Gordon v. Continental Casualty Co. 2024
A massage spa owner purchased an insurance policy that excluded coverage for injuries “arising out of: (a) actual or threatened abuse or molestation by anyone of any person while in the care, custody or control of any insured,” or (b) negligent employment, investigation, supervision, reporting, or retention of persons for whom the insured is legally responsible.
Three women sued the owner and his wife alleging the owner sexually assaulted them during massage sessions. The insurer refused to defend. Following the insureds’ stipulation to liability and assignment to plaintiffs of the insureds’ rights against the insurer, the insurer successfully moved for summary judgment based on the policy exclusion.
The Court of Appeal affirmed. The exclusion barred coverage for the owner’s direct liability because the women were under the owner’s “care, custody or control” when he molested them, even if that control was not complete. The fact the women were being massaged by the owner was sufficient to place them under his “care.” The court also found that the exclusion barred coverage for the negligent training claims against the owner’s wife. The court concluded that although the word “training” was not specifically mentioned in the exclusion, it is encompassed within the excluded claim for negligent supervision.
