Liberty Surplus Ins. Corp. v. Ledesma & Meyer Constr. Co.

would be covered, so long as she herself had not acted in a manner for which the intentional acts exclusion barred coverage." ( Id . at p. 325, 110 Cal.Rptr.3d 612 , 232 P.3d 612 .)

In Minkler we did not consider whether the claims involved were "accidents" under the applicable insurance policies, because the issue was not raised. ( Minkler , supra , 49 Cal.4th at p. 322, fn. 3, 110 Cal.Rptr.3d 612 , 232 P.3d 612 .) But our reasoning there establishes that L&M may be covered even though Hecht's intentional acts were beyond the scope of its policy. L&M's allegedly negligent hiring, retention, and supervision were independently tortious acts, which form the basis of its claim against Liberty for defense and indemnity. The district court's ruling was consistent with Minkler . It did not rely on the fact that Hecht's conduct was intentional, but on two other grounds: a causation analysis, and the court's reading of case law. Both lines of reasoning were faulty.

the injured party. [Citations.] In determining whether the injury is a result of an accident, taking into consideration acts or events before the insured's acts would be illogical and contrary to California case law. [¶] 'Any given event, including an injury, is always the result of many causes.' (1 Dobbs, The Law of Torts (2001) § 171, p. 414.) For that reason, the law looks for purposes of causation analysis 'to those causes which are so closely connected with the result and of such significance that the law is justified in imposing liability.' (Prosser & Keeton on Torts (5th ed. 1984) § 41, p. 264.) In a case of assault and battery, it is the use of force on another that is closely connected to the resulting injury. To look to acts within the causal chain that are antecedent to and more remote from the assaultive conduct would render legal responsibilities too uncertain." ( Delgado , supra , 47 Cal.4th at pp. 315-316, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 .)

In Delgado , the insured's intentional tortious conduct was the immediate cause of injury. Here, Hecht's molestation was the act directly responsible for the injury, while L&M's negligence in hiring, retaining, and supervising him was an indirect cause. Nevertheless, Delgado 's analysis is applicable to our scenario, and supports L&M's position. We noted in Delgado that an injury may be the result of more than one cause. (

A focus on the immediate cause of injury was appropriate for purposes of the territorial limitation in Foremost and the trigger-of-coverage

Hogan , however, did not involve an insured's independent tort liability for damage deliberately caused by another tortfeasor , like Hecht in this case. (Cf. Minkler , supra , 49 Cal.4th at p. 325, 110 Cal.Rptr.3d 612 , 232 P.3d 612 .) The deliberate acts in Hogan were committed by the injured third party : the customer who elected to cut lumber wider than was required. Here, Doe is the injured third party, and her conduct is not at issue. Under the principles discussed in Minkler and Delgado , Hecht's molestation of Doe may be deemed an unexpected consequence of L&M's independently tortious

In support of this result, the court starts with the commonsense definition in

clause refers to the injury-producing acts of the insured, not those of the injured party. [Citations.] In determining whether the injury is a result of an accident, taking into consideration acts or events before the insured's acts would be illogical and contrary to California case law. [¶] 'Any given event, including an injury, is always the result of many causes.' (1 Dobbs, The Law of Torts (2001) § 171, p. 414.) For that reason, the law looks for purposes of causation analysis 'to those causes which are so closely connected with the result and of such significance that the law is justified in imposing liability.' (Prosser & Keeton on Torts (5th ed. 1984) § 41, p. 264.) In a case of assault and battery, it is the use of force on another that is closely connected to the resulting injury. To look to acts within the causal chain that are antecedent to and more remote from the assaultive conduct would render legal responsibilities too uncertain." ( Delgado , at pp. 315-316, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 .)

Today's opinion says Delgado 's analysis is applicable, reasoning that "a finder of fact could conclude that the causal connection between L&M's alleged negligence and the injury inflicted by Hecht was close enough to justify the imposition of liability on L&M." (Maj. opn., ante , 233 Cal.Rptr.3d at p. 493, 418 P.3d at p. 406.) "Under Delgado , L&M's acts must be considered the starting point of the series of events leading to Doe's molestation. L&M does not rely on any event preceding its own negligence to establish

Even in an alleged self-defense case like Delgado , it is not clear why the acts of the injured party preceding the insured's actions are irrelevant to whether the injury was an accident. Consider another example: In a crowded bar, a patron trips and falls with his arms outstretched resembling a punching motion. An employee sees this and reactively, but intentionally, punches and injures the patron in a move of self-defense. In assessing whether this was accidental, we would obviously consider the patron's trip and fall, an event before the insured's act.

Delgado is correct that "the law looks for purposes of causation analysis 'to those causes which are so closely connected with the result and of such significance that the law is justified in imposing liability.' " ( Delgado , supra , 47 Cal.4th at p. 315, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 , citing Prosser & Keeton on Torts, supra , § 41, p. 264.) It is that principle that grounds today's holding that "a finder of fact could conclude that the causal connection between L&M's alleged negligence and the injury inflicted by Hecht was close enough to justify the imposition of liability on L&M." (Maj. opn., ante , 233 Cal.Rptr.3d at p. 493, 418 P.3d at p. 406.)

Today's opinion also seeks to harmonize its holding with Merced Mutual Ins. Co. v. Mendez (1989) 213 Cal.App.3d 41 , 261 Cal.Rptr. 273 ( Merced ). Merced held that no accident occurred when an insured sexually assaulted a victim whom the insured claimed to have honestly believed had consented to sexual activity. ( Id. at p. 50, 261 Cal.Rptr. 273 .) The court stated: "An accident ... is never present when the insured performs a deliberate act unless some additional, unexpected, independent, and unforeseen happening occurs that produces the damage. [Citation.] Clearly, where the insured acted deliberately with the intent to cause injury, the conduct would not be deemed an accident. Moreover, where the insured intended all of the acts that resulted in the victim's injury, the event may not be deemed an 'accident' merely because the insured did not intend to cause injury. Conversely, an 'accident' exists when any aspect in the causal series of events leading to the injury or damage was unintended by the insured and a matter of fortuity." ( Ibid. ) The Court of Appeal then stated that in that case there was no "additional, unexpected, independent or unforeseen act" that occurred and hence there was no accident. ( Ibid. ) Today's opinion says Merced favors finding that Doe's injury was an accident caused by L&M's conduct because Hecht's molestation of Doe was an " 'additional, unexpected, independent, and unforeseen happening' " that

Merced , supra , 213 Cal.App.3d at p. 50, 261 Cal.Rptr. 273 ), and today's opinion is correct that finding Doe's injury was the result of an accident caused by J&M's conduct is consistent with this language in Merced . However, Merced 's application of the law is mistaken. If one were to accept the insured's claim that he had an honest belief that the victim consented to the sexual conduct, then the injury to the victim could be an " ' "unexpected, unforeseen, or undesigned happening or consequence" ' " resulting from the insured's conduct. ( Delgado , supra , 47 Cal.4th at p. 308, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 .) To use Merced 's language, there would be an "aspect in the causal series of events leading to the injury or damage"-namely, the fact that the victim was not consenting-that was "unintended by the insured" and a "matter of fortuity" from the perspective of the insured. ( Merced , at p. 50, 261 Cal.Rptr. 273 .) The Court of Appeal's conclusion that there was "[n]o additional, unexpected, independent or unforeseen act [that] occurred" ( ibid. ) overlooks the fact that the insured claimed he did not realize that the victim was not consenting.

The result in Merced is better explained by the fact that the court implicitly rejected the insured's contention that he honestly believed that the victim was consenting. The court stated that "[a]ll of the acts, the manner in which they were done, and the objective accomplished occurred exactly as [the insured] intended." ( Merced , supra , 213 Cal.App.3d at p. 50, 261 Cal.Rptr. 273 .) If the insured believed the victim to be nonconsenting, then the insured's acts were intentional, not accidental, and no insurance coverage would ensue. But insofar as Merced is understood to hold that a mistake in apprehending another's consent (or lack thereof) can categorically never give rise to an accident, that is inconsistent with our law on the meaning of "accident."

In all other respects, I join the opinion of the court.

district court granted summary judgment to Liberty on its claim for declaratory relief.

the potential for coverage, the focus is properly on the alleged negligence of L&M as the insured employer. It is undisputed that Hecht's sexual misconduct was a "wilful act" beyond the scope of insurance coverage under Insurance Code section 533. ( J. C. Penney Casualty Ins. Co. v. M. K. (1991) 52 Cal.3d 1009 , 1025, 278 Cal.Rptr. 64 , 804 P.2d 689 .) However, Hecht's intentional conduct does not preclude potential coverage for L&M. We noted the distinction between an intentional act of molestation and merely negligent supervision in Minkler v. Safeco Ins. Co. of America (2010) 49 Cal.4th 315 , 110 Cal.Rptr.3d 612 , 232 P.3d 612 ( Minkler ). There the plaintiff sued his Little League coach for sexual molestation. He also sued the coach's mother, whom he accused of negligent supervision for failing to prevent molestations that occurred in her home. The coach was listed as an additional insured on his mother's homeowners insurance policy. We held that an exclusion for injuries arising from an insured's intentional acts did not apply to the mother's liability for negligence. "[T]his is not a situation where the only tort was the intentional act of one insured, and where the liability of a second insured, who claims coverage, is merely vicarious or derivative . On the contrary, [the plaintiff's] claim against [the mother] clearly depends upon allegations that she herself committed an independent tort in failing to prevent acts of molestation she had reason to believe were taking place in her home. Under such circumstances, she had objective grounds to assume she

sought liability insurance coverage for a child molestation committed by one of its drivers at a school. ( Id . at p. 1288.) The relevant policy language covered bodily injury "caused by an occurrence

Delgado v. Interinsurance Exchange of Automobile Club of Southern California (2009) 47 Cal.4th 302 , 308, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 ( Delgado ): "[A]n accident is ' "an unexpected, unforeseen, or undesigned happening or consequence from either a known or an unknown cause." ' " (See maj. opn., ante , 233 Cal.Rptr.3d at p. 490, 418 P.3d at p. 403.) However, the court further states, " 'Under California law, the word "accident" in the coverage clause of a liability policy refers to the conduct of the insured for which liability is sought to be imposed ....' " ( Ibid. , quoting Delgado , at p. 311, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 .) This formulation conflates the term "accident" with the conduct that eventually and proximately causes injury. In this case, L&M's hiring, supervising, and retaining Hecht were not "accidents"; those were deliberate, intentional acts. It was Hecht's sexual abuse of the victim and resulting injury that comprised the accident, from L&M's perspective. In other words, because Hecht's actions and the injury to the victim were " ' "unexpected, unforeseen, or undesigned happening[s] or consequence[s]" ' " from L&M's perspective, they were accidents in the context of providing insurance for L&M. ( Delgado , at p. 308, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 .) Thus, in a liability insurance policy, an "accident" does not necessarily refer to the conduct of the insured; rather, it is an " ' "unexpected, unforeseen, or undesigned happening or consequence" ' " resulting from the conduct of the insured.

This understanding of "accident" is consistent with the court's answer to the question presented. Under the commercial general liability policy at issue, there is coverage for bodily injury so long as "[t]he

potential coverage. As alleged by Doe, the ' "occurrence resulting in injury" ' began with L&M's negligence and ended with Hecht's act of molestation." (Maj. opn., ante , 233 Cal.Rptr.3d at p. 493, 418 P.3d at p. 406.)

Although I agree that a factfinder could conclude that the causal connection was close enough to justify imposing liability on L&M, I would not ground this conclusion on Delgado 's analysis. It is incorrect that "[i]n determining whether the injury is a result of an accident, taking into consideration acts or events before the insured's acts would be illogical and contrary to California case law." ( Delgado , supra , 47 Cal.4th at p. 315, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 .) There are myriad situations where we would examine prior events to determine whether an insured's acts resulted in an accidental injury. For example, suppose an insured driver steps on the

" 'produce[d] the damage.' " (Maj. opn., ante , 233 Cal.Rptr.3d at p. 494, 418 P.3d at p. 406, quoting Merced , at p. 50, 261 Cal.Rptr. 273 .)

Here, the question is whether Liberty had a duty to defend L&M against Doe's lawsuit. "To prevail in an action seeking declaratory relief on the question of the duty to defend, 'the insured must prove the existence of a potential for coverage , while the insurer must establish the absence of any such potential . In other words, the insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot .' [Citation.] The duty to defend exists if the insurer 'becomes aware of, or if the third party lawsuit pleads, facts giving rise to the potential for coverage under the insuring agreement.' " ( Delgado , supra , 47 Cal.4th at p. 308, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 , quoting Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1 , 19, 44 Cal.Rptr.2d 370 , 900 P.2d 619 .)

It is important to keep in mind that a cause of action for negligent hiring, retention, or supervision seeks to impose liability on the employer, not the employee. The district court appeared to recognize that in analyzing

As to liability insurance coverage, tort principles govern the question of causation. "In analyzing coverage under a liability policy, a 'tort approach' [citation] to causation of damages is precisely what is called for .... When the insurer has promised to indemnify the insured for all 'sums which the Insured shall become obligated to pay ... for damages ... because of' nonexcluded property damage, or similar language, coverage necessarily turns on whether the damages for which the insured became liable resulted- under tort law -from covered causes." ( State of California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008 , 1035, 90 Cal.Rptr.3d 1 , 201 P.3d 1147 ( Allstate ).) This rule applies with equal force to a policy covering liability for personal injury. (See Delgado , supra , 47 Cal.4th at p. 315, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 .)

Causation is established for purposes of California tort law if the defendant's conduct is a "substantial factor" in bringing about the plaintiff's injury. ( Allstate , supra , 45 Cal.4th at p. 1036, 90 Cal.Rptr.3d 1 , 201 P.3d 1147 ; Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953 , 968-969, 67 Cal.Rptr.2d 16 , 941 P.2d 1203 ; see Judicial Council of Cal., Civ. Jury Instns. (2018) CACI Nos. 400, 430.) The district court ruled that L&M's alleged negligence was, as a matter of law, "too attenuated" from Hecht's acts of molestation. It reasoned that L&M's actions set the chain of events in motion but did not legally cause Doe's injuries. That reasoning runs counter to California cases expressly recognizing that negligent hiring, retention, or supervision may be a substantial factor in a sexual molestation perpetrated by an employee, depending on the facts presented. ( C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861 , 876, 138 Cal.Rptr.3d 1 , 270 P.3d 699 ; Evan F. v. Hughson United Methodist Church (1992) 8 Cal.App.4th 828 , 835, 10 Cal.Rptr.2d 748 ; cf.

he assigned his claim against his homeowners insurer to the injured party, Delgado. Delgado urged that the attack was an "accident" from his point of view because he did not expect or intend to be assaulted. We rejected the premise of this argument. "Under California law, the word 'accident' in the coverage clause of a liability policy refers to the conduct of the insured for which liability is sought to be imposed on the insured." ( Delgado , at p. 311, 97 Cal.Rptr.3d 298 , 211 P.3d 1083 , italics added.) Because liability insurance is a contract between insurer and insured, and the policy is read in light of the parties' expectations, the relevant viewpoint is that of the insured rather than the injured party. ( Ibid . )

The district court referred to pages 315 and 316 of the opinion in Delgado , supra , 47 Cal.4th 302 , 97 Cal.Rptr.3d 298 , 211 P.3d 1083 . There we addressed Delgado's further contention that the attack was accidental because the insured unreasonably believed he was required to act in self-defense. We disagreed, holding that such a belief could not convert the assault, an act that was purposeful and intended to inflict injury, into an accidental occurrence. We emphasized that the acts of the insured "must be considered the starting point of the causal series of events, not the injured party's acts .... The term 'accident' in the policy's coverage clause refers to the injury-producing acts of the insured, not those of

Merced Mutual Ins. Co. v. Mendez (1989) 213 Cal.App.3d 41 , 261 Cal.Rptr. 273 ( Merced ). The insured in Merced was sued for sexual assault. He claimed his conduct could be considered an "accident" because he mistakenly believed the victim had consented. He conceded that he intentionally engaged in the sexual conduct, but urged that he intended no injury. ( Merced , at pp. 48, 51, 261 Cal.Rptr. 273 .) The court declined to recognize such a minimalist understanding of the term "accident." It explained that "[a]n accident ... is never present when the insured performs a deliberate act unless some additional, unexpected, independent, and unforeseen happening occurs that produces the damage." ( Id . at p. 50, 261 Cal.Rptr. 273 , italics added.) In Merced , "[a]ll of the acts, the manner in which they were done, and the objective accomplished occurred exactly as [the insured] intended. No additional, unexpected, independent or unforeseen act occurred." ( Ibid . )

and arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental thereto." ( Id . at p. 1289, boldface omitted.) The court observed, "[i]t seems clear that this language was intended to address the typical 'slip and fall' case and was not intended to protect against liability for any and all occurrences which could conceivably arise out of an insured's 'use' of its premises. Otherwise, this concededly narrower form of insurance could be

issue in Longden and Maples . ( Foremost , supra , 134 Cal.App.3d at p. 571, 184 Cal.Rptr. 635 ; Longden , supra , 197 Cal.App.3d at p. 233, 242 Cal.Rptr. 726 ; Maples , supra , 83 Cal.App.3d at pp. 647-648, 148 Cal.Rptr. 80 .) However, we have long recognized that "[n]o all-inclusive definition of the word 'accident' can be given." ( Geddes & Smith, Inc. v. St. Paul-Mercury Indemnity Co. (1959) 51 Cal.2d 558 , 563, 334 P.2d 881 ( Geddes ); see

In this case, an employee of Ledesma & Meyer Construction Company, Inc. (L&M), Darold Hecht, committed sexual acts against a 13-year-old student, Jane Doe, at a school where Hecht was working on a construction project undertaken by L&M. Doe sued L&M, among others, and L&M tendered its defense to its insurer Liberty Surplus Insurance Corporation, with whom L&M had a commercial general liability policy. The question is whether that suit alleges an "occurrence" under L&M's commercial general liability policy. I agree with today's opinion that the answer is yes, but I write separately to clarify three aspects of the understanding of an "accident."

The insurance policy in this case provides that "[t]his insurance applies to 'bodily injury' and 'property damages' only if: [¶] (1) The 'bodily injury' ... is caused by an 'occurrence' that takes place in the 'coverage territory' ...." In the "Definitions" section of the policy, the term " 'Occurrence' " is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Thus, the question of coverage turns on whether the injury to Doe was the result of an "accident" caused by L&M and more generally whether, when an employee intentionally causes injury to a third party, that injury can be considered accidental if it was caused by the employer's negligent hiring, retention, or supervision of the employee. Today's opinion holds that such injury can be caused by accident.

'bodily injury' ... is caused by an 'occurrence' that takes place in the 'coverage territory.' " Thus, if an insured's conduct in negligent hiring, retention, or supervision of its employee results in an accident that causes bodily injury, that injury is covered by the insurance policy.

The court addresses a number of cases cited by the federal district court, which arrived at a contrary answer to the question presented. One such case is Delgado , supra , 47 Cal.4th 302 , 97 Cal.Rptr.3d 298 , 211 P.3d 1083 , in which the insured was sued for assault and battery. (Maj. opn., ante , 233 Cal.Rptr.3d at pp. 492-494, 418 P.3d at pp. 405-406.) In that case, as part of a settlement, the insured assigned his claim against his homeowner's insurer to the injured party, Jonathan Delgado. Delgado argued that the attack was accidental because the insured unreasonably believed he was required to act in self-defense. We rejected this argument, holding that such belief could not convert the assault, an act that was purposeful and intended to inflict injury, into an accidental occurrence. In so doing, Delgado stated that the acts of the insured "must be considered the starting point of the causal series of events, not the injured party's acts .... The term 'accident' in the policy's coverage

accelerator because a passenger spilled coffee on the driver and as a result the car hits another car and causes injury to its occupants. In determining whether the injury was accidental, we would of course look to the act of the coffee-spilling passenger, even though the passenger was not the insured. Indeed, any time a motorist takes evasive action due to some situation on the road and thereby causes injury, we would consider that situation-a prior event-in determining whether there was an "accident." (See, e.g., Davilla v. Liberty Life Ins. Co. (1931) 114 Cal.App. 308 , 313-316, 299 P. 831 [finding a result of "accidental means" where insured motorcyclist encountered a stalled vehicle and then deliberately swerved to avoid it and consequently hit his head on the stalled vehicle].)

I agree that "[a]n accident ... is never present when the insured performs a deliberate act unless some additional, unexpected, independent, and unforeseen happening occurs that produces the damage" (