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HEADNOTE: Gloria Pettit, Individually, etc. v. Erie Insurance Exchange, No. 1761, September Term, 1996

________________________________________________________________ INSURANCE -An adult insured's intent to engage in sexual contact with a child embodies an intent to injure for the purpose of applying the intentional injury exclusion in a liability insurance policy.

REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 1761 September Term, 1996

GLORIA PETTIT, Individually, etc.

v.

ERIE INSURANCE EXCHANGE

Wenner, Eyler, Sonner,

JJ. Opinion by Eyler, J. Filed: September 5, 1997

This case involves the question of whether, for purposes of determining the applicability of an intentional injury exclusion in various homeowner's liability policies, an insured's intent to injure is presumed as a matter of law from his sexual molestation of two minor boys or whether the question of intent is an issue of fact that may not be resolved on summary judgment. While we have had occasion to consider a similar issue previously in the case of Harpy v. Nationwide Mut. Fire Ins. Co., 76 Md. App. 474 (1988), appellants seek to distinguish Harpy primarily on the basis that, in this case, there is expert testimony that the insured suffers from "pedophilia," a mental disorder, and consequently, that he did not intend to harm his victims. Consistent with Harpy, we hold that the insured's intent to molest two young boys sexually is sufficient to trigger the intentional injury exclusion of the policies at issue. Accordingly, we shall affirm the judgment of the circuit court. Facts Gloria Pettit, as mother and next friend of her two minor children, appellants, filed an action against James Kowalski in the Circuit Court for Prince George's County for injuries sustained by appellants as a result of Kowalski's sexual molestation of the children. The amended complaint alleges that, beginning on or about April 1, 1991, Kowalski befriended the boys' father, Roger Deprey. Approximately one year later, Mr. Deprey died of a brain tumor. The amended complaint further

alleges in pertinent part that, between April 1, 1991 and May 25, 1993, (1) Kowalski used his relationship with Roger Deprey and the subsequent death of Roger Deprey to befriend the minor plaintiffs, and to gain the plaintiffs' interest, affection, loyalty, and trust; and (2) as a result of this special relationship and in light of the recent death of their father, Kowalski became very attentive to the minor plaintiffs' needs, providing, at times, care and supervision of the minor plaintiffs, and assuming a fatherly role towards the children. The amended complaint goes on to allege that, unknown to the minor plaintiffs' parents, "Kowalski was a pedophile who, for many years, had had recurrent sexual fantasies and sexual urges with numerous other prepubescent children." It further alleges that, during the relevant time period, Kowalski used his relationship with the minor plaintiffs to act on his pedophilic urges and fantasies as follows: [Kowalski] committ[ed] fellatio and oral sex with the minor Plaintiffs with injury; undressed the minor Plaintiffs; physically masturbat[ed] the minor Plaintiffs; fondl[ed] the minor Plaintiffs; and filmed these pedophilic activities, all of which was for the purpose of [Kowalski's] self gratification and satisfaction of [Kowalski's] sexual fantasies as a pedophile[; and] * * * *

[While the children were in his custody, Kowalski] allowed, permitted and encouraged others . . . to perform similar pedophilic acts on the [minor Plaintiffs], while in the - 2 -

presence of [Kowalski], for the self gratification and satisfaction of [Kowalski's] sexual fantasies. While the amended complaint is silent on the issue, the record reveals that the minor appellants were ages seven and nine at the time the sexual abuse first began. After setting forth the factual allegations, the amended complaint then purports to state a cause of action based on various negligence theories. On appeal, appellants specifically identify three negligence theories: (1) negligent care and supervision of the minor children; (2) failure to warn of a dangerous mental condition (pedophilia) and/or failure to refrain from harmful conduct; and (3) failure to take reasonable steps to make his premises safe (i.e., premises liability). During all or some portion of the relevant time period, Kowalski was insured under three different types of liability insurance policies issued by Erie. For the entire time period, Kowalski was covered by a HomeProtector 2003 Policy.1 This policy contains a broad coverage clause that covers all sums the insured becomes legally obligated to pay because of bodily injury or property damage covered by the policy. The policy excludes "[b]odily injury or property damage expected or intended by

Two such policies were issued covering the time period from April 1990 through July 1992 and from July 1992 through July 1993, respectively. - 3 -

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anyone we protect." For the time period from May 1993 through May 1994, essentially for the last month the abuse allegedly occurred, Kowalski was covered by an Ultrasure Package Policy for Landlords and a HomeProtector 2004 Tenantcover Edition Policy. These latter two policies limit coverage to personal injury and property damage caused by an occurrence and define occurrence as "an accident, including continuous or repeated exposure to the same general harmful conditions." These policies exclude "injury or damage expected or intended from the standpoint of the insured." In addition, the Tenantcover Policy contains a clause excluding "bodily injury or property damage which arises out of the sexual molestation, corporal punishment or physical or mental abuse by anyone we protect." While appellants acknowledge that the sexual molestation exclusion, if applicable in the instant case, would exclude coverage, Erie informs us that this particular exclusion was not approved by the Maryland Insurance Commissioner until 1995, and thus, Erie concedes that it has no application to the instant case. On November 9, 1994, Erie filed a declaratory judgment action claiming that it owes no defense or coverage under any of the policies for Kowalski's acts. By stipulation, the parties agreed to stay the underlying tort action until resolution of the declaratory judgment action. The parties filed cross-motions for summary judgment. In opposition to Erie's motion for summary judgment, appellants submitted (1) an affidavit of James Kowalski - 4 -

wherein Kowalski stated that he neither expected nor intended to injure the minor appellants; (2) portions of the transcript of Kowalski's criminal trial containing testimony of Fred Berlin, M.D., Michael Sweda, Ph.D., and Joanna Brandt, M.D., including their conclusions that Kowalski is a pedophile; and (3) an affidavit of Neil H. Blumberg, M.D. who, upon review of Kowalski's medical records and the trial testimony of Drs. Berlin, Sweda, and Brandt, concluded that (a) Kowalski suffers from a mental disorder known as pedophilia, (b) pedophilia is not characterized by intent to injure or harm the sexual partner, and (c) based on the fact that Kowalski is a pedophile, it is Blumberg's opinion to a reasonable degree of medical probability that Kowalski did not have the intent to harm the minor appellants. Following a hearing, the circuit court concluded that the policies provide no coverage as a matter of law, and granted Erie's motion for summary judgment and denied appellants' motion for summary judgment. This appeal followed. Questions Presented Appellants present three questions on appeal that really are restatements of but a single issue: Did the circuit court err by concluding, as a matter of law, that the allegations in the amended complaint do not give rise to a "potentiality of coverage" under any of the insurance policies?

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Standard of Review Under Rule 2-501(a), a party may file a motion for summary judgment "on the ground that there is no genuine dispute as to material fact and that the party is entitled to judgment as a matter of law. . . ." Subsection (e) of the rule directs the

trial court to grant summary judgment in favor of the movant "if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law." Under the summary judgment rule, a trial court does not resolve disputed issues of fact, but instead, makes rulings as a matter of law. Southland Corp. v. Griffith, 332 Md. 704, 712 (1993); Thus, the

Beatty v. Trailmaster, 330 Md. 726, 737 (1993).

standard for appellate review of a grant of summary judgment is whether the trial court was legally correct. at 712; Beatty, 330 Md. at 737. Griffith, 332 Md.

In reviewing the trial court's grant of summary judgment and declaratory relief, we further are mindful of the principles governing declaratory judgment actions involving insurance coverage disputes. Generally, declaratory judgment actions, brought in advance of the underlying tort actions, are not a favored means of resolving liability insurance coverage disputes. Allstate Ins. Co. v. Atwood, 319 Md. 247, 255 (1990).

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"A declaratory judgment action prior to the trial of a tort action against the insured may under certain circumstances be a valuable means of resolving questions of policy coverage where those questions are independent and separable from the claims asserted in a pending suit by an injured third party. * * * *

But where . . . the question to be resolved in the declaratory judgment action will be decided in [a] pending action[], it is inappropriate to grant a declaratory judgment." Chantel Associates v. Mount Vernon Fire Ins. Co., 338 Md. 131, 147 (1995) (quoting Brohawn v. Transamerica Ins. Co., 276 Md. 396, 405-06 (1975)). When an insurance company claims lack of coverage due to an issue entirely collateral to the underlying tort action, such as the insured's failure to comply with some condition of the policy, a declaratory judgment action ordinarily is appropriate. Brohawn, 276 Md. at 405. Similarly, when there is no potentiality of coverage as a matter of law, or if coverage turns upon an issue "independent and separable from the claims asserted," a declaratory judgment action is appropriate. See American Motorists Ins. Co. v. ARTRA Group, Inc., 338 Md. 560, 593-94 (1995)(when allegations of complaint could not be read to assert that pollution was "sudden and accidental," there was no potentiality of coverage, no basis upon which the insurer could be held liable to indemnify any judgment rendered against the - 7 -

insured, and declaratory judgment in advance of the tort trial was appropriate); Chantel Associates, 338 Md. at 147-49 (where issue of coverage was dependent upon when plaintiff's leadrelated injuries first occurred, and such issue was "independent and separable from the claims asserted," a pre-trial declaratory judgment action to determine insurer's duty to indemnify was proper). The parties are in agreement that declaratory judgment is the appropriate means for resolving the coverage issue in this case. They are correct. The parties agree that Kowalski intended to molest the minor appellants sexually; they disagree that that intent is sufficient to trigger the intentional injury exclusion. If appellants are correct that the issue of coverage turns on Kowalski's subjective beliefs regarding the normalcy and healthiness of sexual relations between an adult and a child,2 that is an issue that appellants need not litigate in the underlying tort action, and declaratory judgment in advance of trial is proper. Similarly, if Erie is correct that the issue of

Kowalski's affidavit states that he "was a member of NAMBLA (National Association of Man-Boy Lovers) which is a national organization, comprised of tens of thousands of educated, adult men, who hold responsible positions in our community and who advocate and promote adult sexual behavior with male children as normal, healthy, and satisfying relationships. This organization also believes that such behavior is not in any way injurious to children." Further, Dr. Berlin testified at the criminal trial that, even in the face of serious charges, Kowalski continued to maintain that there was nothing wrong or harmful about his behavior. - 8 -

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coverage may be determined as a matter of law, declaratory judgment in advance of trial is proper. Discussion Appellants argue that coverage potentially exists because they have asserted claims of negligence rather than claims based on intentional tort. As we stated earlier, appellants identify at least three negligence theories under which they proceed: (1) failure to warn or refrain from harmful conduct; (2) negligent care and supervision; and (3) premises liability. Preliminarily,

we fail to see how Mr. Kowalski's pedophilia constitutes a premises defect that would support a cause of action for premises liability. Further, appellants have not cited, and our research has not uncovered, any case holding that there is a duty in negligence to warn others that one is about to commit an intentional tort.3 With respect to appellants' claims for

Appellants rely principally upon B.N. v. K.K., 312 Md. 135 (1988), and Faya v. Almarez, 329 Md. 435 (1993), in support of their argument that a duty to warn exists in this case. Neither of those cases, however, involved a duty to warn paired with an intentional tort. In B.N., had the defendant warned the plaintiff that he had genital herpes, he would have discharged any duty owed to her. If the parties had thereafter engaged in consensual sex, no tort would have occurred. Similarly, had the defendant in Faya warned his patients that he was HIV positive, he would have discharged any duty owed to them, and with his patients' consent, could subsequently have performed their surgeries without the imposition of tort liability. In the instant case, Kowalski could not have avoided tort liability simply by warning the Pettits that he was a pedophile. Any such warning would not have insulated him from liability for subsequently molesting the children. Appellants suggest that if Kowalski had warned Ms. (continued...) - 9 -

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negligent care and supervision, we note that it was Kowalski's intentional sexual molestation of the children and intentional self gratification by permitting others to molest the children, and not any other aspect of his care and supervision of the children, that caused their injuries. Accordingly, such a claim could be viewed as "a patent attempt to recharacterize, as negligent, an act that is clearly intentional. . . ." Atwood, 319 Md. at 253. In any event, even if we assume that Kowalski breached some duty in negligence to appellants, that does not change the fact that it was his ultimate sexual molestation of the boys that resulted in the injuries for which they seek compensation. Thus, we agree with Erie that any concurrent breach of negligence duty does not change the inquiry of whether Kowalski intended or expected to injure the children at the time he molested them. Appellants argue that the trial court created an irrebutable presumption that intent to injure is inferred whenever an adult engages in sexual conduct with a child, and that such a presumption is contrary both to the terms of the policies and to Maryland law. With regard to the policies, appellants point to the fact that one of the policies contains a sexual molestation

(...continued) Pettit and Mr. Deprey that he was a pedophile, and had continued to have access to the children, there might be an issue of contributory negligence. We do not see, however, how the parents' negligence could affect the separate claims of the children. - 10 -

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exclusion. Appellants argue that the fact that such an exclusion could have been used by Erie, but was included in only one of the policies, demonstrates that sexual molestation is not excluded under the other policies at issue. Although it is true that the issue of coverage would be more straightforward were we faced simply with a sexual molestation exclusion, the fact that such an exclusion was not used in the policies does not mean that sexual molestation is covered. Indeed, liability insurance policies

often contain both broad exclusions and specific exclusions that overlap. With respect to their assertions regarding Maryland law, appellants, relying upon Aetna Cas. & Sur. Co. v. Cochran, 337 Md. 98 (1995), and Allstate Insurance Co. v. Sparks, 63 Md. App. 738 (1985), argue that Maryland law requires the application of a subjective test to determine whether bodily injury is intended or expected by the insured for the purpose of applying the intentional injury exclusion. More particularly, appellants argue that in order for the exclusion to apply, Erie must demonstrate that Kowalski formed the specific intent to cause the injuries sustained by the Pettit children. Appellants argue that the evidence demonstrates that Kowalski did not intend or expect to injure the Pettit children when he engaged in his sexual abuse of them. In support of that assertion, appellants point to the fact that the molestation did not involve forcible rape or violence, and that Kowalski's nonsexual conduct toward the children (e.g., - 11 -

helping them with their homework, taking them shopping, swimming, to sporting events, and on camping and field trips, picnics and outings), including naming the children as beneficiaries in his will, demonstrate that he loved the children. Appellants further point to Kowalski's affidavit wherein he states that he neither expected nor intended to injure the children, to the expert opinions classifying Kowalski as a pedophile, and to the expert opinions that pedophiles often believe their sexual relationships with children to be normal and healthy expressions of love. Contrary to appellants' assertion, Cochran does not even address the issue of the type of intent required to trigger an intentional injury exclusion. Appellants are correct, however, that Sparks addresses the issue. In Sparks, the insured, with two friends, attempted to steal gasoline from a feed truck by siphoning. While the youths were siphoning the gasoline, the insured decided to provide illumination with a cigarette lighter. Gas fumes in the area of the truck ignited and a nearby mill and substantially all of its contents were destroyed in the resulting fire. The parties agreed that the boys intended to steal gas but did not intend to burn the property. The insurer argued that coverage was excluded under the policy's intentional damage exclusion. Focusing on the fact that the exclusionary clause excluded coverage for "damage which is either expected or intended from the standpoint of the Insured,"

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this Court held that such language required application of "a more subjective standard of intent than the test of foreseeability" urged by the insurer. Quoting 7A Appleman, Insurance Law and Practice,

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