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State Farm Lloyds v. C.M.W.8/17/2001
Justice Lagarde
State Farm Lloyds (State Farm) appeals the summary judgment declaring it was obligated to indemnify its insured for an underlying judgment that found the insured liable for damages for his actions leading up to and including the sexual molestation of C. M. W. (W.), his minor stepdaughter. State Farm presents two issues for appellate review: (1) whether the trial court erred in granting W.'s motion for summary judgment and (2) whether the trial court erred in denying State Farm's motion for summary judgment. We reverse and render summary judgment for State Farm on the indemnification issue, but reverse and remand the trial court's award of attorneys' fees to W.
Factual and Procedural Background
In August 1995, W. sued Billy Dean Borum (Borum) for injuries she sustained as a result of Borum's actions leading up to and including his act of sexually molesting her (the underlying suit). At the time of the incidents alleged in the underlying suit, W. was Borum's thirteen-year-old stepdaughter and lived in the same house with Borum and W.'s mother. W. alleged causes of action against Borum for negligence, breach of right to privacy, negligence per se, breach of fiduciary duty, gross negligence, battery, and intentional infliction of emotional distress. She sought damages for mental and physical injuries associated with all causes of action.
State Farm was Borum's homeowner's insurance carrier at the time of the actions that formed the basis of W.'s claims against Borum. Borum tendered the underlying suit to State Farm for defense. State Farm initially refused to defend Borum. However, shortly thereafter, State Farm provided a defense for Borum in the underlying suit, subject to a reservation of rights letter in which State Farm reserved its right to contest coverage of W.'s claims based upon various policy provisions, including the intentional injury exclusion.
While the underlying suit was pending, but prior to trial, State Farm initiated a separate declaratory judgment action against Borum and W., seeking a judicial determination that none of the homeowner's policies State Farm issued to Borum obligated State Farm to defend or indemnify Borum in the underlying lawsuit. Although State Farm filed a motion for summary judgment in the declaratory judgment action, it was not presented to the court, and no rulings on the merits of State Farm's declaratory judgment action were made prior to trial of the underlying suit.
Only W.'s causes of action for negligence and battery were submitted to the jury. The appellate record does not contain the reporter's record of the trial in the underlying suit. The jury questions and answers, which were incorporated into the judgment of the underlying suit, are crucial to the disposition of this appeal. Accordingly, despite their length, those questions and answers are repeated here verbatim: QUESTION NO. 1-A Did the negligence, if any, of BILLY DEAN BORUM during the period of time from September 12, 1989, through September 11, 1990, proximately cause an injury , if any, to [C. M. W.]?
Answer "yes" or "no."
ANSWER: No. QUESTION NO. 1-B Did the negligence, if any, of BILLY DEAN BORUM during the period of time from September 12, 1990, through September 11, 1991, proximately cause an injury , if any, to [C. M. W.]?
Answer "yes" or "no."
ANSWER: Yes. If in answer to Question No. 1-A and/or 1-B you have found the negligence of BILLY DEAN BORUM was a proximate cause of an injury to [C. M. W.], then answer Question No. 2. Otherwise, do not answer Question No. 2. QUESTION NO. 2 Was the negligence, if any, of BILLY DEAN BORUM "gross negligence?
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