Separation of Insureds in Vicarious Liability Claims
Liberty Univ., Inc. v. Citizens Ins. Co. of Am., No. 14-2254, ___ F.3d ___, 2015 WL 4153840 (4th Cir. July 10, 2015).
Janet Jenkins, plaintiff in the underlying lawsuit, sued Liberty University, claiming direct and vicarious liability, related to an alleged scheme to kidnap Jenkins’ daughter. Jenkins alleged that the university helped Lisa Miller, the child’s biological mother and Jenkins’ former civil partner, abscond with the child, defying state visitation orders. The university tendered the claim to its liability insurer and a declaratory judgment action ensued.
The district court ruled that the insurer had a duty to defend the university, concluding, in part, that the Separation of Insureds provision in the policy was ambiguous and refusing to consider the intent of the university’s agents when determining whether the underlying complaint alleged an “occurrence” that triggered coverage.
The insurer appealed to the Fourth Circuit, which reversed. It held that the policy’s Separation of Insureds provision did not alter the applicable Virginia rule that the intentionally tortious conduct of an agent is not “unexpected” by the principal vicariously liable under a theory of respondeat superior. As a result, even though the Court considered claims against the underlying defendants separately, because Virginia law imputes the intent of the university’s agents to the university, neither coverage nor the duty to defend were triggered. Virginia’s recognition that a corporation only acts through its agents or officers was also considered. The Court noted, however, that the duty to defend may be triggered where there is a Separation of Insureds provision and the underlying claim alleges vicarious liability of the principal on a negligent supervision theory.