Opinion ID: 1722203
Heading Depth: 1
Heading Rank: 1

Heading: Interpretation of the Exclusion

Text: For its first argument on appeal, Western World contends that the trial court erred when it construed the language of the sexual-action exclusion provision to exclude coverage for sexual acts committed by Youth Services' employees, but not to exclude coverage for sexual acts committed by its residents. Our law regarding the construction of an insurance contract is well settled. In Southern Farm Bureau Cas. Ins. Co. v. Williams, 260 Ark. 659, 543 S.W.2d 467 (1976), we said that: The terms of an insurance contract are not to be rewritten under the rule of strict construction against the company issuing it so as to bind the insurer to a risk which is plainly excluded and for which it was not paid. Thus, if the provision is unambiguous, and only one reasonable interpretation is possible, we will give effect to the plain language of the policy without resorting to the rules of construction. See Unigard Sec. Ins. Co. v. Murphy Oil U.S.A., Inc., 331 Ark. 211, 962 S.W.2d 735 (1998); Smith v. Shelter Mut. Ins. Co., 327 Ark. 208, 937 S.W.2d 180 (1997). If, however, the policy language is ambiguous, and thus susceptible to more than one reasonable interpretation, we will construe the policy liberally in favor of the insured and strictly against the insurer. Unigard, supra ; State Farm Fire & Cas. Co. v. Midgett, 319 Ark. 435, 892 S.W.2d 469 (1995); Keller v. Safeco Ins. Co., 317 Ark. 308, 877 S.W.2d 90 (1994). Finally, whether the language of the policy is ambiguous is a question of law to be resolved by the court. Unigard, supra . We hold that the language of the sexual-action exclusion is unambiguous, and thus we must give effect to its plain meaning without resorting to the rules of construction. The definition of sexual action contained in the exclusion is written very broadly to include any behavior with sexual connotation or purpose. The exclusion then provides several examples of why this conduct may occur, but specifically says not limited to and refers to other reason[s], thus indicating that the improper sexual acts may occur for reasons other than those listed in the definition. Moreover, the last sentence broadens the exclusion by clarifying that Western World will also not be liable if Youth Services is sued in a direct action for negligence, or under a theory of imputed negligence such as respondeat superior. For these reasons, we hold that the sexual-action exclusion unambiguously excludes from coverage liability that results from sexual acts committed by Youth Services' employees or residents. Accordingly, we reverse the trial court's order of declaratory judgment. In reaching this conclusion, we are not unmindful of Youth Services' argument that the exclusion is in conflict with two provisions in the insurance policy. This argument, however, was not raised below nor was it ruled upon by the trial court. Hence, the argument is procedurally barred as it is raised for the first time on appeal. Wilson v. Rebsamen Ins., Inc., 330 Ark. 687, 957 S.W.2d 678 (1997); Slaton v. Slaton, 330 Ark. 287, 956 S.W.2d 150 (1997).