(CN) - A mother who accused an aide of molesting her deaf son cannot get Allstate to cover her successful defense against defamation claims, the 4th Circuit ruled.
Troy Towers, a resident aide at the Maryland School for the Deaf, said he beat criminal sexual abuse charges because of lies spread by one of the residents, Thomas Francis, and Francis' mother Danielle. In a 2008 complaint, Towers said the Francises falsely accused him of sexually abusing his deaf students.
In addition to suffering damage to his reputation, Towers also faced a temporary unpaid suspension, according to the complaint in Frederick County Circuit Court.
The Francises insisted in a brief that their statements did not intend "to slander Mr.Towers  or invade his privacy," and that Thomas made statements to school officials and policy "solely for [his own] protection and not to defame or otherwise harm Mr. Towers."
They ultimately spent more than $66,000 on their defense, and persuaded the court to grant them summary judgment in March 2011.
Around that time, the Francises sued Allstate Insurance, seeking defense and indemnification in the Towers tort suit.
The case was removed to U.S. District Court for the District of Maryland the next month, just as the final judgment was entered for the Francises in the Towers suit.
A federal judge in Baltimore concluded, however, that Allstate did not have to provide coverage since the Francises' renters insurance policy was issued in California.
California law states that intentional conduct is not "accidental," even if the resulting injury is unintended, making the Francises' claims unable to be covered as an "accident" under the policy, according to the ruling.
The Richmond, Va.-based federal appeals court affirmed last week, noting that California law applies since the Francises live in California, the policy was mailed to their California home, and premium payments were made from that state.
"Particularly, as noted by the district court, under the terms of the policy, in order to establish Allstate's duty to defend, the Francises were required to demonstrate that 'the action arose from an 'accident' and sought damages for 'bodily injury' or 'property damage,'" Judge Andre Davis wrote for a three-judge panel.
"California courts have held for nearly a half century that the term 'accident' applies to the insured's act itself, not the consequences of the act," he added.
"California courts construing policies with provisions similar to those in the Allstate policy have repeatedly held that intentional acts are not 'accidents,' and have found insurers not liable for intentional conduct of their insureds," the decision states.
The panel also agreed that District Court is the proper venue since the complexity of the underlying tort action ensured that the Francises' claims would exceed the $75,000 minimum for a federal action.
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