AMERICAN FAMILY MUTUAL INSURANCE COMPANY v. C. et al

Filing 49

ORDER granting 40 Motion for Summary Judgment. See Order for details. Final judgment shall be entered accordingly. Signed by Judge Sarah Evans Barker on 5/10/2022. (LF)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
NEW ALBANY DIVISION
AMERICAN FAMILY MUTUAL
INSURANCE COMPANY,

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Plaintiff,
v.
S. C., et al.
Defendants.

No. 4:20-cv-00243-SEB-DML

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
This is a declaratory judgment action filed by Plaintiff American Family Mutual
Insurance Company ("American Family") seeking a declaration that it has no duty to
defend or indemnify Defendant Kenneth Gray or Defendant Holly Jacobs in connection
with a lawsuit filed against Mr. Gray and Ms. Jacobs by Tara Robbins, as a parent and
next friend of S.C., a minor, alleging negligence claims arising from the alleged sexual
assault and molestation of S.C. by Mr. Gray and Ms. Jacobs's failure to protect S.C. from
Mr. Gray. This matter is before us for a determination of Plaintiff's obligations under the
insurance contracts as framed in its Motion for Summary Judgment [Dkt. 40], filed on
January 14, 2022. For the reasons detailed below, we GRANT Plaintiff's motion.
Factual Background
I.

The Underlying Civil Lawsuit
On June 12, 2020, Ms. Robbins, as a parent and next friend of S.C., filed an action

against Mr. Gray and Ms. Jacobs in Clark Superior Court (the "Underlying Litigation").
1

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The operative complaint in the Underlying Litigation is the amended complaint filed on
January 11, 2021, which claims (in Count I) that S.C. was hired to babysit for Mr. Gray
and Ms. Jacobs's children at the home they occupied with Ms. Jacobs's parents located at
220 Kewanna Drive, Jeffersonville, Indiana, starting on the evening of June 8, 2019, and
lasting into the early morning of June 9, 2019. Mr. Gray is alleged to have returned to
their home on June 9, 2021 in a "highly intoxicated state" and proceeded with negligence
and reckless disregard for S.C.'s rights, to sexually assault and sexually molest her. 1
Count II of the amended complaint alleges that Ms. Jacobs was negligent in failing to
protect S.C. from being sexually assaulted and sexually molested by Mr. Gray.
As a result of Mr. Gray's and Ms. Jacobs's alleged negligence, S.C. seeks payment
from them for medical expenses, personal injury, personal and emotional suffering, both
in the past and continuing into the future, and for Ms. Robbins's loss of her child's
services, love, and companionship, and medical expenses. The prayer for relief in the
Underlying Litigation requests both compensatory and punitive damages.
American Family was notified of the Underlying Action on July 9, 2020. After
investigating coverage issues, American Family determined that it had issued to Ms.
Jacobs's biological parents, Ronnie and Catherine Jacobs, two insurance policies
potentially relevant to the Underlying Litigation: Policy No. 13-025507-01, effective
March 4, 2019 to March 4, 2020 (the "Homeowners Policy"), and Policy No. 13-U26594-

1

On June 9, 2019, Mr. Gray was charged with child molestation under Indiana Code § 35-42-43(a)(F)(1) in Clark Circuit Court. The criminal case against Mr. Gray remains pending under
Cause No. 10C04-1910-FI-000005 with a jury trial currently set for October 25, 2022.
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01, effective November 4, 2018 to November 4, 2019 (the "Umbrella Policy"). Because
Mr. Gray has never been married to Ms. Jacobs and is not related in any other way to the
named insureds, American Family denied that it has a duty to defend or indemnify him in
a letter dated November 16, 2020. However, American Family agreed to defend Ms.
Jacobs under a reservation of rights as documented by letter dated November 16, 2020.
American Family has filed this lawsuit to secure a judicial determination of its
obligations under the insurance contract to defend and/or indemnify Mr. Gray or Ms.
Jacobs.
II.

American Family's Homeowners Insurance Policy
The Homeowners Policy issued by American Family to Ms. Jacobs's parents

provides in pertinent part:
LIABILITY COVERAGES – SECTION II
COVERAGE D – PERSONAL LIABILITY COVERAGE
We will pay, up to our limit, compensatory damages for which any insured
is legally liable because of bodily injury or property damage caused by an
occurrence covered by this policy.
Defense Provision.
If a suit is brought against any insured for damages because of bodily injury
or property damage caused by an occurrence to which this policy applies,
we will provide a defense at our expense by counsel of our choice. We will
defend any suit or settle any claim for damages payable under this policy as
we think proper.
OUR OBLIGATION TO DEFEND ANY CLAIM OR SUIT ENDS WHEN
THE AMOUNT WE HAVE PAID FOR DAMAGES RESULTING FROM
THE OCCURRENCE EQUALS OUR LIMIT.
Dkt. 1-2, Exh. B.
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The Homeowners Policy includes the following definitions relevant to this action:
DEFINITIONS
The following words in this policy have defined meanings[.] [T]hey will
be printed in bold type.
1. Bodily Injury means bodily harm, sickness or disease. It includes
resulting loss of service, required care and death.
Bodily injury does not include:
a. any of the following which are communicable: disease, bacteria,
parasite, virus or other organism which are transmitted by any
insured to any other person;
b. the exposure to any such communicable disease, bacteria,
parasite, virus or other organism; or
c. emotional or mental distress, mental anguish, mental injury, or
any similar injury unless it arises out of actual bodily harm to the
person.
***

5. Insured

a. Insured means you and, if residents of your household:
(1) your relatives; and
(2) any other person under the age of 21 in your care or in the
care of your resident relatives.
***
7. Limit means the limit of liability that applies for the coverage.
***
9. Occurrence means an accident, including exposure to conditions, which
results during the policy period, in:
a. bodily injury; …
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***
14. You and your refer to the person or people shown as the named
insured in the Declarations. These words also refer to your spouse
who is a resident of your household.
Dkt. 1-2, Exh. B.
The Homeowners Policy includes the following exclusion:
EXCLUSIONS – SECTION II
17. Violation of Law. We will not cover bodily injury or property
damage arising out of:
a. violation of any criminal law for which any insured is convicted;
b. violation of any building or housing code for which any insured
is convicted; or
c. violation of any criminal law for which any insured is not
convicted due to mental incapacity.
Dkt. 1-2, Exh. B.
The Homeowners Policy also includes the following language as amended in the
Indiana Amendatory Endorsement:
Coverage D – Personal Liability and Coverage E – Medical Expense do
not apply to:
Sexual Molestation or Misconduct, Corporal Punishment, Physical or
Mental Abuse.
We will not cover bodily injury and property damage arising out of or
resulting from sexual molestation or misconduct, corporal punishment,
physical and mental abuse.
a. This includes any actual or alleged:
(1) sexual molestation or misconduct by any insured:
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(a) including but not limited to personal interaction or
photographic, video, or any other display of sexual activity;
(b) regardless of whether or not consent is given;
(2) corporal punishment; or
(3) physical or mental abuse resulting from acts or omissions of any
insured.
b. This exclusion applies regardless of:
(1) intent to cause injury; or
(2) the theory of relief pursued, asserted, or claimed by anyone
seeking compensation under this policy.
***
Expected or Intended. We will not cover bodily injury or property
damage arising out of an expected or intended action or omission.
a. This includes any type of bodily injury or property damage that an
insured:
(1) intends; or
(2) may expect to result from any intentional act or omission.
b. This exclusion applies even if the bodily injury or property damage is:
(1) of a different kind, quality, or degree than intended;
(2) to a different person or property than intended;
(3) the result of a willful and malicious act, no matter an whom the act
was directed;
(4) unexpected or unforeseen by the person injured or the owner of
the property damaged; or
(5) sustained regardless of whether an insured;
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(a) is under the influence of alcohol or any controlled substance;
(b) lacks the mental capacity to govern his or her conduct; or
(c) is deemed not to have had the mental capacity to form the legal
intent to commit the act or omission.
c. This exclusion applies regardless of the theory of relief pursued, asserted,
or claimed by anyone seeking compensation under this policy.
***
Punitive, Statutorily Imposed, or Court Ordered Damages. We will not
cover punitive, statutorily imposed, or court ordered damages. This includes
any Personal Liability for:
a. punitive, exemplary, statutorily imposed, multiple, or aggravated
damages;
b. fines, penalties, or court ordered restitution; or
c. awarded or statutorily mandated attorney fees related to a. or b. above.
Dkt. 1-2, Exh. B.
III.

American Family's Umbrella Insurance Policy

The Umbrella Policy, as amended by the Indiana Personal Liability Endorsement,
provides in pertinent part as follows:
INSURING AGREEMENT
We provide this policy in return for the premium you pay. The Application,
Declarations and all Endorsements are part of this policy. You represent the
statements in your application are true. We provide this policy on the
condition that your statements are true. We may void this policy if you
make, with intent to deceive, any material statements that we rely on. You
and all insureds must comply with policy terms. This includes maintaining
all Required Underlying Insurance Limits. Any failure to comply with the
policy terms by you or any other insured will affect coverage.
7

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PERSONAL LIABILITY COVERAGE
1. Bodily Injury or Property Damage. We will pay, up to our limit,
compensatory damages for which an insured becomes liable for bodily
injury or property damage caused by an occurrence covered by this policy;
2. Personal Injury. We will pay, up to the remaining amount of the Personal
Injury Aggregate Limit shown in the Declarations, compensatory damages
for which an insured becomes legally liable for personal injury caused by
an occurrence covered by this policy, and arising out of one or more offenses
listed in the definition of personal injury; ….
***
DEFENSE PROVISION
If a suit is brought against an insured for damages because of injury caused
by an occurrence to which this policy applies, we will provide a defense at
our expense by counsel of our choice.
HOWEVER, WE ARE NOT OBLIGATED TO DEFEND IF:
1. THE OCCURRENCE IS COVERED BY OTHER INSURANCE
AVAILABLE TO AN INSURED; OR
2. THERE IS NO APPLICABLE UNDERLYING INSURANCE IN EFFECT
AT THE TIME OF THE OCCURRENCE AND THE AMOUNT OF
DAMAGES CLAIMED OR INCURRED IS LESS THAN THE
APPLICABLE PRIMARY LIMIT SHOWN IN THE DECLARATIONS
OF THIS POLICY.
We may join, at our expense, with the insured or any insurer providing
underlying insurance in the investigation, defense or settlement of any
claim or suit which we believe may require payment under this policy.
However, we will not contribute to the costs and expenses incurred by an
insurer providing underlying insurance.
OUR DUTY TO DEFEND ENDS WHEN THE AMOUNT WE HAVE
PAID FOR DAMAGES RESULTING FROM THE OCCURRENCE
EQUALS OUR LIMIT.
Dkt. 1-3, Exh. C.
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The Umbrella Policy contains the following relevant definitions:
DEFINITIONS
When the following words in this policy have defined meanings, they will
be printed in bold type.
Bodily Injury means the definition in the applicable underlying insurance
that applies to the loss.
In the event there is no applicable underlying insurance, bodily injury
means physical injury, sickness, disease, or death of any person. It includes
resulting loss of services, loss of consortium, and required care.
***
Occurrence means:
a.

Under Personal Liability Coverage, an accident, including continuous
or repeated exposure to substantially the same general harmful
conditions, which results, during the policy period, in bodily injury
or property damage;
***

Insured means:
a.

The named insured;

b.

Your relatives;
***

Relative means a residence of your household who is:
a.

Related to you by blood, marriage or adoption, including your ward
or foster child;

b.

Any other person under the age of 21 who is in your care or the care
of your residence relative.
***
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Underlying Insurance means any policy providing the insured with initial
or primary liability insurance covering one or more of the types of liability
listed in the Schedule of underlying insurance in the declarations.
Dkt. 1-3, Exh. C.
The Umbrella Policy as amended by the Indiana Personal Liability Endorsement
contains the following exclusions:
EXCLUSIONS
***
Violation of Law. We will not cover injury arising out of violation of a
penal law or ordinance by or with the knowledge or consent of an insured
when an insured is convicted of such violation.
***
Aggression. We will not cover injury arising out of any aggressive activity,
harassment, or bullying committed by the insured by any means.
***
Expected or Intended. We will not cover injury arising out of an expected
or intended act or omission.
a.

This includes any type of injury that an insured:
(1)
(2)

b.

Intends; or
May expect to result from any intentional act or omission.

This exclusion applies even if the injury is:
(1)

Of a different kind, quality or degree than intended;

(2)

To a different person or property than intended;

(3)

The result of a willful and malicious act, no matter at whom
the act was directed;

(4)

Unexpected or unforeseen by the person injured or the owner
of the property damaged, or
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(5)

Sustained regardless of whether an insured:
(a)
(b)

Lacks the mental capacity to govern his or her conduct;
or

(c)
c.

Is under the influence of alcohol or any controlled
substance;

Is deemed not to have the mental capacity to form the
legal intent to commit the act or omission.

This exclusion applies regardless of the theory of relief pursued,
asserted, or claimed by anyone seeking compensation under this
policy.

However, this exclusion does not apply when the loss arises out of the use of
reasonable force by an insured to protect persons or property.
***
Punitive, Statutorily Imposed, or Court Ordered Damages. We will not
cover punitive, statutorily imposed, or court ordered damages.
This includes any Personal Liability for:
a.

Punitive, exemplary, statutorily imposed, multiple, or aggravated
damages;

b.

Fines, penalties, or court ordered restitution; or

c.

Awarded or statutorily mandated attorney fees related to a. or b.
above.

Sexual Molestation or Misconduct, Corporal Punishment, Physical or
Mental Abuse. We will not cover injury arising out of or resulting from
sexual molestation or misconduct, corporal punishment, physical or mental
abuse.
a.

This includes any actual or alleged:
(1)

Sexual molestation or misconduct by any insured:
(a)

Including but not limited to personal interaction or
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photographic, video, or any other display of sexual
activity;
(b)

Regardless of whether or not consent is given;

(2)
(3)
b.

Corporal punishment; or
Physical or mental abuse resulting from acts or omissions of
any insured.

This exclusion applies regardless of:
(1)

Intent to cause injury; or

(2)

The theory of relief pursued, asserted, or claimed by anyone
seeking compensation under this policy.

Violation of Law. We will not cover injury arising out of violation of any
criminal law for which any insured:
a.

Is convicted or adjudicated; or

b.

Due to mental incapacity, disease, or defect is either not convicted or
convicted of a lesser charge.

This exclusion applies even if an insured lacks the mental capacity to govern
his or her conduct.
However, this exclusion does not apply to the extent that such injury is
covered by the underlying insurance at the time of the occurrence or
offense, and the injury is covered by valid and collectible underlying
insurance for the full Minimum Required Underlying Limits shown in the
Declarations.
Dkt. 1-3, Exh. C.
As amended by Indiana Personal Liability Endorsement, the Umbrella
Policy also includes the following language:
Limit of Liability
***
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c.

Subject to a., and be., the Limit of Liability is the most we will pay
for all damages because of bodily injury and property damage,
and/or personal injury offenses, and/or loss assessments resulting
from any one occurrence regardless of the number of:
(1)

Insureds;
***

(9)

Exposures or premiums shown in the Declarations. Our limit
is in excess of your primary limit.

Dkt. 1-3, Exh. C.
IV.

The Instant Litigation
On December 3, 2020, American Family filed its complaint for declaratory

judgment, seeking a declaration that it has no duty to defend or indemnify Mr. Gray or
Ms. Jacobs in the Underlying Lawsuit. American Family now seeks summary judgment
in its favor on its complaint.
Legal Analysis
I.

Summary Judgment Standard
Summary judgment is appropriate where there are no genuine disputes of material

fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a);
Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). A court must grant a motion for
summary judgment if it appears that no reasonable trier of fact could find in favor of the
nonmovant on the basis of the designated admissible evidence. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247–48 (1986). We neither weigh the evidence nor evaluate
the credibility of witnesses, id. at 255, but view the facts and the reasonable inferences

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flowing from them in the light most favorable to the nonmovant. McConnell v. McKillip,
573 F. Supp. 2d 1090, 1097 (S.D. Ind. 2008).
II.

Interpretation of Insurance Contracts Under Indiana Law
There is no dispute that Indiana law governs the outcome and analysis of this case.

In an insurance policy dispute under Indiana law, “the insured has the burden of proving
that the coverage applies, and the insurer, if relying on an exclusion to deny coverage, has
the burden of demonstrating that the exclusion is applicable.” Bowman, Heintz, Boscia &
Vician, P.C. v. Valiant Ins. Co., 35 F. Supp. 3d 1015, 1023 (N.D. Ind 2014) (quotation
marks and citation omitted). The interpretation of an insurance policy entails a matter of
law. Westfield Companies v. Knapp, 804 N.E.2d 1270, 1273–74 (Ind. Ct. App. 2004).
Insurance contract provisions are subject to the same rules of construction as other
contracts. Thus, courts must construe insurance policies "as a whole, rather than
considering individual words, phrases or paragraphs." Id. at 1274. If the contract
language is clear and unambiguous, it should be given its plain and ordinary meaning.
Newman Mfg., Inc. v. Transcon. Ins. Co., 871 N.E.2d 396, 401 (Ind. Ct. App. 2007).
Additionally, “[i]nsurance companies are free to limit their liability, so long as they do so
in a manner consistent with public policy as reflected by case or statutory law.” Gheae v.
Founders Ins. Co., 854 N.E.2d 419, 423 (Ind. Ct. App. 2006). Thus, “[a]n insurance
policy that is unambiguous must be enforced according to its terms, even those terms that
limit an insurer’s liability.” Haag v. Castro, 959 N.E.2d 819, 824 (Ind. 2012) (quoting
Property-Owners Ins. Co. v. Ted's Tavern, Inc., 853 N.E.2d 973, 978 (Ind. Ct. App.
2006)).
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Under Indiana law, "an insurer's duty to defend its insureds is broader than its
coverage for liability or duty to indemnify." Indiana Farmers Mut. Ins. Co. v. Ellison,
679 N.E.2d 1378, 1381–82 (Ind. Ct. App. 1997), trans. denied. In order to determine
whether an insurer has a duty to defend, Indiana courts look to the allegations contained
within the complaint as well as to those facts known or ascertainable by the insurer after a
reasonable investigation. Jim Barna Log Sys. Midwest, Inc. v. General Cas. Ins. Co. of
Wisconsin, 791 N.E.2d 816, 823 (Ind. Ct. App. 2003). The complaint's allegations "give
rise to a duty to defend whenever, if proved true, coverage would attach." Federal Ins.
Co. v. Stroh Brewing Co., 127 F.3d 563, 566 (7th Cir. 1997). However, “[w]hen the
underlying factual basis of the complaint, even if proved true, would not result in liability
under the insurance policy, the insurance company can properly refuse to defend.”
Wayne Twp. Bd. of Sch. Comm’rs v. Indiana Ins. Co., 650 N.E.2d 1205, 1208 (Ind. Ct.
App. 1995).
III.

Discussion

A. Duty to Defend/Indemnify Defendant Gray
American Family maintains that it has no duty to defend or indemnify Mr. Gray in
the Underlying Litigation because he is not an "insured" under the Homeowners Policy or
the Umbrella Policy, and, even if he did so qualify, the acts he is alleged to have
committed in the Underlying Action do not constitute an "occurrence" and/or are
excluded from coverage under the Policies. We can dispense quickly with American
Family's motion as applied to Mr. Gray as all parties agree that Mr. Gray does not qualify
as an "insured" under either the Homeowners Policy or the Umbrella Policy issued by
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American Family to Ms. Jacobs's parents. American Family therefore has no duty to
defend or indemnify Mr. Gray in the Underlying Litigation and is thus entitled to
summary judgment in its favor and against Mr. Gray in this declaratory judgment action.
B. Duty to Defend/Indemnify Defendant Jacobs
We turn next to address American Family's obligations to Ms. Jacobs under the
Homeowners and Umbrella Policies. American Family concedes for purposes of
deciding this summary judgment motion that Ms. Jacobs qualifies as an "insured" and
that the acts and/or omissions she is alleged to have committed in the Underlying
Litigation constitute an "occurrence" under both Policies. American Family argues that it
is nonetheless entitled to a declaration that it has no duty to defend or indemnify Ms.
Jacobs because the exclusion in the Policies relative to sexual molestation or misconduct
(the "Sexual Molestation Exclusion"), which excludes from coverage "bodily injury …
arising out of or resulting from sexual molestation or misconduct …," (Dkt. 29-2 at 34;
Dkt. 29-3 at 17), unambiguously bars all coverage for the negligence claim asserted
against Ms. Jacobs in the Underlying Litigation based on her alleged failure to protect
S.C. from the sexual molestation allegedly committed by Mr. Gray.
Defendants rejoin that American Family's reliance on the Sexual Molestation
Exclusion is misplaced 2 because the insurer ignores additional limiting language in the

2

Defendants alternatively argue that the Policies' failure to specifically state in their respective
definition sections that "bodily injury" excludes "sexual molestation by any person" is fatal to
American Family's claim. However, Defendants do not cite, nor are we aware, of any
requirement that exclusions of coverage must be included in the definition of "bodily injury."
Rather, the exclusion section of an insurance policy may limit or eliminate certain aspects of
coverage otherwise found in the insuring agreement, which is the approach American Family
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exclusion providing in relevant part that "[t]his includes any actual or alleged … sexual
molestation or misconduct by any insured … including but not limited to personal
interaction or photographic, video, or any other display of sexual activity … regardless of
whether or not consent is given …." Dkt. 29-2 at 34; Dkt. 29-3 at 17 (emphasis in
original). When read as a whole, Defendants say, the Sexual Molestation Exclusion
unambiguously excludes coverage for bodily injury arising from sexual molestation only
if committed by the insured; thus, the Policies do not exclude coverage for the negligence
claim asserted against Ms. Jacobs in the Underlying Litigation because she is not
personally alleged to have sexually molested S.C. Defendants argue that, even if the
Court finds that the policy language at issue is ambiguous, any ambiguity must be
resolved in favor of the insured and American Family's summary judgment motion and
request for declaratory judgment must therefore be denied.
Upon careful consideration of the various policy provisions and the applicable
case law, we find that American Family has met its burden to establish that the Sexual
Molestation Exclusion unambiguously excludes coverage for claims against an insured
resulting from bodily injury caused by sexual molestation or misconduct, regardless of
who is alleged to have committed the sexual molestation or misconduct and regardless of

took here by including a separate exclusion for sexual molestation and misconduct. See Gheae v.
Founders Ins. Co., 854 N.E.2d 419, 421 (Ind. Ct. App. 2006); West Bend Mut. v. Keaton, 755
N.E.2d 652, 654 (Ind. Ct. App. 2001). Accordingly, the fact that the Policies' definition of
"bodily injury" does not specify that it excludes injury from sexual molestation or misconduct is
not dispositive, and we reject Defendants' argument otherwise.
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the theory of liability alleged against the insured. As noted, the exclusion provision in its
entirety states as follows:
We will not cover bodily injury and property damage arising out of or
resulting from sexual molestation or misconduct, corporal punishment,
physical and mental abuse.
a. This includes any actual or alleged:
sexual molestation or misconduct by any insured:

(1)

(a) including but not limited to personal interaction or
photographic, video, or any other display of sexual activity;
(b) regardless of whether or not consent is given;
(2)

corporal punishment; or

(3)

physical or mental abuse resulting from acts or omissions of
any insured.

b. This exclusion applies regardless of:
(1) intent to cause injury; or
(2) the theory of relief pursued, asserted, or claimed by anyone
seeking compensation under this policy.
Dkt. 1-2, Exh. B.
The first sentence of the Sexual Molestation Exclusion clearly and unambiguously
excludes coverage for bodily injury "arising out of" or "resulting from" sexual
molestation or misconduct, without reference to any limitation as to who committed the
act of molestation. Courts interpreting sexual molestation exclusions with virtually
identical policy language as contained in this first sentence have consistently held that
such exclusions unambiguously exclude coverage for negligence claims brought against
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insureds who, like Ms. Jacobs, are sued for failing to prevent sexual molestation
perpetrated by a third party. See, e.g., Westfield Ins. Co. v. Hill, 790 F. Supp. 2d 855, 864
(N.D. Ind. 2011) (holding that policy language excluding from coverage "bodily injury
… arising out of sexual molestation" "remove[s] from coverage an entire category of
injuries; i.e., those arising out of sexual acts …'regardless of the identity of the actual
perpetrator of the sexual offense'") (collecting cases). Such claims "aris[e] out of or
result[] from" sexual molestation because there is a "clear nexus" between the claim and
the alleged improper touching such that without the alleged sexual molestation "there
would be no damages, no lawsuit and no negligence claim." Id. at 866. As in Hill, the
failure to protect allegation asserted against Ms. Jacobs in the Underlying Litigation does
not include "bodily injury" separate from the alleged acts of sexual molestation allegedly
committed by Mr. Gray. Accordingly, the injury alleged in the Underlying Litigation
without a doubt "aris[es] out of or result[s] from" alleged sexual molestation.
The only question remaining, then, is whether, as Defendants contend, the
additional language in the Sexual Molestation Exclusion specifying that "[t]his includes
any actual or alleged … molestation or misconduct by any insured …" has the effect of
narrowing the meaning of the exclusion such that it could be understood to exclude only
those claims that arise out of sexual molestation by the insured. We do not believe this
language can fairly and accurately be so interpreted. Reading the exclusion as a whole, it
is clear that this additional language is merely illustrative, providing examples of types of
behaviors that are encompassed within the broad exclusion, as opposed to comprising an
exhaustive list of examples of such conduct.
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As American Family argues, courts have long recognized that use of the words
"includes" or "including" in an insurance contract and otherwise generally implies that
whatever follows is not an exhaustive or exclusive list. E.g., Fed. Land Bank v. Bismarck
Lumber Co., 314 U.S. 95, 100 (1941) (noting that the word "including" is not "one of allembracing definition but connotes simply an illustrative application of the general
principle"); Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994) (use of the
term "including" indicates the "'illustrative and not limitative' function of the examples
given"); DIRECTV, Inc. v. Crespin, 224 Fed. App'x 741, 748 (10th Cir. 2007) (generally,
"include" introduces "an illustrative—and non-exclusive—list"); Cox v. City of Dallas,
256 F.3d 281, 293 (5th Cir. 2001) (collecting cases citing that "including" is illustrative
and nonexhaustive); In re Order for Payment of Attorney Fees, Reimbursement of
Expenses, 7 N.E.3d 289, 293 (Ind. Ct. App. 2014) (observing that "the term 'include'
signals that the list that follows is meant to be illustrative rather than exhaustive"); People
v. Perry, 864 N.E.2d 196, 208–09 (Ill. 2007) (finding that the plain and ordinary meaning
of "include" is illustrative not exhaustive, even in the absence of additional clarifying
verbiage such as "but not limited to"). Defendants have failed to present any argument or
supportive authority for why the Court should deviate from this generally accepted
understanding of the meaning of the word "includes" in interpreting the policy language
at issue here.
Our conclusion that "includes" is illustrative—not exhaustive—and that the
exclusion encompasses the type of negligence claim as is alleged against Ms. Jacobs in
the Underlying Litigation is buttressed by the fact that the Sexual Molestation Exclusion
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specifically states that the exclusion applies "regardless of … the theory of relief pursued,
asserted, or claimed by anyone seeking compensation …" under the Policies. For these
reasons, we hold that the Sexual Molestation Exclusion clearly and unambiguously
excludes coverage for the negligence claim alleged against Ms. Jacobs in the Underlying
Litigation that is based on her alleged failure to protect S.C. from the acts of sexual
molestation allegedly committed by Mr. Gray. American Family is therefore entitled to
summary judgment and a declaration that it owes no duty to defend or indemnify Ms.
Jacobs in the Underlying Litigation.
IV.

Conclusion
For the reasons detailed above, we GRANT Plaintiff's Motion for Summary

Judgment on its request for declaratory relief and find the following:
(1) That Policy No. 12-025507-01 effective March 4, 2019 to March 4, 2020 extends
no duty to defend Mr. Gray or Ms. Jacobs in the Underlying Litigation and the
defense of Ms. Jacobs may be withdrawn;
(2) That Policy No. 13-025507-01 effective March 4, 2019 to March 4, 2020 provides
no coverage for the potential liability of Mr. Gray or Ms. Jacobs in the Underlying
Litigation;
(3) That Policy No. 13-025507-01 effective March 4, 2019 to March 4, 2020 provides
no duty to pay any judgment which may be awarded in favor of S.C. against Mr.
Gray or Ms. Jacobs in the Underlying Litigation;
(4) That Policy No. 13-U26594-01 effective November 4, 2018 to November 4, 2019
extends no duty to defend Mr. Gray or Ms. Jacobs in the Underlying Litigation;
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(5) That Policy No. 13-U26594-01 effective November 4, 2018 to November 4, 2019
provides no coverage for the potential liability of Mr. Gray or Ms. Jacobs in the
Underlying Litigation; and
(6) That Policy No. 13-U26594-01 effective November 4, 2018 to November 4, 2019
provides no duty to pay any judgment which may be awarded in favor of S.C.
against Mr. Gray or Ms. Jacobs in the Underlying Litigation.
Final judgment shall be entered accordingly.
IT IS SO ORDERED.

Date: _________________________
5/10/2022

_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana

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Distribution:
Jeremy Bart McMahon
[e-mail]
Ginny L. Peterson
KIGHTLINGER & GRAY, LLP (Indianapolis)
[e-mail]
Scott Thomas Roby
SCOTT T. ROBY, ATTORNEY AT LAW, PSC
[e-mail]
Jeffrey T. Sampson
THE SAMPSON LAW FIRM
[e-mail]

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