Intentional Acts Exclusion Includes Failure to Prevent Sexual Assualt of Minor by Spouse
In J.G. v. Wangard, 2008 WL 2745125 (Wis., 2008), J.G., a minor who was sexually assaulted and R.G., her mother, brought an action against the perpetrator, Steven Wangaad, his wife, Deborah, and their homeowner's insurers. Their insurer moved for a declaratory ruling and to dismiss the case against them on grounds that homeowner's policies did not cover the losses alleged in the complaint. The circuit court granted the insurers' motion to dismiss and Deborah Wangard appealed. J.G. and R.G. cross-appealed and the court of appeals affirmed. Deborah Wangard petitioned for review.
The question thus presented to the Wisconsin Supreme Court was whether the Wangard's homeowner's insurance policies provided coverage for the alleged negligence of Deborah in failing to prevent Steven's intentional sexual contact with J.G. The policies in question covered liability for “damages a covered person is legally obligated to pay for personal injury or property damage,” but they contained exclusions that barred coverage for damages arising out of the intentional act of “any covered person.”
The court determined that the intentional acts exclusions in the homeowner's policies, excluding from coverage “any damages arising out of an act intended by any covered person to cause personal injury or property damage,” barred coverage for Deborah Wangard's alleged negligence in failing to prevent Steven's intentional sexual assaults of R.G.
The court explained that without considering whether Deborah's negligent conduct was itself “intentional,” it was clear that J.G.'s and R.G.'s alleged damages arose out of Steven's intentional wrongful conduct. For this reason, the court held that the exclusion plainly barred coverage as to Steven and to Deborah if, as is undisputed, J.G. and R.G.'s personal injury damages arose out of Steven's intentional sexual contact with J.G.
The court further held that the existence of a severability clause did not change this analysis. According to the court, it was inescapable that the policies, even when applied separately to Steven and Deborah as if they were distinct contracts, would include Steven Wangard, either explicitly by name or implicitly by status in the coverage summary, as Steven would continue to fall under “any insured” for purposes of the intentional acts exclusion in Deborah's “separate” policies. Therefore, it was not reasonable to suggest that “separate” policies owned by Deborah that explicitly named Steven as an insured would not regard Steven as an insured subject to the intentional acts exclusion. The severability clause could not reasonably be interpreted to eliminate express language in the policies referencing Steven by name.
Under this construction the court therefore rejected Deborah's contention that the policies were contextually ambiguous. The court explained that use of “any covered person” in the exclusion, coupled with the fact that Steven was a named insured even if coverage was applied separately to Deborah, led it to conclude that a reasonable interpretation of the Wangards' policies excluded coverage for both Steven and Deborah. And, because of the unambiguous language in the policies, the court also rejected Deborah's arguments that the court of appeals' decision in this case was inconsistent with the construction of the policies in several other cases cited by the defendants.
In addition, the court held that an insured could not reasonably expect coverage for harms resulting from sexual assaults committed by one's spouse, noting, “[t]he average person purchasing homeowner's insurance would cringe at the very suggestion that [the person] was paying for such coverage. And certainly [the person] would not want to share that type of risk with other homeowner's policyholders.”
In sum, the court concluded that the intentional acts exclusion in the Wangards' homeowner's policies excluded coverage for damages “arising out of an act intended by any covered person to cause personal injury,” and that Steven was a “covered person” under the Wangards' policies. Also, J.G.'s and R.G.'s injuries allegedly arose out of Steven's intentional acts, and Deborah had no reasonable expectation of coverage for damages arising out of Steven's intentional sexual contact with J.G. Therefore, the intentional acts exclusion in the Wangards' homeowner's policies applied and excluded coverage for the alleged negligence of Deborah. Furthermore, no insured would reasonably expect liability coverage for damages arising out of an act of sexual assault premised upon intentional sexual contact.
Accordingly, the court affirmed the court of appeals.