Answering a Ninth Circuit question, the Supreme Court today concludes in Liberty Surplus Insurance Corp. v. Ledesma and Meyer Construction Company, Inc. that a company can properly claim insurance coverage for a lawsuit alleging that the company negligently hired, trained, and supervised an employee who, while working on a middle school construction project, sexually abused a 13-year-old student. The court’s opinion by Justice Carol Corrigan concludes that, although the sexual misconduct itself “was a ‘wilful act’ beyond the scope of insurance coverage,” the “allegedly negligent hiring, retention, and supervision were independently tortious acts” which could be covered, and that a trier of fact could find a causal connection between those independent torts and the molestation.
Justice Goodwin Liu separately concurs, writing “to clarify three aspects of the understanding of an ‘accident,'” the pertinent term under the insurance policy.
The court’s finding of potential insurance coverage is contrary to the district court’s ruling that is being reviewed by the Ninth Circuit. The court also disagrees with two other federal district court decisions, issued in 1991 and 2004.