Opinion ID: 750099
Heading Depth: 2
Heading Rank: 1

Heading: Western World Policies

Text: 34 Western World issued three commercial general liability policies to FUMC. The policy numbers and coverage periods are as follows: (1) GLA 328492, 11/11/91 to 11/11/92; (2) GLA 358038, 8/6/92 to 8/6/93; and (3) NGL 05750, 8/6/93 to 8/6/94. FUMC is the only relevant named insured on each policy. 5 The four associate ministers are insureds under each policy as either executive officers or employees of FUMC. 6 35 Each policy contains the following exclusion: SEXUAL ACTION EXCLUSION 36 It is agreed that no coverage exists for claims or suits brought against any insured for damages arising from sexual action. Sexual action includes, but is not limited to, any behavior with sexual connotation or purpose--whether performed for sexual gratification, discrimination, intimidation, coercion or other reason. 37 It is further agreed that this exclusion applies even if an alleged cause of the damages was the insured's negligent hiring, placement, training, supervision, act, error or omission. 38 Cooke, Levin, FUMC, and the four associate ministers argue that this exclusion does not preclude coverage for Cooke's and Levin's claims against FUMC and the four associate ministers. They are incorrect. 39 The plain meaning of sexual action as described in the exclusion includes all of Bailey's misconduct. It is impossible to characterize Bailey's behavior as other than having a sexual connotation or purpose and being performed for sexual gratification. The exclusion establishes very broad parameters for acts that fall within its compass by using the words, [s]exual action includes, but is not limited to, and Bailey's actions toward Cooke and Levin unambiguously fall within those parameters. 40 This court has held that the words arising out of, 7 when used within an insurance policy, are broad, general, and comprehensive terms effecting broad coverage. Red Ball Motor Freight, Inc. v. Employers Mut. Liab. Ins. Co., 189 F.2d 374, 378 (5th Cir.1951). The words are understood to mean 'originating from,' 'having its origin in,' 'growing out of' or 'flowing from.'  Id.; see also Continental Cas. Co. v. City of Richmond, 763 F.2d 1076, 1080-81 (9th Cir.1985) (applying Red Ball's interpretation of the term arising out of, and concluding that a claim need only bear an incidental relationship to the excluded injury for the policy's exclusion to apply). Without Bailey's sexual misconduct, Cooke and Levin would have no claims against FUMC and the four associate ministers. Every alleged harm caused to Cooke and Levin by FUMC and the four associate ministers stems from and is integrally related to Bailey's acts. Therefore, we agree with the district court that all of the factual allegations that underlie Cooke's and Levin's legal claims against FUMC and the four associate ministers arise out of Bailey's sexual actions, thereby precluding coverage under Western World's policies. 41 In Old Republic Insurance Co. v. Comprehensive Health Care Associates, Inc., 2 F.3d 105, 108-09 (5th Cir.1993), this court held that claims for negligence per se, ratification, negligent hiring, and negligent supervision against an employer for the sexual misconduct of its employee were barred from coverage by the following exclusion: 42 In consideration of the premium charge, it is agreed that such coverage as is provided by this policy shall not apply to any claim, demand and causes of action arising out of, or resulting from ... sexual abuse ... whether caused by, or at the instigation of, or at the direction of, or omission by, the Insured, his employees, patrons or any causes whatsoever. 43 Id. at 108. This sexual abuse exclusion is sufficiently similar to the sexual action exclusion in Western World's policies to draw a close parallel between Old Republic and the case before us. Although Cooke and Levin allege a litany of causes of action against FUMC and the four associate ministers that were not alleged in Old Republic, the fundamental reasoning of Old Republic that a broadly worded sexual abuse exclusion is not to be narrowly construed remains applicable. Western World has no duty to defend or to indemnify FUMC or the four associate ministers against any of Cooke's or Levin's claims. 44 In addition, we note that many of Cooke's and Levin's claims are expressly excluded from coverage because the alleged causes of damages included FUMC's and the four associate ministers' negligent hiring, placement, training, supervision, act, error or omission.