Issue By: David L. Blinn
Luiz Baek v. Continental Casualty Company
Court of Appeal, Second Appellate District (October 6, 2014)
Most commercial general liability policies provide coverage for negligent acts only. Although the duty to defend is broader than the duty to indemnify, courts have usually treated claims of sexual assault as being intentional, and therefore not covered under the policy. This case considered whether claims of sexual assault against a masseuse provided him with coverage under the massage company’s policy.
Luiz Baek (“Baek”) was a massage therapist employed by Heaven Massage and Wellness Center (“HMWC”). In May of 2010, Jaime W sued HMWC and Baek for sexual assault, alleging that during a massage on January 3, 2010, Baek “touched, fondled, rubbed, grabbed and squeezed Plaintiff’s breasts, buttocks, inner thighs and genitals, all while making and emitting moans, groans, grunts and other sounds and noises of sexual pleasure.” Her complaint alleged seven causes of action against HMWC and Baek, including sexual harassment, sexual battery, assault, battery, false imprisonment, intentional infliction of emotional distress and negligence.
Baek filed suit against Continental Casualty Company (“Continental”), the general liability carrier for HMWC, who had denied him coverage under the lawsuit. Baek argued that the complaint alleged he was either a partner or employee of HMWC, and as such, he was an additional insured under Continental’s policy. Baek’s complaint contained causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing and fraud.
Continental demurred to the complaint, asserting that even if Baek were proven to be a partner or employee of HMWC, there was no coverage for claims of sexual assault, which could not be claimed to be within the course and scope of his employment or in furtherance of HMWC’s business. The trial court agreed, holding that the sexual battery as alleged was not committed within the course and scope of Baek’s employment as a masseur, and was not causally connected to HMWC’s business as a provider of massage services. The court sustained the demurrer without leave to amend, and Baek appealed.
The Court of Appeal affirmed. It first dealt briefly dealt with Continental’s claim that Baek could not be an additional insured because his complaint alleged that he signed an independent contractor agreement. The Court noted that it was the allegations of Jaime W.’s complaint, not those of Baek’s bad faith complaint, which were relevant to the issue of whether he was potentially covered as an additional insured. Having to accept those as true, the Court had to assume, for purposes of the appeal, that Baek was an employee or partner of HMWC.
The Court then looked at the policy’s language for coverage for employees and/or partners. Members or partners were covered as additional insureds, “but only with respect to the conduct of your business.” Employees were also insureds, “but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business.”
The Supreme Court had previously held in Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291 that “As with . . . nonsexual assaults, a sexual tort will not be considered engendered by the employment unless its motivating emotions were fairly attributable to work-related events or conditions.” In Lisa M., a technician performing an ultra sound had allegedly assaulted a woman. The Lisa M. court had noted that while the technician could not have assaulted her had he not been so employed, it was beyond the scope of his job to perform such an assault, and he simply took advantage of his position to commit an assault for reasons unrelated to his work. Further, just because the technician’s job involved intimate physical contact with patients was an insufficient basis on which to impose vicarious liability for sexual assault. To hold medical care providers strictly liable for deliberate sexual assaults by every employee would negate the scope of employment as a limitation on vicarious liability in every such case.
The Court of Appeal, relying on Lisa M.¸ as well as subsequent similar Supreme Court case involving an alleged sexual assault between two deputy sheriffs (Farmers Ins. Group v. County of Santa Clara (1995) 11 Cal.4th 992), held that the allegations against Baek, were intentional in nature, and were not performed within the scope of his employment with HMWC.
Similarly, the Court held that although the alleged sexual assault occurred during a massage, the particular acts on which liability was premised, i.e., the unwanted touching, “while making and emitting…sounds and noises of sexual pleasure” indisputably were not “duties related to the conduct of [HMWC’s] business or acts of the kind Baek had been hired to perform. For the same reasons, the Court concluded the alleged sexual assault was not “with respect to the conduct of [HMWC’s] business.” The assault could not be said to have been done at HMWC’s require or in any way for its benefit.
Finally, the Court was not persuaded by Baek’s claim that Continental at least had a duty to defend the cause of action brought by Jaime W for “negligence,” alleging a cause of action for “negligent massage.” The sole facts alleged in support were the same alleged acts of sexual misconduct raised in the other causes of action, all of which were, by their very nature, intentional.
The Court of Appeal held that because the intentional sexual assault alleged in the underlying case could not properly be characterized as within the scope of Baek’s employment or having occurred while performing duties related to the conduct of HMWC’s business, Baek was not insured under the policy, and Continental had no duty of defense or indemnity. The trial court thus did not err in sustaining the demurrer without leave to amend. Judgment in favor of Continental was affirmed.
Because of policy reasons, there is very little room for coverage for a claim of sexual assault by an employee under a CGL policy. While there is room to argue negligent employment to provide coverage for the employer, the very nature of the actions alleged will most often mean that there is no coverage for the employees themselves. However, a review of the facts alleged in the complaint will always be warranted.
For a copy of the complete decision, see: Baek v Continental Casualty