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S. F. v. West American Insurance Co.11/3/1995
OPINION BY JUSTICE LEROY R. HASSELL, SR.
In this appeal of a declaratory judgment, we consider whether a provision in a liability insurance contract is ambiguous, and we must determine the amount of insurance available under the terms of the insurance contract to satisfy any judgments that may be entered against the insureds.
The West American Insurance Company filed its amended motion for declaratory judgment against numerous infants and their parents (collectively referred to as "claimants"), James E. Owens, William F. Weeks, Thomas A. Conner, Margaret Cody, Jean J. Ford, David L. Huffman, and Michael J. Coyle, trading as Harbor View Associates (collectively referred to as the "insureds"), and Century 21 Landmark Realty. West American had issued a policy of liability insurance to the insureds who are the owners of Harbor View Apartments, located in Norfolk.
The claimants had filed seven separate lawsuits against the insureds. The claimants alleged that the infant claimants were sexually assaulted and/or molested on multiple occasions by the insureds' resident manager, Charles Raymond Vette. The claimants alleged that Century 21 Landmark Realty and the insureds were negligent in the hiring, selection, retention, and supervision of Vette and Century 21 Landmark Realty, and that these parties "knew or should have known that Charles R. Vette had a history of criminal behavior, was a known child molester, had been convicted of child molestation and was on parole at the time of the hiring, and knew or should have known Charles R. Vette was unfit for the employment situation."
West American sought and obtained a declaration from the trial court that the claimants' claims which arose "from the alleged 'negligent hiring' of Vette[,] constituted no more than a single 'occurrence' as defined by the Policy and applicable law" and, thus, West American's total potential exposure to all the claimants is limited to $1,000,000. We awarded the claimants an appeal.
West American's policy of insurance contains the following provisions pertinent to this appeal:
SECTION II--COMPREHENSIVE BUSINESS LIABILITY
The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury. . . or personal injury caused by an occurrence to which this insurance applies.
The total liability of the Company for all damages, including . . . damages for care and loss of services, as a result of any one occurrence shall not exceed the limit of liability stated in the Declarations as applicable to each occurrence.
The above limits shall apply regardless of the following:
1. the number of persons or organizations insured under this policy;
2. the number of persons or organizations who have sustained injury or damage;
3. the number of claims made or causes of action or suits brought because of injury or damage.
For the purpose of determining the limit of the Company's liability, all bodily injury and property damage arising out of a continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence.
Section II of the policy, which contains definitions, states in pertinent part:
Occurrence means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured
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