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B.M.B. v. State

July 10, 2003

B. M. B., PLAINTIFF,
v.
STATE FARM FIRE AND CASUALTY COMPANY, DEFENDANT.



SYLLABUS BY THE COURT

Where insurance coverage is being or has been sought for personal injury or bodily harm resulting from an insured's nonconsensual sexual contact with another, and where there is a genuine issue of material fact as to whether the insured's acts were "unintentional" because of mental illness, as set forth in the holding of State Farm Fire & Casualty Co. v. Wicka, 474 N.W.2d 324 (Minn. 1991), and therefore outside the scope of an insurance policy's intentional act exclusion, the trial court shall submit the issue to the jury and is not, as a matter of law, to infer the insured's intent to cause injury.

Certified question answered.

Heard, considered, and decided by the court en banc.

The opinion of the court was delivered by: Anderson, Russell A., Justice.

OPINION

Plaintiff B. M. B. obtained a judgment, in state district court, against Ronald K. Halliday for compensatory and punitive damages resulting from Halliday's nonconsensual sexual contact with B. M. B. Halliday's insurer, defendant State Farm Fire and Casualty Company (State Farm), denied coverage. Halliday then assigned his State Farm policy rights to B. M. B., who commenced suit for breach of insurance contract in federal district court against State Farm. The federal district court denied State Farm's motion for summary judgment on grounds that the policy's intentional act exclusion precluded coverage, but at State Farm's request, has asked us the following certified question:

Where insurance coverage is being or has been sought for personal injury or bodily harm resulting from an insured's nonconsensual sexual contact with another, can the trial court submit to a jury the question of whether the insured's acts were "unintentional" because of mental illness as set forth in the holding of State Farm Fire & Casualty Co. v. Wicka, 474 N.W.2d 324 (Minn. 1991), and therefore outside the scope of an insurance policy's intentional act exclusion, or must the court infer the insured's intent to cause injury as a matter of law?

We answer and hold that where insurance coverage is being or has been sought for personal injury or bodily harm resulting from an insured's nonconsensual sexual contact with another, and where there is a genuine issue of material fact as to whether the insured's acts were "unintentional" because of mental illness, as set forth in the holding of State Farm Fire & Cas. Co. v. Wicka, 474 N.W.2d 324 (Minn. 1991), and therefore outside the scope of an insurance policy's intentional act exclusion, the trial court shall submit the issue to the jury and is not, as a matter of law, to infer the insured's intent to cause injury.

I.

B. M. B. was 10 years old in June 1992, when she visited her uncle Ronald K. Halliday, a practicing anesthesiologist, and his family in Faribault, Minnesota. During the visit, Halliday sexually abused B. M. B. At the time B. M. B. was abused by Halliday, he was a named insured under a personal liability umbrella policy issued by defendant State Farm.

In June 1995, B. M. B's parents commenced a civil lawsuit in Rice County District Court against Halliday.*fn1 Halliday sought coverage from State Farm. State Farm declined to provide coverage, questioning, among other things, whether the incidents were "expected or intended" by Halliday or were the result of Halliday's "willful and malicious" acts, and denied it had any duty to defend or indemnify Halliday.*fn2 The jury returned a verdict against Halliday and awarded B. M. B. $100,000 in compensatory damages, reduced by the court to $95,000, and $1,500,000 in punitive damages.

In June 1999, Halliday assigned to B. M. B.'s parents his rights, if any, to proceeds under his State Farm umbrella policy. B. M. B.'s attorney sent a demand letter to State Farm asserting that Halliday suffered from a mental illness at the time he abused B. M. B. in 1992 and claiming that, therefore, the policy's exclusion for expected or intended acts did not apply. State Farm did not alter its position that coverage did not exist, and B. M. B. brought this action against State Farm in federal district court, alleging that State Farm breached its duty to defend and indemnify Halliday in the underlying civil sexual abuse litigation in Rice County.

B. M. B. presented expert testimony from Dr. Thomas Gratzer, a psychiatrist, who concluded that Halliday had psychiatric disorders at the time of the abuse that prevented him from controlling his actions:

[S]exual offenders represent a diverse group of individuals. Paraphilias*fn3 [sic] represent a small subset of sex offenders who meet the diagnostic criteria for a * * * sexual disorder. In my opinion, Mr. Halliday's aberrant sexual behaviors are a function of his sexual disorders. He shows a multiplicity of sexual disorders including pedophilia, voyeurism, paraphilic disorder n.o.s.,*fn4 and sexual disorder n.o.s. Mr. Halliday's ...


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