The policy stated, "This insurance applies to 'bodily injury' and 'property damage' only if: (1) The 'bodily injury' or 'property damage' is caused by an 'occurrence' that takes place in the 'coverage territory'"

"Occurrence" was defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."

Accident was not further defined in the policy, but the Ohio Supreme Court has previously defined the term as "an unexpected happening without intention or design."

TVPRA

The Trafficking Victims Protection Reauthorization Act (TVPRA) is a federal law addressing human trafficking that provides resources and legal guidance for victims. All of the underlying lawsuits against Red Roof include a civil claim; there is no alleged criminal liability in the suits. A provision of the TVPRA states:

"An individual who is a victim of a violation of this chapter may bring a civil action against the perpetrator (or whoever knowingly benefits, or attempts or conspires to benefit, financially or by receiving anything of value from participation in a venture which that person knew or should have known has engaged in an act in violation of this chapter) in an appropriate district court of the United States and may recover damages and reasonable attorneys fees."

The plaintiffs allege that Red Roof is liable because it knowingly benefited from participation in a venture that it knew or should have known resulted in violations of the TVPRA.

Liberty Mutual argued that the TVPRA requires a level of intentional conduct, which contradicts the definition of an accidental "occurrence." As a result, Liberty claimed it had no duty to defend.

District Court

Red Roof argued that the "participation in a venture" aspect of the TVPRA does not refer to an intent to act, but to an intent to cause harm.

The term is not defined in the policy, but the court in a previous case, held that "participation", in connection with the TVPRA, means "taking part." The court held that participation could mean direct or indirect association, meaning that it did not require an "overt act in the furtherance of the sex trafficking."

The District Court also contrasted the text of the civil provisions of the TVPRA and the criminal provisions. The criminal provisions defined "participation in a venture" as "knowingly assisting, supporting, or facilitating" a violation.

This is missing from the civil provisions, showing that Congress did not intend to have that requirement for civil violations. The court stated, "It is possible for a defendant to be civilly liable without having violated any of the criminal portions of the TVPRA, because the statute permits recovery under a civil standard even in the absence of proof of intentional conduct."

Liberty Mutual also argued that the doctrine of inferred intent should apply, and the court should be able to infer that Red Roof had an intent to cause harm. However, under the doctrine, intent can only be inferred if the intentional act necessarily results in harm.

The hotel's alleged intentional act is participation in the venture and not the act of sex trafficking. The court clarified that renting a hotel room to a sex trafficker does not inherently result in harm unless the trafficker commits a further criminal violation, so the doctrine did not apply.

The court ruled that the underlying lawsuits do constitute an "occurrence", so Liberty Mutual has a duty to defend Red Roof.

Editor's Note

The court found that a civil TVPRA claim does not require that the underlying plaintiffs allege or prove that Red Roof intended to cause harm. The allegations made by the underlying lawsuits fall within the scope of coverage of the policy, so Red Roof is entitled to a defense.

Liberty's assertion of the doctrine of inferred intent also failed because the doctrine requires that the intentional act necessarily result in harm. Red Roof renting rooms to sex traffickers does not necessarily result in harm unless there is knowledge that the trafficker committed a violation of the TVPRA.

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