Liberty University, Inc. v. Citizens Insurance Co. of America
16 F. Supp. 3d 636
W.D. Va.2014Background
- Liberty seeks a declaration that Hanover has a duty to defend Liberty regarding the Jenkins Complaint in Vermont; cross motions for summary judgment were filed Jan. 31, 2014.
- Four policies at issue cover Liberty: 2009-2010 CGL, 2009-2010 CGL Umbrella, 2012-2013 SELL Endorsement to the CGL, and 2012-2013 SELL Endorsement to the Umbrella; delivery and governing law favor Virginia.
- Jenkins Complaint alleges Lisa Miller abducted Isabella Miller-Jenkins with Liberty and TRBC ties; it also alleges Liberty’s agents improperly aided or supported Miller, with public advocacy and fundraising tied to the case.
- The court applies Virginia law under the Eight Corners Rule and a broad duty-to-defend standard; the judge strikes extrinsic evidence (Dean Staver affidavit) and focuses on the complaint and the contracts.
- The court concludes Hanover has a duty to defend Liberty under the CGL Policy (Coverage A and B) and the SELL Endorsement, related to the Jenkins Complaint, while indemnity remains unresolved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend under CGL Coverage A | Liberty argues Jenkins alleges an occurrence and property loss; separation of insureds may prevent imputing intent. | Hanover contends Jenkins only alleges intentional acts, not occurrences, and exclusions may apply. | Duty to defend under CGL Coverage A (occurrence) recognized. |
| Duty to defend under CGL Coverage B | Claims include personal and advertising injury from unlawful detention; acts tied to Liberty’s business. | Exclusions for knowing violations/criminal acts may bar coverage; separation of insureds creates ambiguity. | Duty to defend under CGL Coverage B established. |
| SELL Endorsement coverage | Jenkins alleged wrongful acts by Liberty in the educational context; losses fall within endorsement. | Endpoints rely on whether acts were within course and scope; intentional acts exclusion may apply. | Duty to defend under SELL Endorsement found; intentional acts exclusion does not defeat it. |
| Effect of separation of insureds clause | Clause may prevent imputing agents’ intentions to Liberty. | Clause could be read to bar coverage for certain acts. | Ambiguity resolved in Liberty’s favor; imputation barred, preserving Liberty’s defense duty. |
Key Cases Cited
- AES Enrollment, Inc. v. Steadfast Ins. Co., 283 Va. 609, 725 S.E.2d 532 (Va. 2012) (occurrence requires harm not expected from insured; supports broad duty to defend when harm is unanticipated)
- National Fruit Prod. Co., Inc. v. Fireman’s Fund Ins. Co., 178 F.3d 1285 (4th Cir. 1999) (insurer not liable where only intentional acts alleged, no negligence)
- Bankers & Shippers Ins. Co. of New York v. Watson, 216 Va. 807, 224 S.E.2d 312 (Va. 1976) (severability of interests; exclusions applied separately to insureds)
- Transit Casualty Co. v. Hartman’s, Inc., 218 Va. 703, 239 S.E.2d 894 (Va. 1978) (severability principle; distinguishes employee vs. employer scope of coverage)
- Bennett v. Sage Payment Solutions, Inc., 710 S.E.2d 736 (Va. 2011) (amendment/alternative theories allowed to present coverage under dispute)
- Dannenfeldt v. Aetna Cas. & Sur. Co., 778 F. Supp. 484 (D. Ariz. 1991) (duty to defend can arise when allegations potentially fall within policy)