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California Supreme Court holds that negligent hiring, supervision, or retention of employee may qualify as an "accident" under commercial general liability policy

June 4, 2018

Liberty Surplus Insurance Co. v. Ledesma & Meyer Construction Co.
(June 4, 2018, S236765) ___ Cal.5th ___

A molestation victim sued the perpetrator’s employer, alleging a cause of action for negligent hiring, retention, and supervision of the employee who abused her. The employer’s commmercial general liability policy covered bodily injury caused by an “occurrence” and defined “occurrence” as an “accident.” The insurer sought declaratory relief in federal court, contending it had no obligation to defend or indemnify. The district court granted summary judgment for the insurer. The employer appealed, and the Ninth Circuit Court of Appeals sought the California Supreme Court’s opinion.

The Supreme Court held that, although the employee’s conduct was intentional and beyond the scope of insurance coverage, there was a potential for coverage of the employer’s separate acts of negligence. The Court ruled that even if hiring, retention, and supervision of the employee were deliberate acts, the employee’s molestation could be considered an accident because it could be viewed as an “additional, unexpected, independent, and unforeseen happening” which followed the employer’s conduct and caused the injury.

More Information

For more information, please contact Mitchell C. Tilner and Karen M. Bray .

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