Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-00647/USCOURTS-azd-2_13-cv-00647-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:2201 Declaratory Judgment (Insurance)

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Travelers Indemnity Company of America, 

a foreign corporation; and Travelers 

Indemnity Company, 

Plaintiffs, 

v. 

Thomas W. Isom, a single individual; and 

Mary J. Isom, a single individual, 

Defendants.

No. CV-13-00647-PHX-GMS

ORDER 

 Pending before the Court are Plaintiffs’ Motion for Summary Judgment (Doc. 23) 

and Motion for Summary Disposition on Motion for Summary Judgment as to Defendant 

Mary Isom (Doc. 27). For the following reasons, Plaintiffs’ Motion for Summary 

Judgment is granted. 

BACKGROUND 

This case arises from a lawsuit and a liability insurance policy. The lawsuit was 

brought in Pinal County Superior Court by A.H, Defendant Mary Isom’s minor 

granddaughter, against Defendants and Ryan Isom. Defendants were formerly husband 

and wife and Ryan Isom is Thomas Isom’s son and was Mary Isom’s stepson. (Doc. 1 ¶ 

21.) A.H claims that on “multiple occasions dating back many years and continuing 

through 2010,” Ryan Isom sexually assaulted her while she was at the Isom residence 

and/or being supervised by Mary and/or Thomas Isom. (Id. ¶¶ 22–23.) In the lawsuit, 

A.H alleged claims of assault, battery, and intentional infliction of emotional distress 

against Ryan Isom. (Id. ¶¶ 24–25.) She also alleged a claim of negligence against Mary 

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and Thomas Isom. (Id.) 

 Plaintiff Travelers Indemnity Company of America (“Travelers”) issued a 

Farm/Ranch Policy (the “Farm Policy”) to Mary and Thomas Isom for the policy period 

November 15, 2012 to November, 15, 2013. (Id. ¶ 8.) Travelers had previously issued 

Farm/Ranch policies to Mary and Thomas Isom beginning November 15, 2007. (Id. ¶ 9.) 

Travelers also issued Excess Liability Insurance Policies to Mary and Thomas Isom for 

these time periods (the “Excess Policy”). (Id. ¶ 11.) The Named Insureds on all of these 

Travelers’ policies were Mary and Thomas Isom, a partnership; William Isom; Clifton 

Isom; Isom Family Trust; and the Revocable Trust of Thomas W. Isom. (Id. ¶ 12.) 

 The Farm Policy provides liability coverage for claims made against the Insureds 

for “bodily injury” or “property damage” caused by an occurrence during the coverage 

period, subject to various exclusions. (Id. ¶ 14.) Some of these exclusions include that 

coverage does not extend to “Expected or Intended Injury,” defined in the policy as 

“‘[b]odily injury’ or ‘property damage’ expected or intended from the standpoint of the 

‘insured’. . . .” (Id. ¶ 16.) The coverage also excludes “Sexual Molestation, Corporal 

Punishment Or Physical Or Mental Abuse,” defined as “‘[b]odily injury’ or ‘property 

damage’ arising out of sexual molestation, corporal punishment or physical or mental 

abuse.” (Id. ¶ 18.) 

 On December 6, 2012, Mary and Thomas Isom gave Travelers notice of a claim 

arising from the lawsuit brought against them by A.H (the “Claim”). (Id. ¶ 20.) Travelers 

states that it has been providing Mary and Thomas Isom a defense in the lawsuit pursuant 

to the Claim and subject to a full reservation of its rights under the Farm Policy and at 

law. (Id. ¶ 32.) 

 Plaintiffs now bring the present action in this Court, seeking a declaratory 

judgment that there is no coverage for Defendants’ Claim under either the Farm Policy or 

Excess Policy and that Plaintiffs are entitled to attorneys’ fees and costs. (Doc. 1.) 

Plaintiffs now move for summary judgment against both Defendants, alleging that the 

Farm Policy’s and Excess Policy’s terms bar coverage for the Claim. (Doc. 23.) 

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Defendant Thomas Isom timely responded to the Motion (Docs. 25, 26), but Defendant 

Mary Isom failed to do so. In response, Plaintiffs moved for Summary Disposition on 

their Motion for Summary Judgment as to Mary Isom. (Doc. 27.) Mary Isom then 

responded to both that Motion and the original Motion for Summary Judgment, stating 

that she joins in the Response filed earlier by Thomas Isom. (Docs. 28, 29.) The Court 

will address each of Plaintiffs’ Motions in turn. 

DISCUSSION 

I. Motion for Summary Judgment 

 A. Legal Standard 

Summary judgment is appropriate if the evidence, viewed in the light most 

favorable to the nonmoving party, demonstrates “that there is no genuine dispute as to 

any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 

P. 56(a). “[A] party seeking summary judgment always bears the initial responsibility of 

informing the district court of the basis for its motion, and identifying those portions of 

[the record] which it believes demonstrate the absence of a genuine issue of material 

fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 

 Substantive law determines which facts are material and “[o]nly disputes over 

facts that might affect the outcome of the suit under the governing law will properly 

preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 

248 (1986). “A fact issue is genuine ‘if the evidence is such that a reasonable jury could 

return a verdict for the nonmoving party.’”Villiarimo v. Aloha Island Air, Inc., 281 F.3d 

1054, 1061 (9th Cir. 2002) (quoting Anderson, 477 U.S. at 248). Thus, the nonmoving 

party must show that the genuine factual issues “‘can be resolved only by a finder of fact 

because they may reasonably be resolved in favor of either party.’” Cal. Architectural 

Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987) 

(quoting Anderson, 477 U.S. at 250). Because “[c]redibility determinations, the weighing 

of the evidence, and the drawing of legitimate inferences from the facts are jury 

functions, not those of a judge, . . . [t]he evidence of the nonmovant is to be believed, and 

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all justifiable inferences are to be drawn in his favor” at the summary judgment stage. Id.

at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 15859 (1970)). Furthermore, 

the party opposing summary judgment “may not rest upon the mere allegations or denials 

of [the party's] pleadings, but . . . must set forth specific facts showing that there is a 

genuine issue for trial.” Fed. R. Civ. P. 56(e); see Matsushita Elec. Indus. Co. v. Zenith 

Radio Corp., 475 U.S. 574, 586–87 (1986); Brinson v. Linda Rose Joint Venture, 53 F.3d 

1044, 1049 (9th Cir. 1995).

 B. Application 

 1. Exclusion for Claims Arising from Sexual Molestation 

 No party contests that Arizona law applies to this case. Interpretation of an 

insurance policy is a question of law. See, e.g., Blue Ridge Ins. Co. v. Stanewich, 142 

F.3d 1145, 1147 (9th Cir. 1998). Arizona law directs courts to construe an insurance 

contract “according to [its] plain and ordinary meaning.” Keggi v. Northbrook Property 

and Cas. Ins. Co., 199 Ariz. 43, 46, 13 P.3d 785 (Ct. App. 2000); see Aztar Corp. v. U.S. 

Fire Ins. Co., 223 Ariz. 463, 469, 224 P.3d 960, 966 (Ct. App. 2010). “If a clause may be 

susceptible to different constructions . . . [the Court] will first attempt to discern the 

meaning of the clause by examining the purpose of the exclusion in question, the public 

policy considerations involved and the transaction as a whole.” Keggi, 199 Ariz. at 46, 13 

P.3d 785 (internal quotations omitted). 

 As noted above, the Farm Policy excludes coverage from “‘[b]odily injury’ or 

‘property damage’ arising out of sexual molestation, corporal punishment or physical or 

mental abuse.” (Doc. 24, PSOF ¶ 11.) Here, A.H’s claims against Ryan Isom arise from 

alleged sexual molestation. Travelers argues that while Mary and Thomas Isom are not 

themselves being accused of sexual molestation or abuse by A.H., the negligence claim 

against them arises from that alleged abuse and is thus also excluded. 

 As a general matter, Arizona law is clear that negligence claims deriving from an 

excluded activity are themselves typically excluded. See, e.g., Am. Family Mut. Ins. Co. 

v. White, 204 Ariz. 500, 508, 65 P.3d 449, 457 (Ct. App. 2003) (denying coverage for 

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claim of negligent supervision against parents of child who engaged in excluded 

activity—violation of criminal law—because the negligent supervision claim “derives 

from the claim against Travis, which is excluded”); Behrens v. Aetna Life & Cas., 153 

Ariz. 301, 302, 736 P.2d 385, 386 (Ct. App. 1987) (a claim for negligent entrustment or 

supervision was inseparable from the excluded negligent operation of a boat); 

Lumbermens Mut. Cas. Co. v. Kosies, 124 Ariz. 136, 138, 602 P.2d 517, 519 (Ct. App. 

1979) (“It is evident that negligent entrustment as a distinct and specific cause of action is 

not exclusive of, but rather is derived from, the more general concept of ownership, 

operation and use of a motor vehicle.”). In other words, the “focus of an exclusion should 

be the injury, not the pleaded cause of action.” White, 204 Ariz. at 508, 65 P.3d at 457 

(citing Nw. G.F. Mut. Ins. Co. v. Norgard, 518 N.W.2d 179, 184 (N.D.1994)). When the 

allegations raised against the party seeking coverage do not exist separate and apart from 

the excluded action, there is no coverage. See Colony Ins. Co. v. Events Plus, Inc., 585 F. 

Supp. 2d 1148, 1155 (D. Ariz. 2008). 

 That is the case here. Defendants do not suggest that A.H.’s negligence claim 

against them arises from anything but the alleged sexual assaults by Ryan Isom. Because 

the Farm Policy excludes coverage for those occurrences, it also excludes coverage for 

negligence claims arising directly from those occurrences. Indeed, the policy language 

itself excludes not just claims alleging sexual molestation, but “any claim arising from” 

such allegations. The exclusion therefore bars coverage of Defendants’ Claim. 

 2. Doctrine of Reasonable Expectations 

 Defendants argue that application of the exclusion to this case would violate their 

reasonable expectations. The doctrine of reasonable expectations can bar enforcement of 

a term in a standardized insurance contract in a limited set of circumstances. Gordinier v. 

Aetna Cas. & Sur. Co., 154 Ariz. 266, 272, 742 P.2d 277, 283 (1987). First, the doctrine 

may apply “[w]here the contract terms, although not ambiguous to the court, cannot be 

understood by the reasonably intelligent consumer who might check on his or her rights.” 

Id. Here, Defendants do not allege that the relevant contract terms are ambiguous. 

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Second, the doctrine may apply “[w]here the insured did not receive full and adequate 

notice of the term in question, and the provision is either unusual or unexpected, or one 

that emasculates apparent coverage.” Id. at 372. Thomas Isom suggests that the exclusion 

is “buried nearly 100 pages into the Policy,” but does not dispute the accuracy of the 

copy of the Farm Policy provided by Plaintiffs, which lists the exclusion on page 7 of the 

Farm Liability Coverage Form. (Doc. 24-2 at 94.) Further, that coverage form, like the 

Farm Policy’s other coverage forms, begins by noting that “[v]arious provisions in this 

policy restrict coverage. Read the entire policy carefully to determine rights, duties and 

what is and is not covered.” (Id. at 88.) Defendants also do not suggest that the exclusion 

is either unusual or unexpected. 

 Finally, reasonable expectations may apply when some activity that is reasonably 

attributable to the insurer “would create an objective impression of coverage in the mind 

of a reasonable insured” or “has induced a particular insured reasonably to believe that he 

has coverage, although such coverage is expressly and unambiguously denied by the 

policy.” Id. at 373. Here, Thomas Isom alleges that Carol Hooper at Ag Management 

Services, who he asserts is Plaintiffs’ agent, told him that he had purchased 

“comprehensive liability” coverage, but Defendant does not explain how this created an 

expectation that the Farm Policy contained no exclusions. Accordingly, the doctrine of 

reasonable expectations does not bar coverage. 

II. Motion for Summary Disposition 

 As Defendant Mary Isom failed to timely file a response to Plaintiffs’ Motion, 

Plaintiffs ask for summary disposition regarding their Motion for Summary Judgment as 

to Mary Isom. (Doc. 27.) However, as Mary Isom has now joined Thomas Isom’s 

response to the Motion for Summary Judgment and the Court’s reasoning for granting 

that Motion applies to both Defendants, the Court denies Plaintiffs’ Motion for Summary 

Disposition as moot. 

/ / / 

/ / / 

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CONCLUSION 

 The plain language of the Farm Policy excludes coverage for Defendants’ Claim. 

Further, application of this plain language is not barred by Arizona law. Thus, Plaintiffs 

are entitled to summary judgment. 

 Therefore, 

IT IS ORDERED that Plaintiffs’ Motion for Summary Judgment (Doc. 23) is 

granted. 

IT IS FURTHER ORDERED that Plaintiffs’ Motion for Summary Disposition 

on Motion for Summary Judgment as to Defendant Mary Isom (Doc. 27) is denied as 

moot. 

IT IS FURTHER ORDERED directing the Clerk of Court to terminate this 

action and enter judgment accordingly. 

 Dated this 20th day of March, 2014. 

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