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Kim v. National Indemnity Company (8/11/00) sp-5305

     Notice:  This opinion is subject to correction before publication in
the Pacific Reporter.  Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.


JOHN S. KIM and T.O., as      )
Mother and Next Friend of     )    Supreme Court No. S-9207
L.W., a minor,                )
                              )    Superior Court No.
             Appellants,      )    4BE-98-076 CI
     v.                       )    O P I N I O N
NATIONAL INDEMNITY COMPANY,   )    [No. 5305 - August 11, 2000]
a Nebraska Corporation,       )
             Appellee.        )

          Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Bethel,
                   Charles R. Pengilly, Judge.

          Appearances: John S. Hedland and Amy L.
Vaudreuil, Hedland, Brennan, Heideman & Cooke, Anchorage, for
Appellant T.O.  Laurence P. Keyes, Hughes Thorsness Powell
Huddleston & Bauman, LLC, Anchorage, for Appellee.

          Before:  Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.  

          FABE, Justice.

          John Kim, a Bethel taxicab driver, sexually abused a
minor who was a passenger in Kim's cab.  When the minor's mother
sued the cab driver, Kim looked to his automobile insurer for
coverage.  This appeal asks whether Kim's automobile insurance
policy extends coverage under these circumstances.  Because Kim's
insuring agreement covers only accidental injury, and because it
specifically bars coverage for injury arising from intentional acts
and sexual molestation, we conclude that it does not provide
coverage.  Nor does the policy's uninsured motorist provision cover
the minor's injury.  We therefore affirm the superior court's
decision to grant summary judgment in favor of the insurer.
          John Kim, a taxicab driver in Bethel, sexually abused
L.W., a minor, in his taxicab.  A jury convicted Kim of second- and
third-degree sexual abuse of a minor.  T.O., L.W.'s mother,
subsequently filed a civil action against Kim, alleging that Kim
engaged in sexual contact and sexual penetration with L.W.
          At the time of the incident, Kim was insured under a
commercial automobile insurance policy from National Indemnity
Company.  Kim had purchased this policy -- a $300,000 single limit
policy -- to provide basic insurance for his taxi.  The policy
provides coverage for "all sums an 'insured' legally must pay as
damages because of 'bodily injury' or 'property damage' to which
this insurance applies, caused by an 'accident' and resulting from
the ownership, maintenance or use of a covered 'auto.'"  (Emphasis
added.)  But the policy excludes coverage for "'[b]odily injury' or
'property damage' expected or intended from the standpoint of the
'insured.'"  (Emphasis added.)  It also excludes coverage for
bodily injury or property damage arising out of the "abuse or
molestation by anyone of any person while that person is in the
care, custody or control of any insured."
          National Indemnity reserved its right to contest coverage
and agreed to defend Kim.  Kim ultimately confessed judgment and
assigned his rights against National Indemnity to T.O. 
          National Indemnity brought a declaratory judgment action
and moved for summary judgment, asserting that the policy does not
provide coverage for Kim's sexual abuse of L.W.  T.O. opposed the
motion and cross-moved for a ruling that the policy covers L.W.'s
injuries.  Superior Court Judge Charles R. Pengilly concluded that
there was no coverage and granted summary judgment for National
Indemnity, awarding fees and costs accordingly.  T.O., on behalf of
her son L.W., brings this appeal.
          "We review a grant of summary judgment de novo, applying
our independent judgment.  We will uphold the summary judgment if
no issues of material fact are in dispute and the moving party is
entitled to judgment as a matter of law." [Fn. 1]
          Moreover, we interpret insurance contracts de novo where
there are no relevant unresolved or controversial facts. [Fn. 2] 
In reviewing such contracts, we examine "the language of the
disputed policy provisions, the language of other provisions in the
policy, relevant extrinsic evidence, and case law interpreting
similar provisions." [Fn. 3]  Also, because insurance policies are
contracts of adhesion, we will construe them "so as to provide the
coverage which a layman would reasonably have expected, given his
lay interpretation of the policy language." [Fn. 4]
     A.   Coverage Does Not Extend to Kim's Sexual Abuse of L.W.
Because the Abuse Was Not Accidental and Because Sexual Abuse
Implies a Harmful Intent.

          We construe an insurance contract "according to the
entirety of its terms and conditions as set out in the policy and
as amplified, extended, or modified" by other provisions that are
part of the policy. [Fn. 5]  We ordinarily begin this process by
looking to the insuring agreement and then examining any relevant
exclusions. [Fn. 6]  Thus, we turn first to the insuring agreement
itself and examine whether L.W.'s injury arose from an "accident." 

          The insurance policy agrees to cover damages that are
"caused by an 'accident.'"  The policy defines "accident" as
including "continuous or repeated exposure to the same conditions
resulting in 'bodily injury or 'property damage.'"  Because we find
the policy's definition of "accident" to be unhelpful in the
present context, we turn to our previous definition of that term:
an "accident" is "anything that begins to be, that happens, or that
is a result which is not anticipated and is unforeseen and
unexpected." [Fn. 7]  An accident ordinarily does not include
injuries that are intentionally inflicted by the insured. [Fn. 8] 
Indeed, Alaska recognizes "a general public policy against insuring
a person against liability for his or her intentional acts." [Fn.
          The superior court concluded that "L.W.'s damages were
intentionally caused -- they did not arise from an accident."  T.O.
does not specifically address this argument in her brief, but
maintains that Kim did not intend to cause harm, thereby placing
L.W.'s injuries within the policy's coverage.  National Indemnity
responds that Kim's sexual abuse of L.W. could not have been an
          Having been convicted of second- and third-degree sexual
abuse of a minor, Kim was found to have knowingly engaged in sexual
penetration and sexual contact with L.W. [Fn. 10]  Thus, Kim's
sexual contact with L.W. was deliberate rather than accidental. 
Nor does T.O. cite any authority that Kim's abuse of L.W. was an
accident.  Because the insuring agreement only covers injuries
"caused by an accident," we conclude that there is no coverage
under this provision.
          Moreover, Kim's insurance policy specifically excludes
from coverage injuries that are "expected or intended from the
standpoint of the 'insured.'"  We agree with the majority rule that
"in liability insurance cases involving sexual abuse of children,
the intent to cause injury can be inferred as a matter of law."
[Fn. 11]  The majority of courts agree with this rule [Fn. 12]
because "the harm to the victimized child is no less serious when
the abusive adult's subjective intentions are purportedly
'benign.'" [Fn. 13] 
          Because we infer an intent to injure as a matter of law
from acts of child abuse and molestation, Kim's subjective intent
is irrelevant. [Fn. 14]  Moreover, once the intent to injure is
inferred, "it is unimportant that the scope of the injuries
inflicted are greater than or different from the injuries which
objectively might be expected." [Fn. 15]  Thus, in addition to not
being an "accident," Kim's sexual abuse of L.W. was an intentional
act for which the insurance policy specifically bars coverage.
     B.   The Abuse or Molestation Exclusion Does Not Grant
Coverage to Kim's Abuse of L.W.

          T.O. argues that even if coverage does not exist under
the insuring provisions, coverage may be implied through the abuse
or molestation exclusion.  That exclusion states that the policy
does not apply to injury arising out of the "abuse or molestation
by anyone of any person while that person is in the care, custody
or control of any insured."  (Emphasis added.)  T.O. argues that
because this provision excludes from coverage injuries that result
from the molestation of persons within the insured's "care,
custody, or control," the policy must cover injuries that result
from the molestation of persons not within the insured's care,
custody, or control.  National Indemnity responds that the "care,
custody or control" language does not create coverage for sexual
abuse injuries in any circumstances.
          We agree with National Indemnity that the abuse and
molestation exclusion does not imply that the policy would
otherwise have covered acts of abuse and molestation by the
insured.  Indeed, as we have already determined, the policy
excludes such acts by an insured because such acts are not
"accidental" and are, in fact, "intentional."  Thus, even if L.W.
were not in Kim's care, custody, or control, the policy would not
cover L.W.'s injuries because Kim's acts of abuse were not
accidental.  The exclusion does not imply that coverage extends to
intentional abuse by Kim under any circumstances.  And it does not
create coverage where coverage otherwise does not exist or where
the policy specifically excludes it. [Fn. 16]  As the federal
district court in Alaska observed in a case involving a homeowner's
policy, "[t]he average person purchasing homeowner's insurance
would cringe at the very suggestion that he was purchasing
insurance to cover liability for sexual assault and molestation of
a child." [Fn. 17]  We therefore conclude that the exclusion does
not grant coverage to injuries resulting from the sexual abuse of
a person who is not in the care, custody, or control of the
insured. [Fn. 18]
     C.   The Uninsured/Underinsured Motorist (UM/UIM) Provision
Does Not Extend Coverage to T.O.'s Claims.
          Alternatively, T.O. argues that if there is no liability
coverage under the policy, she is entitled to recover from the
uninsured motorist provision under the same policy. [Fn. 19]
          T.O. argues that "if liability is denied based upon the
molestation exclusion, there is no coverage that applies and the
insurer has denied coverage."  Thus, she argues, Kim's taxi would
be uninsured from L.W.'s perspective and the uninsured coverage
provision should therefore apply. [Fn. 20]  Even if this were true,
however, the UM/UIM insuring agreement only covers accidental 
injuries that result from the use of the automobile.  It states:
          We will pay all sums the "insured" is legally
          entitled to recover as compensatory damages
from the owner or driver of an "uninsured motor vehicle" or
"underinsured motor vehicle."  The damages must result from "bodily
injury" sustained by the "insured" or "property damage" caused by
an "accident."

(Emphasis added.)  Thus, the uninsured motorist provision does not
cover L.W.'s injury for the same reasons that the general insuring
agreement does not:  L.W.'s injury did not result from an
"accident." [Fn. 21]
          Kim's insurance policy only covers injuries that result
from an "accident," and it specifically excludes coverage for
injuries that are expected or intended or that result from acts of
sexual abuse or molestation.  Because we conclude that Kim's sexual
abuse of L.W. was not an accident, and because we infer an intent
to injure in sexual abuse cases, we agree with the superior court
that coverage does not exist here.  In addition, L.W. cannot
recover under the policy's UM/UIM provision because that provision,
too, requires "accidental" injury.  We therefore AFFIRM the
superior court's decision to grant summary judgment and AFFIRM its
award of fees and costs.


Footnote 1:

     Fejes v. Alaska Ins. Co., Inc., 984 P.2d 519, 522 (Alaska
1999) (internal citations and punctuation omitted).

Footnote 2:

     See id.

Footnote 3:

     Id. (internal quotation and punctuation omitted).

Footnote 4:

     Id. (quoting INA Life Ins. Co. v. Brundin, 533 P.2d 236, 241
(Alaska 1975)). 

Footnote 5:

     AS 21.42.230.

Footnote 6:

     See Fejes, 984 P.2d at 522-24; Jones v. Horace Mann Ins. Co.,
937 P.2d 1360, 1362-66 (Alaska 1997); Columbia Mut. Ins. Co. v.
State Farm Mut. Auto. Ins. Co., 905 P.2d 474, 475-78 (Alaska 1995);
Whispering Creek Condominium Owner Ass'n v. Alaska Nat'l Ins. Co.,
774 P.2d 176, 177-80 (Alaska 1989); State v. Underwriters at
Lloyds, London, 755 P.2d 396, 399-400 (Alaska 1988); Hale v.
Fireman's Fund Ins. Co., 731 P.2d 577, 579-80 (Alaska 1987).

Footnote 7:

     Fejes, 984 P.2d at 523 (quoting Brundin, 533 P.2d at 242

Footnote 8:

     See 6B John Alan Appleman & Jean Appleman, Insurance Law and
Practice sec. 4312, at 316-17 (1979).

Footnote 9:

     St. Paul Fire & Marine Ins. Co. v. F.H., 55 F.3d 1420, 1423
(9th Cir. 1995) (citing Dairy Queen v. Travelers Indem. Co., 748
P.2d 1169, 1172 (Alaska 1988)).

Footnote 10:

     See AS 11.41.436(a)(1); AS 11.41.438(a)(1).

Footnote 11:

     Wiley v. State Farm Fire & Cas. Co., 995 F.2d 457, 461 (3d
Cir. 1993) (citing cases at 461 n.5); see M.C. v. Northern Ins. Co.
of New York, 1 P.3d 673, 676 n.10 (Alaska 2000) ("It is immaterial
that the offense of sexual abuse of a minor does not require the
state to prove nonconsensual sexual contact. . . .  Alaska law
regards the victim's minority as precluding meaningful consent.").

Footnote 12:

     See, e.g., Whitt v. DeLeu, 707 F. Supp. 1011, 1014-15 (W.D.
Wis. 1989) (courts following the majority view "have found that the
alleged sexual contact is so substantially certain to result in
some injury, or so inherently injurious, that the act is considered
a criminal offense for which public policy precludes a claim of
unintended consequences, that is, a claim that no harm was intended
to result from the act") (internal punctuation and citation
omitted); CNA Ins. Co. v. McGinnis, 666 S.W.2d 689 (Ark. 1984)
(sexual abuse of minor stepdaughter over 10-year period); J.C.
Penney Cas. Ins. Co. v. M.K., 804 P.2d 689, 695 (Cal. 1991) ("the
intent to molest [a child] is, by itself, the same as the intent to
harm"); McCullough v. Central Fl. YMCA, 523 So. 2d 1208 (Fla. Dist.
App. 1988) (fondling genitals of three young boys); Roe v. State
Farm Fire & Cas. Co., 376 S.E.2d 876 (Ga. 1989) (molestation of
neighbor's minor daughter); Altena v. United Fire & Cas. Co., 422
N.W.2d 485 (Iowa 1988) (extending inference as a matter of law to
nonconsensual sexual acts with a 20-year-old adult); Linebaugh v.
Berdish, 376 N.W.2d 400, 405 (Mich. App. 1985) (intent to injure
inferred sexual assault of a 14-year-old girl); Horace Mann Ins.
Co. v. Independent Sch. Dist. No. 656, 355 N.W.2d 413, 416 (Minn.
1984) (inferring intent to injure from unconsented sexual contact
with minor); (Allstate Ins. Co. v. Mugavero, 589 N.E.2d 365, 369
(N.Y. 1992) (the majority rule "finds support in logic and in the
generally accepted conception of harm as being inherent in the act
of sexually abusing a child"); Rodriguez v. Williams, 729 P.2d 627,
630 (Wash. 1986) ("intent to injure . . . should be inferred to the
insured in sex abuse cases); Horace Mann Ins. Co. v. Leeber, 376
S.E.2d 581, 584 n.7, 585 (W.Va. 1988) (citing states following
majority approach at n.7); 2 Eric Mills Holmes, Holmes's Appleman
on Insurance 2d sec. 9.4, at 539 (1996) (For claims arising out of
sexual molestation perpetrated by insureds, "[n]o coverage should
be provided regardless of the insured's protestation that no injury
was intended.  An intent to injure should be presumed from the
nature of the act."); 4 Holmes, Holmes' Appleman on Insurance 2dsec.
23.4, at 513 (1998) ("In certain situations, such as child sexual
molestation, intent to harm may be inferred as a matter of law.").

Footnote 13:

     Wiley, 995 F.2d at 464 (citing Mugavero, 589 N.E.2d at 369). 
See Yearty v. State, 805 P.2d 987, 994 (Alaska App. 1991)
("Virtually every case involving sexual abuse of a child is . . .
nonconsensual; because no case of a child sexual abuse involves
conduct that is truly consensual, it is difficult to conceive of a
situation in which an act of sexual abuse on a child would not also
be an act of sexual assault.") (quoted in M.C. v. Northern Ins. Co.
of New York, 1 P.3d 673, 676 n.10 (Alaska 2000)).

Footnote 14:

     See Allstate Ins. Co. v. Roelfs, 698 F. Supp. 815, 820 n.6 (D.
Alaska 1987).

Footnote 15:

     Rodriguez, 729 P.2d at 630.

Footnote 16:

     We observe that the abuse or molestation exclusion's probable
purpose is to exclude coverage specifically in third-party assault
situations for negligent failure to prevent abuse and molestation
of a child who is under the insured's supervision.  At most, the
abuse or molestation exclusion implies that, without the exclusion,
the insured might be held liable in such third-party assault cases. 
We encountered such a situation in C.P. v. Allstate Ins. Co., 996
P.2d 1216 (Alaska 2000).  That case did not involve an exclusion
from coverage for intentional sexual abuse, and the insureds'
liability was predicated on a third-party assault against a victim
to whom the insureds owed a duty of care arising from a parental or
custodial relationship.  See id. at 1226-27.  Here, by contrast,
Kim perpetrated the very act of sexual abuse that we conclude bars
coverage under the policy, and we need not reach whether coverage
would extend to a claim that Kim negligently failed to prevent a
third-party act of abuse or molestation in his taxicab.

Footnote 17:

     Roelfs, 698 F. Supp. at 817 (internal punctuation omitted)
(citing Rodriguez v. Williams, 713 P.2d 135, 137-38 (Wash. App.
1986), aff'd, 729 P.2d 627 (1986)).

Footnote 18:

     National Indemnity also asserts that the policy does not cover
L.W.'s injury because the sexual molestation did not arise from the
"use" of Kim's automobile.  Under the insurance policy, coverage
extends to injury resulting from "the ownership, maintenance or use
of a covered 'auto.'"  The superior court accepted National
Indemnity's argument that because the taxicab was the "mere situs"
of the molestation, and the molestation did not arise from the
"use" of Kim's taxicab, there was no coverage.  Because we resolve
T.O.'s appeal on other grounds, we need not address this argument

Footnote 19:

     Although T.O. also purports to rely on the "underinsured motor
vehicle" coverage, she does not advance any claim that Kim's
automobile was underinsured.  We therefore consider T.O. to have
waived that argument.  See Adamson v. University of Alaska, 819
P.2d 886, 889 n.3 (Alaska 1991).

Footnote 20:

     The policy defines "uninsured motor vehicle" as an automobile
"[f]or which an insuring or bonding company denies coverage[.]"

Footnote 21:

     T.O. also argues that the trial court's award of fees and
costs should be reversed because it improperly granted summary
judgment in favor of National Indemnity.  The superior court
granted National Indemnity $7,716.50 in attorney's fees and
$1,162.44 in costs.  Because we conclude that the superior court
did not err in granting summary judgment, we affirm the award of
attorney's fees and costs.  See Alaska R. Civ. P. 82(a) ("the
prevailing party in a civil case shall be awarded attorney's fees
calculated under this rule"); Alaska R. Civ. P. 79(a) ("the
prevailing party is entitled to recover costs . . . that were
necessarily incurred in the action").