Opinion ID: 2348653
Heading Depth: 1
Heading Rank: 5

Heading: The Term Arising Out Of

Text: On appeal, Porto and the BSA focus their arguments on the motion justice's interpretation of the term arising out of as it is used in the homeowners' policy. Arising out of is not defined in the policy. They contend that this term is ambiguous, and, because it is a term limiting the scope of insurance coverage, they suggest it must be construed by the court in favor of coverage. Campbell, 682 A.2d at 935. Porto and BSA argue that the motion justice erroneously concluded that the complaint alleged that Jimmy's injuries all arose from Abbott's acts of sexual molestation. Specifically, they argue that negligent supervision and failure toeducate are distinct claims within the family's complaint  both of which are alleged as proximate causes of Jimmy's injuries  wholly apart from the charges of sexual assault asserted against Abbott. They contend that these separate claims against Porto for negligence cannot be construed as arising from Abbott's intentional acts of sexual molestation. In addition, Porto and BSA suggest, the family's complaint contains separate allegations that Abbott subjected Jimmy to viewing pornography and to observing live sexual acts  occurrences that, according to defendants, fall outside the purview of the policy's sexual-molestation exclusion because they do not involve any physical contact between Jimmy and his abuser. Porto and BSA argue on appeal that the negligence claims against Porto concerning these acts are not subject to the policy's definitional exclusion because they cannot be construed as arising from physical sexual molestation. Porto and BSA insist that the ambiguous term arising out of should be narrowly construed in interpreting an insurance policy exclusion, referencing our previous holding in Hingham Mutual Fire Insurance Co. v. Heroux, 549 A.2d 265, 267 (R.I.1988) (examining similar policy exclusions in cases from other jurisdictions containing the language arising out of and concluding that the term should be construed to mean injuries having a causal connection [with] the excluded item or thing). In support of their argument, Porto and BSA rely primarily on St. Paul Fire & Marine Insurance Co. v. Schrum, 149 F.3d 878, 881 (8th Cir. 1998) (holding that molestation by a third party is merely incidental to a separate negligent supervision claim against the insured, and that the negligent-supervision claim gave rise to `separate and non-excluded causes of [the children's] injuries, apart from the [accompanying sexual act]'). They also cite cases in support of their contention that negligent-supervision claims should not be excluded from coverage under a homeowner's insurance policy when theyare alleged as a separate proximate cause of the victim's injuries, even when another person's intentional sexual misconduct also allegedly caused those injuries. See Horace Mann Insurance Co. v. Barbara B., 846 P.2d 792, 798 (Cal.1993) ( en banc ) (holding that potential liability for the insured's nonsexual negligent conduct was severable from potential liability for the insured's alleged sexual acts, giving rise to a duty to defend); Doe v. Shaffer, 738 N.E.2d 1243, 1248-49 (2000) (holding that providing liability insurance coverage to a diocese and bishop for their negligence relating to alleged sexual abuse committed by others would not violate public policy). ACIC counters that the term arising out of is not ambiguous. It suggests that the phrase is generally understood as meaning originating out of, flowing from or based on. In support of this interpretation, ACIC references case law construing the term aris[ing] out of broadly to bar coverage in similar situations, citing at oral argument a recently published order from this Court, Howard v. Guidant Mutual Insurance Group, 785 A.2d 561, 562-63 (R.I.2001) (mem.), as well as numerous cases from other jurisdictions. [4] Further, ACIC argues that the concept of causation in insurance law is different from the tort concept of proximate cause, suggesting that the focus of this Court's analysis in determining the scope of coverage should be on the injuries suffered rather than on the theories of recovery plead in the family's complaint. ACIC contends that the issue [in determining the scope of coverage and an insurer's duty to defend] is not the negligence of Porto and what form it took, the issue is what are the plaintiff's damages and from what do they arise. ACIC asserts that all the family's damages arose out of Abbott's acts of actual, alleged, or threatened sexual molestation; as a result, it maintains, they are excluded from coverage under Porto's insurance policy. The phrase arising out of within policy language is generally considered to mean flowing from or having its origin in, thereby  indicating that there only need be `a' causal connection, rather than a proximate causal connection. 7 Couch on Insurance 3d § 101:54 at XXX-XXX-XX (1997). [5] (Emphasis added.) As previously noted, this Court has considered the term arising out of in an insurance policy's exclusory provisions only twice previously, once in the context of an uninsured-premises exclusion, see Hingham Mutual Insurance Co., 549 A.2d at 266, and again recently in the context of a sexual-misconduct exclusion, see Howard, 785 A.2d at 562-63. In both these cases, this Court declined to read the term arising out of as ambiguous. Howard, 785 A.2d at 563; Hingham Mutual Fire Insurance Co., 549 A.2d at 266-67. In the absence of an ambiguity, we afford the term its plain, ordinary, and literal meaning, enforcing what we deem to be the objective manifestation of the parties' expectations. See Amica Mutual Insurance Co., 583 A.2d at 551-52. In Hingham, we examined the reasoning of other courts and concluded that the term arising out of  in the context of an uninsured-premises exclusion  should be construed narrowly as intending to limit the scope of coverage to incidents with a causal connection to the [uninsured] premises, not to incidents that merely occur on the [uninsured] premises. Hingham Mutual Fire Insurance Co., 549 A.2d at 267 (citing Hanson v. General Accident Fire & Life Insurance Corp., 450 So.2d 1260, 1261-62 (Fla. Dist.Ct.App.1984)). Accord 7 Couch on Insurance 3d at § 101:54 (arising out of means only that a causal connection exists between the alleged injuries and the excluded subject matter). Applying our interpretation of the term arising out of in Hingham and Howard to the definition of bodily injury in this policy, we conclude that it excludes coverage for bodily injury claims having a causal connection with the actual, alleged or threatened sexual molestation of a person. When applying this definition to the facts of this case, it is useful, however, to underscore the distinction between the meaning of proximate cause in insurance-coverage cases as opposed to its meaning in tort cases. This distinction has been recognized both by courts and by commentators who have considered the issue. [6] The traditional tort concept of proximate cause focuses on legal culpability for the accident, and whether the conduct of the alleged tortfeasor in any way produced plaintiff's injuries. Proximate cause [in tort cases] is established by showing that but for the negligence of the tortfeasor, injury to the plaintiff would not have occurred. English v. Green, 787 A.2d 1146, 1151 (R.I.2001) (quoting Skaling v. Aetna Insurance Co., 742 A.2d 282, 288 (R.I.1999)). This concept of proximate cause, however, is different from the causation question in insurance-coverage disputes: In insurance cases, the concern is ordinarily not with the question of `culpability' or why the injury occurred, but only with the nature of the injury and how it physically happened, which must then be compared with the language of the insurance policy to determine whether this type of injury from this type of physical cause was intended to be covered by the policy.    In essence, when a claim for damages is grounded on an insurance contract, the liability of the insurer depends upon whether the damages sustained were a result of a risk or hazard against which the insured was covered by the policy. 7 Couch on Insurance 3d § 101:41 at XXX-XXX-XX. Thus, it is not the proximate cause of the injuries suffered that determines the insured's right to coverage under the policy  rather, it is the nature of the bodily injuries suffered by plaintiff and how the alleged tortfeasor(s) supposedly inflicted these injuries. If the type of injuries suffered are excluded from coverage under the language of the policy, no right to coverage or duty to defend the insured exists  even if, as here, the insured's conduct is an alleged proximate cause of the injuries in question. As the New York Court of Appeals has stated: While the insured's negligence may have been a proximate cause of plaintiff's injuries, that only resolves its liability; it does not resolve the insured's right to coverage based on the language of the contract between him and the insurer. Merely because the insured might be found liable under some theory of negligence does not overcome the policy's exclusion for injury resulting from [the excluded conduct]. Mount Vernon Fire Insurance Co. v. Creative Housing Ltd., 668 N.E.2d 404, 406 (N.Y.1996) (holding that an insurance company had no duty to defend a separate negligence claim against the insured when the injuries alleged resulted from a third party's assault on the plaintiff). In sum, for insurance-coverage purposes, if the alleged sexual molestation is a cause of the claimed bodily injuries, then the existence of other alleged negligence claims and proximate causes is of no moment  the bodily injuries alleged are causally connected to or arise out of the sexual molestation, and are thereby excluded from coverage. Here, Porto and BSA rely on the Schrum and Horace Mann Insurance Co. cases for the proposition that the family's negligence claims against Porto should be viewed as separate, severable claims, irrespective of the allegations concerning Abbott's intentional misconduct. See Schrum, 149 F.3d at 881; Horace Mann Insurance Co., 17 Cal.Rptr.2d 210, 846 P.2d at 798. We agree that the family's various theories of recovery are separate causes of action and could provide discrete grounds for finding liability against the various defendants. As the above analysis shows, however, the relevant inquiry for determining potential coverage under an insurance policy of this type is not the theories of relief in the complaint, but whether the injures alleged by plaintiff have a causal connection with whatever type of conduct or situation that the policy has excluded from coverage. In both Schrum and Horace Mann Insurance Co. the underlying complaint alleged not only multiple theories of recovery, but also separate, discrete injuries allegedly attributable to the different causes of action. Schrum, 149 F.3d at 880-81; Horace Mann Insurance Co., 846 P.2d at 798; see also Allstate Insurance Co. v. Bates, 185 F.Supp.2d 607, 612-13 (E.D.N.C.2000) (discussing the separate injuries relating to the different theories of recovery alleged in Schrum, and rejecting its holding when no independent injuries are alleged); Waller v. Truck Insurance Exchange, Inc., 11 Cal.4th 1, 44 Cal.Rptr.2d 370, 900 P.2d 619, 634 (Cal.1995) (discussing the separate facts alleged giving rise to independent injuries in the Horace Mann Insurance Co. complaint, and distinguishing the case as inapplicable to additional tort theories of recovery when noncovered acts    comprised the entire complaint). Here, the family's complaint alleged no separate, independently caused bodily injuries to Jimmy resulting solely from Porto's negligence. Rather, the complaint alleged injuries resulting from Abbott's alleged sexual assault on Jimmy, which included, among other things, exposure to pornography and live sexual acts. The complaint then alleged that Porto's negligence was a contributing or additional proximate cause of these injuries. But while the averred cause of the family's injuries is different, the alleged bodily injuries to Jimmy and his parents are the same. Under the language of the insurance policy, ACIC is not bound to indemnify or defend claims for bodily injuries arising out of the actual, alleged or threatened sexual molestation of a person. As the Minnesota Supreme Court has observed, considering a similar policy exclusion, [t]he plain language of the polic[y] provides no coverage for injury in the form of sexual molestation, regardless of whether the injury was caused by an insured or the injury could have been prevented by an insured. Metropolitan Property and Casualty Insurance Co. v. Miller, 589 N.W.2d 297, 300 (Minn.1999). Interpreting arising out of as we did in Hingham to mean having a causal connection to the excluded matter, we conclude that all the injuries alleged in the family's complaint have a causal connection with, and thus arise out of, Abbott's alleged acts of fondling, engaging in oral sexual activity, and exposing [Jimmy] to pornography and live sexual acts.