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Travelers Indemnity Co. v. Children's Friend and Service12/1/2005
intentional infliction of emotional distress, by definition, allege intentional acts and cannot be the basis of a duty to defend. The remaining five causes of action-negligent misrepresentation, negligent infliction of emotional distress, negligence, breach of fiduciary duty, and breach of contract-are based on the theory that CFS acted negligently in making certain representations to the Roweys. Accordingly, this Court need not address each cause of action separately. Rather, this Court need only determine whether the baseline claim of negligent misrepresentation is an "accident," including "continuous or repeated exposure to conditions," causing damages "neither expected nor intended from the standpoint of the insured:" in other words, whether negligent misrepresentation is an "occurrence."
2. Negligent Misrepresentation is an "Occurrence"
Whethernegligent misrepresentation may be considered an "accident" is a question of first impression in Rhode Island. Guided by Rhode Island and extraterritorial case law, this Court answers the question in the affirmative.
In Craven, as noted above, the Rhode Island Supreme Court held that regardless of whether the facts in a complaint are described in terms of negligence, when the insurance policy defines an "occurrence" as an "accident," an insurer owes its insured no duty to defend if the complaint alleges intentional acts. 693 A.2d at 1022-23. There, the Supreme Court found that even though the plaintiff's claim was for negligent infliction of emotional distress, the alleged acts of the defendant, which were the basis of the cause of action, were intentional. The plaintiff's complaint alleged that the defendant was "negligent and careless respecting the emotional distress and mental anguish he was causing" her. Id. at 1022. The defendant's alleged actions, however, were deliberate in nature; he was alleged to have "frequently touched [the defendant] sexually, 'committed sexual acts upon her body and had intercourse with her,' all without her consent." Id. at 1022. Thus, the cause of the defendant's actions was not an accident, and the insurer owed no duty to defend. See Sena v. Travelers Ins. Co., 801 F. Supp. 471, 475 (D.N.M. 1992) (" t strains the imagination to speculate how a pattern of sexual overtures and touching can be accidental").
Relying on the Rhode Island Supreme Court's ruling in Sanzi v. Shetty, 864 A.2d 614, 620 (R.I. 2005) (holding that where intentional acts are alleged, there is no "accident," and therefore no "occurrence"), National Union argues that, on the instant facts, Craven is dispositive because negligent misrepresentation involves an intentional act. This argument, however, misconstrues the tort. Negligent misrepresentation indeed involves an intentional act, but that act is speech, not misrepresentation. Speech is intentional in the same way that driving an automobile is intentional. An automobile accident-often the paradigm example of negligence-is certainly unintentional. Extending the analogy, the tort of negligent misrepresentation is better understood as an unintentional misstatement-an "accident."
Not all courts, however, are in agreement on this issue. In Safeco Ins. Co. of Am. v. Andrews, 915 F.2d 500, 502 (9th Cir. 1990), for example, the United States Court of Appeals for the Ninth Circuit, applying California law, held, inter alia, that negligent misrepresentation does not constitute an "occurrence." Applying Safeco, the Court of Appeal of California explained that negligent misrepresentation is a "subspecies or variety of fraud" because intent to induce reliance is an element of the cause of action. Miller v. W. Gen. Agency, Inc., 41 Cal. App. 4th 1144, 1150 (Cal. Ct. App. 1
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