Liberty Surplus Ins. Corp. v. Ledesma & Meyer Constr. Co., 233 Cal. Rptr. 3d 487 (Cal. S. Ct. 2018)

Ledesma & Meyer Construction Company (“L&M”) contracted with the San Bernardino Unified School District to manage a construction project at a middle school where a 13-year-old student (“Jane Doe”) was allegedly sexually abused by Darold Hecht, an assistant superintendent hired by L&M. After Doe sued L&M for negligently hiring, retaining and supervising Hecht, L&M tendered the defense to its insurer (Liberty Insurance). Liberty defended L&M under a reservation of rights and simultaneously sought declaratory relief in federal court that it had no obligation to defend or indemnify L&M because the commercial general liability policy at issue provided coverage for “bodily injury” caused by an “occurrence,” which was defined in the policy as an “accident.” The district court granted summary judgement to Liberty; on appeal, the Ninth Circuit sought clarification of California law from the California Supreme Court, which resulted in this opinion. The Supreme Court held, contrary to the district court, that L&M’s position is correct and that “Hecht’s molestation of Doe may be deemed an unexpected consequence of L&M’s independently tortious acts of negligence.”