Title: S.F. an Infant (Jane Doe) v. West American Ins. Co

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
S. F. (JANE DOE), AN INFANT, ETC., ET AL. 
 
OPINION BY JUSTICE LEROY R. HASSELL, SR. 
v.   Record No. 950120         November 3, 1995 
 
WEST AMERICAN INSURANCE COMPANY 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK 
 
John E. Clarkson, Judge 
 
 
In this appeal of a declaratory judgment, we consider 
whether a provision in a liability insurance contract is 
ambiguous, and we must determine the amount of insurance 
available under the terms of the insurance contract to 
satisfy any judgments that may be entered against the 
insureds. 
 
The West American Insurance Company filed its amended 
motion for declaratory judgment against numerous infants and 
their parents (collectively referred to as "claimants"), 
James E. Owens, William F. Weeks, Thomas A. Conner, Margaret 
Cody, Jean J. Ford, David L. Huffman, and Michael J. Coyle, 
trading as Harbor View Associates (collectively referred to 
as the "insureds"), and Century 21 Landmark Realty.  West 
American had issued a policy of liability insurance to the 
insureds who are the owners of Harbor View Apartments, 
located in Norfolk. 
 
The claimants had filed seven separate lawsuits against 
the insureds.  The claimants alleged that the infant 
claimants were sexually assaulted and/or molested on 
multiple occasions by the insureds' resident manager, 
Charles Raymond Vette.  The claimants alleged that Century 
21 Landmark Realty and the insureds were negligent in the 
hiring, selection, retention, and supervision of Vette and 
Century 21 Landmark Realty, and that these parties "knew or 
should have known that Charles R. Vette had a history of 
criminal behavior, was a known child molester, had been 
convicted of child molestation and was on parole at the time 
of the hiring, and knew or should have known Charles R. 
Vette was unfit for the employment situation."   
 
West American sought and obtained a declaration from 
the trial court that the claimants' claims which arose "from 
the alleged 'negligent hiring' of Vette[,] constitute[d] no 
more than a single 'occurrence' as defined by the Policy and 
applicable law" and, thus, West American's total potential 
exposure to all the claimants is limited to $1,000,000.  We 
awarded the claimants an appeal. 
 
West American's policy of insurance contains the 
following provisions pertinent to this appeal: 
 
SECTION II--COMPREHENSIVE BUSINESS LIABILITY 
 
 
The Company will pay on behalf of the insured all 
sums which the insured shall become legally 
obligated to pay as damages because of bodily 
injury . . . or personal injury caused by an 
occurrence to which this insurance applies. 
 
 
The total liability of the Company for all 
damages, including . . . damages for care and loss 
of services, as a result of any one occurrence 
shall not exceed the limit of liability stated in 
the Declarations as applicable to each occurrence. 
 
 
. . . . 
 
 
The above limits shall apply regardless of the 
following: 
 
 
1. 
the number of persons or organizations 
insured under this policy; 
 
 
2. 
the number of persons or organizations 
who have sustained injury or damage; 
 
 
3.  the number of claims made or causes of 
action or suits brought because of 
injury or damage. 
 
 
For the purpose of determining the limit of the 
Company's liability, all bodily injury and 
property damage arising out of a continuous or 
repeated exposure to substantially the same 
general conditions shall be considered as arising 
out of one occurrence.   
 
Section II of the policy, which contains definitions, states 
in pertinent part: 
 
[O]ccurrence means 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 and with respect to personal 
injury, the commission of an offense, or a series 
of similar or related offenses. 
 
 
The claimants contend that the policy's definition of 
occurrence is ambiguous and, thus, this definition should be 
construed so that the policy affords coverage to the 
insureds.  West American argues that its definition of 
occurrence is unambiguous. 
 
Recently, we stated the following principles which are 
applicable here:   
 
An ambiguity, if one exists, must be found on the 
face of the policy.  Nationwide Mutual Ins. Co. v. 
Wenger, 222 Va. 263, 268, 278 S.E.2d 874, 877 
(1981).  And, language is ambiguous when it may be 
understood in more than one way or when it refers 
to two or more things at the same time.  Lincoln 
National Life Ins. Co. v. Commonwealth Container 
Corp., 229 Va. 132, 136-37, 327 S.E.2d 98, 101 
(1985).  Finally, doubtful, ambiguous language in 
an insurance policy will be given an 
interpretation which grants coverage, rather than 
one which withholds it.  St. Paul Ins. v. Nusbaum 
& Co., 227 Va. 407, 411, 316 S.E.2d 734, 736 
(1984).  American Reliance Ins. Co. v. Mitchell, 
238 Va. 543, 547, 385 S.E.2d 583, 585 (1989).  
 
Granite State Insurance Co. v. Bottoms, 243 Va. 228, 233-34, 
415 S.E.2d 131, 134 (1992).  Applying these principles, we 
are of opinion that the definition of occurrence in West 
American's insurance contract is indeed ambiguous because it 
is susceptible to numerous interpretations.  For example, 
within the factual content of the claimants' motions for 
judgment against West American's insureds, an occurrence 
could be deemed as any one of the following:  the insureds' 
negligent hiring of Vette, or the insureds' negligent 
supervision of Vette, or the insureds' negligent retention 
of Vette.  And, it is incumbent upon the insurer to use 
language sufficiently clear to avoid any such ambiguity if 
the insurer desires to limit its coverage.  See St. Paul 
Insurance, 227 Va. at 412, 316 S.E.2d at 736.   
 
Because the definition of occurrence is ambiguous, we 
must construe the policy in favor of the insureds and, thus, 
we hold that the trial court erred by declaring that the 
insurer's total potential exposure to the claimants is 
limited to $1,000,000.  Now, we must now determine the 
maximum amount that the policy of insurance obligates the 
insurer to pay to the claimants on behalf of its insureds in 
the event a judgment is entered against them.   
 
West American's declarations page provides a $1,000,000 
limitation of liability for each occurrence.  And, as quoted 
above, the insurance contract contains the following 
pertinent provision:  "For the purpose of determining the 
limit of the Company's liability, all bodily injury and 
property damage arising out of a continuous or repeated 
exposure to substantially the same general conditions shall 
be considered as arising out of one occurrence."  Each 
infant claimant was allegedly subjected to Vette's repeated 
acts of sexual molestation, and the injuries resulting from 
those acts arose out of a "continuous or repeated exposure 
to substantially the same general conditions."  Thus, even 
though each infant claimant was subjected to several acts of 
sexual molestation, under the terms of the insurance 
contract, these acts constitute only one occurrence per 
infant claimant.  Therefore, we hold that the insurance 
contract requires West American to pay on behalf of its 
insureds all sums which the insureds shall become legally 
obligated to pay to the claimants for an amount not to 
exceed $1,000,000 for each infant claimant.  West American's 
total potential exposure to all the claimants cannot exceed 
a maximum total of $7,000,000. 
 
Accordingly, we will reverse the judgment of the trial 
court and enter a final judgment here declaring that the 
insurer must pay on behalf of the insureds all sums which 
they shall become legally obligated to pay in an amount not 
to exceed $1,000,000 for each infant claimant.   
 
Reversed and final judgment.