Doe v. Shaffer

[This opinion has been published in Ohio Official Reports at 

90 Ohio St.3d 388

.]




    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-Ohio-186

.]
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.
                                  __________________
        {¶ 1} 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.


1. This individual’s name has been changed.
                                   SUPREME COURT OF OHIO




         {¶ 2} 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
         {¶ 3} 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 pertinent time frame. The policies provided liability indemnity coverage
in excess of the limits of coverage afforded by a number of underlying insurance
policies.
         {¶ 4} The Diocese and Griffin filed an answer that included a counterclaim
for declaratory judgment that Interstate possessed a duty to defend and indemnify


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


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                                   January Term, 2000




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.
          {¶ 5} 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.
          {¶ 6} This case presents the issue of whether the public policy precluding
liability insurance coverage for acts of sexual molestation also prohibits 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
          {¶ 7} 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



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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
       {¶ 8} 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.
       {¶ 9} 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 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

.
       {¶ 10} 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



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                                      January Term, 2000




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
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

.
         {¶ 11} 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.




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. 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.



                                                 5
                                   SUPREME COURT OF OHIO




         {¶ 12} 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 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.
         {¶ 13} 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.
         {¶ 14} 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.)




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,


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                                   January Term, 2000




        {¶ 15} 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.
        {¶ 16} 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.
        {¶ 17} This is so because the intentions of the molester are immaterial to
determining whether the allegedly negligent party has coverage. Silverball
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

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.



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                                  SUPREME COURT OF OHIO




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 recognize that
employers who make negligent hiring decisions clearly do not intend the
employees to inflict harm.” Id. at 1163.
         {¶ 18} 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

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 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
                                January Term, 2000




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”).
       {¶ 19} 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, 

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

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                                  SUPREME COURT OF OHIO




(explaining that “public policy [has come] to favor liability insurance for negligent
acts as a means of assuring that innocent persons are made whole”).
         {¶ 20} 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 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.
         {¶ 21} 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
         {¶ 22} 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.

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.


                                                 10
                                January Term, 2000




       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.
                              __________________
       LUNDBERG STRATTON, J., concurring in part and dissenting in part.
       {¶ 23} 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.
       {¶ 24} 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.
(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.
       {¶ 25} 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



                                         11
                             SUPREME COURT OF OHIO




related to the underlying act of sexual molestation, not the intentional act itself.
Because this reverses our previous position on this legal issue, I believe we should
apply this interpretation prospectively only.
       {¶ 26} 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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