Opinion ID: 1377809
Heading Depth: 3
Heading Rank: 1

Heading: Intentional Acts Exclusion

Text: While our analysis could end here based on the lack of bodily injury or occurrence necessary to trigger coverage, we proceed to address the exclusions relied upon by the circuit court in its grant of summary judgment. In ruling that the intentional acts exclusion was applicable, the trial court applied the Leeber decision to the instant case and concluded that because the complaint is fundamentally one of sexual harassment, coverage was expressly excluded. At issue in Leeber, was whether the intentional injury exclusion in a homeowner's liability policy [14] precluded the availability of coverage for alleged sexual misconduct. 180 W.Va. at 376, 376 S.E.2d at 582. Addressing the issue as a matter of first impression, this Court examined the majority and minority views and concluded, consistent with the majority position, that [t]here is neither a duty to defend an insured in an action for, nor a duty to pay for, damages allegedly caused by the sexual misconduct of an insured, when the liability insurance policy contains a so-called `intentional injury' exclusion. In such a case the intent of an insured to cause some injury will be inferred as a matter of law. Id. at 376, 376 S.E.2d at 582, syllabus. We are unpersuaded by Animal Care's contention that Leeber is not controlling because it was not a sexual harassment case. Clearly, our holding that intent will be implied as a matter of law in instances of sexual misconduct extends logically to allegations of sexual harassment. [15] The United States District Court for the Southern District of West Virginia recently considered and rejected the argument that Leeber would only apply where an actual sexual assault has occurred. In American States Insurance Co. v. Fishes Hot Dog Huntington, Inc., No. 3:98-0165 (S.D.W.Va. Jan. 22, 1999), the district court stated that  Leeber rejects such line-drawing. Id. at 3. As support for this conclusion, the court reasoned that  Leeber 's holding explicitly applies to allegations of `sexual misconduct,' not just sexual assault. Id. In addition, the district court relied upon the fact that this Court was careful in Leeber not to limit its holding to those cases involving `violence,' or penetration or a lengthy period of time during which the sexual contacts have occurred. Id. at 3-4 (quoting Leeber, 180 W.Va. at 379-80, 376 S.E.2d at 585-86). Both the district court in Fishes Hot Dog and the lower court correctly applied Leeber to sexual harassment cases to conclude that coverage is precluded for such claims where the liability policy contains an intentional acts exclusion. As a final means of attempting to avoid the preclusive effects of the intentional acts exclusion, Animal Care contends that the complaint filed by Ms. Smith contains additional allegations that are couched in negligence. Specifically, Animal Care maintains that averments stating that it knew or should have known of Dr. Yurko's conduct, [16] but failed to implement proper and appropriate corrective action in response thereto imply a cause of action in negligence. [17] An analogous argument was rejected by this Court in Leeber where the insured focused on the inclusion of allegations concerning the negligent seduction of the assaulted student involved in an attempt to secure coverage. Borrowing from a Maryland decision, we stated that the allegations of `negligence' in the complaint are `a transparent attempt to trigger insurance coverage by characterizing allegations of [intentional] tortious conduct under the guise of negligent activity.' 180 W.Va. at 381, 376 S.E.2d at 587 (quoting Harpy v. Nationwide Mut. Fire Ins. Co., 76 Md.App. 474, 545 A.2d 718, 725 (1988)). In Fishes Hot Dog, the district court cited this same language from Leeber in rejecting the insured's attempt to avoid the intentional acts exclusion based on inclusion of the term negligent in the complaint. Slip op. at 4. Other courts have similarly determined that inclusion of negligence-type allegations in complaints that are essentially sexual harassment claims will not defeat the application of an intentional acts exclusion. See Bilstein Corp. v. Federal Ins. Co., 168 F.3d 497, 1999 WL 96438, at  (9th Cir. 1999) (finding no duty to defend sexual harassment case that included claims of negligence and defamation under intentional act exclusion since non-harassment claims were `inseparable' from intentional harassment conduct); Medallion Indus., Inc. v. Atlantic Mut. Ins. Co., 152 F.3d 927, 1998 WL 403338, at  (9th Cir.1998) (upholding district court's determination of no coverage in sexual harassment case including count of negligent supervision, reasoning that mere labeling does not create negligence especially where Oregon law requires proof of employer's knowledge of employee's wrongful act); Green Chimneys Sch. for Little Folk v. National Union Fire Ins. Co., 244 A.D.2d 387, 664 N.Y.S.2d 320, 321 (N.Y.App.Div.1997) (affirming denial of coverage for sexual harassment claim because claim did not constitute occurrence under policy definition and ruling that inclusion in the underlying complaint of causes of action sounding in negligent hiring and supervision does not alter the fact that `the operative act[s] giving rise to any recovery [are] the [intentional sexual] assault[s]'); Board of Educ. v. Continental Ins. Co., 198 A.D.2d 816, 604 N.Y.S.2d 399, 400 (N.Y.App.Div.1993) (finding no coverage for teacher's claim against school district for failing to prohibit sexual harassment by principal, creating offensive work environment, and wrongful termination and observing that inclusion of knew or should have known language did not change the gravamen of the complaint from one alleging intentional acts ... to one involving negligent conduct). Accordingly, we determine that the inclusion of negligence-type allegations in a complaint that is at its essence a sexual harassment claim will not prevent the operation of an intentional acts exclusion contained in an insurance liability policy which is defined as excluding bodily injury expected or intended from the standpoint of the insured.