John Doe and Jane Doe v. Peoples et al
Filing
62
Memorandum Opinion and Order: The Peoples defendants are realigned as plaintiffs. The 16 and 33 MOTION for Summary Judgment are granted as set out herein. A separate judgment will be entered. Signed by District Judge Tom S. Lee on 7/1/19 (LWE)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
JOHN DOE AND JANE DOE, NATURAL
PARENTS, NEXT FRIEND AND DULYAPPOINTED GUARDIANS OF JAMES DOE,
A MINOR
VS.
PLAINTIFF
CIVIL ACTION NO. 3:18CV366-TSL-LRA
KELLY PEOPLES, ADAM PEOPLES,
PEOPLES CONSTRUCTION CORPORATION,
THE TRAVELERS, NATIONWIDE PROPERTY
AND CASUALTY INSURANCE COMPANY AND
UNKNOWN INSURANCE COMPANIES 1-10
DEFENDANTS
MEMORANDUM OPINION AND ORDER
In July 2017, plaintiffs John and Jane Doe, parents of the
minor James Doe, filed suit in the Circuit Court of Rankin County,
Mississippi, against Kelly Peoples and Peoples Construction
Company seeking damages under various legal theories based on
allegations that in October 2016, Kelly Peoples, then a fortyyear-old adult, had sex with the fourteen-year-old James Doe.
In
March 2018, the Does filed the present action in the Circuit Court
of Rankin County seeking a declaratory judgment that the
homeowners’ insurance policy issued by Nationwide Property and
Casualty Insurance Company (Nationwide) to Kelly Peoples, and a
commercial automobile policy issued by The Travelers/The Charter
Oak Fire Insurance Company (Charter Oak) to Peoples Construction
Company, provide coverage for the allegations and claims in the
underlying action.
In this declaratory judgment action, the Does,
in addition to naming Nationwide and Charter Oak as defendants,
named Kelly Peoples, Adam Peoples and Peoples Construction Company
as defendants.
Nationwide and Charter Oak removed the case to
this court and have now separately moved for summary judgment.
Plaintiffs John and Jane Doe and each of the other named
defendants have filed separate responses in opposition to these
motions.
The court, having considered the parties’ submissions
and memoranda, first concludes that it has subject matter
jurisdiction based on diversity of citizenship as the Peoples
defendants are properly regarded as and should be realigned as
plaintiffs in this cause; and second, the court concludes that
both insurers’ summary judgment motions are well-taken and should
be granted.
Subject Matter Jurisdiction
The Does are citizens of Mississippi, as are Kelly Peoples,
Adam Peoples and Peoples Construction Company (the Peoples
defendants).
insurers.1
Nationwide and Charter Oak are nonresident
Thus, from the face of the complaint, it would appear
that complete diversity of citizenship is lacking.
See 28 U.S.C.
§ 1332 (district courts have jurisdiction where amount in
controversy exceeds $75,000 and the matter is between citizens of
different states); McLaughlin v. Miss. Power Co., 376 F.3d 344,
353 (5th Cir. 2004) (§ 1332 requires “complete diversity” which
“requires that all persons on one side of the controversy be
1
Nationwide is an Ohio company; Charter Oak is a
Connecticut company.
2
citizens of different states than all persons on the other side.”)
(citation omitted).
In their notice of removal, however,
Nationwide and Charter Oak assert that the Peoples defendants
should be realigned as plaintiffs as their sole interest in this
declaratory judgment action is adverse to that of the insurers and
the same as that of the named plaintiffs, i.e., establishing
coverage under the subject policies for the claims in the
underlying lawsuit.
See Griffin v. Lee, 621 F.3d 380, 388 (5th
Cir. 2010) (generally accepted test of proper alignment in this
circuit “‘is whether the parties with the same “ultimate
interests” in the outcome of the action are on the same side.’”)
(quoting Lowe v. Ingalls Shipbuilding, A Div. of Litton Sys.,
Inc., 723 F.2d 1173, 1178 (5th Cir. 1984) (citation omitted));
Zurn Indus., Inc. v. Acton Constr. Co., 847 F.2d 234, 236 (5th
Cir. 1988) (parties’ alignment for jurisdictional purposes “has to
be determined from the ‘principal purpose of the suit,’ and the
‘primary and controlling matter in dispute.’”) (quoting City of
Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 62 S. Ct. 15, 86 L.
Ed. 47 (1941)).
None of the parties herein disputes that the Doe
plaintiffs and the Peoples defendants have the same “ultimate
interests” in the outcome of this case or questions the propriety
of the proposed realignment.
However, “[s]ubject-matter
jurisdiction cannot be created by waiver or consent,” Howery v.
Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001), and thus,
regardless of whether any party has objected, the court has an
3
independent duty to examine its jurisdiction, Simon v. Wal-Mart
Stores, Inc., 193 F.3d 848, 850 (5th Cir. 1999).
Here, the court
has done so, and having fully considered the matter, finds that
realignment of the Peoples defendants as plaintiffs is proper,
both as a matter of procedure and substance.
“Federal courts are not bound by the labels the parties give
themselves in the pleadings”, Ashford v. Aeroframe Servs, L.L.C.,
907 F.3d 385, 387 (5th Cir. 2018) (citing Zurn Indus., 847 F.2d at
236); instead, courts must “‘look beyond the pleadings, and
arrange the parties according to their sides in the dispute,’” id.
(quoting City of Indianapolis, 314 U.S. at 69, 62 S. Ct. 15).
Moreover, “[a]ny realignment of parties should take place before
jurisdiction is decided.”
Id. (citing Peters v. Standard Oil Co.
of Tex., 174 F.2d 162, 163 (5th Cir. 1949)).
These principles obviously apply to a case that is originally
brought in federal court.
However, many of the the district
judges in this circuit – maybe even a majority – have rejected the
use of realignment of parties to create diversity jurisdiction in
a removed case.
See Jackson Cty., Miss. v. Singing River Health
Sys., No. 1:18CV237-LG-RHW, 2018 WL 4183216, at *3 (S.D. Miss.
Aug. 31, 2018) (observing that post-removal “[r]ealignment is
currently disfavored among courts within the Fifth Circuit....”);
Thompson v. Gen. Motors LLC, No. 416CV00026DMB-JMV, 2016 WL
7471328, at *4 n.3 (N.D. Miss. Dec. 28, 2016) (noting that despite
4
a variance in views among district judges in this circuit as to
when, if ever, post-removal realignment to create diversity is
permissible, “‘in a more recent trend, courts in our circuit
consistently disfavor realignment after removal.’”) (quoting
Bilyeu v. Wells Fargo Ins. Servs., USA, Inc., No. 1:16-cv-23, 2016
WL 5721060, at *7 (W.D. La. Aug. 8, 2016)); Huntsman Corp. v.
Int'l Risk Ins. Co., No. CIV.A. H-08-1542, 2008 WL 4453170, at *6
(S.D. Tex. Sept. 26, 2008) (stating that “the trend in this
circuit disapproves of using realignment after removal to cure a
defect in removal jurisdiction.”).
The Fifth Circuit has not expressly endorsed realignment
after removal to create diversity, but so far as the undersigned
is aware, neither has it expressed disapproval of post-removal
realignment.
See Ashford v. Aeroframe Servs., LLC, No.
2:14-CV-992, 2015 WL 2089994, at *3 (W.D. La. May 4, 2015) (“The
Fifth Circuit has remained silent as to whether realignment of the
parties is proper in a removal action.
Therefore, it cannot be
said that a realignment of the parties would be contrary to law
per se.”).2
Nearly all of the circuit courts that have directly
2
Ashford v. Aeroframe Services, L.L.C., 907 F.3d 385 (5th
Cir. 2018), was a removed action. The Fifth Circuit affirmed the
district court’s denial of a post-removal motion to realign a
nondiverse defendant as a plaintiff, which realignment would have
created diversity jurisdiction. The court found that diversity
jurisdiction was lacking because, when the suit was first filed in
state court, the interests of the plaintiff Ashford and the
nondiverse defendant Aeroframe were adverse. Although it was
5
addressed the issue have approved of post-removal realignment of
parties to create diversity jurisdiction.3
Commentators have also
found post-removal realignment to be permissible.
See 14C Charles
Alan Wright & Arthur R. Miller, Federal Practice and Procedure
§ 3723 (4th ed., updated Apr. 2019) (“Before determining
removability under Section 1441(b) on the basis of
diversity-of-citizenship jurisdiction, a district court will
contended that their interests had subsequently aligned, the fact
that they were not adverse at the time the suit was filed meant
there could be no diversity jurisdiction because, “‘[c]onsistent
with general principles for determining federal jurisdiction, ...
diversity of citizenship must exist both at the time of filing in
state court and at the time of removal to federal court.’” Id. at
386-87 (quoting Coury v. Prot, 85 F.3d 244, 248–49 (5th Cir. 1996)
(emphasis added by Ashford)). The majority opinion, authored by
Judge Higginson, did not opine on whether diversity jurisdiction
may be achieved by realignment in a removed case, but rather
stated that, “even accounting for the possibility of realignment,
‘the state of facts that existed at the time of filing’ failed to
meet the jurisdictional prerequisite of complete diversity.” Id.
at 387 (quoting Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S.
567, 570–71, 124 S. Ct. 1920, 158 L. Ed. 2d 866 (2004)). In a
concurring opinion, Judge Davis similarly wrote, “assuming that
realignment is permitted to establish diversity jurisdiction upon
removal, it was improper to realign Aeroframe as a plaintiff”
because the proof did not demonstrate that its interest was
adverse to that of Ashford. Id. at 388. Judge Jones, dissenting,
was of the opinion that the parties should have been realigned by
the district court according to their true and ultimate interests
in the litigation, which would have created diversity
jurisdiction. Id. at 389.
3
See McCarty v. Nat'l Union Fire Ins. Co. of Pittsburgh,
PA, 699 F. App'x 464, 467 (6th Cir. 2017); Drew v. Safeco Ins. Co.
of Ill., 578 F. App'x 954, 956 (11th Cir. 2014); Yellowbird Bus
Co. v. Lexington Ins. Co., 450 F. App'x 213, 216 (3d Cir. 2011)
White v. United States Fid. and Guar. Co., 356 F.2d 746 (1st Cir.
1966); Broidy v. State Mut. Life Assur. Co. of Worcester, Mass.,
186 F.2d 490, 492 (2d Cir. 1951).
6
realign the parties according to their true interests in the
outcome of the litigation, as it would were the case originally
brought in the federal court.”); id. (stating that while the law
of the forum state will provide the substantive rules to govern
decision in a diversity suit, “it is well-settled that, for
purposes of removal, federal law determines who is a plaintiff and
who is a defendant.”).
Although there are surely contexts in which post-removal
realignment would be improper, in the undersigned’s view, there is
no warrant for wholesale rejection of the device.
Moreover, the
court is persuaded that in the circumstances of the present case,
realignment is proper, as it was in Doe v. Sharma, No.
CIVA307CV172HTWLRA, 2008 WL 3339942, at *4 (S.D. Miss. Aug. 6,
2008) (removed declaratory judgment action brought by tort
claimant to establish insurance coverage for underlying claim in
which court realigned alleged tortfeasors as plaintiffs as they
would benefit, just as would the plaintiff, if the defendant
insurers were found liable for coverage for the claims in the
underlying state court suit), and in Jackson HMA, Inc. v. Saint
Paul Fire & Marine Ins. Co., 246 F. Supp. 2d 535, 537 (S.D. Miss.
Jan. 27, 2003) (removed declaratory judgment action by decedent’s
medical provider concerning insurance coverage in which court
realigned wrongful death claimants as plaintiffs as they shared
the medical provider’s interest in receiving insurance payments
7
related to wrongful-death claims).
Consequently, the court
concludes it has diversity jurisdiction over the present action.
Background Facts and the Underlying Lawsuit
According to the allegations of the underlying complaint, on
July 16, 2016, James Doe, the John and Jane Does’ fourteen-yearold son, broke up with Kelly and Adam Peoples’ minor daughter and
blocked her on Snapchat.
Following the break-up, Kelly, who was
forty at the time, began following James on Snapchat and
communicating with him via Snapchat and cell phone.
She sent him
nude photographs of herself by Snapchat and cell phone and
convinced him to send her nude photos of himself in return.
Before long, Kelly pursued a sexual relationship with James.
She
picked him up from school one day and drove him to a self-storage
facility near his home where she made out with him in her vehicle.
Then, on three subsequent occasions, she had sex with him.
The
first time, she picked him up near his home and took him to her
home, where she had sex with him; the second, she had him meet her
at midnight at his neighborhood pool, where she picked him up,
drove him to a secluded area and had sex with him in her car; and
the third, she again picked him up near his home and drove him to
her home, where she drank heavily, gave him shots of vodka and had
sex with him.
On October 16, Kelly paid James $1,000 to delete
the nude photos of her from his cell phone.
On October 31, 2016,
James’s parents confronted him, and he admitted to having had sex
with Kelly.
8
Kelly was indicted on January 19, 2017 for statutory rape, in
violation of Mississippi Code Annotated § 97-3-65(1)(a).
On
October 3, 2017, she pled guilty to the charge and was given a
fifteen-year suspended sentence.4
On October 27, 2017, John and
Jane Doe filed suit in the Circuit Court of Rankin County,
Mississippi against Kelly Peoples, and against Peoples
Construction Company.
As to Kelly Peoples, the Does asserted one
count for negligent infliction of emotional distress and three
counts for negligence per se based on alleged violations of
Mississippi Code Annotated § 97-3-65 (statutory rape/gratification
of lust), and Mississippi Code Annotated § 97-5-49 (serving
alcohol to/allowing consumption of alcohol by, minor).
The Does
sued Peoples Construction Company (PCC) for negligent entrustment,
charging that during Kelly’s illicit activities with James, she
drove a vehicle owned by PCC with the company’s permission and
consent, notwithstanding that it knew or should have known of her
illicit activities.
On February 2, 2018, the Does then filed the present action
in the Circuit Court of Rankin County seeking a declaratory
4
In pleading guilty, Kelly admitted she was guilty of the
elements of the offense, and specifically admitted that
On, about or between the dates of the 1st of October,
2016 and the 31st day of October, 2016, [she] ... did
willfully, unlawfully and feloniously have sexual
intercourse with [James Doe], a male child being at
least fourteen (14) but under sixteen (16) years of age
....
9
judgment that insurance policies issued by Nationwide and Charter
Oak provide coverage for their claims in the underlying action.
The Insurance Policies
The Nationwide Policy:
Prior to October 2016, Nationwide
issued to Kelly Peoples a homeowners’ policy that was in effect in
October 2016.
Adam Peoples is a named insured under the policy.
Nationwide’s policy includes personal liability coverage,
providing in relevant part as follows:
We will pay damages an Insured is legally obligated to
pay due to an occurrence resulting from negligent
personal acts or negligence arising out of the
ownership, maintenance or use of real or personal
property. We will provide a defense at our expense by
counsel of our choice. ...
The policy defines “occurrence” as “bodily injury or property
damage resulting from an accident, including continuous or
repeated exposure to the same general condition.”
The policy
excludes from coverage bodily injury
a) caused intentionally by or at the direction of an
insured, including willful acts the result of which the
Insured knows or ought to know will follow from the
insured’s conduct. ...
b) caused by or resulting from an act or omission which
is criminal in nature and committed by an insured.
c) arising out of the ownership, maintenance or use of,
or loading or unloading of; entrustment or the negligent
supervision by an insured of ... a motor vehicle ....
...
l) resulting from acts or omissions relating directly or
indirectly to sexual molestation, physical or mental
abuse, harassment, including harassment, whether actual,
alleged or threatened.
10
Nationwide denied Kelly’s claim for coverage and denied her
request to defend and/or indemnify and now seeks a determination
via summary judgment that it has no duty to defend or indemnify as
the claims asserted by the Does in the underlying action do not
amount to an “occurrence” under the policy and/or are excluded
from coverage under one or more of the referenced exclusions.
The Charter Oak Policy:
PCC is the named insured under a
policy issued by Charter Oak which includes a commercial general
liability (CGL) coverage part and a commercial auto coverage part.
The CGL part provides coverage for bodily injury caused by an
“occurrence”, which is defined as “an accident, including
continuous or repeated exposure to substantially the same general
harmful conditions.”
The commercial auto form similarly provides
coverage for “bodily injury” caused by an “accident”, which is
defined to include “continuous or repeated explsure to the same
conditions resulting in ‘bodily injury’ or ‘property damage’”.
Both coverage forms exclude from coverage bodily injury “expected
or intended from the standpoint of the insured.”
Charter Oak
contends it is entitled to summary judgment because, as a matter
of law, its policy provides no coverage and/or excludes coverage
for the claims asserted by the Does in the underlying action.
Duty to Defend/Indemnify
Mississippi has adopted the allegations of the complaint
rule, by which “the determination of whether an insurance company
11
has a duty to defend depends upon the language of the policy as
compared to the allegations of the complaint in the underlying
action.”
Minnesota Life Ins. Co. v. Columbia Cas. Co., 164 So. 3d
954, 970 (Miss. 2014) (citations omitted); Travelers Indem. Co. v.
Mitchell, 925 F.3d 236, 240 (5th Cir. 2019) (under Mississippi’s
“so-called eight corners rule”, question whether insurer has duty
to defend insured against claim “is resolved by comparing the four
corners of the policy with the four corners of the complaint)
(citation omitted).
“An insurance company's duty to defend its
insured is triggered when it becomes aware that a complaint has
been filed which contains reasonable, plausible allegations of
conduct covered by the policy.
However, no duty to defend arises
when the claims fall outside the policy's coverage.”
Baker
Donelson Bearman & Caldwell, P.C. v. Muirhead, 920 So. 2d 440, 451
(Miss. 2006).
When reviewing a complaint to see whether it states
a claim that is within or arguably within the scope of the
coverage provided by the insurance policy, “the court compares the
words of the complaint with the words of the policy, looking ‘not
to the particular legal theories' pursued by the plaintiffs, ‘but
to the allegedly tortious conduct underlying’ the suit.”
Acceptance Ins. Co. v. Powe Timber Co., Inc., 403 F. Supp. 2d 552,
554 (S.D. Miss. 2005) (quoting Ingalls Shipbuilding v. Federal
Ins. Co., 410 F.3d 214, 225 (5th Cir. 2005)).
See also Acadia
Ins. Co. v. Pearl River Cmty. Coll., 237 F. Supp. 3d 437, 440
12
(S.D. Miss. 2017) (insurer has duty to defend complaint which
contains allegations covered by the language of the policy,
independent of its duty to indemnify, which is determined once the
facts have been developed to establish whether the conduct of the
insured giving rise to the claim falls under or outside the
coverage afforded by the policy) (citing Moeller v. Am. Guar. &
Liab. Ins. Co., 707 So. 2d 1062, 1069 (Miss. 1996)).
“The interpretation of an insurance policy is a question of
law for the court when the meaning of the terms is clear and
unambiguous.”
Shelter Mut. Ins. Co. v. Simmons, 543 F. Supp. 2d
582, 585 (5th Cir. 2008).
See Hinton v. Pekin Ins. Co., 268 So.
3d 543, 551 (Miss. 2019), reh'g denied (May 9, 2019) (“‘[T]he
interpretation of an insurance policy is a question of law, not
one of fact.’”) (quoting Minn. Life, 164 So. 3d at 967).
Therefore, summary judgment in favor of an insurer usually will be
appropriate if the allegations of the underlying complaint do not
state a claim that is within or arguably within the coverage of
the subject policies.
Audubon Ins. Co. v. Stefancik, 98 F. Supp.
2d 751, 754–55 (S.D. Miss. 1999).
There Was No “Accident” or “Occurrence”
Numerous Mississippi cases and cases applying Mississippi law
have addressed the meaning of the terms “occurrence” and
“accident” in insurance policies, and the law is clear:
“[I]ntentional acts do not constitute an ‘occurrence’ under
13
policies which define ‘occurrence’ as an accident.”
Maryland Cas.
Co. v. Lab Disc. Drug, Inc., 468 F. Supp. 2d 862, 865 (S.D. Miss.
2006).
Under such policies, “there is no ‘occurrence’ ... if the
harm for which recovery is sought from the insured resulted from
an insured's intentional or deliberate actions, even if the
insured did not intend such harm.”
Supp. 2d at 555.
Acceptance Ins. Co., 403 F.
Thus, coverage “does not extend ‘to injuries
unintended by the insured but which resulted from intentional
actions of the insured’ even if those actions were not
intentionally tortious but rather only negligent.
If the acts
themselves were not accidental, even if they may have been
negligent, then there is no ‘occurrence.’” Id.
See United States
Fidelity & Guarn. Co. v. Omnibank, 812 So. 2d 196, 197 (Miss.
2002) (holding that “an insurer's duty to defend under a general
commercial liability policy does not extend to negligent actions
that are intentionally caused by the insured,” or, stated another
way, that “even if an insured acts in a negligent manner, that
action must still be accidental and unintended in order to
implicate policy coverage”); Allstate Ins. Co. v. Moulton, 464 So.
2d 507, 510 (Miss. 1985) (holding that in determining whether
there had been an occurrence, “[t]he only relevant consideration
is whether, according to the declaration, the chain of events
leading to the injuries complained of were set in motion and
followed a course consciously devised and controlled by [the
14
insured] without the unexpected intervention of any third person
or extrinsic force”).
Nationwide and Charter Oak argue that all of Kelly Peoples’
alleged actions that form the basis for the Does’ claims in the
underlying action were intentional, not accidental and that
consequently, there was no “occurrence” or “accident” and hence no
coverage, or potential coverage, under any of the policies at
issue for the claims in their lawsuit.
The Does’ Response:
For their part, the Does assert that
Kelly’s “initial actions with James” were “innocent, benign and
friendly”; she only wanted to befriend James in the hope that he
would get back together with her daughter.
Kelly’s actions, they
say, “were unintended inasmuch as she had no intent of the
relationship with James exceeding anything beyond friendship and
she certainly intended no harm to befall him.”
The Does
acknowledge, of course, that despite Kelly’s purported initial
innocent intentions, the relationship “changed from an ill-advised
but still platonic and friendly one, to an illicit one”.
But they
submit that this was not something she planned or expected and was
instead “purely accidental” and unintended.
See Moulton, 464 So.
2d at 509 (defining “accident” as “anything that happens or is the
result of that which is unanticipated and takes place without the
insured’s foresight or anticipation”).
patently without merit.
The Does’ position is
As the insurers note, the Does have not
sued Kelly because she “befriended” James.
15
They have sued her and
sought an award of damages against her because she intentionally –
not accidentally – pursued James, sent him nude photographs of
herself, convinced him to send her nude photographs of himself,
had sex with him on several occasions and gave him alcohol.
In
short, they have sued her because she “entered into an illicit
relationship with James Doe, and had sex with him.”
Kelly Peoples’ Response:
Kelly contends there is a genuine
issue of material fact as to whether her actions were intentional
or accidental for these reasons:
she did not intend to harm
James; she was not convicted of an intent-based crime; and the
Does have specifically pled causes of action grounded in
negligence.5
Her arguments are also without merit.
Although it is true the Does have purported to assert causes
of action against Kelly for negligent infliction of emotional
distress and negligence per se, as stated supra, it is the facts
alleged, not the characterization of those facts, that determine
whether there is any potential for coverage.
See Maryland Cas.
Co., 468 F. Supp. 2d at 866 (concluding that “all the claims,
regardless of how characterized, stem from allegations of
intentional, i.e., not accidental, sexual misconduct by [the
insured] and therefore do not involve a covered occurrence”)
(emphasis added); see also Employers Mut. Cas. Co. v. Raddin, No.
5
Adam Peoples has filed a separate response in opposition
to Nationwide’s motion in which he adopts by reference the
arguments contained in Kelly’s response.
16
5:10-CV-137 DCB RHW, 2012 WL 1098624, at *8 (S.D. Miss. Mar. 30,
2012) (stating that “it is the facts alleged, not the pleader's
legal conclusions, that are relevant to the insurer's duty to
defend,” and thus, because “the underlying allegations of
‘negligence’ [did] not correspond with any factual allegation of
accidental conduct” but instead “strictly related to” intentional
acts, there was no “occurrence”).
All of the Does’ factual allegations in support of their
claims involve manifestly intentional acts on Kelly’s part.
And,
since Kelly’s actions were intentional and not accidental, then
there was no “occurrence”, regardless of whether she intended to
harm James.6
See Lambert v. Safeco Ins. Co. of Am., 87 So. 3d
1123, 1126 (Miss. Ct. App. 2012) (holding that insured’s actions
were not an accident and thus not an “occurrence” under the
subject policy irrespective of intent to harm); Moulton, 464 So.
2d at 510 (holding that “the term accident refers to [the
insured’s] action and not whatever unintended damages flowed from
that act”).
In any event, Mississippi law regards “sexual abuse
[as] an inherently injurious act as to which the law will infer
intent.
Thus, regardless of how the allegations are worded in a
particular complaint, sexual abuse will be considered intentional
conduct.”
Raddin, 2012 WL 1098624, at *9 (citing American
6
Though it would be immaterial, the court does note that
Kelly has offered no evidence that she did not intend to harm
James.
17
Manufacturers Mut. Ins. Co. v. Stallworth, 433 F. Supp. 2d 767,
772 (S.D. Miss. 2006)); Am. Nat. Gen. Ins. Co. v. L.T. Jackson,
203 F. Supp. 2d 674, 684 and n.15 (S.D. Miss. 2001), aff’d, 37
Fed. Appx. 714, 2002 WL 1220663 (5th Cir. 2002) (observing that
“the Mississippi Supreme Court has implicitly recognized that
there are some inherently injurious acts, such as sexual abuse, as
to which the law will infer an intent to injure”, and noting
further that “[c]ourts have concluded virtually unanimously that
an inference of intent to harm will be inferred as a matter of law
where there are allegations of sexual misconduct toward
children.”).
Peoples Construction’s Response: In its response to Charter
Oak’s motion,7 PCC asserts, among other arguments, that even
though Kelly’s alleged actions may have been intentional, its own
alleged actions were not.
That is, the claim against it is for
negligent entrustment, and the facts in support of that claim do
not suggest intentional acts.
However, the Fifth Circuit
recognized in American Guarantee and Liability Insurance Co. v.
1906 Co., that courts had repeatedly held that
no coverage is provided the employer or supervisory
personnel for claims of negligent hiring or supervision
when the underlying tortious conduct is intentional and
when those claims against the employer or supervisor are
related to and are interdependent on the employee's
intentional misconduct....
7
PCC is the named insured under the Charter Oak policy;
it is not insured under, and has no interest in Nationwide’s
homeowners’ coverage.
18
129 F.3d 802, 809 (5th Cir. 1997).
It went on to predict that
Mississippi courts would likely also hold that
where negligence claims against an employer, such as
negligent hiring, negligent training, and negligent
entrustment, are related to and interdependent on the
intentional misconduct of an employee, the “ultimate
question” for coverage purposes is whether the
employee's intentional misconduct itself falls within
the definition of an occurrence.
Id. at 810.
PCC also argues that it cannot be held liable to the Does in
the underlying action because, contrary to the Does’ allegations,
it did not own the vehicle Kelly People used when committing the
alleged intentional acts, and instead, the vehicle she used was
her own personal vehicle, and further, Kelly was not an employee
or principal of PCC and was not otherwise under the control of
PCC.
Mississippi law does recognize an exception to the
“allegations of the complaint rule”, “which holds that an insurer
has a duty to defend when presented with extrinsic facts, ... that
trigger coverage under the policy.”
Mulberry Square Prods. v.
State Farm Fire & Cas. Co., 101 F.3d 414, 422 (5th Cir. 1996)
(emphasis added).8
However, if the “true facts” “would not
support a claim for liability against the insured, then knowledge
of these facts by the insurer does not give rise to a duty to
defend.”
Acceptance Ins. Co., 403 F. Supp. 2d at 559.
8
The “true
Kelly Peoples also references the “true facts” exception
in her response, but she does not suggest how it is even arguably
pertinent.
19
facts” claimed by PCC would not support a claim for liability by
PCC and would not trigger coverage.9
Exclusions
Both insurers argue that the Does’ claims fall within various
exclusions in their respective policies.
While one or more of the
referenced exclusions are clearly applicable to the Does’ claims,
it is unnecessary to address the exclusions as it is apparent that
the policies’ coverage provisions do not extend to the claims
asserted by the Does in the underlying actions.
Conclusion
Based on the foregoing, it is ordered that the Peoples
defendants are realigned as plaintiffs; and it is further ordered
that the motions for summary judgment by the defendant insurers
are granted.
A separate judgment will be entered in accordance with Rule
589 of the Federal Rules of Civil Procedure.
SO ORDERED this 1st day of July, 2019.
/s/ Tom S. Lee
UNITED STATES DISTRICT JUDGE
9
PCC has argued that any ruling by the court granting
Charter Oak’s motion for summary judgment ought not be binding on
PCC inasmuch as Charter Oak has not filed a pleading asserting a
claim against PCC for declaratory judgment and PCC has not filed a
pleading asserting a claim against Charter Oak for coverage, in
this action or otherwise. However, the Does have made such a
claim; and PCC, as a party to this action, has been afforded the
opportunity to address the coverage issues presented, and in fact
has done so.
20
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