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Allstate Property and Casualty Insurance Co. v. Choi

United States District Court, E.D. Washington

March 3, 2015

JONG HWAN CHOI, a married man, and JESSICA ARROYO OBISPO, an adult woman, Defendants.


STANLEY A. BASTIAN, District Judge.

This is a declaratory judgment action which involves evaluating the circumstances necessary to trigger an insurance company's duty to defend and indemnify when the insured is sued by the victim of alleged sexual misconduct. The parties agree that allegations of intentional sexual assault do not, standing alone, trigger either duty. But, in most cases, allegations of negligent conduct trigger both duties. The insured in this case initiated sexual contact with the victim who has now filed a lawsuit against the insured alleging both negligent and intentional conduct. The principal question is whether the duty to defend and the duty to indemnify are triggered by an allegation that the insured negligently concluded that he had consent from the victim to engage in sexual activity. The answer is yes.

Summary of the Case

Allstate Property and Casualty Insurance Company and Allstate Indemnity Company (jointly "Allstate") bring this action for declaratory judgment against Jong Hwan Choi and Jessica Arroyo Obispo. Choi carried a Homeowner Policy and Personal Umbrella Policy at the relevant times. Allstate seeks a declaration that there is no coverage or duty to defend for claims made by Obispo against Choi arising out of an incident which is now the subject of a lawsuit pending in Grant County Superior Court.

Obispo alleges that Choi sexually assaulted her at his home in March 2013. She filed suit against him and alleges several causes of action, including: (1) assault; (2) battery; (3) false imprisonment; (4) intentional or reckless infliction of emotional distress; (5) negligence; and (6) negligent infliction of emotional distress. Allstate is providing a defense in the pending lawsuit subject to a reservation of rights. Choi defends with the explanation that, in his opinion, Obispo consented to the sexual activity at the time it occurred. This was the same explanation that he gave in court when he pled guilty to a misdemeanor count of Assault in the Fourth Degree with Sexual Motivation.

Motion Standard

Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (citing Fed.R.Civ.P. 56(c)). There is no genuine issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The moving party has the burden of showing the absence of a genuine issue of fact for trial. Celotex, 477 U.S. at 325.

In addition to showing that there are no questions of material fact, the moving party must show that it is entitled to judgment as a matter of law. Smith v. Univ. of Wash. Law Sch., 233 F.3d 1188, 1193 (9th Cir. 2000). The moving party is entitled to judgment as a matter of law if the non-moving party has failed to make a sufficient showing on an essential element of a claim on which the nonmoving party has the burden of proof. Celotex, 477 U.S. at 323. The non-moving party cannot rely on conclusory allegations alone to create an issue of material fact. Hansen v. United States, 7 F.3d 137, 138 (9th Cir. 1993).

When considering a motion for summary judgment, a court may neither weigh the evidence nor assess credibility; instead, "[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255.


Allstate denies liability to defend or indemnify as to Obispo's suit against Choi claiming there was no "Occurrence" as defined under either the homeowner or personal umbrella policy and that Choi's actions fall under the intentional and criminal acts exclusion.

The duty to indemnify only exists if the policy covers the acts that give rise to the insured's liability. The duty to defend, however, is different from - and broader than - the duty to indemnify. American Best Food, Inc. v. Alea London, Ltd., 168 Wn.2d 398, 696 (2010). There is a duty to defend when a complaint against the insured - construed liberally - alleges facts which could impose liability against the insured within the policy's coverage. Id. (citing Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn.2d 751, 760 (2002)) If there is any reasonable interpretation of the facts or law that could result in coverage, the duty to defend attaches. Id. Generally, Courts should interpret insurance contracts as the average insurance purchaser would understand them, giving undefined terms their plain, ordinary and popular meaning. Allstate Insurance Co. v. Raynor, 143 Wn.2d 469, 476 (2001). Court's should attempt to give meaning to each provision in the policy and ambiguity is resolved in favor of the insured. Moeller v. Farmers Ins. Co. of Washington, 173 Wn.2d 264, 272 (2011). The interpretation of an insurance policy is a matter of law. Raynor, 143 Wn.2d at 476.

The controlling question in this case is whether Choi's actions, as alleged in Obispo's underlying complaint, constitute an Occurrence under either of Choi's Allstate policies, and if it does, whether the intentional and criminal acts exclusion applies. If the underlying complaint, if proven true, could result in Choi's liability then Allstate has a duty to defend Choi in the action.

The homeowner's policy states an Occurrence "means an accident, including continuous or repeated exposure to substantially the same general harmful conditions during the policy period, resulting in bodily injury or property damage." In turn, bodily injury is defined as "physical harm to the body, including ...

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