Liberty Surplus Insurance Corp v. Ledesma and Meyer Construction, 834 F.3d 998

Ledesma & Meyer Construction (L&M) contracted to manage a school construction project and agreed to indemnify the school district for claims arising from L&M’s negligence.
L&M hired Darold Hecht as an assistant superintendent; Hecht was later accused of repeatedly sexually abusing a 13-year-old student while on the project.
The school district tendered defense to L&M; Liberty (insurer) defended L&M under a reservation of rights and denied defense to the school district.
Jane Doe sued L&M, the school district, Hecht, and individuals, alleging claims including negligence, negligent hiring/retention/supervision, and battery.
Liberty sought a declaratory judgment that it had no duty to defend or indemnify under L&M’s commercial general liability policy, which covers bodily injury caused by an "occurrence" defined as an "accident."
The district court granted summary judgment for Liberty, holding negligent hiring/retention/supervision was too attenuated from Hecht’s intentional acts to be an "occurrence." The Ninth Circuit certified the central question to the California Supreme Court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether negligent hiring/retention/supervision of an employee who intentionally injures a third party constitutes an "occurrence" (an "accident") under a CGL policy	The complaint alleges negligent acts by L&M that caused the plaintiff’s injury; those negligent acts are separate and thus constitute an "occurrence" triggering duty to defend	The employee’s intentional sexual abuse was the real cause; negligent supervision is too attenuated and not an "accident," so no coverage	The Ninth Circuit did not decide on the merits; it certified the question to the California Supreme Court for resolution

Delgado v. Interinsurance Exchange of Automobile Club of Southern California, 211 P.3d 1083 (Cal. 2009) (held assault and battery by insured did not qualify as an "accident" under the policy)
Minkler v. Safeco Ins. Co. of Am., 232 P.3d 612 (Cal. 2010) (addressed insurer duties in sexual-abuse coverage context and noted unresolved questions about "occurrence" defined as "accident")
Hogan v. Midland Nat. Ins. Co., 476 P.2d 825 (Cal. 1970) (explained deliberate acts may fall outside "accident" coverage when damages flow from intentional decision)
Lehman Bros. v. Schein, 416 U.S. 386 (U.S. 1974) (federal courts may certify unsettled state-law questions to state supreme courts)