
166 Id. at 16, quoting MoAlley, 2011 WL 601662 at *3.
31
“negligence” is included “as a legal theory in the Underlying Action, if all of the
factual allegations relate to intentional conduct, the lntentional Acts Exclusion bars
coverage.”107
However, McA lley is distinguishable from the instant case. Although McA lley
involved a teacher who was accused of raping a student but the underlying complaint
alleged negligence, rape was statutorily defined as intentional. Citing 11 Del. C. §§
770-773, the Court in McAlley stated that because rape was intentional conduct there
was no duty to defend, despite that fact that the underlying complaint alleged
negligence.108 The Court in McAlley held:
Apparently, the plaintiffs in the underlying action sought to trigger
coverage by claiming negligence even though they alleged not a single
fact to support this claim. The coverage determination must be made
based on the facts alleged in the Complaint, not the manufactured
claims of a plaintiff seeking to implicate coverage by clever pleading.
According to the express provisions of the Selective policy, in the
absence of allegations of accidental conduct in the Complaint, the duty
to defend is not triggered.109
107 Ia'. (emphasis in the original).
108 McAlley, 2011 WL 601662 at *3 (Citing 11 Del. C. §§ 770-773, the Court held that “[r]ape is
intentional conduct.”).
109 Id
32
Here, the Underlying Complaint alleges Gross Negligent lnfliction of
Emotional Distress and Gross Negligence.110 The Underlying Complaint alleges that
Plaintiff, a teacher, “put his arm around [the student] and touched her several times
at school and on school property, which was unwanted and made her feel scare [sic]
and uncomfortable.”111 The Underlying Complaint also alleges that Plaintif “acted
with gross negligence in that he knew or should have known that his conduct toward
[the student] would be offensive to her. . .”1 12 lt also alleges that the student suffered
injuries, such as sweating, racing heart, hyper-arousal, and nervousness.113 “Under
well-settled Delaware law, a teacher has a duty to exercise due care to provide for
the safety of his or her students and to protect those students.”114 These allegations
potentially satisfy the elements of negligent infliction of emotional distress and do
not trigger the lntentional Acts Exclusion.
The second exclusion in the insurance policy, in the instant case, is the Sexual
Misconduct Exclusion. Plaintiff argues that the Sexual Misconduct Exclusion does
110 The elements of negligent infliction of emotional distress are: (1) negligence causing fright to
someone; (2) that the plaintiff was within the “zone of danger”; and (3) that the plaintiff suffered
physical harm as a result. Spence v. Cherian, 135 A.3d 1282, 1289-90 (Del. Super. May 20, 2016).
111 Underlying Complaint, at paragraph 15.
112 Ia'. at paragraph 58.
113 Id. at paragraphs 30-37.
114 Tews v. Cape Henlopen Sch. Dist., 2013 WL 1087580 at *4 (Del. Super. Feb. 14, 2013),
33
not apply because not all of the alleged acts in the Underlying Complaint are sexual
in nature. Defendant challenges that position and cites Paragraph 18 of the
Underlying Complaint which alleges that “[Plaintiff’s] entire course of behavior
implied sexual innuendo, or directly stated it.”115
While the course of behavior arguably implies or directly states sexual
innuendo, several of the factual allegations in the Underlying Complaint, viewed
separately, could be interpreted as non-sexual in nature. For example, it is alleged
that Plaintiff told Student that he was receiving treatment for his anger problem
which could separately be interpreted as non-sexual coercion or conduct.116
Moreover, at the hearing on the Motion for Reargument, Defendant conceded that it
was theoretically possible that if examined individually some of the alleged acts
could be interpreted as non-sexual.
Furthermore, the Underlying Complaint alleges several allegations pertaining
to the effect of Plaintiff’ s alleged conduct on Student without stating that the conduct
was of a sexual nature. However, allegations of implied sexual innuendo could
arguably be the Student’s interpretation or perception. lt does not establish as a
matter of law that all the factual allegations alleged Sexual Misconduct.
115 See Underlying Complaint, at paragraph 18; Defendant’s Reply Brief in Further Support of its
Motion for Reargument, at 4.
116 Underlying Complaint, at paragraph 23.
34
Therefore, because the Underlying Complaint is subject to more than one
interpretation (whether all the acts were of a sexual nature or some of the alleged
acts were of a non-sexual nature) the Court finds that, giving credence to the
allegations, there is an ambiguity. Where an ambiguity exists in the pleadings the
Court must resolve the ambiguity against the insurance company.117 Therefore, this
Court finds that the Underlying Complaint alleges acts that could be conduct other
than sexual misconduct
ln addition, it is not clear that implied “sexual innuendo” rises to the level of
sexual misconduct as the term is used in the insurance policy.118 The insurance
policy does not define the term ‘sexual misconduct.’ As with the pleadings, “any
ambiguity in the policy will be construed against the insurer.”1 19 As such, this Court
117 Continental Casualty. Co. 317 A.2d at 105 (“Any ambiguity in the pleadings should be
resolved against the carrier.”).
118 Sexual Misconduct and Molestation Liability Exclusion:
This insurance does not apply to “bodily injury”, “property damage”, or “personal and
advertising injury” arising out of:
1. Any actual or alleged sexual misconduct or sexual molestation of any person; and
2. Any allegations relating thereto that:
a. An insured negligently employed, investigated, trained, supervised, reported to
proper authorities or failed to so report, or retained a person whose conduct would
be excluded by l. above, or
b. Are based on an alleged practice, custom or policy, including but not limited to any
allegation that a person’s civil rights have been violated.
119 Regis Ins. Co. v. Graves, 2005 WL 273239 at *2 (Del. Super. Jan. 28, 2005).
35
finds that the Underlying Complaint alleges acts that could be outside the scope of
the Sexual Misconduct Exclusion.120
To avoid its duty to defend under the Sexual Misconduct Exclusion,
Defendant must show that there is no other reasonable interpretation of the alleged
acts in the Underlying Complaint other than sexual misconduct, sexual molestation,
or some other sexual activity. Here, Defendant has failed to show “as a matter of
law that there is no possible factual or legal basis upon which the insurer might
eventually be obligated to indemnify the insured.”121
Therefore, because it has not been shown that each allegation of the
Underlying Complaint was either an intentional act or an act of sexual misconduct
and because at least one of the allegations potentially supports a claim under the
insurance policy, Defendant cannot rely on the lntentional Acts Exclusion and/or
Sexual Misconduct Exclusion to avoid its duty to defend.122
120 Moreover, in Sherman, 190 A.3d at 174, in the context of the third prong of §228, the Court
recognized the existence of mixed motives. The Court held that where mixed motives are possible
the issue is not to be decided by the Court. Here, the factual allegations in the Underlying
Complaint could be interpreted as having mixed motivation. As such, the Court cannot decide as
a matter of law that the factual allegations exclusively allege conduct of a sexual nature.
121 Rhone-Poulenc Basic Chemicals Co., 1992 WL 22690, at *8 (emphasis added).
122 Id. (“[a]n insurer then can be excused from its duty to defend only if it can be determined as a
matter of law that there is no possible factual or legal basis upon which the insurer might eventually
be obligated to indemnify the insured.”).
36
M
For the foregoing reasons, Plaintiff" s Motion for Summary Judgment is
GRANTED; Defendant’s Motion of Summary Judgment is DENIED.
IT IS SO ORDERED.
104~€;€/¢.@13/1-#
Diarie Clarke Streett,'Judge
Original to Prothonotary
cc: Lisa C. McLaughlin, Esquire
Daniel A. Griffith, Esquire
37