Allstate Insurance v. Mugavero
79 N.Y.2d 153, 589 N.E.2d 365, 581 N.Y.S.2d 142 (1992)
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Rule of Law:
For the purposes of a homeowner's insurance policy exclusion for intentionally caused injuries, the intent to cause harm is inferred as a matter of law from the act of child sexual abuse, regardless of the insured's subjective intent. An exclusion for injury 'intentionally caused by an insured person' bars coverage for all insureds, including those who are merely negligent, if one insured's intentional act caused the injury.
Facts:
- From 1979 through April 1984, Ann Mugavero worked as a babysitter for Ellen B.'s two minor children, Christian and Theresa.
- During this period, Ann's husband, Edward Mugavero, allegedly committed repeated acts of sodomy and sexual abuse against the children while they were in Ann's care.
- The alleged acts included forcible anal and oral sodomy.
- Edward and Ann Mugavero were insured under a homeowner's insurance policy issued by Allstate.
- Upon his arrest for sexual assault, Edward Mugavero provided a statement to police claiming that he was merely 'comforting the children when he was hugging them'.
Procedural Posture:
- Ellen B., on behalf of her minor children, sued Edward and Ann Mugavero in New York Supreme Court (the trial court) for assault, battery, and negligence.
- The Mugaveros demanded that their homeowner's insurer, Allstate, defend and indemnify them in the lawsuit.
- Allstate initiated a separate declaratory judgment action in Supreme Court, seeking a ruling that it had no duty to defend or indemnify the Mugaveros.
- The Mugaveros and Ellen B. moved for summary judgment in the declaratory action, while Allstate cross-moved for summary judgment.
- The Supreme Court denied Allstate's motion and declared that Allstate was obligated to provide the Mugaveros with a defense.
- Allstate, as appellant, appealed to the Appellate Division of the Supreme Court, an intermediate appellate court.
- A divided Appellate Division affirmed the trial court's order.
- Allstate, as appellant, was granted leave to appeal to the Court of Appeals of New York, the state's highest court.
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Issue:
Does a homeowner's insurance policy, which excludes coverage for bodily injury 'intentionally caused by an insured person', require the insurer to defend and indemnify an insured accused of sexually abusing children and his co-insured wife accused of negligent supervision?
Opinions:
Majority - Hancock, Jr., J.
No, the homeowner's insurance policy does not require the insurer to defend or indemnify the insureds because the harm is deemed intentionally caused and falls within a policy exclusion. For certain acts, like child sexual abuse, the harm is so inherent in the act itself that the intent to injure is inferred as a matter of law. To do the act is to do the harm, and public policy precludes insulating a person from the financial consequences of such conduct. The argument that the acts were merely negligent is a conclusory assertion that contradicts the factual allegations of intentional sexual assault. Furthermore, because the policy excludes injury 'intentionally caused by an insured person,' the exclusion applies to all insureds, including the merely negligent Ann Mugavero, as the injuries were caused by the intentional acts of her husband, Edward Mugavero, who is also an insured.
Dissenting - Alexander, Titone and Bellacosa, JJ.
Yes, the insurer should be required to provide a defense under its broad duty to defend. The majority allows the abhorrent nature of the alleged acts to unsettle long-standing, predictable principles of insurance law. By inferring intent as a matter of law from the nature of the conduct, the court creates an ad hoc exception that distorts the policy's language and challenges settled precedents. Courts should not allow emotion to eclipse established contractual insurance law principles, as this leads down a 'slippery slope' that undermines the essential values of precision and definitiveness in this field.
Analysis:
This decision establishes a significant precedent in New York by creating a category of conduct—child sexual abuse—where the intent to cause injury is legally inferred, regardless of the perpetrator's subjective state of mind. This strengthens the hand of insurers in denying coverage for claims arising from such inherently harmful acts by preventing insureds from arguing their actions were intentional but the resulting harm was not. The court's interpretation of 'an insured person' in the exclusion clause also solidifies the principle that the intentional, wrongful act of one insured can void coverage for all other insureds under the policy for that same occurrence, even for those whose liability is based on negligence.
