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9th Circuit Seeks Advice in Insurer Liability Case

(CN) - The 9th Circuit asked the California Supreme Court to weigh in on how a homeowner's liability insurance policy should apply when her son, a little league coach, allegedly molested one of his player's at her house.

In 2003, Scott Minkler sued Betty Schwartz and her son, David, claiming the coach sexually molested him for several years, starting in 1987. Minkler said Schwartz knew that her son had molested Minkler in her home, but did nothing.

David Schwartz submitted the claims to his mother's insurer, Safeco, which refused to defend them based on the "intentional acts" exclusion in the policies. Because David was listed on the policy, Safeco said the alleged sexual assaults were not covered.

Minkler won a default judgment of more than $5 million against Betty. He agreed not to execute the judgment in exchange for a transfer of her rights against Safeco.

The district court dismissed the case, and Minkler appealed.

The 9th Circuit certified the following question to the state Supreme Court:

"Where a contract of liability insurance covering multiple insureds contains a severability-of-interests clause in the 'Conditions' section of the policy, does an exclusion barring coverage for injuries arising out of the intentional acts of 'an insured' bar coverage for claims that one insured negligently failed to prevent the intentional acts of another insured?"

The court said the question is of "considerable importance" to insurance companies and anyone with a policy containing a severability provision.

"Because of the ubiquity of such clauses, the issue is a recurrent one and courts have reached different answers," the federal appeals court explained.

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