The U.S. District Court for the Southern District of Georgia recently ruled that an insurer must provide coverage to its insured with respect to a civil lawsuit involving allegations of sexual assault. The case, BOJ OF WNC, LLC d/b/a Bojangles Famous Chicken N Biscuits v. Westfield National Insurance Company (Civil Action No. CV 122-124), stemmed from a lawsuit filed by a minor employee of the insured restaurant franchisee, who accused the restaurant manager of raping her during her work shift. Specifically, the plaintiff alleged that the manager confined her in a restroom he instructed her to clean, forcibly removed her clothing, and raped her. The underlying case was ultimately settled. The insurance policy at issue included both a Businessowners Liability Coverage Form (the BLC Form) and a Commercial Liability Umbrella Coverage Form (the CLUC Form).
Abuse or Molestation Exclusion
The Court first addressed the BLC Form's abuse or molestation exclusion. The exclusion precluded coverage for bodily injury arising from the "actual or threatened abuse or molestation" of any person in the "care, custody, or control of any insured." The insured contended that some of the plaintiff's injuries arose out of false imprisonment, rather than the sexual assault, because the manager locked her in the bathroom. The Court rejected this argument, explaining that the manager detained the plaintiff in the bathroom only long enough to rape her and then immediately left, leaving the plaintiff free to leave as well.
The insured further argued that the plaintiff was not under the insured's care, custody, or control. However, the Court found that the plaintiff was under both the care and control of the insured because employers have control or influence over their employees. Thus, the Court held that the plaintiff's injuries arose from the abuse or molestation by the manager, and that there was no coverage under the BLC form based on the abuse or molestation exclusion.
Employment-Related Exclusions
The Court next considered three employment-related exclusions under the CLUC Form. These included:
- Employer's Liability Exclusion, which barred coverage for an employee's bodily injury "arising out of and in the course of" employment.
- Employment-Related Practices Exclusion, which barred coverage for bodily injury arising from "employment-related practices" such as coercion or harassment.
- Workers' Compensation Provision, which stated that insurance does not apply to obligations under workers' compensation or similar laws.
The Court explained that these three exclusions called for a causal connection between the employment conditions and the injury. Citing Murphy v. ARA Servs., Inc., the Court emphasized that an injury arises out of employment only when there is a causal link peculiar to the work. 298 S.E.2d 528, 530 (Ga. Ct. App. 1982). The Court concluded that nothing inherent in working at a fast-food restaurant or cleaning bathrooms made the sexual assault foreseeable, and the plaintiff's mere proximity to the manager was insufficient to establish a causal connection between the assault and her employment with the insured. Accordingly, the Court held that the employment-related exclusions did not apply, and therefore, there was coverage under the CLUC form, which lacked the abuse or molestation exclusion.
What Does This Mean for Georgia Insurers?
This decision demonstrates that an abuse or molestation exclusion can bar coverage for sexual assaults perpetrated by one employee of an insured against another, because the employees are considered to be under the care and control of the insured. At the same time, employment exclusions common to commercial general liability policies will not necessarily bar coverage for sexual assaults perpetrated by one employee against another.
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