Concord Mutual Insurance Co. v. Madore

Concord Mutual Insurance Co. v. Madore  (2004-291); 178 Vt. 281; 
882 A.2d 1152

2005 VT  70

[Filed 01-Jul-2005]

  NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
  40 as well as formal revision before publication in the Vermont Reports. 
  Readers are requested to notify the Reporter of Decisions, Vermont Supreme
  Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
  order that corrections may be made before this opinion goes to press.


                                 2005 VT  70

                                No. 2004-291


 Concord Mutual Insurance Company                       Supreme Court
 
                                                        On Appeal from
   v.                                                   Windham Superior Court


  Leo Madore, Linda Madore on behalf of T.M. (a minor)  April Term, 2005
  and Tracy Dion on behalf of T.S. (a minor)


  Karen R. Carroll, J.

  Richard J. Holmes of Robert A. Mello & Associates, PLC, South Burlington,
  for  Plaintiff-Appellee.
       
  Thomas C. Bixby of McCarty Law Offices, P.C., Brattleboro, for
  Defendants-Appellants Dion and T.S. (a minor).

  PRESENT:     Reiber, C.J., Dooley, Johnson and Skoglund, JJ., and Allen,
               C.J. (Ret.), Specially Assigned 

        
       ¶  1.   JOHNSON, J.   Plaintiff Concord General Mutual Insurance
  Company brings this declaratory judgment action claiming that it does not
  owe its insureds a duty to defend or indemnify them in an underlying tort
  suit arising from minor-on-minor sexual molestation.  Plaintiff moved for
  and was granted judgment against all parties to the underlying tort suit on
  grounds that the homeowners' policy at issue expressly excluded from
  coverage personal liability arising out of the sexual molestation of any
  person, whether intentional or unintentional.  On appeal, defendants argue
  that the court impermissibly resolved a genuine issue of material fact on
  summary judgment when it determined that the molestation exclusion applied
  to the facts of this case.  Specifically, defendants argue that the
  exclusion applies only to intentional acts of sexual molestation and,
  therefore, the court also erred in failing to permit discovery on the
  question of whether the minor perpetrator in this case was capable of
  forming the requisite intent.  We affirm because the court properly
  interpreted the dispositive policy exclusion at issue, and such
  interpretation presented a question of law that was within the court's
  power to resolve on summary judgment.

       ¶  2.    In September 2003, defendant Tracy Dion filed a complaint
  in superior court on behalf of herself and her minor son T.S. seeking
  damages from defendants Leo Madore, Linda Madore, and their minor son T.M.
  for injuries sustained as a result of T.M.'s alleged sexual molestation of
  T.S.  Paragraph six of the underlying complaint states, "T[.]S[.] was
  sexually molested by T[.]M[.] from the Summer of 1998 through the Fall of
  2001."  (Emphasis added).  All ten counts of the underlying complaint
  "repeat and reallege" the sexual molestation allegation contained in
  paragraph six.  In January 2004, Dion amended each count of the complaint
  adding the allegation that T.M.'s conduct also "constituted a violation of
  Vermont statutes lewd or lascivious conduct with a child 13 V.S.A. §§ 2601,
  2602, and 2631."  
   
       ¶  3.   During the period covered by the allegations in the
  underlying complaint, the Madore defendants were the insureds on a
  homeowners' insurance policy issued by plaintiff.  The policy provided
  personal liability coverage for suits brought against an insured for
  damages because of bodily injury.  The policy required plaintiff to supply
  insureds a defense against lawsuits seeking damages for occurrences that
  fall within the policy coverage.  The policy coverage contains, among
  others, an exclusion in subsection (a) for bodily injury resulting from
  acts which are "expected or intended by one or more 'insureds' "; an
  exclusion in subsection (b) for bodily injury that "aris[es] out of or in
  connection with a 'business' engaged in by an 'insured' " including any act
  or omission "regardless of its nature or circumstance, involving a service
  or duty rendered"; an exclusion in subsection (g) for bodily injury
  "[a]rising out of . . . [t]he ownership, maintenance, use, loading, or
  unloading of an excluded watercraft"; an exclusion in subsection (i) for
  bodily injury "[c]aused directly or indirectly by war"; an exclusion in
  subsection (j) for bodily injury "[w]hich arises out of the transmission of
  a communicable disease by an " 'insured' " and; an exclusion in subsection
  (1) for bodily injury "[a]rising out of sexual molestation of any person." 

       ¶  4.   In response to a dispute that arose between the parties
  about whether the Madores' homeowners insurance policy provided coverage
  for Dion's claim, plaintiff filed this declaratory judgment action naming
  the Madores, Tracy Dion, and T.S. as defendants.  In its complaint,
  plaintiff alleged five independent reasons that it felt justified a denial
  of coverage, including the intentional acts exclusion and the sexual
  molestation exclusion cited above.  

       ¶  5.   Plaintiff subsequently moved for judgment on the pleadings
  under V.R.C.P. 12(c).  Of the grounds alleged in its complaint, plaintiff's
  motion relied solely on the sexual molestation exclusion.  Plaintiff argued
  that the exclusion applied to bar coverage for defendant Dion's claims in
  the underlying tort suit, all of which derived from the allegation that the
  insureds' son had sexually molested T.S.
   
       ¶  6.   Defendants responded by filing a motion for summary judgment
  pursuant to V.R.C.P. 56.  In their statement of facts, defendants note that
  the policy does not define the term "sexual molestation" as used in the
  exclusion.  Defendants argued that they were entitled to judgment as a
  matter of law because, in their view, the undefined term includes only
  sexual molestation that was intentional.  Defendants asserted that the
  minor perpetrator in question should be presumed incapable of forming the
  requisite intent as a matter of law.  Defendants argued, therefore, that
  the policy exclusion at issue would not bar coverage for the underlying
  complaint because it alleges unintentional sexual molestation for which
  coverage is not specifically excluded.  The parties then traded pleadings
  in opposition to each other's respective motions. 
   
       ¶  7.    The court granted plaintiff's motion for judgment on the
  pleadings and denied defendants' motion for summary judgment.  The court
  identified the "pivotal issue" as "whether there is any possibility that
  Plaintiff insurer might be obligated to indemnify Defendants Madore and
  T.M. on any of the claims asserted in the underlying suit."  Consistent
  with our precedent, the court analyzed the issue by comparing the
  allegations in defendant Dion's tort complaint to the terms of coverage in
  the policy.  See Hardwick Recycling & Salvage Co. v. Acadia Ins. Co., 2004
  VT 124, ¶ 15, 15 Vt. L. Wk. 397, 869 A.2d 82 (describing mode of analysis in
  insurance coverage disputes).  The court examined both the underlying tort
  complaint and the Madores' insurance policy that had been "incorporated
  into the pleadings" by the parties.  After quoting from the sexual
  molestation exclusion that plaintiff's motion relied on, and the
  intentional acts exclusion, the court concluded that the molestation
  exclusion is "clear, unambiguous and applicable here."  The court
  specifically rejected defendants' argument that, based on our decision in
  Northern Security Ins. Co. v. Perron, 172 Vt. 204, 777 A.2d 151 (2001), a
  sexual molestation exclusion cannot bar coverage when the alleged molester
  is a minor.  The court also noted that, under defendants' interpretation,
  the specific sexual molestation exclusion would be completely redundant
  because intentional acts of sexual molestation would be excluded by the
  general intentional acts exclusion.  Based on its conclusion that the plain
  meaning of the sexual molestation exclusion encompasses all acts of sexual
  molestation regardless of whether the alleged perpetrator was capable of
  forming legal intent, the court denied defendants' motion for summary
  judgment, noting that the question of intent was immaterial.  We find no
  error in any of these conclusions.

       ¶  8.   On appeal, defendants assert that the superior court erred
  by granting plaintiff's motion for summary judgment because a genuine issue
  of material fact exists as to whether the insurance policy excluded
  coverage for minor-on-minor sexual molestation.  Defendants raise this
  argument even though the trial court's order purports to grant plaintiff
  judgment on the pleadings, and not summary judgment.  Defendants assert
  that by attaching the underlying complaint to its motion for judgment on
  the pleadings, plaintiff presented matters outside the pleadings, which the
  court then considered, thus converting the motion to one for summary
  judgment.  See V.R.C.P. 12(c) (requiring a motion for judgment on the
  pleadings to be treated as motion for summary judgment in accordance with
  V.R.C.P. 56 whenever matters outside the pleadings are presented to and not
  excluded by the court).  As noted, the court considered the underlying
  complaint as "incorporated" by the parties' pleadings.  We need not resolve
  this dispute over the motion's proper classification because this case
  presents only a question of law, which we review under the de novo
  standard.  Thus, even if we assume that the motion should have been
  reviewed under the summary judgment standard, the standard of review on
  appeal as to the ultimate question of policy interpretation is the same. 
  See V.R.C.P. 61 (outlining the harmless error standard and instructing the
  court to disregard any error or defect in the proceeding that does not
  affect the "substantial rights of the parties").  Moreover, applying that
  standard we reach the same result as the trial court.    
   
       ¶  9.   The trial court correctly pointed out that this case turns on
  the interpretation of the sexual molestation policy exclusion. 
  Notwithstanding defendants' argument to the contrary, "[c]onstruction of
  the language of insurance contracts is a question of law, not of fact." 
  Fireman's Fund Ins. Co. v. CNA Ins. Co., 2004 VT 93, ¶ 8, 15 Vt. L. Wk.
  296, 862 A.2d 251.  Our review of trial court rulings on questions of law
  presented by summary judgment motions is plenary, and nondeferential. 
  Hardwick Recycling, 2004 VT 124, ¶ 14.  In making our own inquiry into the
  legal effect of and interrelationship between the insurance contract terms,
  we read the disputed terms according to their plain and popular meaning,
  resolving ambiguity, if any, in favor of the insured.  Fireman's Fund Ins.
  Co., 2004 VT 93, ¶ 9.  Nonetheless, we will not deny the insurer the
  benefit of unambiguous terms inserted into the contract for its benefit. 
  Id.  

       ¶  10.   The trial court concluded, and we agree, that the sexual
  molestation exclusion is both unambiguous and applicable to the underlying
  claim.  The policy does not, however, contain a definition for the term
  "sexual molestation."  Accordingly, we may take judicial notice of its
  dictionary definition to determine its popular meaning.  Hardwick
  Recycling, 2004 VT 124, ¶ 26.  The term "sexual" is defined primarily as
  being "[o]f relating to, involving, or characteristic of sex, sexuality,
  the sexes, or the sex organs and their functions."  American Heritage
  Dictionary, 1249 (3rd ed. 1997).  "Sexual" is also defined as "[i]mplying
  or symbolizing erotic desires or activity."  Id.  The dictionary also
  indicates that to "molest" is "[t]o disturb, interfere with, or annoy" or
  alternatively "[t]o subject to unwanted or improper sexual activity."  Id.
  at 879.  
   
       ¶  11.   The concept of legal intent is beyond the plain meaning
  that we derive from the foregoing definitions.  The verb molest, as an
  intransitive verb, focuses on the effect the action has on its object, the
  victim, without reference to the intent of the perpetrator.  Moreover,
  reading the underlying complaint in light of the definitions above leaves
  little doubt that the allegations it contains fall within the sexual
  molestation exclusion contained in the insurance policy.  Aside from the
  direct use of the term "sexual molestation" in paragraph six that is then
  "realleged" in every count of the underlying complaint, the underlying
  complaint also states that "[T.M.] intended to commit unpermitted harmful
  and offensive sexual contact upon [T.S.]"(FN1)  In paragraph twenty, the
  underlying complaint states that T.M. forced "harmful and offensive
  unwanted sexual contact" upon T.S.  Paragraph seventy-two alleges that the
  Madore defendants permitted T.M. "to be in a position to molest children." 
  This comparison belies any claim that the allegations in the complaint do
  not fall within the plain and popular meaning of the term "sexual
  molestation" as it is used in the policy exclusion at issue.  
   
       ¶  12.   Defendants also err when they suggest that the sexual
  molestation exclusion "falls under the intentional act provisions of the
  policy."  This claim is unsupported by the policy language and structure to
  which we must give effect.  See Waters v. Concord Group Ins. Cos., 169 Vt.
  534,536, 725 A.2d 923, 926 (1999) (mem.) ("Proper insurance contract
  interpretation requires that the policy provisions be read together and
  viewed as an integrated whole.").  In fact, the sexual molestation and the
  intentional act exclusions are but two of a group of separately numbered,
  independent exclusions all of which fall under the general heading for
  exclusions to the "personal liability" and "medical payment to others"
  coverage.  The intentional act exclusion is found at Section II(1)(a), and
  the sexual molestation exclusion is found at Section II(1)(k)(1).  As noted
  above, there are a number of other exclusions interposed between the two in
  question, and some pertain to occurrences that could not be classified
  strictly as intentional acts of the insured.  These include the provision
  at Section II(1)(i) for bodily injuries caused directly or indirectly by
  the "[d]ischarge of a nuclear weapon . . . even if accidental."  Sexual
  molestation is not, therefore, an enumerated example of the types of
  intentional acts excluded by the intentional act exclusion-it is an
  exclusion unto itself.  In light of the fact that the policy clearly
  establishes separate exclusions for intentional acts and sexual
  molestation, an interpretation of the molestation language that writes an
  intent element into it would, as the trial court noted, render it
  redundant.  We cannot adopt such an interpretation.  Id. ("The court is . .
  . bound to enforce the contract as written and not to rewrite it on behalf
  of one or both of the parties."). 

       ¶  13.   Having concluded that the sexual molestation exclusion
  makes no distinction between acts of molestation which are done by a
  perpetrator capable of forming legal intent, and acts which are done by an
  individual who may be incapable of forming intent, we find no application
  for Northern Security Insurance Co. v. Perron.  In Perron, we considered
  whether the inferred-intent rule we apply to cases involving sexual abuse
  perpetrated on a minor by an adult should also apply to minor-on-minor
  sexual abuse cases.  172 Vt. at 214-15, 777 A.2d  at 158-60.  We did so in
  the context of an insurance coverage dispute concerning the application of
  a general intentional act exclusion, and not, as is the case here, a
  specific sexual molestation exclusion existing independently from an
  intentional act provision.  Accordingly, Perron is not pertinent to our
  analysis here.
   
       ¶  14.   Also irrelevant is defendant Dion's amendment of the
  underlying complaint to include an allegation that T.M.'s actions toward
  T.S. rose to the level of lewd and lascivious conduct with a child as
  proscribed by Vermont's criminal statutes.  Simply describing the
  underlying conduct with a specific legal term does not change the general
  character of that conduct.  As noted above, the conduct alleged falls
  within the plain meaning of the term sexual molestation; whether it may
  also amount to the level of criminal conduct is besides the point.  

       ¶  15.  In light of our conclusion that T.M.'s capacity to form
  legal intent is immaterial to the application of the sexual molestation
  exclusion, defendants' claim that the court erred in denying them discovery
  related to the question of  T.M.'s intent is moot.

       Affirmed. 

  FOR THE COURT:



  _______________________________________
  Associate Justice

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                                  Footnotes


FN1.  In arguing that the sexual molestation exclusion applies only to
  intentional sexual molestation, and that the minor T.M. may not have been
  capable of forming the requisite intent, defendant Dion has taken a
  position that would directly undermine some of the allegations contained in
  the underlying complaint.