D.W.J. v. Wausau Business Insurance Company

Filing 19

ORDER: re Motion to Dismiss 7 . Signed by Judge Sharon L. Gleason on 06/28/2016. (AEM, CHAMBERS STAFF) (Main Document 19 replaced on 6/28/2016) (PRR, COURT STAFF).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA

D.W.J.,
Plaintiff,
v.
WAUSAU BUSINESS INSURANCE
COMPANY,
Defendant.
Case No. 5:15-cv-00003-SLG
ORDER RE MOTION TO DISMISS
Before the Court is Defendant Wausau Business Insurance Company’s Motion to
Dismiss at Docket 7. Plaintiff D.W.J. opposed at Docket 12, and Defendant replied at
Docket 18. Oral argument was not requested and was not necessary to the Court’s
determination of the motion. For the reasons set forth below, the motion will be granted.
FACTS & PROCEEDINGS
This is an insurance coverage dispute arising out of a sexual assault that occurred
at the Super 8 Motel in Ketchikan in May 2011. The victim of the assault, D.W.J., brings
this action as the assignee of the hotel employee who committed the assault, Robert
Callanan. The defendant, Wausau Business Insurance Company, provides specified
liability insurance to the hotel and, by extension, its employees. Plaintiff D.W.J. alleges
that Wausau should have defended and indemnified Mr. Callanan for his sexual assault.
The parties do not dispute the majority of the facts. 1

1

The operative complaint in this case, at Docket 1-2, alleges only the date of the incident and
Mr. Callanan’s employment at the time of the assault. Docket 1-2 (Complaint) at ¶¶ 5, 9. As

On May 26, 2011, D.W.J. checked into the Super 8 Motel in Ketchikan. Robert
Callanan was the only employee on the premises that day, and registered D.W.J. into the
hotel. Mr. Callanan assigned D.W.J. to a room on the first floor, near the hotel’s front
desk. Within ten to fifteen minutes after D.W.J. had checked into her room, Mr. Callanan
used his key to open D.W.J.’s door. He told her that he was there to fix the television, but
instead of fixing the television, he “pushed [her] down on her own hotel bed, stripped her
nearly naked, groped her breasts and performed cunnilingus on her, all against her will
and after she told him to stop.” 2 D.W.J. told Mr. Callanan that she needed to use the
restroom, and from there called her husband and the police. When D.W.J.’s husband
arrived, “Mr. Callanan had D.W.J. gripped by the arm, and was seen attempting to leave
[the room] with [her].”3
On May 14, 2012, Mr. Callanan was convicted by a jury of First Degree Sexual
Assault as a result of this incident. 4 He was sentenced to 24 years in prison with 10 years
suspended. 5 Mr. Callanan appealed his conviction.

discussed further herein, the Court has considered this motion to dismiss as a motion for summary
judgment, and relies primarily on the factual allegations set for in the First Amended Complaint
filed by D.W.J. in July 2012 against the owner of the hotel—the Peninsula Group—and Mr.
Callanan. See infra, pages 5–6.
2

Docket 7-2 (Prior Complaint) at ¶ 11.

3

Docket 7-2 (Prior Complaint) at ¶ 16.

4

Docket 7-1 (Judgment) at 1; see Case History, Case No. 1KE-11-00523CR, available at
http://www.courtrecords.alaska.gov/eservices/?x=fUeG4NJ5w38ezsjqxenun7nqtUMww*TKOmV
ivCFEJCuDa6ZHn9yMnbO7jqV-KBCdzmNvpyStWhqgcmZYt37xiA (date of conviction).

5

Docket 7-1 (Judgment) at 2.

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The day following his conviction, May 15, 2012, D.W.J. filed a civil action against
Mr. Callanan and the Peninsula Group—the entity that owned the Super 8 Motel. 6 In that
complaint, D.W.J. noted that Mr. Callanan had been convicted of sexual assault in the
first degree. 7 D.W.J. alleged (1) assault and sexual battery, and assault and battery
related to kidnapping; (2) negligent failure to supervise, hire, train, or screen Mr. Callanan,
and negligent infliction of emotional distress; (3) breach of contract; and (4) claims under
the Alaska Unfair Trade Practices and Consumer Protection Act. 8

D.W.J.’s First

Amended Complaint identified the sexual assault as an “intentional tort[]”; it did not assert
that the assault was an accident, negligent, or unintentional. 9 The only references to
negligence in that complaint were as follows: D.W.J. alleged that Mr. Callanan was liable
for negligence because he assigned her a room on the first floor, and she asserted that
Mr. Callanan had a duty to “keep [her] safe,” and he breached this duty “by assaulting
[her] and engaging in negligent, or reckless and outrageous conduct against her.” 10
In the prior case, D.W.J. settled her claims against the Peninsula Group before
trial. Mr. Callanan did not enter an appearance, nor did he tender the civil complaint to
Wausau; however, Wausau still sent Mr. Callanan a letter dated October 11, 2012

6

Docket 7-2 (Prior Complaint) at ¶¶ 21, 22; see Case Record in case 1KE-12-224CI, available at
http://www.courtrecords.alaska.gov/eservices/?x=Jqs6ku2R718lccY*qJLp3oFTPULDKEDQOHAXpiGGMbt4u-fMX50Bld4FOtrPKV*PWeqlYRe52sh984c93fELA (date of
filing).

7

Docket 7-2 (Prior Complaint) at ¶ 20; Docket 7-1 (Judgment) at 1.

8

Docket 7-2 (Prior Complaint) at ¶¶ 24–41.

9

Docket 7-2 (Prior Complaint) at ¶ 26.

10

Docket 7-2 (Prior Complaint) at ¶¶ 27–28, 32.

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denying coverage. Wausau explained that it would not provide a defense to Mr. Callanan
because “[a] sexual assault obviously is not part of your duties and was not within the
scope of your employment by Peninsula.”11 Wausau added that even if Mr. Callanan was
an “insured,” his sexual assault of D.W.J. was not an “occurrence” such that it was
covered under the policy. 12
Mr. Callanan died in July 2013, while his criminal case was still on appeal. 13
Because he had not appeared in the civil case, that court entered a default judgment
against Mr. Callanan’s estate in the amount of $641,264.86. 14 In her memorandum in
support of the entry of the default judgment, D.W.J. asserted that all of her damages
should be allocated to Mr. Callanan and none to the Peninsula Group, because “[w]ith
[Mr.] Callanan’s assault being intentional, there is no fault to allocate and, thus, no
offset.” 15 The court evidently agreed and entered a default judgment against Mr. Callanan
for 100% of the claimed damages; the parties here agree there was no allocation of fault
to the Peninsula Group. 16 Mr. Callanan’s estate then assigned any claim it might have
against Wausau to D.W.J., and D.W.J. filed the instant case against Wausau in Alaska

11

Docket 7-3 (Letter) at 1–2.

12

Docket 7-3 (Letter) at 2.

13

Docket 13 (Opp’n) at 3; Docket 7 (Mot.) at 4.

14

Docket 7-4 (Default Judgment).

15

Docket 7-5 (Mem. in Support of Default Judgment) at 2.

16

See Docket 7-5 (Mem.); Docket 7-4 (Default Judgment); Case Record in case 1KE-12-224CI,
available
at
http://www.courtrecords.alaska.gov/eservices/?x=Jqs6ku2R718lccY*qJLp3oFTPULDKEDQOHAXpiGGMbt4u-fMX50Bld4FOtrPKV*PWeqlYRe52sh984c93fELA.
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Superior Court. The case was timely removed to this Court. 17 D.W.J. asserts claims of
negligent adjustment, breach of contract, and breach of the covenant of good faith and
fair dealing; she seeks damages in excess of $100,000, including punitive damages. 18
At issue in this case is whether the Wausau policy provides coverage to
Mr. Callanan for his conduct towards D.W.J. Wausau asserts that the Court should
dismiss the action because: (1) Mr. Callanan was not acting within the scope of his
employment when he assaulted D.W.J., and, therefore, the Wausau policy provides him
no coverage; and (2) Mr. Callanan’s intentional sexual assault of D.W.J. does not qualify
as an “occurrence” under the policy.
DISCUSSION
I.

Jurisdiction
The Court has subject-matter jurisdiction over this action pursuant to 28 U.S.C. §

1332(a). Because the Court is sitting in diversity, it applies the substantive law of the
forum state, Alaska, including the collateral estoppel rules of that state. 19
II.

Conversion to Summary Judgment
Defendant Wausau styles its briefing as a motion to dismiss D.W.J.’s Complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6). In ruling on a motion to dismiss, a
court “consider[s] only allegations contained in the pleadings, exhibits attached to the

17

Docket 1 (Removal).

18

Docket 1-2 (Complaint) at ¶¶ 35–42.

19

See Erie Railroad v. Tompkins, 304 U.S. 64 (1938); Jacobs v. CBS Broad., Inc., 291 F.3d 1173,
1177 (9th Cir. 2002); Pardo v. Olson & Sons, Inc., 40 F.3d 1063, 1066 (9th Cir. 1994) (“Because
this is a diversity case, we apply the collateral estoppel rules of the forum state . . . .”).
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complaint, and matters properly subject to judicial notice.” 20 However, Wausau has
presented as attachments materials beyond the scope of the challenged pleading, and
D.W.J. does not assert that the attached additional materials should be excluded. 21
“If, on a motion under Rule 12(b)(6) . . . , matters outside the pleadings are
presented to and not excluded by the court, the motion must be treated as one for
summary judgment under Rule 56.”22 Either party may bring the conversion provision
into operation by submitting materials other than the challenged pleading. 23 A district
court has discretion to accept or reject this additional material based on “whether or not
the proffered material, and the resulting conversion from the Rule 12(b)(6) to the Rule 56
procedure, is likely to facilitate the disposition of the action.” 24
The Court finds that consideration of the additional materials submitted without
objection in this case will facilitate the disposition of the action, because the materials
provide a comprehensive view of the dispute and the legal issues before the Court.
Therefore, the Court will not exclude the additional materials and will convert Wausau’s
motion to dismiss into a motion for summary judgment under Rule 56.

20

Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012) (quoting Swartz v. KPMG LLP, 476 F.3d
756, 763 (9th Cir. 2007)) (internal quotation marks omitted).
21

See Docket 12 (Opp’n) at 2. D.W.J.’s Complaint is the challenged pleading. See generally
FED. R. CIV. P. 7(a) (Pleadings Allowed).

22

FED. R. CIV. P. 12(d).

23

Conversion of a Rule 12(b)(6) Motion Into a Summary Judgment Motion, 5C FED. PRAC. &
PROC. CIV. § 1366 (3d ed. 2016).
24

Id.

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Rule 56(a) directs a court to “grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” When considering a motion for summary judgment, a court must
draw “all justifiable inferences” in the non-moving party’s favor. 25 The burden of showing
the absence of a genuine dispute of material fact initially lies with the moving party. 26 If
the moving party meets this burden, the non-moving party must present specific evidence
demonstrating the existence of a genuine issue of fact. 27 The non-moving party may not
rely on mere allegations or denials. To reach the level of a genuine dispute, the evidence
must be such “that a reasonable jury could return a verdict for the non-moving party.” 28
If the evidence provided by the non-moving party is “merely colorable” or “not significantly
probative,” summary judgment to the moving party is appropriate. 29
III.

Scope of Employment
The Wausau insurance policy provides coverage for employees, “but only for acts

within the scope of their employment by [Peninsula Group] or while performing duties
related to the conduct of [Peninsula Group’s] business.” 30

25

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (citing Adickes v. S.H. Kress & Co.,
398 U.S. 144, 158–59 (1970)).
26

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); In re Oracle Corp. Sec. Litig., 627 F.3d 376,
387 (9th Cir. 2010).
27

Anderson, 477 U.S. at 250; Oracle, 627 F.3d at 387.

28

Anderson, 477 U.S. at 248.

29

Id. at 249–50 (citing Dombrowski v. Eastland, 387 U.S. 82, 84–85 (1967); First Nat’l Bank of
Ariz. v. Cities Serv. Co., 391 U.S. 253, 290 (1968)).

30

Docket 7-6 (Policy) at 13.

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Wausau asserts that under no set of facts can sexual activity, whether consensual
or nonconsensual, be within Mr. Callanan’s scope of employment as a front desk clerk.
Wausau argues that under Alaska law an act must be motivated at least in part by a desire
to serve the employer, and a sexual assault cannot have such a motivation. Wausau also
asserts that no insured could have a reasonable expectation of being insured for sexual
assault. 31
D.W.J. responds that she has also asserted a “negligent billeting” theory, under
which Mr. Callanan’s action of assigning her a room on the first floor of the hotel made
her less safe. Because checking a guest into the hotel is motivated at least in part by a
desire to serve the employer, she asserts coverage would apply. And D.W.J. relies
heavily on a case where the Alaska Supreme Court held that a counselor’s sexual
relations with a patient were related to his employment. 32 Finally, D.W.J. asserts that the
assault was close enough in time and space to Mr. Callanan’s performance of hotelrelated duties that it was within his scope of employment or while performing duties
related to Peninsula Group’s business. 33

31

Docket 7 (Mot.) at 4–15.

32

Docket 13 (Opp’n) at 10 (quoting Doe v. Samaritan Counseling Ctr., 791 P.2d 344 (Alaska
1990)).
33

Docket 13 (Opp’n) at 4–23.

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In determining whether an employee has acted within his scope of employment,
Alaska courts apply a flexible multi-factored test. 34 The test adopts the factors set forth
in the Restatement (Second) of Agency:
(1) Conduct of a servant is within the scope of employment if, but only if:
(a) it is of the kind he is employed to perform;
(b) it occurs substantially within the authorized time and space limits;
(c) it is actuated, at least in part, by a purpose to serve the master;
and
(d) if force is intentionally used by the servant against another, the
use of force is not unexpected by the master.
(2) Conduct of a servant is not within the scope of employment if it is
different in kind from that authorized, far beyond the authorized time or
space limits, or too little actuated by a purpose to serve the master. 35
Not all four of the Restatement factors are required—rather, together they are relevant
considerations. 36 However, the Alaska Supreme Court has held that that some purpose
to serve the master, factor (c) of the test, must be present. 37
The case that D.W.J. relies on most heavily is Doe v. Samaritan Counseling
Center. 38 In that case, a therapist engaged in kissing and fondling with his patient during
sessions, and after the patient terminated the sessions the two engaged in sexual
intercourse. The patient filed suit against the counseling center for the counselor’s
actions, in part based on a theory of respondeat superior liability. The trial court granted
34

Doe, 791 P.2d at 347; Rosenbaum v. Burgess, No. 3:06-00144 (RJB), 2007 WL 623795, at *4
(D. Alaska Feb. 23, 2007).
35

Restatement (Second) of Agency § 228.

36

Doe, 791 P.2d at 347.

37

VECO, Inc. v. Rosebrock, 970 P.2d 906, 924 n.36 (Alaska 1999).

38

791 P.2d 344 (Alaska 1990).

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summary judgment to the counseling center on the respondeat superior claim, but the
Alaska Supreme Court reversed. It framed the question as whether an employee could
be acting in the scope of employment even if the employee’s tortious conduct was not
motivated by a desire to serve the employer. 39 It opined that “where tortious conduct
arises out of and is reasonably incidental to the employee’s legitimate work activities, the
‘motivation to serve’ test will have been satisfied.” 40 Because of a therapy phenomenon
called transference in which a patient becomes dependent on the therapist, the court
reasoned that the sexual encounter was incidental to the therapy. 41 Thus, the court
appeared to hold that “motivation to serve” could be deemed satisfied so long as the
employee’s acts were “reasonably incidental” to those tasks the employee was hired to
perform; no actual desire to serve the employer need be present.
Nine years later, in VECO, Inc. v. Rosebrock, the Alaska Supreme Court retreated
from its holding in Doe. 42 There, an employee sued VECO, alleging a hostile work
environment and retaliation. While the scope of employment test was not the focus of the
case, the court cited with approval the Restatement of Agency, that an “employee is not
acting within the scope of employment unless his actions are ‘actuated, at least in part,
by a purpose to serve the master.’” 43 The court cited Doe’s language regarding the

39

Doe, 791 P.2d at 345–47.

40

Id. at 348.

41

Id. at 348–49.

42

970 P.2d 906 (Alaska 1999).

43

Rosebrock, 970 P.2d at 924 (quoting Restatement (Second) of Agency § 228(1)(c)).

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tortious conduct being “reasonably incidental to the employee’s legitimate work activities”
and held that “to the extent that this language suggests that the employee’s acts need
not be motivated in fact at least to some degree to serve the master’s business we
disapprove of it.”44 The court noted that the aided in agency theory from another section
of the Restatement would have been more applicable to the facts of Doe, as it does not
require that the conduct be within the scope of employment. 45 The Alaska Supreme Court
concluded that “imposing vicarious liability under a scope of employment theory absent
at least a partial purpose on the part of the employee to serve the employer seems
unjustified.” 46
Thus, after Rosebrock, although Alaska has not strictly required that each of the
four factors of the Restatement of Agency be present, the Alaska Supreme Court has
stated that an “employee is not acting within the scope of employment unless his actions
are ‘actuated, at least in part, by a purpose to serve the master.’” 47 Here, D.W.J. does
not allege, nor could she rationally allege, that Mr. Callanan’s criminal actions were at all
carried out for the purpose of serving Peninsula Group. Under Rosebrock, an employee
must be acting at least in part with a purpose to serve the master, and an employee
perpetrating a sexual assault cannot do such.

Moreover, even if this factor was not

required, Mr. Callanan’s conduct cannot meet two of the remaining three Restatement

44

Id. at 924 n.36.

45

Id. (citing Restatement (Second) of Agency § 219(2)(d) (Aided in Agency Section)).

46

Id.

47

Id. at 924 (quoting Restatement (Second) of Agency § 228(1)(c)).

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factors. The Restatement also asks whether the conduct is “of the kind [the employee] is
employed to perform.” 48 Under no circumstances is a front desk clerk employed to
perform sexual assaults, and D.W.J. does not allege such. D.W.J. also cannot meet the
final factor, that “if force is intentionally used by the servant against another, the use of
force is not unexpected by the master.”49

Here, force was intentionally used by

Mr. Callanan against D.W.J., and that force would not have been expected by the
Peninsula Group. Unlike a person employed in an occupation where a use of force could
be expected, such as a security guard, Mr. Callanan was employed as a front desk clerk,
a position that should not require any force.

Finally, D.W.J. has alleged that Mr.

Callanan’s criminal act occurred “substantially within the authorized time and space limits”
of his employment because the assault happened on the premises of the hotel during his
shift. 50 But the ability to meet one out of four Restatement factors is insufficient: a sexual
assault is “different in kind from that authorized . . . [and] too little actuated by a purpose
to serve the master.”51
D.W.J. also asserts that Mr. Callanan should be an insured because he was
performing business-related tasks under the second portion of the policy language: “while
performing duties related to the conduct of [Peninsula Group’s] business.” 52 But the Court

48

Restatement (Second) of Agency § 228(1)(a).

49

Id. at (1)(c).

50

See Id. at (1)(b).

51

Id. at (2).

52

Docket 7-6 (Policy) at 13.

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finds that in sexually assaulting D.W.J., Mr. Callanan was not performing a businessrelated task. 53

The fact that the assault happened on work premises and during

Mr. Callanan’s work shift is insufficient to bring Mr. Callanan’s intentional sexual assault
under the second portion of the policy language. 54 And, as discussed later in this order,
Mr. Callanan is estopped by his criminal conviction of asserting that the sexual encounter
was consensual. 55
Finally, D.W.J. asserts a “negligent billeting” theory based on Mr. Callanan’s action
of placing D.W.J. on the ground floor of the hotel. The First Amended Complaint in the
prior action did not specifically state a “negligent billeting” theory; rather, it expressly

53

Although neither party cites to Laidlaw Transit, Inc. v. Crouse, 53 P.3d 1093 (Alaska 2002), the
Court will briefly discuss it as it ties in closely with D.W.J.’s argument that the assault should be
covered because it occurred while Mr. Callanan was on duty at the hotel and allegedly entering
D.W.J.’s room to fix the television. See Docket 13 (Opp’n) at 6–9. In Laidlaw, a student’s mother
brought an action for negligence against a transit company after a school bus driver caused an
accident while driving under the influence of marijuana. The jury returned a verdict against
Laidlaw Transit. On appeal, Laidlaw Transit argued that the driver’s conduct was not in the scope
of her employment because she had not ingested the marijuana out of a purpose to serve the
employer. But the Alaska Supreme Court disagreed and held that the driver had “specifically
been employed to drive a school bus” and had been performing that task at the time of the
accident. The court held that “the conduct at issue—driving while impaired by marijuana—both
arose out of and was incidental to [the driver’s] legitimate work activities because it carried out
the very function that [she] was hired to perform—driving a school bus.” Id. at 1096–99. The facts
presented in the instant case differ greatly from Laidlaw. Here, Mr. Callanan was not engaged in
any activity he was hired to perform while he assaulted D.W.J., even if the Court assumes that he
entered the room initially intending to fix the television.
54

See Selective Ins. Co. v. Oglebay, No. Civ. AMD 05-951, 2005 WL 3027460, at *1 (D. Md.
2005), aff’d, 242 F. App’x 104 (4th Cir. 2007) (holding that assault performed in driving school car
during work hours was not “while performing duties related to the conduct” of the driving school’s
business); Baek v. Cont’l Cas. Co., 178 Cal. Rptr. 3d 622, 633 (Cal. App. 2014) (“Although the
alleged sexual assault of Jaime W. occurred during a massage, the particular acts on which
liability is premised—i.e., ‘touch[ing], fondl[ing], rubb[ing], grabb[ing] and squeez[ing] Plaintiff’s
breasts, buttocks, inner thighs and genitals’ . . . indisputably were not ‘duties related to the conduct
of [HMWC’s] business’ or acts of the kind Baek had been hired to perform.”).
55

See infra, page 16–17. And even if the sexual acts had been consensual, they still would not
have been a business-related activity.

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stated that Mr. Callanan engaged in “deception, fraud, and false pretenses” by assigning
D.W.J. to a ground-floor room. 56 Regarding negligence, the prior complaint simply stated
that Mr. Callanan negligently “fail[ed] to keep D.W.J. safe,” but did not elaborate. 57 But
in any event, the act of assigning D.W.J. a room on the first floor, itself, was not the basis
for D.W.J.’s claims; the basis for her claims arose when Mr. Callanan intentionally
sexually assaulted her. 58 In United Services Automobile Association v. Neary, the Alaska
Supreme Court held that “it is the unforeseen event, not every act of negligence preceding
it, that constitutes the accident or occurrence for purposes of insurance coverage.” 59
Thus, even if D.W.J. had expressly pled her “negligent billeting” claim in the prior
complaint, the claim against Mr. Callanan would have still been a tort claim for intentional
sexual assault, based on the facts alleged by D.W.J. 60

56

Docket 7-2 (Prior Complaint) at ¶ 37.

57

Docket 7-2 (Prior Complaint) at 4.

58

See United Servs. Auto Ass’n v. Neary, 307 P.3d 907, 913 (Alaska 2013) (holding that
unforeseen event of child shooting another child constitutes the act for which there is coverage,
not the parents’ negligent acts in failing to secure firearm).

59

Neary, 307 P.3d at 913.

60

The duty to defend arises out of the facts of the case, not the label placed on the facts by the
attorneys. See State, Dep’t of Transp. & Pub. Facil. v. State Farm Fire & Cas. Co., 929 P.2d 788,
792 (Alaska 1997); see also Gonzalez v. Fire Ins. Exch., 184 Cal.Rptr.3d 394, 407 (Cal. App.
2015) (“A general boilerplate pleading of ‘negligence’ adds nothing to a complaint otherwise
devoid of facts giving rise to a potential for covered liability.”). Moreover, even if D.W.J. amended
her complaint, she cannot cure the fact that the underlying action against Mr. Callanan was an
intentional tort claim for sexual assault. Ebner v. Fresh, Inc., 818 F.3d 799, 808 (9th Cir. 2016)
(“Although, under Federal Rule of Civil Procedure 15(a)(2), leave to amend should be ‘freely’
given, that liberality does not apply when amendment would be futile.”).
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Because Mr. Callanan’s sexual assault was not performed within the scope of his
employment or while performing business-related tasks, he is not an insured under the
Peninsula Group’s insurance policy with respect to D.W.J.’s particular injury.
IV.

Occurrence as Defined by the Policy
Because the Court has held that Mr. Callanan was not an additional insured for his

sexual assault, it need not consider whether the assault could have been an “occurrence”
covered under the policy. Nonetheless, the Court will also address this issue.
The Wausau policy covers only “bodily injury” that is caused by an “occurrence.”61
“[O]ccurrence” is defined in the policy as “an accident, including continuous or repeated
exposure to substantially the same general harmful conditions.”62 The policy does not
define “accident,” but the Alaska Supreme Court has defined it as “anything that begins
to be, that happens, or that is a result which is not anticipated and is unforeseen and
unexpected.”63 The event must be unexpected and unintentional from the standpoint of
the insured, 64 because “Alaska recognizes ‘a general public policy against insuring a
person against liability for his or her intentional acts.’” 65
Wausau asserts that D.W.J. cannot allege any facts that would show the sexual
assault was an accident as that term is interpreted in Alaska. It asserts that Mr. Callanan’s

61

Docket 7-6 (Policy) at 2.

62

Docket 7-6 (Policy) at 21.

63

Neary, 307 P.3d at 913 (quoting Fejes v. Alaska Ins. Co., 984 P.2d 519, 523 (Alaska 1999)).

64

Shaw v. State Farm Mut. Auto Ins. Cos., 19 P.3d 588, 590–91 (Alaska 2001).

65

Kim v. Nat’l Indem. Co., 6 P.3d 264, 267 (Alaska 2000).

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conviction for sexual assault in the first degree bars his assignee D.W.J. from asserting
that he was merely mistaken about consent, and it asserts that the sexual assault was
not an accident from Mr. Callanan’s perspective. 66 D.W.J. responds that even if the
conduct was intentional, the harm may not have been intentional from Mr. Callanan’s
viewpoint. And she asserts that Mr. Callanan may have accidentally believed that he had
D.W.J.’s consent. 67
In Kim v. National Indemnity Co., the Alaska Supreme Court held that a cab driver
could not be insured for sexually assaulting his minor passenger because the cab driver’s
abuse of the minor was intentional, not accidental. 68 The court held that “having been
convicted of second- and third- degree sexual abuse of a minor, Kim was found to have
knowingly engaged in sexual penetration and sexual contact with L.W. Thus, Kim’s
sexual contact with L.W. was deliberate rather than accidental.” 69
Here, Mr. Callanan was convicted of sexual assault in the first degree, in violation
of AS 11.41.410(a). Under that statute, an offender is guilty if the offender “engages in
sexual penetration with another person without consent of that person.” 70 To prove the
completed crime of first-degree sexual assault, the prosecution “is required to establish

66

Docket 7 (Mot.) at 15–20.

67

D.W.J. also returns to the negligent billeting theory, asserting that this was an occurrence that
caused harm under the terms of the policy, but, as explained above, the Court finds that the
relevant claim is the sexual assault, not any negligence that preceded it. See supra, page 13–
14.
68

6 P.3d 264, 267 (Alaska 2000).

69

Kim, 6 P.3d at 267.

70

AS 11.41.410(a)(1).

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that the defendant (1) knowingly engaged in sexual intercourse and (2) recklessly
disregarded the victim’s lack of consent to that intercourse.” 71
Like in Kim, the Court finds that Mr. Callanan can offer no facts showing that his
sexual assault of D.W.J was an accident. The criminal conviction establishes that the
conduct was performed knowingly and that Mr. Callanan did not have consent for the
sexual encounter. 72 After having been convicted of knowing and intentional conduct,
Mr. Callanan’s assignee cannot now argue that it was an accident. Accordingly, Wausau
is entitled to summary judgment because the sexual assault was not an “occurrence”
under the Wausau policy.
V.

Duty to Defend
D.W.J. asserts that even if Mr. Callanan was not covered for his sexual assault

under the Peninsula Group’s policy, Wausau still had a duty to defend him because it was
unclear whether this was a case of mistaken consent. Moreover, D.W.J. represents that
Wausau later learned that (1) Peninsula’s manager had asserted that the conduct was

71

Sergie v. State, 105 P.3d 1150, 1153 (Alaska App. 2005).

72

A federal court sitting in diversity applies the collateral estoppel rules of the forum state. Jacobs
v. CBS Broad., Inc., 291 F.3d 1173, 1177 (9th Cir. 2002); Pardo v. Olson & Sons, Inc., 40 F.3d
1063, 1066 (9th Cir. 1994) (“Because this is a diversity case, we apply the collateral estoppel
rules of the forum state . . . .”). Under Alaska state law, “a conviction . . . will collaterally estop the
criminal defendant from denying any element in a subsequent civil action against him that was
necessarily established by the conviction, as long as the prior conviction was for a serious criminal
offense and the defendant in fact had the opportunity for a full and fair hearing.” Lamb v.
Anderson, 147 P.3d 736, 742 (Alaska 2006); see also Scott v. Robertson, 583 P.2d 188, 191–92
(Alaska 1978) (adopting rule). The Court finds that Mr. Callanan’s conviction was for a serious
criminal offense and he had a full opportunity for a fair hearing. Therefore, collateral estoppel
applies as to D.W.J.’s lack of consent. And the fact that Mr. Callanan died while the case was on
appeal does not alter the result. Wyatt v. Wyatt, 65 P.3d 825, 831 (Alaska 2003) (“We have
repeatedly held that the pendency of an appeal is irrelevant for the purposes of res judicata and
collateral estoppel.”).
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consensual, and (2) D.W.J. had offered to release Mr. Callanan for additional money. 73
D.W.J. asserts that this information should have led Wausau to defend Mr. Callanan.
D.W.J. also asserts that the law in this area is unclear. 74 Wausau counters that no insured
could have a reasonable expectation of being insured for a sexual assault. And it asserts
that Mr. Callanan’s conviction estops his assignee from asserting that the sex acts were
consensual. 75
Mr. Callanan was convicted of first-degree sexual assault on May 14, 2012. Thus,
as of May 14, 2012, it was established that Mr. Callanan lacked consent for his actions.
On May 15, 2012, D.W.J. filed her civil suit against Mr. Callanan—the suit for which
D.W.J. asserts Wausau should have provided a defense. Wausau sent Mr. Callanan a
refusal-to-defend letter in October 2012, to which there is no indication Mr. Callanan ever
responded. 76
While an insurer’s duty to defend is broader than its duty to indemnify, if the insurer
can show a “complete and absolute absence of” coverage, then the insurer does not have
a duty to defend. 77 As detailed above, the Court has found that a complete absence of
coverage existed in this case, even taking the facts in the light most favorable to
Mr. Callanan’s assignee, D.W.J.

73

Docket 1-2 (Complaint) at ¶¶ 27, 30.

74

Docket 13 (Opp’n) at 20.

75

Docket 7 (Mot.) at 4–15.

76

Docket 13 (Opp’n) at 21; Docket 7-3 (Letter).

77

Christianson v. Conrad-Houston Ins., 318 P.3d 390, 402 (Alaska 2014); Pension Trust Fund v.
Federal Ins. Co., 307 F.3d 944, 955 (9th Cir. 2002).

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This case bears similarities to M.C. v. Northern Insurance Co. of New York, a case
involving an insurance coverage dispute for the sexual assault of a minor. 78 In M.C., the
civil suit and the criminal proceeding occurred concurrently. Initially, the insurer tendered
a defense to the defendant in the civil suit, but when the defendant pled guilty to the
criminal offense of sexual abuse of a minor, the insurer withdrew its defense and denied
coverage in the companion civil case. The defendant then confessed judgment in the
civil case and assigned his rights to proceed against the insurer to the victim and her
mother. In their resulting case against the insurer, the Alaska Supreme Court held that
the insurer owed no duty to defend once the defendant pled guilty to sexual abuse of a
minor, because “the defendant could not conceivably have been covered by the policy,”
and at that juncture the insurer “could fairly conclude that the suit against [the defendant]
was not ‘within or potentially within’ the policy’s coverage.” 79
Here, at the time the underlying civil suit commenced, it had been established that
Mr. Callanan had knowingly acted without D.W.J.’s consent; thus, Mr. Callanan could not
conceivably have been covered by the policy, and Wausau could fairly conclude that the
suit against Mr. Callanan was not within or potentially within the policy’s coverage.
Moreover, D.W.J.’s argument that later information should have caused Wausau to
disregard the judgment of conviction entered by the State of Alaska is unpersuasive. And
the Court finds that the law was not uncertain on this point such that there is no basis to
support a finding of a duty to defend Mr. Callanan on that basis.

78

1 P.3d 673 (Alaska 2000).

79

1 P.3d at 674, 676–77.

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CONCLUSION
For the foregoing reasons, IT IS ORDERED that Wausau’s Motion to Dismiss at
Docket 7, treated as a motion for summary judgment, is GRANTED. The Clerk of Court
is directed to enter a final judgment accordingly.

DATED this 28th day of June, 2016.
/s/ Sharon L. Gleason
UNITED STATES DISTRICT JUDGE

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