Metropolitan News-Enterprise


Thursday, August 13, 2009


Page 1


High Court to Hear Coverage Issue in Molestation Suit




The California Supreme Court yesterday agreed to decide whether an “intentional acts” exclusion in a homeowner’s policy excuses the insurer from defending against a claim that the insured failed to prevent another person from molesting a child in the insured’s home.

The justices, at their weekly conference in San Francisco, accepted a request by the Ninth U.S. Circuit Court of Appeals to answer a certified question in the case of Minkler v. Safeco Insurance Company, Ninth Circuit No. 07-56689, Supreme Court No. S174016.

Scott Minkler sued Safeco for bad faith breach of insurance contract after settling his suit, based on several intentional and negligent tort theories, against the insured, Betty Schwartz. He alleged in the underlying action that Schwartz was aware that her son, David Schwartz, the coach of Minkler’s youth baseball team, was molesting him over a period of several years, beginning in 1987.

Betty Schwartz, Minkler claimed, did nothing to stop the molestations even though they occurred in her home and with her knowledge. After Safeco refused to defend her in the underlying suit, she defaulted, resulting in a judgment for more than $5 million.

Schwartz then assigned her breach of contract and bad faith claims against Safeco to Minkler in exchange for a covenant not to execute. Minkler sued on those claims in Superior Court, but Safeco removed the action to federal court.

Minkler appealed to the Ninth Circuit after U.S. District Judge M. Margaret Morrow of the Central District of California dismissed his suit for failure to state a cause of action. In doing so, Morrow rejected the plaintiff’s argument that a severability-of-interests clause in the policy rendered the intentional acts exclusion inapplicable to the negligence claim against Betty Schwartz, even though the clause precluded coverage of any claim against her son. 

The clause stated:

“This insurance applies separately to each insured. This condition will not increase our limit of liability for any one occurrence.”

The Ninth Circuit panel requested last April that the state high court decide the issue. It said the question of the severability clause’s affect was “one of considerable importance to insureds and insurers alike” because many policies have similar provisions, the state Supreme Court has never addressed the issue, two Court of Appeal cases on the subject resulted in limited holdings on unique facts, and courts in other jurisdictions have reached conflicting results.

In other conference action, the justices left standing a May 26 Court of Appeal ruling in favor of the City of West Hollywood in its ongoing effort to develop low-cost housing on the site known as Tara.

The land, located at 1343 Laurel Avenue, had been donated to the city by its longtime owner, Elsie Weisman. It is occupied by a large colonial-revival style house construed in 1923; the property acquired the nickname “Tara,” after the famed plantation in “Gone With the Wind.”

The city has been trying to develop approximately 35 units of low-income housing on the site for the past six years, while opponents claim that Weisman intended to limit the culturally significant property to public use.

The Supreme Court ruled last year that the city failed to conduct a sufficient environmental review. The case the justices declined to hear involves a separate lawsuit seeking to reform the deed to the city in order to require that the property be used only for public purposes.

The lower courts agreed with the city that the action was barred by the statute of limitations.

The case, decided in an unpublished opinion, is Save Tara v. City of West Hollywood, B204319.


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