Tuesday, January 20, 2015

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High Court Depublishes Ruling on Sex Assault Defense

By a MetNews Staff Writer

The California Supreme Court has left standing a ruling of this district’s Court of Appeal that an insurer had no duty to defend a massage therapist, in a suit by a client who claimed to have been sexually assaulted during a massage, but ordered depublication of the opinion.

The case is Baek v. Continental Casualty Company. It was decided Oct. 6 and had been published at 230 Cal.App.4th 356.

No justice of the Supreme Court voted to grant review at Wednesday’s conference, or to allow the opinion to remain published.

The case was decided by Div. Four, which affirmed a judgment in favor of Continental Casualty Company, holding that it had no duty to defend or indemnify Luiz Baek in connection with the incident in January 2010.

“Because the intentional sexual assault alleged in the underlying case cannot properly be characterized as within the scope of Baek’s employment or having occurred while performing duties related to the conduct of [his employer’s] business, Baek was not insured under the policy, and Continental had no duty of defense or indemnity,” then-Los Angeles Superior Court Judge Lee S. Edmon wrote for the panel.

Edmon has since been elevated to presiding justice of the Court of Appeal’s Div. Three.

The lawsuit was brought by a client of Heaven Massage and Wellness Center against the business and Baek. The client was identified only as Jaime W.

The complaint included claims for sexual harassment and other intentional torts, as well as for negligence. It alleged that Baek “touched, fondled, rubbed, grabbed and squeezed Plaintiff’s breasts, buttocks, inner thighs and genitals, all while making and emitting moans, groans, grunts and other sounds and noises of sexual pleasure.”

The employer tendered its defense to Continental, which asserted that there was no coverage because the policy’s “professional services” exclusion applied. The employer then cross-complained for breach of contract and bad faith.

A Los Angeles Superior Court judge granted summary judgment for Continental on the cross-complaint, but the Court of Appeal reversed two years ago, finding the exclusion inapplicable.

Baek then filed his own suit against Continental, alleging that Baek was a partner or employee and thus entitled to a defense as an additional insured. Continental demurred on the ground that Baek was acting outside the scope of employment.

The trial judge sustained the demurrer, finding that there was no coverage and no potential of coverage.

Edmon agreed that Continental had no duty to defend or to indemnify Baek because he was not an additional insured.

She emphasized that under the policy language, “members and partners” of the business were additional insureds “only with respect to the conduct of [the] business,” while “employees” were insured “only for acts within the scope of their employment…or while performing duties related to the conduct of [the business].”

Assuming that Baek was a partner or employee, Edmon explained, he was still not an insured because sexual assault was outside the scope of the business.

She cited Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291 in which the court rejected the contention that a hospital ultrasound technician’s sexual molestation of a patient during an ultrasound exam was within the scope of his employment.

The justices held that the alleged assault was not employment-related because “its motivating emotions” weren’t “fairly attributable to work-related events or conditions.” The technician, they held, was not employed to engage in intimate activity with the patient, but merely to perform an examination and record the results.

Baek’s case was similar, Edmon explained, because Baek’s employment, while it created an opportunity for him to be alone with the plaintiff, did not require him to engage in the alleged assaultive conduct.

Edmon went on to note that while there does not appear to be a California published decision on the subject, courts in other states have held that a workplace sexual assault does not occur “while performing duties related to the conduct of” an insured’s business, as the phrase is used in comprehensive general liability policies.