Court Opinion

ID: 2816277
Source: CourtListenerOpinion
Date Created: 2015-07-10 15:02:21.566562+00
Date Added: 2024-06-11T11:30:39.400693
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 14-2254

LIBERTY UNIVERSITY, INC.,

                Plaintiff – Appellee,

           v.

CITIZENS INSURANCE COMPANY OF AMERICA; HANOVER        AMERICAN
INSURANCE COMPANY; HANOVER INSURANCE COMPANY,

                Defendants – Appellants.

Appeal from the United States District Court for the Western
District of Virginia, at Lynchburg.     Norman K. Moon, Senior
District Judge. (6:13-cv-00033-NKM-RSB)

Argued:   May 13, 2015                     Decided:   July 10, 2015

Before NIEMEYER, DUNCAN, and THACKER, Circuit Judges.

Vacated and remanded by published opinion. Judge Thacker wrote
the opinion, in which Judge Niemeyer and Judge Duncan joined.

ARGUED: John Peter Malloy, ROBINSON & COLE LLP, Hartford,
Connecticut, for Appellants.    Harold Edward Johnson, WILLIAMS
MULLEN, Richmond, Virginia, for Appellee.   ON BRIEF: Thomas S.
Garrett, HARMAN CLAYTOR CORRIGAN & WELLMAN, Richmond, Virginia;
Wystan M. Ackerman, ROBINSON & COLE LLP, Hartford, Connecticut,
for Appellants.     Calvin W. Fowler, Jr., WILLIAMS MULLEN,
Richmond, Virginia, for Appellee.
THACKER, Circuit Judge:

            In     November   2012,       Janet     Jenkins       sued      Liberty

University,       Inc.   (“Appellee”),      alleging       that       the    school

participated -- both directly and vicariously -- in a scheme to

kidnap Jenkins’s daughter in order to disrupt the parent-child

relationship.       In her complaint (“Jenkins Complaint”), Jenkins

alleged that Appellee and its agents helped Lisa Miller, the

child’s biological mother and Jenkins’ former partner in a same-

sex civil union, to defy state court visitation orders and to

abscond with the child to Nicaragua.

            The    district   court   ruled       that     Citizens      Insurance

Company of America (“Appellant”), Appellee’s liability insurance

carrier, has a duty to defend Appellee.                   Under the insurance

policy at issue, Appellant must defend Appellee against suits

alleging certain harms that arise from an “occurrence” -- an

unexpected    accident,    which   does     not    fall    under      any   of   the

coverage exclusions.       The policy also contains a “Separation of

Insureds”    provision,    which   requires       the    court   to    evaluate    a

claim by each named insured individually. 1               Concluding that this

     1 In addition to Appellee, the Jenkins Complaint names
Victoria Hyden, who was a “student worker” at Liberty University
School of Law, as a defendant. J.A. 44. The Jenkins Complaint
alleges that Hyden acted as Appellee’s agent when she “aided and
abetted” the kidnapping.   Id. at 49 (internal quotation marks
omitted).    Although the Jenkins Complaint names many other
(Continued)
                                      2
Separation    of   Insureds   provision    is   ambiguous   and   should    be

interpreted in Appellee’s favor, the district court refused to

consider the intent of Appellee’s agents when determining if the

complaint    alleged   an   accidental    “occurrence”   and   whether     the

policy’s exclusions applied.        The district court also decided

that, even if the Separation of Insureds provision would not

prevent imputing the intent of Appellee’s agents to Appellee,

the Jenkins Complaint failed to “sufficiently allege” Appellee’s

vicarious liability.        Thus, the district court granted summary

judgment and awarded defense costs to Appellee.

            We conclude otherwise.        Because the Jenkins Complaint

does not allege an “occurrence,” and because it triggers the

policy’s coverage exclusions, Appellant has no duty to defend.

                                    I.

            We review a grant of summary judgment de novo.                 See

CACI Int’l, Inc. v. St. Paul Fire & Marine Ins. Co., 566 F.3d

150, 155 (4th Cir. 2009).

defendants, they are not named insureds under the policy and are
not essential to resolving this appeal.

         Citations to the “J.A.” refer            to the Joint Appendix
filed by the parties in this appeal.

                                    3
                                           II.

                                             A.

                                 The Jenkins Complaint

              The child at the core of this dispute was born to Lisa

Miller and Janet Jenkins in 2002 while the two women were joined

in a Vermont same-sex civil union.                       Miller is the biological

mother and a legal parent to the child.                          Jenkins is also the

child’s legal parent, pursuant to a 2004 Vermont state court

ruling.     Miller subsequently converted to Christianity; moved to

Virginia; and believing that homosexuality was sinful, sought to

prevent    Jenkins        from   having    contact       with    her    daughter.            For

several years, Miller defied visitation orders issued by Vermont

and   Virginia        courts.       In   2009,       facing     the    possibility          that

Vermont or Virginia would transfer custody to Jenkins, Miller

absconded to Nicaragua with the child.                     Jenkins has not seen her

daughter since.

              Jenkins brought a lawsuit in Vermont district court on

her own behalf and on behalf of her daughter in November 2012.

Appellee      and     Victoria      Hyden,       a    student       worker     at     Liberty

University,       were     among    the    named       defendants.            The     Jenkins

Complaint alleges that Appellee assisted Miller by withholding

the   child      from     Jenkins   and    by     taking      the     child    out    of     the

country.         As   a   result,    Jenkins         claims   Appellee        was    directly

liable     for      conspiring      to    “commit       the     intentional          tort    of

                                             4
kidnapping,” which is “chargeable as a criminal offense under

Vermont     law,”        and     conspiring         “through     [a]      pattern     of

racketeering” to kidnap the child and to “assure her continued

detention” in Nicaragua in violation of the Racketeer Influence

and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(d). 2                        J.A.

49, 51.     The Jenkins Complaint also asserts that Appellee was

vicariously liable for the role Hyden played in the kidnapping,

for its agents’ racketeering, and for its agents’ participation

in a conspiracy to violate Jenkins’s and the child’s “rights to

a parent-child relationship.”                Id. at 46, 49.

            In   particular,           the    Jenkins    Complaint      charges     that

Miller retained the dean of Liberty University School of Law,

Mathew    Staver,        and     one    of    the     school’s    professors,       Rena

Lindevaldsen,       as     her     attorneys.           As   alleged,     Staver     and

Lindevaldsen encouraged and assisted Miller in violating state

court     orders,    established             social     media    forums    soliciting

     2   Pursuant to 18 U.S.C. § 1962,

            It shall be unlawful for any person employed
            by or associated with any enterprise engaged
            in, or the activities of which affect,
            interstate or foreign commerce, to conduct
            or participate, directly or indirectly, in
            the conduct of such enterprise’s affairs
            through    a     pattern  of    racketeering
            activity . . . .

18 U.S.C. § 1962(c).             Section 1962(d) criminalizes conspiring to
violate § 1962(c).

                                              5
donations    to    groups      that     aimed       to   “prevent       court    ordered

contact”    between    Jenkins       and     her    daughter,     and    planned     with

other   co-conspirators        to     kidnap       the   child.     J.A.       42.   The

Jenkins Complaint further accuses Victoria Hyden, an employee of

the law school, of calling Miller’s father to help transport

Miller and the child to a parking lot in Lynchburg, Virginia,

where Philip Zodhiates -- who is Hyden’s father and was one of

Staver’s acquaintances -- picked them up and drove them to the

Canadian border.       Staver allegedly aided the kidnapping by using

telephone lines registered to Liberty University to speak to

Zodhiates as he drove back from the Canadian border.                        Therefore,

“[w]ith    the    assistance    of . . . Philip           Zodhiates      and    Victoria

[Hyden] . . . as agents of . . . Liberty University . . . Miller

was able to leave the United States” with the child.                       Id. at 46.

            The Jenkins Complaint also alleges that Appellee and

its agents “enable[d] [Miller] to remain outside the country.”

J.A. 44.    For example, Lindevaldsen allegedly founded a Facebook

group to solicit donations for Miller while Miller was hiding

with the child in Nicaragua.               The Jenkins Complaint also asserts

that Hyden emailed “her co-workers at the law school requesting

donations for supplies to send to . . . Miller to enable her to

remain outside the country.”               Id. at 44.       The Jenkins Complaint

further     alleges     that        Staver       and     Lindevaldsen       “routinely

instructed their Law School students that the correct course of

                                             6
action     for      a   person    in . . . Miller’s           situation    would     be    to

engage in ‘civil disobedience’ and defy court orders.”                               Id. at

45.       As    such,    “Liberty     University           encouraged    its   agents      to

disregard state laws governing parental rights . . . of same-sex

families.”          Id. at 45-46.

                Based on these facts, the Jenkins Complaint alleges

that Appellee was directly liable for its involvement in the

kidnapping          scheme   and,   at    the       same   time,   vicariously       liable

because        it    “promoted,     condoned         and    explicitly    ratified        its

agent[s’]        tortious,       racketeering        activity.”         J.A.   46.        The

Jenkins Complaint sought damages for these injuries.

                                             B.

                                         The Policy

                The policy at issue was effective from February 2009

to February 2010 and contains two coverage forms: (1) Commercial

General Liability coverage (“CGL”) and (2) School and Educators

Legal Liability coverage (“SELL”). 3

      3Technically, there are four insurance policies at issue.
But two of these are umbrella policies that the parties agree
have essentially the same terms as the CGL and the SELL.

                                                7
                                      1.

                              CGL Coverage

          The CGL itself provides two subsidiary coverage forms:

Coverage A and Coverage B.

                                      a.

                                  Coverage A

          Under Coverage A, Appellant must defend suits seeking

damages for “bodily injury” and “property damage” arising from

an “occurrence.”     J.A. 68.       Consistent with Virginia law, the

policy   defines   the    terms    “occurrence       and   accident   .   .     .

synonymous[ly]     [as]   refer[ing]       to   an     incident   that        was

unexpected from the viewpoint of the insured.”                 AES Corp. v.

Steadfast Ins. Co., 725 S.E.2d 532, 536 (Va. 2012) (internal

quotation marks omitted); J.A. 81.              According to the Supreme

Court of Virginia:

          For coverage to be precluded under a CGL
          policy because there was no occurrence, it
          must be alleged that the result of an
          insured’s intentional act was more than a
          possibility; it must be alleged that the
          insured subjectively intended or anticipated
          the result of its intentional act or that
          objectively, the result was a natural or
          probable consequence of the intentional act.
          . . . .
          . . . Where the harmful consequences of an
          act are alleged to have been not just
          possible, but the natural and probable
          consequences of an intentional act, choosing
          to perform the act deliberately, even if in
          ignorance of that fact, does not make the
          resulting injury an ‘accident’ . . . .

                                      8
AES, 725 S.E.2d at 536, 538 (internal quotation marks omitted).

Accordingly, a suit alleging only intentional torts does not

state an “occurrence.”              See Travelers Indem. Co. v. Obenshain,

245   S.E.2d    247,     249        (Va.     1978).        Even       if    the        insured

demonstrates that the suit alleges “bodily injury” or “property

damage”    arising     from    an    “occurrence,”        Coverage         A’s    “Expected

Injury     Exclusion”     excludes         “‘[b]odily       injury’        or     ‘property

damage’     expected     or    intended           from   the     standpoint        of     the

insured.”    J.A. 69.

                                             b.

                                      Coverage B

            Coverage     B    insures      against       suits    alleging        “personal

and   advertising       injury,”       the        definition     of    which       includes

“[f]alse    arrest,     detention      or     imprisonment.”           J.A.      81.         The

policy defines “wrongful act” as:

            any breach         of    duty . . . committed             by    an
            insured:

                 a.     In the lawful discharge of the
                        duties that are characteristic of,
                        distinctive or inherent to the
                        operation and functioning of an
                        educational institution; and

                 b.     While acting within the course and
                        scope of their duties for the named
                        insured.

Id. at 130.     But Coverage B’s “Criminal Acts Exclusion” excludes

any   “‘[p]ersonal      and     advertising          injury’     arising         out    of    a

                                             9
criminal act committed by or at the direction of the insured.”

Id.   at   73.      And    Coverage    B’s    “Knowing   Violation     Exclusion”

excludes any “‘[p]ersonal and advertising injury’ caused by or

at the direction of the insured with the knowledge that the act

would violate the rights of another and would inflict ‘personal

and advertising injury’” (“Knowing Violation Exclusion”).                   Id.

                                        2.

                                 SELL Coverage

            Under    the    SELL,     Appellant    has   the   duty    to   defend

against any claim “[a]lleging injury arising out of a wrongful

act . . . and seeking loss because of such injury.”                     J.A. 116

(internal quotation marks omitted).              The SELL policy contains an

“Intentional     and      Criminal     Acts    Exclusion,”     which     excludes

coverage for:

                 [a]ny   “claim”    arising   out  of   any
            intentional,       dishonest,       fraudulent,
            criminal, or malicious act or omission or
            any willful violation of law by the insured
            . . . .
            . . . .
                 This exclusion precludes coverage for
            all   insured    persons   under   the   policy
            regardless    whether    the   person   seeking
            coverage participated in any way in the
            intentional or criminal acts or omissions.

Id. at 116.

                                        10
                                        3.

                           Separation of Insureds

            The insurance policy includes a Separation of Insureds

provision, which states:

            Except   with   respect to   the Limits   of
            Insurance,    and   any  rights  or   duties
            specifically assigned in this Coverage part
            to the first Named Insured, this insurance
            applies:

                   a. As if each Named Insured were the
                      only Named Insured; and

                   b. Separately to each insured against
                      whom claim is made or “suit” is
                      brought.

J.A. 159.

            When    multiple    named   insureds   claim    the   right   to   a

defense against the same suit, a separation of insureds clause

requires the insurer to evaluate the claims against each named

insured individually.          The insurer treats each insured as if he

or she has separate insurance coverage, so that excluded conduct

by   one   insured      does   not   preclude   claims    brought    by   other

insureds.    See W. Am. Ins. Co. v. AV&S, 145 F.3d 1224, 1227-29

(10th Cir. 1998); see, e.g., Commercial Standard Ins. Co. v. Am.

Gen. Ins. Co., 455 S.W.2d 714, 721 (Tex. 1970) (construing a

severability       of   interests    clause,    which    “refer[s]   to    each

insured as a separate and distinct individual apart from any and

every other person who may be entitled to coverage thereunder”

                                        11
(internal    quotation     marks      omitted)).       The     policy    designates

Appellee’s “employees,” “volunteer workers,” “student groups,”

and “executive officers” as additional named insureds.                        J.A. 62,

75-76 (internal quotation marks omitted).

                                          C.

                           Underlying Litigation

            Faced with the Jenkins Complaint, Appellee turned to

Appellant, seeking to have Appellant defend the lawsuit on its

behalf.     When Appellant refused, Appellee filed a complaint in

district    court,    requesting      a   declaration     of     its    right    to   a

defense    and   an   award    of    damages    for   costs     and    fees    it   had

already incurred defending against the Jenkins Complaint.                           The

parties filed cross-motions for summary judgment.                      The district

court granted summary judgment in favor of Appellee, holding

Appellant had a duty to defend and awarding defense costs.

            The district court began its analysis with the CGL.

Regarding    Coverage    A,    the    court     determined      that    the    Jenkins

Complaint   did   not    allege      “bodily    injury”   but     that    it    sought

damages for “property damage” allegedly caused by Appellee and

its agents.       It determined that, under Virginia law, Appellee

could   become    liable      for    physical    injury    to    the     plaintiffs’

tangible property because the Jenkins Complaint alleged that the

“[p]laintiffs suffered injury to their . . . property, including

. . . deprivation of personal property.”                  J.A. 51; see Liberty

                                          12
Univ., Inc. v. Citizens Ins. Co. of Am., 16 F. Supp. 3d 636,

653-54 (W.D. Va. 2014).

             The district court then turned to whether the alleged

“property damage” arose from an “occurrence,” as defined by the

policy.      It recognized that the “Jenkins Complaint made claims

for   only    intentional      torts”    and     that,    if    the    intent    of

Appellee’s agents was imputed to Appellee, Appellee “should have

reasonably anticipated or foreseen the incident of [the child]’s

abduction.”       Liberty, 16 F. Supp. 3d at 655, 659-60.                 But the

district court nonetheless concluded that the Jenkins Complaint

alleges an “occurrence” for two reasons.

             First,    the   district    court   opined      that,    although   no

Virginia court had interpreted a separation of insureds clause,

relevant case law forbade the court from imputing to Appellee

the intent of its agents -- even though the Jenkins Complaint

unequivocally       alleged     Appellee’s       liability       in    respondeat

superior for its agents’ acts.            See Liberty, 16 F. Supp. 3d at

655-60.      Noting that separation of insureds clauses generally

direct “courts [to] consider each insured separately under the

contract in determining whether provisions excluding the insured

from coverage apply to that particular insured,” the district

court believed the Separation of Insureds provision in this case

required     it   to   “separate   the       intent   [and     expectations]     of

Liberty’s agents and employees from Liberty’s own.”                   Liberty, 16

                                        13
F.    Supp.    3d     at    659,      660     (internal         quotation       marks       omitted).

Therefore, the district court reasoned that, although Appellee

was     allegedly          responsible         for        the    kidnapping          through       its

employee Hyden -- who was also a named insured -- Appellee could

not     become      liable        for       causing       damage     that       arose       from    an

“occurrence” because the Jenkins Complaint does not allege that

Appellee        individually            expected           or     intended           the     alleged

kidnapping.           The district court held in the alternative that,

even     if      the       Separation          of        Insureds     provision             did    not

unambiguously require it to separate the intent of Appellee’s

agents, the provision at least “create[d] an ambiguity in the

contract”        as        to     “whether       the       expectations           of        Liberty’s

agents . . . would be imputed to Liberty” -- an ambiguity that

“must [be] construe[d] in favor of . . . the insured.”                                        Id. at

659.

               Second,          the   district        court      concluded       that       Appellee

could     not       be      held      liable        for     damages        arising          from    an

“occurrence” because the Jenkins Complaint did not “sufficiently

allege”       Appellee’s          vicarious         liability.           The    district          court

opined    that,        because        the    complaint          supplied       “only    conclusory

allegations         that        tie   Liberty       to    the     actions       of    its     alleged

agents     and      employees”          and    “provide[d]          no     facts       to    support

allegations           of    vicarious          liability,”          there        could        be    no

                                                    14
“imputation    of     [its]        tortfeasor     employees’           expectations.”

Liberty, 16 F. Supp. 3d at 660-61.

            Turning    to     CGL     Coverage         B,     the     district     court

determined    that    the    Jenkins      Complaint         alleged    “personal    and

advertising    injury,”       but,     based      on        essentially    the     same

reasoning for its decision that the complaint did not plead an

“occurrence” under Coverage A, the court concluded that neither

the Knowing Violation Exclusion nor the Criminal Acts Exclusion

applied.

            The district court’s analysis of the SELL coverage was

similar.      That    is,     the    court     concluded        that     the     Jenkins

Complaint pled an injury arising from a “wrongful act,” because

its “factual allegations [supported an inference] that Liberty

was essentially negligent in urging civil disobedience of court

orders” without implicating the Intentional and Criminal Acts

Exclusion.    Liberty, 16 F. Supp. 3d at 672.

                                       III.

                                          A.

                            Virginia Insurance Law

            Because our jurisdiction rests in diversity, we apply

the law of Virginia and its choice of law rules.                        See Erie R.R.

Co. v. Tompkins, 304 U.S. 64, 78 (1938); see also Klaxon Co. v.

Stentor    Elec.    Mfg.    Co.,    313    U.S.   487,        496-97    (1941);    Res.

Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631, 635

                                          15
(4th Cir. 2005).            Virginia substantive insurance law applies to

policies that are delivered to insureds in Virginia.                          See CACI

Int’l, Inc. v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150,

154 (4th Cir. 2009); Res. Bankshares Corp., 407 F.3d at 635-36.

It is undisputed that the policy was delivered to Appellee, a

Virginia-based university.                   If we are presented with an issue

that       Virginia’s highest court has not directly or indirectly

addressed, we must anticipate how it would rule.                          See Ellis v.

Grant Thornton LLP, 530 F.3d 280, 287 (4th Cir. 2008).

               Virginia applies the “Eight Corners Rule” to determine

if    an   insurer     has      a     duty   to    defend   a   lawsuit    against   the

insured.       See AES Corp. v. Steadfast Ins. Co., 725 S.E.2d 532,

535 (Va. 2012).            Under the Eight Corners Rule, we “compar[e] the

‘four      corners’        of   the    underlying      complaint    with    the   ‘four

corners’ of the policy[] to determine whether the allegations in

the underlying complaint come within the coverage provided by

the policy.”         Id.

               The insured has the initial burden to establish a duty

to defend, but this burden is not onerous because “[p]rinciples

of insurance law in Virginia . . . are solicitous of insureds.”

CACI, 566 F.3d at 155.                The duty to defend is much broader than

the     duty    to     indemnify         because,      “while . . . the       duty    to

indemnify relies on litigated facts,” id. at 154, the duty to

defend arises “whenever the [underlying] complaint alleges facts

                                              16
and circumstances, some of which would, if proved, fall within

the   risk    covered    by   the    policy,”    AES,   725   S.E.2d    at    535

(internal quotation marks omitted).

             Indeed, when a complaint’s allegations could support

alternative     theories      of    liability    (e.g.,   claims   for       both

intentional torts and negligence) and one theory falls within

the coverage agreement, the insurer has a duty to defend the

insured against all claims.              Parker v. Hartford Fire Ins. Co.,

278 S.E.2d 803, 804 (Va. 1981) (holding that an exclusion for

intentional     injury     did     not    preclude   coverage,   even    though

complaint alleged intentional trespass, because under Virginia

law a claim for intentional trespass could also “support[] a

judgment of unintentional trespass” without amendment (internal

quotation marks omitted)). 4             “On the other hand, if it appears

clearly that the insurer would not be liable under its contract

for any judgment based upon the allegations, it has no duty even

to defend.”     AES, 725 S.E.2d at 536-38; see, e.g., Premier Pet

Prods., LLC v. Travelers Prop. Cas. Co. of Am., 678 F. Supp. 2d

409, 418-19 (E.D. Va. 2010).

      4See also Minn. Lawyers Mut. Ins. Co. v. Antonelli, Terry,
Stout & Kraus, LLP, 472 F. App’x 219, 225 (4th Cir. 2012)
(unpublished) (noting that Parker v. Hartford Fire Insurance Co.
does not hold that a duty to defend lies when a complaint would
support “any conceivable cause of action” and still requires
“that the complaint actually asserts the claim” (emphasis
omitted)).

                                          17
            If the insured demonstrates that the complaint alleges

a covered injury, the burden shifts to the insurer to show that

the    policy’s          “exclusionary           language . . . clearly         and

unambiguously bring[s] the particular [alleged] act or omission

within its scope.”         Floyd v. N. Neck Ins. Co., 427 S.E.2d 193,

196 (Va. 1993); see also Fuisz v. Selective Ins. Co. of Am., 61

F.3d 238, 244-45 (4th Cir. 1995).                 However, ambiguities in an

insurance     policy      are     construed      against      the    insurer,   who

presumably drafted the contract and “could have written it more

clearly.”    CACI, 566 F.3d at 155.

                                           B.

                                     Analysis

            We    conclude       that    the     district     court    erroneously

interpreted the Jenkins Complaint, the Separation of Insureds

provision, and Virginia law.

                                           1.

                                  CGL Coverage A

                                           a.

            “Occurrence” and Respondeat Superior Liability

            As    to     CGL    Coverage    A,    we   hold   that    the   Jenkins

Complaint,       which     only     alleges       Appellee’s        liability   for

intentional       conduct,        does     not     plead      an      “occurrence,”

notwithstanding the Separation of Insureds provision.

                                           18
            In    the     first      place,       we   conclude      that    Virginia’s

highest court would hold that an allegation of a principal’s

liability    under      the   theory        of    respondeat      superior     for    the

intentional acts of an agent does not state an “occurrence.”                           In

Rockingham Mutual Insurance Co. v. Davis, an employee sued her

employer claiming it was vicariously liable for the intentional

tort of another employee.            See 58 Va. Cir. 466, 467 (2002).                 The

employer’s insurer sought a declaration that it had no duty to

defend    because       the   underlying          complaint    did    not     state   an

“occurrence.”       The Circuit Court of Rockingham County, Virginia

agreed,     concluding        that     an        intentional      tort      “cannot   be

considered unexpected, even when viewed from the standpoint of

the employer, and does not become an ‘occurrence’ . . . simply

by operation of respondeat superior.”                    Id. at 473-74 (emphasis

supplied).       This is because Virginia holds that an agent’s state

of mind is ordinarily imputed to the principal.                      See Fulwiler v.

Peters, 20 S.E.2d 500, 503 (Va. 1942) (“The general rule is that

knowledge of the agent is imputed to the principal . . . .”);

Atl. Envtl. Constr. Co. v. Malveaux, 762 S.E.2d 409, 412 (Va.

Ct. App. 2014); Magco of Md., Inc. v. Barr, 531 S.E.2d 614, 617

(Va. Ct. App. 2000) (“Indeed, it is a longstanding principle in

the Commonwealth that a foreman’s knowledge of facts or events

on a worksite is imputed to his employer.”); Rockingham, 58 Va.

                                            19
Cir. at 473 (“The doctrine of respondeat superior attributes the

bad intentions of the employee to the employer . . . .”). 5

            Federal     district      courts     sitting   in    Virginia     --

including the district court below -- have also applied this

rule.    See, e.g., Liberty Univ., Inc. v. Citizens Ins. Co. of

Am., 16 F. Supp. 3d 636, 656 (W.D. Va. 2014) (“[A]n insurance

company would have no duty to defend an employer for claims

based on the intentional torts of its employees.”); State Farm

Fire & Cas. Co. v. Frank, No. 4:10-cv-99, 2011 WL 1883987, at

*10 (E.D. Va. Apr. 20, 2011); Am. & Foreign Ins. Co. v. Church

Sch. in Diocese of Va., 645 F. Supp. 628, 633 (E.D. Va. 1986)

(concluding   that     under    an    occurrence-based     insurance    policy,

allegations    of      respondeat      superior    liability     for    agents’

intentional    torts     “are   not    covered    and   impose   no    duty   to

defend”).

            Therefore, in this case the pivotal issue is whether

the Separation of Insureds provision alters Virginia’s rule that

the expectations and bad intentions of Appellee’s agents are

     5 Likewise, in an unpublished disposition we observed that
under Virginia law “claims of agency liability [and] respondeat
superior . . . for the intentional acts of an agent do not
impose a duty to defend,” even if viewed from the perspective of
the insured. Nat’l Fruit Prod. Co. v. Fireman’s Fund Ins. Co.,
No. 98-1471, 1999 WL 270033, at *3 (4th Cir. May 4, 1999)
(unpublished).

                                        20
imputed to Appellee.                The district court concluded the provision

alters Virginia’s rule.                  We disagree.

               Although the Separation of Insureds provision requires

the    coverage         claims      of    each       named    insured        to    be        evaluated

“[s]eparately           to   each    insured         against       whom   claim         is    made   or

‘suit’ is brought,” J.A. 159, it does not displace Virginia’s

rule       that    an     agent’s        intentionally            tortious    act        cannot      be

“unexpected” by the principal who is vicariously liable for the

act.       See State Farm, 2011 WL 1883987, at *10; Church Sch., 645

F. Supp. at 633; Rockingham, 58 Va. Cir. at 467.                                        Because she

was either an “employee” or a “volunteer worker” under the terms

of the policy, Hyden would qualify as a named insured.                                       J.A. 76.

The Jenkins Complaint names Hyden as a defendant, so we must

analyze Appellee’s coverage claim separately. 6                               But even if we

imagine that Appellee was the only party sued in this case and

the    only       insured     requesting         a   defense        under    the        policy,      the

Jenkins Complaint still frames Appellee’s liability in terms of

respondeat         superior.             Therefore,          we    have     ample        reason      to

anticipate         that      Virginia      courts       would       impute        the    intent      of

Appellee’s agents accordingly.

       6
       Although Staver and Lindevaldsen are named insureds, the
Jenkins Complaint does not name them as defendants.

                                                 21
            Our decision in IFCO Systems of North America, Inc. v.

American Home Assurance Co., 502 F. App’x 342 (4th Cir. 2013)

(unpublished), and other cases cited by the district court, are

inapposite.       The district court below viewed the issue in IFCO

Systems as “whether an insurance company had a duty to defend an

employer    for    intentional         tort    claims       against       its       employees.”

Liberty, 16 F. Supp. 3d at 659.                       This is an incorrect view

because,    in    IFCO    Systems,       the       underlying          complaint       asserted

claims     against       the      insured          for,     inter        alia,        negligent

supervision       and    hiring    and         conversion          under       a     theory     of

vicarious liability -- all arising from thefts committed by the

insured’s employees.             See IFCO, 502 F. App’x at 343-44.                             The

policy     provided      occurrence-based             coverage          and        contained     a

separation of insureds provision.                   Analyzing whether there was a

duty to defend, we distinguished allegations of a principal’s

vicarious liability for its agent’s intentional torts -- which

would not constitute an “occurrence,” despite the separation of

insureds provision -- from assertions that the principal was

liable   for     the    agent’s    intentional            act    due    to    its     negligent

failure to supervise.            See id. at 345, 347 (observing that “none

of the . . . cases cited by the district court [were] directly

on point” because “none of the cases involved a situation where

the   court       was    asked     to    determine          whether           an     employee’s

intentional       conduct      could    be    treated       as    an     ‘accident’       in     a

                                              22
subsequent negligence action against the employer” (emphasis in

original)).        Because     negligent       hiring      or   supervision       actions

depend on whether the alleged harm was reasonably foreseeable,

we    concluded     the     separation       of     insureds      clause       may     have

“require[d] us to approach the question of coverage solely from

IFCO’s perspective.”           Id. at 347.          Therefore, we certified the

question of whether, “[i]n a negligent hiring and supervision

action      against       an       insured-employer, . . . the                intentional

conduct of an employee of the insured constitute[d] a covered

‘occurrence.’”        Id. at 343.            Notably, we did not certify a

similar question regarding the complaint’s allegation that the

insured was vicariously liable for its employees’ conversion.

             When a complaint alleges the liability of a principal

for   the    intentional       acts     of     an    agent      under     a    negligent

supervision       theory,      a     separation       of    insureds       clause      may

implicate the duty to defend.                  There are several reasons why

this result may occur.             First, a negligent supervision action is

not    particularly         concerned        with     the       agent’s       intent     or

expectations -- the claim is predicated on whether the harm was

foreseeable.       See Interim Pers. of Cent. Va., Inc. v. Messer,

559 S.E.2d 704, 707 (Va. 2002).                     Second, because a negligent

supervision claim alleges the principal’s direct liability, a

separation of insureds clause may require the court to look at

whether the harm was foreseeable solely from the principal’s

                                          23
perspective.         See   IFCO,   502   F.    App’x      at    347.      And,   in    the

context of an occurrence-based policy, Virginia’s potentiality

rule holds that insurers must defend an entire suit if any of

the complaint’s allegations could support a judgment that the

principal      did   not    expect,      intend,     or        foresee    the    agent’s

intentional tort. See Travelers Indem. Co. v. Obenshain, 245

S.E.2d 247, 249 (Va. 1978) (“If the allegations state a case

which may be covered by the policy, Travelers has a duty to

defend . . . .”).

            The cases the district court cited merely demonstrate

these propositions.          See Pac. Ins. Co. v. Catholic Bishop of

Spokane, 450 F. Supp. 2d 1186, 1202 (E.D. Wash. 2006) (rejecting

insurer’s    argument      that    the   alleged     sexual       abuse    was    not    a

covered “accident” because insurer “disregard[ed] the fact that

the   claims     against     the    diocese     [were]         based     upon    alleged

negligent hiring, supervision, and retention, not an intentional

wrong of direct sexual abuse”); King, 85 S.W.3d at 185, 188-92

(finding duty to defend because insured was sued for intentional

torts under a theory of respondeat superior and for negligence

and the policy contained a separation of insureds provision and

because the “employer’s alleged negligent hiring, training, and

supervision constitute[d] an ‘occurrence’ under the terms of the

insurance policy although the injury was directly caused by the

employee’s     intentional        conduct’”);      Unigard       Mut.    Ins.    Co.    v.

                                          24
Argonaut Ins. Co., 579 P.2d 1015, 1018 (Wash. Ct. App. 1978)

(separating claims against a child for his intentional act of

burning    a    school,    which    precluded           the    duty   to    defend,    from

claims against the child’s parents for negligent supervision,

which was not an excluded intentional act).

               Critically,       unlike           the         underlying         complaints

considered in the cases cited by the district court, the Jenkins

Complaint does not allege that Appellee was responsible for its

agents’ intentional acts because it was negligent.                             Rather, the

Jenkins Complaint alleges that Appellee is directly liable for

harm arising from its intentional participation in conspiracies

and vicariously liable for the intentional acts of its agents.

For    these     reasons,     the       Separation            of    Insureds     provision

unambiguously would not displace the ordinary rule in Virginia

that   a   complaint      alleging      a    principal’s           liability     solely   in

respondeat superior for the acts of its agent does not state an

“occurrence.”

               Furthermore,      even       if    the     Separation        of    Insureds

provision      was    ambiguous,     the     district          court’s     interpretation

contradicts the clearly-stated intent of the parties.                                 Under

Virginia       law,     courts      must         interpret         insurance      policies

consistent with the parties’ intent.                      See Transit Cas. Co. v.

Hartman’s, Inc., 239 S.E.2d 894, 897 (Va. 1978); see also Safeco

Ins. Co. of Am. v. Merrimack Mut. Fire Ins. Co., 785 F.2d 480,

                                            25
482 (4th Cir. 1986).                      Ambiguities in the instrument must be

construed in favor of the insured.                             But we do not entertain an

absurd    result          --     one       that      would      “enlarge     the     obligations

undertaken       originally               by   the      insurer,       and   would     permit     a

windfall to [the insured].”                          Transit Cas. Co., 239 S.E.2d at

897.

               While Virginia law provides that an agent’s intent is

imputed to the principal for the purpose of determining whether

an     injury    was        an       “occurrence”             (i.e.,      expected    from      the

principal’s perspective) the district court would impose a duty

to defend even though the policy clearly states that any harm

that    was     “expected            or    intended          from   the    standpoint      of   the

insured” is excluded from coverage.                            J.A. 69; see also Nw. G.F.

Mut.    Ins.    Co.       v.     Norgard,         518     N.W.2d     179,    184    (N.D.    1994)

(stating that “the purpose of severability clauses is to spread

protection,          to        the        limits        of     coverage,      among       all    of

the . . . insureds.               The purpose is not to negate bargained-for

exclusions which are plainly worded” (alteration in original)

(internal quotation marks omitted)).

               The        district             court’s          interpretation            enlarges

Appellant’s obligation beyond what it anticipated.                                   And because

Virginia recognizes that a corporation, like Appellee, “can act

only    through       its       officers          and     agents,”        Pulliam    v.    Coastal

Emergency Servs. of Richmond, Inc., 509 S.E.2d 307, 320 (Va.

                                                     26
1999), the district court’s construction of the Separation of

Insureds provision would nullify the Expected Injury Exclusion

for allegations of vicarious liability against organizational or

corporate    insureds,        creating        a    windfall       to   Appellee.         Cf.

Minkler v. Safeco Ins. Co. of Am., 232 P.3d 612, 621 (Cal. 2010)

(holding that to permit a severability of insurance clause to

prevail over a plainly worded exclusion for intentional acts

“would effectively nullify a policy exclusion in the case of

married    coinsureds,        since     one       coinsured    spouse      could   always

demand coverage for the excluded tortious act of the other on

the mere basis of derivative community property liability”).

            For the foregoing reasons, we conclude the Separation

of Insureds provision does not displace Virginia’s rule that an

insurer    has   no    duty      to    defend      against    a    suit    alleging      the

insured is liable for the intentional acts of its agents under a

theory of respondeat superior.                     Because the Jenkins Complaint

alleges only intentional acts, we hold that it does not allege

Appellee’s liability for damage arising from an “occurrence.”

                                           b.

           “Sufficient” Allegations of Respondeat Superior

            We now turn to the district court’s alternative basis

for   holding    that      the    Jenkins         Complaint       does    not    state    an

“occurrence.”         In   this       section     of   its    opinion,     the   district

court     reasoned     that,      even     if      the   Separation        of    Insureds

                                           27
provision did not preclude ascribing to Appellee its agents’

expectations, the Jenkins Complaint “did not state a plausible

claim that Liberty is liable for intentional torts,” offered

“only conclusory allegations that tie Liberty to the actions of

its alleged agents and employees,” and “provide[d] no facts to

support allegations of vicarious liability.”                    Liberty, 16 F.

Supp. 3d    at   660,    661,    663.     Significantly,       when   determining

whether insurance coverage exists, Virginia courts do not ask if

a complaint “sufficiently” alleges facts in support of a claim

such that it would survive a motion to dismiss.                   Instead, they

determine whether the complaint alleges facts and circumstances

that fall within the four corners of the policy.                      The claim’s

probability of success is inconsequential.              See Fuisz, 61 F.3d

at 244-45; Church Sch., 645 F. Supp. at 633; AES, 725 S.E.2d at

535 (“[I]t is a well-established principle, consistently applied

in this Commonwealth, that only the allegations in the complaint

and the provisions of the insurance policy are to be considered

in deciding whether there is a duty on the part of the insurer

to defend and indemnify the insured.”); cf. CACI Int’l, Inc. v.

St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 155-56 (4th Cir.

2009)     (acknowledging        differences   between      a     Rule    12(b)(6)

analysis and a duty-to-defend analysis).            The Jenkins Complaint

clearly    alleges      facts    and    circumstances   demonstrating        that

                                        28
Appellee is liable in respondeat superior for kidnapping and

racketeering through its agent Hyden.

            Therefore, we conclude Appellant has no duty to defend

Appellee under CGL Coverage A.

                                            2.

                                 CGL Coverage B

            We    also   hold   that        Appellant   has    no    duty   to    defend

pursuant    to     CGL   Coverage       B    because,    assuming       the      Jenkins

Complaint     alleged     “personal          and   advertising        injury,”        the

Criminal Acts Exclusion clearly applies.

            The    district     court       concluded   that    CGL    Coverage       B’s

exclusion for criminal acts did not apply because the Jenkins

Complaint’s       “allegations    insufficiently          tie       Liberty      to   any

criminal acts either directly or vicariously.”                       Liberty, 16 F.

Supp. 2d at 669.         But the Criminal Acts Exclusion applies to

injuries “arising out of a criminal act committed by or at the

direction of the insured.”          J.A. 73.

            In the context of homeowner’s insurance, the Circuit

Court of Warren County, Virginia has observed that an injury

arises out of an event “when there is apparent to the rational

mind upon consideration of all of the circumstances, a causal

connection between” the event and the injury.                       Erie Ins. Exch.

v. Young, 69 Va. Cir. 34, 41 (2005) (internal quotation marks

omitted).        Notably, The Supreme Court of Virginia has quoted

                                            29
this definition of “arising out of” “many times with approval”

Lucas v. Lucas, 186 S.E.2d 63, 64 (Va. 1972) (internal quotation

marks omitted).           Against this backdrop, we conclude that the

criminal acts exclusion applies for two reasons.                            First, the

Jenkins     Complaint       clearly     and         unambiguously      alleges         that

Appellee    and     its    agents     committed        criminal     acts    –     namely,

kidnapping and conspiracy to commit racketeering, which is a

federal    crime    pursuant    to    18   U.S.C.       § 1962(d).         The    Jenkins

Complaint    also    specifically       alleges        Appellee’s    role       in    these

crimes.     For example, the Jenkins Complaint contends that Staver

used   Liberty      University’s      phone      lines    to   speak       with      Philip

Zodhiates after Zodhiates deposited Miller and the child near

the Canadian border and that other Liberty University employees

assisted Miller while she was in Nicaragua.                    Second, the Jenkins

Complaint    unambiguously      claims          that    Appellee     is    liable       for

injuries arising from those criminal acts.                     With respect to the

kidnapping claim, the Jenkins Complaint asserts that Jenkins and

the child suffered injuries as a result of the kidnapping.                             J.A.

52.    The Jenkins Complaint also alleges injuries as a “direct

and proximate result of Defendants’ [RICO] violation.”                               Id. at

51.       These    statements       allege      a    causal    connection         between

Appellee’s alleged criminal acts and the claimed injuries.

            Therefore, Appellant has no duty to defend pursuant to

CGL Coverage B.

                                           30
                                          3.

                                   SELL Coverage

The district court concluded that the SELL’s Intentional and

Criminal     Acts   Exclusion      did    not   apply      because      “the   Jenkins

Complaint      insufficiently      implicated      Liberty        in . . . excluded

conduct because it insufficiently alleged direct or vicarious

liability and facts to support those links.”                        Liberty, 16 F.

Supp. 3d at 673.           However, the Intentional and Criminal Acts

Exclusion      embraces    claims       “arising   out     of     any    intentional,

dishonest, fraudulent, criminal, or malicious act or omission or

any   willful    violation    of    law    by   the   insured”       and   “precludes

coverage for all insured persons under the policy regardless

whether the person seeking coverage participated in any way in

the intentional or criminal acts or omissions.”                         J.A. 116.    As

we    have   emphasized,    the    Jenkins      Complaint       alleges    Appellee’s

liability for injuries arising from its direct involvement in

conspiracies to commit kidnapping and racketeering, which carry

criminal     penalties.       We    conclude       these    claims       clearly    and

unambiguously       trigger       the     Intentional       and      Criminal       Acts

Exclusion. 7

       7
       Appellee argues that the Criminal Acts Exclusion and the
definition of “personal and advertising injury” are in conflict,
which is impermissible under Virginia law because an insurer
cannot “‘give coverage with the right hand and then take away
with the left.’”   Appellee’s Resp. Br. 40 (alteration omitted)
(Continued)
                                          31
                                 IV.

            For the foregoing reasons, we hold that Appellant had

no duty to defend Appellee against the Jenkins Complaint.           We

therefore    reverse   the   district   court’s    grant   of   summary

judgment, vacate its award of fees and costs, and remand for

further proceedings.

                                                  VACATED AND REMANDED

(quoting Fuisz, 61 F.3d at 243). Appellee’s argument relies on
the definition a “personal and advertising injury” as one
arising out of seven enumerated “offenses.” J.A. 81 (emphasis
supplied). Appellee equates “offenses” with “crimes.” But that
reading of “offense” is not supported by the policy.         The
examples of “offenses” it provides are noncriminal acts -- torts
and copyright offenses.   Therefore, read together, there is no
conflict between the policy’s definition of “personal and
advertising injury” and the Criminal Acts Exclusion.

                                  32