World Harvest Church v. Grange Mut. Cas. Co.
2013 Ohio 5707
Ohio Ct. App.2013Background
- In 2006 the Faietas sued World Harvest Church (WHC) and employee Richard Vaughan alleging Vaughan physically abused their toddler; claims included battery, intentional infliction of emotional distress (IIED), and negligent supervision of Vaughan by WHC.
- A jury returned general verdicts awarding the Faietas compensatory and punitive damages against Vaughan and WHC; after statutory caps and post-trial rulings, WHC faced a multi-million dollar judgment and paid a settlement of $3,101,147.
- WHC sought indemnification from its insurer, Grange Mutual Casualty Company (Grange); Grange refused coverage and WHC sued for a declaratory judgment and indemnity.
- The trial court concluded Grange must indemnify WHC for the full compensatory award ($549,100), attorney fees ($693,861), and postjudgment interest ($229,716), but not punitive damages. Both parties appealed.
- The appellate court held (1) Grange had the burden to allocate a prior general verdict because it owed a defense and failed to obtain or advise seeking special interrogatories; (2) the policies did not cover WHC’s direct negligent-supervision and any IIED directly by WHC due to an abuse-or-molestation exclusion, but did cover WHC’s vicarious liability for Vaughan’s intentional torts to the extent of $82,365; (3) Grange must indemnify for attorney fees and the portion of postjudgment interest attributable to covered sums; (4) punitive damages are not insurable and are excluded.
Issues
| Issue | WHC's Argument | Grange's Argument | Held |
|---|---|---|---|
| Who bears burden to allocate a prior general verdict between covered and noncovered claims? | Burden on insurer (Grange) because it defended under a reservation of rights and failed to seek an allocated verdict. | Burden on insured (WHC) to allocate the general verdict to recover from insurer. | Burden ordinarily on insured, but shifts to insurer when insurer had duty to defend and failed to request or advise obtaining an allocated verdict; here burden shifted to Grange. |
| Are Vaughan’s intentional torts (battery/IIED) and resulting damages “occurrences” / covered as bodily injury? | WHC: Vicarious liability for employee’s intentional torts qualifies as an “occurrence”; emotional injury falls within CU policy definition. | Grange: Intentional torts are not accidents/occurrences; emotional harm is not bodily injury. | Vicarious liability for employee intentional acts can be an "occurrence"; CU policy covers mental anguish; coverage exists for vicarious liability on Vaughan’s intentional torts (as to employee acts), but not for intentional acts committed by WHC itself. |
| Does the abuse-or-molestation exclusion bar coverage for Vaughan’s battery and WHC’s negligent supervision? | WHC: “Abuse” should be read narrowly (sexual abuse) and exclusion is ambiguous. | Grange: Exclusion plainly bars coverage for abuse/molestation and negligent supervision of abusers. | Exclusion unambiguous and covers physical abuse; jury findings that Vaughan intentionally harmed the child preclude coverage for Vaughan’s battery and for WHC’s negligent supervision under the exclusion. |
| Are punitive damages, attorney fees, and postjudgment interest covered? | WHC: Punitive damages covered (or at least insurer must indemnify); attorney fees and interest covered. | Grange: Punitive damages uninsurable by statute and public policy; disputes over allocation of fees/interest. | Punitive damages not covered (statutory and public-policy bar); attorney fees covered and insurer liable for fees; postjudgment interest covered but the portion attributable to excluded (noncovered) compensatory damages vacated. |
Key Cases Cited
- Westfield Ins. Co. v. Hunter, 128 Ohio St.3d 540 (discusses de novo review of insurance-policy interpretation)
- Safeco Ins. Co. of Am. v. White, 122 Ohio St.3d 562 (explains when negligent vicarious liability can constitute an "occurrence")
- Neal-Pettit v. Lahman, 125 Ohio St.3d 327 (holds punitive damages are not insurable and insurer may cover attorney fees separately)
- Natl. Union Fire Ins. Co. of Pittsburgh, PA v. Wuerth, 122 Ohio St.3d 594 (respondeat superior and vicarious-liability coverage discussion)
- Sharonville v. Am. Emps. Ins. Co., 109 Ohio St.3d 186 (insured bears burden to prove coverage)
- Magnum Foods, Inc. v. Continental Cas. Co., 36 F.3d 1491 (explains why burden shifts to insurer that controls defense and fails to seek an allocated verdict)
- Howell v. Richardson, 45 Ohio St.3d 365 (collateral estoppel bars relitigation of prior findings about culpable mental state)