Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co., Inc.

Filed 6/4/18

IN THE SUPREME COURT OF CALIFORNIA

LIBERTY SURPLUS INSURANCE )
CORPORATION et al., )
)
Plaintiffs and Respondents, )
) S236765
v. )
) 9th Cir. No. 14-56120
LEDESMA & MEYER )
CONSTRUCTION COMPANY, INC., )
et al., )
)
Defendants and Appellants. )
____________________________________)

Here we consider a question of California insurance law posed by the
United States Court of Appeals for the Ninth Circuit: When a third party sues an
employer for the negligent hiring, retention, and supervision of an employee who
intentionally injured that third party, does the suit allege an “occurrence” under the
employer’s commercial general liability policy? (Liberty Surplus Ins. Corp. v.
Ledesma & Meyer Constr. Co. (9th Cir. 2016) 834 F.3d 998, 1000.)1 The answer
turns on whether the injury can be considered “accidental.” We conclude that it
can.

1 We have rephrased the question slightly. (See Cal. Rules of Court, rule
8.548(f)(5).)

SEE CONCURRING OPINION
 I. BACKGROUND
Appellants Ledesma & Meyer Construction Company, Inc. and its
principals, Joseph Ledesma and Kris Meyer (collectively, L&M) contracted with
the San Bernardino Unified School District to manage a construction project at a
middle school. In 2003, L&M hired Darold Hecht as an assistant superintendent
and assigned him to the project. In 2010, Jane Doe, a 13-year-old student at the
school, sued in state court alleging that Hecht had sexually abused her. Doe’s
claims include a cause of action against L&M for negligently hiring, retaining, and
supervising Hecht.
L&M tendered the defense to its insurers, Liberty Surplus Insurance
Corporation and Liberty Insurance Underwriters, Inc. (collectively, Liberty).
Liberty defended L&M under a reservation of rights. It also sought declaratory
relief in federal court, contending it had no obligation to defend or indemnify
L&M. The commercial general liability policy at issue provided coverage for
“ ‘bodily injury’ ” “caused by an ‘occurrence.’ ” “Occurrence” was defined as “an
accident.”2 The district court granted summary judgment to Liberty on the cause
of action for negligent hiring, retention, and supervision.

2 In a section titled “Insuring Agreement,” the policy stated:
“a. We will pay those sums that the insured becomes legally obligated to pay as
damages because of ‘bodily injury’ . . . to which this insurance applies. We will
have the right and duty to defend the insured against any ‘suit’ seeking those
damages. However, we will have no duty to defend the insured against any ‘suit’
seeking damages for ‘bodily injury’ . . . to which this insurance does not apply. . . .
“b. This insurance applies to ‘bodily injury’ and ‘property damages’ only if:
“(1) The ‘bodily injury’ . . . is caused by an ‘occurrence’ that takes place in
the ‘coverage territory’ . . . .”
In the “Definitions” section, the policy stated: “ ‘Occurrence’ means an
accident, including continuous or repeated exposure to substantially the same
general harmful conditions.”

2
 The court reasoned that Doe’s injury was not caused by an “occurrence”
because the “alleged negligent hiring, retention and supervision were acts
antecedent to the sexual molestation . . . . While they set in motion and created the
potential for injury, they were too attenuated from the injury-causing conduct
committed by Hecht.” The court was not persuaded by the argument that L&M’s
supervision and retention of Hecht continued until the time of the molestation.
“First, the supervision and retention are still not the injury-causing acts. Second,
courts have rejected the argument that the insured’s intentional acts of hiring,
supervising, and retaining are accidents, simply because the insured did not intend
for the injury to occur.”
On appeal, L&M argued that the district court misapplied California law.
The Court of Appeals sought our opinion. As we explain, L&M’s position is
correct.
II. DISCUSSION
As a general matter, the meaning of the term “accident” in a liability
insurance policy is settled in California. “[A]n accident is ‘ “an unexpected,
unforeseen, or undesigned happening or consequence from either a known or an
unknown cause.” ’ [Citations.] ‘This common law construction of the term
“accident” becomes part of the policy and precludes any assertion that the term is
ambiguous.’ ” (Delgado v. Interinsurance Exchange of Automobile Club of
Southern California (2009) 47 Cal.4th 302, 308 (Delgado).) “Under California
law, the word ‘accident’ in the coverage clause of a liability policy refers to the
conduct of the insured for which liability is sought to be imposed . . . .” (Id. at p.
311, italics added.) “[T]he term ‘accident’ is more comprehensive than the term
‘negligence’ and thus includes negligence (Black’s Law Dict. [(5th ed. 1979)] at p.

3
14, col. 2) . . . .”3 (Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 765
(Safeco).) Accordingly, a policy providing a defense and indemnification for
bodily injury caused by “ ‘an accident’ ” “promise[s] coverage for liability
resulting from the insured’s negligent acts.” (Ibid, italics added.)4
Here, the question is whether Liberty had a duty to defend L&M against
Doe’s lawsuit. “To prevail in an action seeking declaratory relief on the question
of the duty to defend, ‘the insured must prove the existence of a potential for
coverage, while the insurer must establish the absence of any such potential. In
other words, the insured need only show that the underlying claim may fall within
policy coverage; the insurer must prove it cannot.’ [Citation.] The duty to defend
exists if the insurer ‘becomes aware of, or if the third party lawsuit pleads, facts
giving rise to the potential for coverage under the insuring agreement.’ ”
(Delgado, supra, 47 Cal.4th at p. 308, quoting Waller v. Truck Ins. Exchange, Inc.
(1995) 11 Cal.4th 1, 19.)
It is important to keep in mind that a cause of action for negligent hiring,
retention, or supervision seeks to impose liability on the employer, not the
employee. The district court appeared to recognize that in analyzing the potential
for coverage, the focus is properly on the alleged negligence of L&M as the
insured employer. It is undisputed that Hecht’s sexual misconduct was a “wilful
act” beyond the scope of insurance coverage under Insurance Code section 533.
(J. C. Penney Casualty Ins. Co. v. M. K. (1991) 52 Cal.3d 1009, 1025.) However,

3 As explained in the dictionary cited by the Safeco court, any kind of
fortuitous event may be considered an “accident.” The legal elements of the tort
of negligence delineate a narrower set of circumstances.
4 The homeowners policy at issue in Safeco, like the homeowners policy in
Delgado and the commercial general liability policy in this case, contemplated a
defense and indemnification for bodily injury caused by “ ‘an occurrence,’ ”
defined in the policy as “ ‘an accident.’ ” (Delgado, supra, 47 Cal.4th at p. 308;
Safeco, supra, 26 Cal.4th at pp. 764-765.)

4
Hecht’s intentional conduct does not preclude potential coverage for L&M. We
noted the distinction between an intentional act of molestation and merely
negligent supervision in Minkler v. Safeco Ins. Co. of America (2010) 49 Cal.4th
315 (Minkler). There the plaintiff sued his Little League coach for sexual
molestation. He also sued the coach’s mother, whom he accused of negligent
supervision for failing to prevent molestations that occurred in her home. The
coach was listed as an additional insured on his mother’s homeowners insurance
policy. We held that an exclusion for injuries arising from an insured’s intentional
acts did not apply to the mother’s liability for negligence. “[T]his is not a situation
where the only tort was the intentional act of one insured, and where the liability
of a second insured, who claims coverage, is merely vicarious or derivative. On
the contrary, [the plaintiff’s] claim against [the mother] clearly depends upon
allegations that she herself committed an independent tort in failing to prevent acts
of molestation she had reason to believe were taking place in her home. Under
such circumstances, she had objective grounds to assume she would be covered, so
long as she herself had not acted in a manner for which the intentional acts
exclusion barred coverage.” (Id. at p. 325.)
In Minkler we did not consider whether the claims involved were
“accidents” under the applicable insurance policies, because the issue was not
raised. (Minkler, supra, 49 Cal.4th at p. 322, fn. 3.) But our reasoning there
establishes that L&M may be covered even though Hecht’s intentional acts were
beyond the scope of its policy. L&M’s allegedly negligent hiring, retention, and
supervision were independently tortious acts, which form the basis of its claim
against Liberty for defense and indemnity. The district court’s ruling was
consistent with Minkler. It did not rely on the fact that Hecht’s conduct was
intentional, but on two other grounds: a causation analysis, and the court’s
reading of case law. Both lines of reasoning were faulty.

5
 As to liability insurance coverage, tort principles govern the question of
causation. “In analyzing coverage under a liability policy, a ‘tort approach’
[citation] to causation of damages is precisely what is called for . . . . When the
insurer has promised to indemnify the insured for all ‘sums which the Insured
shall become obligated to pay . . . for damages . . . because of’ nonexcluded
property damage, or similar language, coverage necessarily turns on whether the
damages for which the insured became liable resulted — under tort law — from
covered causes.” (State of California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008,
1035 (Allstate).) This rule applies with equal force to a policy covering liability
for personal injury. (See Delgado, supra, 47 Cal.4th at p. 315.)
Causation is established for purposes of California tort law if the
defendant’s conduct is a “substantial factor” in bringing about the plaintiff’s
injury. (Allstate, supra, 45 Cal.4th at p. 1036; Rutherford v. Owens-Illinois, Inc.
(1997) 16 Cal.4th 953, 968-969; see Judicial Council of Cal., Civ. Jury Instns.
(2018) CACI Nos. 400, 430.) The district court ruled that L&M’s alleged
negligence was, as a matter of law, “too attenuated” from Hecht’s acts of
molestation. It reasoned that L&M’s actions set the chain of events in motion but
did not legally cause Doe’s injuries. That reasoning runs counter to California
cases expressly recognizing that negligent hiring, retention, or supervision may be
a substantial factor in a sexual molestation perpetrated by an employee, depending
on the facts presented. (C.A. v. William S. Hart Union High School Dist. (2012)
53 Cal.4th 861, 876; Evan F. v. Hughson United Methodist Church (1992) 8
Cal.App.4th 828, 835; cf. Rest.3d of Agency, § 7.05; Rest.2d of Agency, § 213.)5

5 We note that the jury instructions issued by our Judicial Council include
“substantial factor” causation as an element of the tort of negligent hiring,
retention, or supervision. The fifth element listed in CACI No. 426 is “[t]hat
[name of employer defendant]’s negligence in [hiring/ supervising/ [or] retaining]

6
Indeed, molestation was the alleged cause of injury in a significant number of
cases based on negligent hiring, retention, or supervision.6
The district court further relied on case law to reject the idea that L&M’s
“intentional acts of hiring, supervising, and retaining [Hecht] are accidents, simply
because the insured did not intend for the injury to occur.” The court cited a
number of authorities, including Delgado, supra, 47 Cal.4th 302. There, the
insured was sued for assault and battery. As part of a settlement, he assigned his
claim against his homeowners insurer to the injured party, Delgado. Delgado
urged that the attack was an “accident” from his point of view because he did not
expect or intend to be assaulted. We rejected the premise of this argument.
“Under California law, the word ‘accident’ in the coverage clause of a liability
policy refers to the conduct of the insured for which liability is sought to be
imposed on the insured.” (Delgado, at p. 311, italics added.) Because liability
insurance is a contract between insurer and insured, and the policy is read in light
of the parties’ expectations, the relevant viewpoint is that of the insured rather than
the injured party. (Ibid.)

[name of employee] was a substantial factor in causing [name of plaintiff]’s
harm.” (Italics omitted and added.)
CACI No. 426 is consistent with California case law on the causation
element of Doe’s claim against L&M. (See People v. Morales (2001) 25 Cal.4th
34, 48, fn. 7 [jury instructions are not themselves legal authority, but may
accurately reflect the state of the law].)
6 In addition to the C.A. and Evan F. cases cited above, see John R. v.
Oakland Unified School Dist. (1989) 48 Cal.3d 438, 453; Lopez v. Watchtower
Bible & Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566, 591; Z.V. v.
County of Riverside (2015) 238 Cal.App.4th 889, 902; Doe v. Capital Cities
(1996) 50 Cal.App.4th 1038, 1054; Roman Catholic Bishop v. Superior Court
(1996) 42 Cal.App.4th 1556, 1564-1565; Virginia G. v. ABC Unified School Dist.
(1993) 15 Cal.App.4th 1848, 1855.

7
 The district court referred to pages 315 and 316 of the opinion in Delgado,
supra, 47 Cal.4th. There we addressed Delgado’s further contention that the
attack was accidental because the insured unreasonably believed he was required
to act in self-defense. We disagreed, holding that such a belief could not convert
the assault, an act that was purposeful and intended to inflict injury, into an
accidental occurrence. We emphasized that the acts of the insured “must be
considered the starting point of the causal series of events, not the injured party’s
acts . . . . The term ‘accident’ in the policy’s coverage clause refers to the injury-
producing acts of the insured, not those of the injured party. [Citations.] In
determining whether the injury is a result of an accident, taking into consideration
acts or events before the insured’s acts would be illogical and contrary to
California case law. [¶] ‘Any given event, including an injury, is always the
result of many causes.’ (1 Dobbs, The Law of Torts (2001) § 171, p. 414.) For
that reason, the law looks for purposes of causation analysis ‘to those causes
which are so closely connected with the result and of such significance that the
law is justified in imposing liability.’ (Prosser & Keeton on Torts (5th ed. 1984) §
41, p. 264.) In a case of assault and battery, it is the use of force on another that is
closely connected to the resulting injury. To look to acts within the causal chain
that are antecedent to and more remote from the assaultive conduct would render
legal responsibilities too uncertain.” (Delgado, supra, 47 Cal.4th at pp. 315-316.)
In Delgado, the insured’s intentional tortious conduct was the immediate
cause of injury. Here, Hecht’s molestation was the act directly responsible for the
injury, while L&M’s negligence in hiring, retaining, and supervising him was an
indirect cause. Nevertheless, Delgado’s analysis is applicable to our scenario, and
supports L&M’s position. We noted in Delgado that an injury may be the result of
more than one cause. (Delgado, supra, 47 Cal.4th at p. 315.) As discussed above,
a finder of fact could conclude that the causal connection between L&M’s alleged

8
negligence and the injury inflicted by Hecht was close enough to justify the
imposition of liability on L&M. Under Delgado, L&M’s acts must be considered
the starting point of the series of events leading to Doe’s molestation. L&M does
not rely on any event preceding its own negligence to establish potential coverage.
As alleged by Doe, the “ ‘occurrence resulting in injury’ ” began with L&M’s
negligence and ended with Hecht’s act of molestation. (Id. at p. 316.)7
The district court also cited Merced Mutual Ins. Co. v. Mendez (1989) 213
Cal.App.3d 41 (Merced). The insured in Merced was sued for sexual assault. He
claimed his conduct could be considered an “accident” because he mistakenly
believed the victim had consented. He conceded that he intentionally engaged in
the sexual conduct, but urged that he intended no injury. (Merced, at pp. 48, 51.)
The court declined to recognize such a minimalist understanding of the term
“accident.” It explained that “[a]n accident . . . is never present when the insured
performs a deliberate act unless some additional, unexpected, independent, and
unforeseen happening occurs that produces the damage.” (Id. at p. 50, italics
added.) In Merced, “[a]ll of the acts, the manner in which they were done, and the
objective accomplished occurred exactly as [the insured] intended. No additional,
unexpected, independent or unforeseen act occurred.” (Ibid.)
The district court’s reliance on Merced was misplaced because it is
distinguishable. First, Merced did not involve a claim of negligent hiring,
retaining, or supervising. Instead, the intentional acts of the insured himself
caused the alleged injury. Second, the argument in support of coverage here is
different from the one rejected in Merced. There, the insured acknowledged that
he intended the acts that caused the injury, but not the injury. Here, L&M argues

7 Any claim alleging negligent hiring by an employer will be based in part on
events predating the employee’s tortious conduct. Plainly, that sequence of events
does not itself preclude liability.

9
that Hecht’s acts were neither intended nor expected from its perspective. Thus,
Merced provides no support for the district court’s conclusion that L&M’s
negligent hiring, retention, and supervision of Hecht cannot be an accident. That
said, Merced’s definition of what constitutes an accident is consistent with
Delgado, and actually favors L&M.8 Even though the hiring, retention, and
supervision of Hecht may have been “deliberate act[s]” by L&M, the molestation
of Doe could be considered an “additional, unexpected, independent, and
unforeseen happening . . . that produce[d] the damage.” (Merced, supra, 213
Cal.App.3d at p. 50.)
The district court also relied on Foremost Insurance Co. v. Eanes (1982)
134 Cal.App.3d 566 (Foremost), but that case is inapposite. The Foremost court
considered the meaning of the term “accident” appearing in a territorial limitation
clause, not a coverage clause. The insureds had loaned a vehicle to friends in
Orange County, and the vehicle was involved in a collision in Mexico. The court
concluded as a matter of “common sense” that the “ ‘accident’ ” occurred in
Mexico for purposes of the territorial limitation. (Id. at p. 571.) Here, however,
we are not concerned with where the accident occurred but with whether there was
an “accident” within the scope of the policy language. For that purpose, “[t]he
term ‘accident’ in the policy’s coverage clause refers to the injury-producing acts
of the insured . . . .” (Delgado, supra, 47 Cal.4th at p. 315.)
Another case cited by the district court, American Empire Surplus Lines
Ins. Co. v. Bay Area Cab Lease (N.D.Cal. 1991) 756 F.Supp. 1287 (American
Empire), is also inapposite. There, the insured taxi cab company sought property

8 The concurring opinion agrees with Merced’s formulation of what
constitutes an accident, but concludes that Merced’s “application of the law [was]
mistaken.” (Conc. opn., post, at p. 6.) The question whether Merced was
correctly decided is, of course, not before us here.

10
insurance coverage for a child molestation committed by one of its drivers at a
school. (Id. at p. 1288.) The relevant policy language covered bodily injury
“caused by an occurrence and arising out of the ownership, maintenance or use of
the insured premises and all operations necessary or incidental thereto.” (Id. at p.
1289, boldface omitted.) The court observed, “[i]t seems clear that this language
was intended to address the typical ‘slip and fall’ case and was not intended to
protect against liability for any and all occurrences which could conceivably arise
out of an insured’s ‘use’ of its premises. Otherwise, this concededly narrower
form of insurance could be extended to cover all aspects of an insured’s business
operations. Nearly all acts could be said to ‘arise out of the use of the insured
premises’ in the sense that all business actions either directly originate from or are
ultimately attributable to the ‘head office.’ If Cab Co. had wanted to be insured
against liability for acts committed by its drivers while off company premises it
could have purchased a comprehensive general liability policy.” (Ibid.) Here,
L&M did purchase a comprehensive general liability policy. American Empire is
also distinguishable because the policy in that case expressly excluded damages
arising from assault. (Id. at p. 1290.)
A brief discussion in American Empire concludes, in dicta, that negligent
hiring cannot be an “accident.” (American Empire, supra, 756 F.Supp. at p.
1290.) The discussion is erroneous. The court relied on Foremost, supra, 134
Cal.App.3d 566, which is not on point for the reasons noted. It also cited two
cases addressing whether an injury that occurs after expiration of the policy period
may be considered the result of a covered “accident” because the insured’s
negligent acts took place during the policy period. In State Farm Mut. Auto. Ins.
Co. v. Longden (1987) 197 Cal.App.3d 226, 233 (Longden), the court held that
while a “potential” for liability arose as a result of the insured’s negligence, there
was no “accident” until the claimant was injured. Similarly, in Maples v. Aetna

11
Cas. & Surety Co. (1978) 83 Cal.App.3d 641, 647-648 (Maples), another trigger-
of-coverage case, the court said that “the term ‘accident’ unambiguously refers to
the event causing damage, not the earlier event creating the potential for future
injury . . . .”
Longden and Maples are based on the unremarkable proposition that an
“accident” does not occur until there is an injury. Their reasoning as to negligence
creating a mere potential for damage is relevant in determining whether an
“accident” occurred during the period of an insurance policy’s coverage. But
when damage is inflicted during the policy period, those cases do not support a
finding against coverage for the insured’s earlier negligent conduct. Accordingly,
the American Empire court incorrectly applied Longden and Maples to conclude
that alleged negligent hiring “merely created the potential for injury . . . but was
not itself the cause of the injury.” (American Empire, supra, 756 F.Supp. at p.
1290.) The district court in this case similarly erred by relying on Longden and
Maples to find that “California courts have consistently drawn a distinction
between the immediate circumstances that inflict injury, and the preceding
negligence that sets in motion the chain of events leading to that injury.”9
A focus on the immediate cause of injury was appropriate for purposes of
the territorial limitation in Foremost and the trigger-of-coverage issue in Longden
and Maples. (Foremost, supra, 134 Cal.App.3d at p. 571; Longden, supra, 197
Cal.App.3d at p. 233; Maples, supra, 83 Cal.App.3d at pp. 647-648.) However,
we have long recognized that “[n]o all-inclusive definition of the word ‘accident’

9 The reasoning in Farmer v. Allstate Ins. Co. (C.D.Cal. 2004) 311
F.Supp.2d 884, 892-893, is also faulty. There, the court concluded that a daycare
operator was not entitled to liability coverage for negligent supervision of her
husband, who molested a child in the operator’s care. The Farmer court, like the
American Empire court and the district court here, mistakenly relied on Longden
and Maples.

12
can be given.” (Geddes & Smith, Inc. v. St. Paul Mercury Indemnity Co. (1959)
51 Cal.2d 558, 563 (Geddes); see Delgado, supra, 47 Cal.4th at p. 309; Hogan v.
Midland National Ins. Co. (1970) 3 Cal.3d 553, 559 (Hogan).) Context matters in
this area of the law. (See Delgado, at pp. 309, 313, 315.) Factors relevant to the
application of a territorial limitation clause or the resolution of a dispute over
whether an accident occurred during the policy period are not necessarily pertinent
to all coverage questions.
Liberty marshals additional authority in an attempt to rule out coverage for
L&M, but the attempt fails. Geddes was the case from which the Delgado court
drew its definition of “accident” as “ ‘ “an unexpected, unforeseen, or undesigned
happening or consequence from either a known or an unknown cause.” ’ ”
(Delgado, supra, 47 Cal.4th at p. 308, quoting Geddes, supra, 51 Cal.2d at pp.
563-564.) Geddes held that a supplier of aluminum doors was entitled to
insurance coverage for liability stemming from doors that failed unexpectedly
after installation. Liberty contends the Geddes court’s emphasis on the
suddenness of the door failures establishes that damage is only covered if it is
accidental at the time it occurs. (See Geddes, at p. 564.) To the extent Geddes can
be read to support such a rule, it does not help Liberty. At the time Doe was
molested, from L&M’s point of view the event could have been “ ‘an unexpected,
unforeseen, or undesigned happening or consequence’ ” of its hiring, retention, or
supervision of Hecht. (Geddes, at p. 563; see Delgado, at p. 309.)10
Liberty also relies on Hogan, supra, 3 Cal.3d 553. There, a manufacturer
sold a saw that did not cut lumber to the proper dimensions. When a customer

10 As Liberty acknowledges, language in Geddes considering whether an
event is “accidental” from the standpoint of the person injured was discredited by
Delgado, which made it clear that the relevant perspective is that of the insured.
(Delgado, supra, 47 Cal.4th at p. 309; Geddes, supra, 51 Cal.2d at p. 563.)

13
sued, the manufacturer sought coverage from its insurance carrier. The Hogan
court recognized that the policy covered lumber the saw cut too narrowly.
However, it held that coverage did not extend to lumber the customer deliberately
cut wide to compensate for the saw’s imprecision. (Id. at pp. 559-560.)
According to Liberty, Hogan establishes that there is no coverage for an
“accident” if the injury-producing conduct is deliberate. Hogan, however, did not
involve an insured’s independent tort liability for damage deliberately caused by
another tortfeasor, like Hecht in this case. (Cf. Minkler, supra, 49 Cal.4th at p.
325.) The deliberate acts in Hogan were committed by the injured third party:
the customer who elected to cut lumber wider than was required. Here, Doe is the
injured third party, and her conduct is not at issue. Under the principles discussed
in Minkler and Delgado, Hecht’s molestation of Doe may be deemed an
unexpected consequence of L&M’s independently tortious acts of negligence.
Hogan’s holding does not apply.11
We recognize society’s interest in providing an incentive for employers to
take precautions against sexual abuse by their employees. However, the threat of
liability for negligent hiring, retention, and supervision is a significant deterrent
even when insurance coverage is available. We also acknowledge that insurance
does not generally cover intentionally inflicted injuries. But as noted in Minkler,
“the public policy against insurance for one’s own intentional sexual misconduct

11 We acknowledge that Hogan stands in some tension with Delgado’s
declaration that the term “accident” in an insurance policy “refers to the injury-
producing acts of the insured, not those of the injured party.” (Delgado, supra, 47
Cal.4th at p. 315.) Arguably, the Hogan customer’s intentional act of cutting
lumber wider than required would have been an unexpected consequence from the
perspective of the insured saw manufacturer. (See id. at p. 309.) However,
deliberate acts by an injured claimant present a number of considerations that do
not pertain to deliberate injurious acts by an employee. Given the factual
dissimilarities between this case and Hogan, we have no occasion to revisit its
holding here.

14
does not bar liability coverage for others whose mere negligence contributed in
some way to the acts of abuse. In such cases . . . there is no overriding policy
reason why a person injured by sexual abuse should be denied compensation for
the harm from insurance coverage purchased by the negligent facilitator.”
(Minkler, supra, 49 Cal.4th at p. 327, fn. 4.)
Liberty’s arguments, if accepted, would leave employers without coverage
for claims of negligent hiring, retention, or supervision whenever the employee’s
conduct is deliberate. Such a result would be inconsistent with California law,
which recognizes the cause of action even when the employee acted
intentionally.12 The requirements for liability of this kind are not easily met, but
they are well established.13 Absent an applicable exclusion, employers may
legitimately expect coverage for such claims under comprehensive general
liability insurance policies, just as they do for other claims of negligence.

12 See the molestation cases cited on pages 6 and 7, ante, and also Phillips v.
TLC Plumbing, Inc. (2009) 172 Cal.App.4th 1133, 1139 (murder), Delfino v.
Agilent Technologies, Inc. (2006) 145 Cal.App.4th 790, 815 (cyber harassment),
and Mendoza v. City of Los Angeles (1998) 66 Cal.App.4th 1333, 1339-1340
(wrongful death).
13 The evidence was found insufficient in Z.V. v. County of Riverside, supra,
238 Cal.App.4th at pages 903-904; Delfino v. Agilent Technologies, Inc., supra,
145 Cal.App.4th at page 815; Doe v. Capital Cities, supra, 50 Cal.App.4th at
pages 1054-1055; and Roman Catholic Bishop v. Superior Court, supra, 42
Cal.App.4th at pages 1565-1568. In Phillips v. TLC Plumbing, Inc., supra, 172
Cal.App.4th at pages 1141-1145, the court held that liability did not extend to
injuries inflicted by a former employee. In Mendoza v. City of Los Angeles, supra,
66 Cal.App.4th at page 1341, there was no liability for injury inflicted by an off-
duty employee in his home. And in Evan F. v. Hughson United Methodist
Church, supra, 8 Cal.App.4th at pages 837-838, the employer was not responsible
for a molestation committed by a third party who had been molested by an
employee.

15
 CORRIGAN, J.

WE CONCUR:

CANTIL-SAKAUYE, C. J.
CHIN, J.
CUÉLLAR, J.
KRUGER, J.
BIGELOW, J. *

_______________________
* Presiding Justice of the Court of Appeal, Second Appellate District,
Division Eight, assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.

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 CONCURRING OPINION BY LIU, J.

In this case, an employee of Ledesma & Meyer Construction Company,
Inc. (L&M), Darold Hecht, committed sexual acts against a 13-year-old student,
Jane Doe, at a school where Hecht was working on a construction project
undertaken by L&M. Doe sued L&M, among others, and L&M tendered its
defense to its insurer Liberty Surplus Insurance Corporation, with whom L&M
had a commercial general liability policy. The question is whether that suit alleges
an “occurrence” under L&M’s commercial general liability policy. I agree with
today’s opinion that the answer is yes, but I write separately to clarify three
aspects of the understanding of an “accident.”
I.
The insurance policy in this case provides that “[t]his insurance applies to
‘bodily injury’ and ‘property damages’ only if: [¶] (1) The ‘bodily injury’ . . . is
caused by an ‘occurrence’ that takes place in the ‘coverage territory’ . . . .” In the
“Definitions” section of the policy, the term “ ‘Occurrence’ ” is defined as “an
accident, including continuous or repeated exposure to substantially the same
general harmful conditions.” Thus, the question of coverage turns on whether the
injury to Doe was the result of an “accident” caused by L&M and more generally
whether, when an employee intentionally causes injury to a third party, that injury
can be considered accidental if it was caused by the employer’s negligent hiring,
retention, or supervision of the employee. Today’s opinion holds that such injury
can be caused by accident.
In support of this result, the court starts with the commonsense definition in
Delgado v. Interinsurance Exchange of Automobile Club of Southern California
(2009) 47 Cal.4th 302, 308 (Delgado): “[A]n accident is ‘ “an unexpected,
unforeseen, or undesigned happening or consequence from either a known or an
unknown cause.” ’ ” (See maj. opn., ante, at p. 3.) However, the court further
states, “ ‘Under California law, the word “accident” in the coverage clause of a
liability policy refers to the conduct of the insured for which liability is sought to
be imposed . . . .’ ” (Ibid., quoting Delgado, at p. 311.) This formulation conflates
the term “accident” with the conduct that eventually and proximately causes
injury. In this case, L&M’s hiring, supervising, and retaining Hecht were not
“accidents”; those were deliberate, intentional acts. It was Hecht’s sexual abuse of
the victim and resulting injury that comprised the accident, from L&M’s
perspective. In other words, because Hecht’s actions and the injury to the victim
were “ ‘ “unexpected, unforeseen, or undesigned happening[s] or
consequence[s]” ’ ” from L&M’s perspective, they were accidents in the context
of providing insurance for L&M. (Delgado, at p. 308.) Thus, in a liability
insurance policy, an “accident” does not necessarily refer to the conduct of the
insured; rather, it is an “ ‘ “unexpected, unforeseen, or undesigned happening or
consequence” ’ ” resulting from the conduct of the insured.
This understanding of “accident” is consistent with the court’s answer to
the question presented. Under the commercial general liability policy at issue,
there is coverage for bodily injury so long as “[t]he ‘bodily injury’ . . . is caused by
an ‘occurrence’ that takes place in the ‘coverage territory.’ ” Thus, if an insured’s
conduct in negligent hiring, retention, or supervision of its employee results in an
accident that causes bodily injury, that injury is covered by the insurance policy.

2
 II.
The court addresses a number of cases cited by the federal district court, which
arrived at a contrary answer to the question presented. One such case is Delgado,
supra, 47 Cal.4th 302, in which the insured was sued for assault and battery. (Maj.
opn., ante, at pp. 7–9.) In that case, as part of a settlement, the insured assigned his
claim against his homeowner’s insurer to the injured party, Jonathan Delgado.
Delgado argued that the attack was accidental because the insured unreasonably
believed he was required to act in self-defense. We rejected this argument, holding
that such belief could not convert the assault, an act that was purposeful and intended
to inflict injury, into an accidental occurrence. In so doing, Delgado stated that the
acts of the insured “must be considered the starting point of the causal series of
events, not the injured party’s acts . . . . The term ‘accident’ in the policy’s coverage
clause refers to the injury-producing acts of the insured, not those of the injured party.
[Citations.] In determining whether the injury is a result of an accident, taking into
consideration acts or events before the insured’s acts would be illogical and contrary
to California case law. [¶] ‘Any given event, including an injury, is always the result
of many causes.’ (1 Dobbs, The Law of Torts (2001) § 171, p. 414.) For that reason,
the law looks for purposes of causation analysis ‘to those causes which are so closely
connected with the result and of such significance that the law is justified in imposing
liability.’ (Prosser & Keeton on Torts (5th ed. 1984) § 41, p. 264.) In a case of
assault and battery, it is the use of force on another that is closely connected to the
resulting injury. To look to acts within the causal chain that are antecedent to and
more remote from the assaultive conduct would render legal responsibilities too
uncertain.” (Delgado, at pp. 315–316.)
Today’s opinion says Delgado’s analysis is applicable, reasoning that “a finder
of fact could conclude that the causal connection between L&M’s alleged negligence
and the injury inflicted by Hecht was close enough to justify the imposition of liability

3
on L&M.” (Maj. opn., ante, at p. 9.) “Under Delgado, L&M’s acts must be
considered the starting point of the series of events leading to Doe’s molestation.
L&M does not rely on any event preceding its own negligence to establish potential
coverage. As alleged by Doe, the ‘ “occurrence resulting in injury” ’ began with
L&M’s negligence and ended with Hecht’s act of molestation.” (Maj. opn., ante, at
p. 9.)
Although I agree that a factfinder could conclude that the causal connection
was close enough to justify imposing liability on L&M, I would not ground this
conclusion on Delgado’s analysis. It is incorrect that “[i]n determining whether the
injury is a result of an accident, taking into consideration acts or events before the
insured’s acts would be illogical and contrary to California case law.” (Delgado,
supra, 47 Cal.4th at p. 315.) There are myriad situations where we would examine
prior events to determine whether an insured’s acts resulted in an accidental injury.
For example, suppose an insured driver steps on the accelerator because a passenger
spilled coffee on the driver and as a result the car hits another car and causes injury to
its occupants. In determining whether the injury was accidental, we would of course
look to the act of the coffee-spilling passenger, even though the passenger was not the
insured. Indeed, any time a motorist takes evasive action due to some situation on the
road and thereby causes injury, we would consider that situation — a prior event — in
determining whether there was an “accident.” (See, e.g., Davilla v. Liberty Life Ins.
Co. (1931) 114 Cal.App. 308, 313–316 [finding a result of “accidental means” where
insured motorcyclist encountered a stalled vehicle and then deliberately swerved to
avoid it and consequently hit his head on the stalled vehicle].)
Even in an alleged self-defense case like Delgado, it is not clear why the acts
of the injured party preceding the insured’s actions are irrelevant to whether the injury
was an accident. Consider another example: In a crowded bar, a patron trips and falls
with his arms outstretched resembling a punching motion. An employee sees this and

4
reactively, but intentionally, punches and injures the patron in a move of self-defense.
In assessing whether this was accidental, we would obviously consider the patron’s
trip and fall, an event before the insured’s act.
Delgado is correct that “the law looks for purposes of causation analysis ‘to
those causes which are so closely connected with the result and of such significance
that the law is justified in imposing liability.’ ” (Delgado, supra, 47 Cal.4th at p. 315,
citing Prosser & Keeton on Torts, supra, § 41, p. 264.) It is that principle that
grounds today’s holding that “a finder of fact could conclude that the causal
connection between L&M’s alleged negligence and the injury inflicted by Hecht was
close enough to justify the imposition of liability on L&M.” (Maj. opn., ante, at p. 9.)
III.
Today’s opinion also seeks to harmonize its holding with Merced Mutual
Ins. Co. v. Mendez (1989) 213 Cal.App.3d 41 (Merced). Merced held that no
accident occurred when an insured sexually assaulted a victim whom the insured
claimed to have honestly believed had consented to sexual activity. (Id. at p. 50.)
The court stated: “An accident . . . is never present when the insured performs a
deliberate act unless some additional, unexpected, independent, and unforeseen
happening occurs that produces the damage. [Citation.] Clearly, where the
insured acted deliberately with the intent to cause injury, the conduct would not be
deemed an accident. Moreover, where the insured intended all of the acts that
resulted in the victim’s injury, the event may not be deemed an ‘accident’ merely
because the insured did not intend to cause injury. Conversely, an ‘accident’
exists when any aspect in the causal series of events leading to the injury or
damage was unintended by the insured and a matter of fortuity.” (Ibid.) The
Court of Appeal then stated that in that case there was no “additional, unexpected,
independent or unforeseen act” that occurred and hence there was no accident.
(Ibid.) Today’s opinion says Merced favors finding that Doe’s injury was an

5
accident caused by L&M’s conduct because Hecht’s molestation of Doe was an
“ ‘additional, unexpected, independent, and unforeseen happening’ ” that
“ ‘produce[d] the damage.’ ” (Maj. opn., ante, at pp. 9–10, quoting Merced, at
p. 50.)
I agree that “[a]n accident . . . is never present when the insured performs a
deliberate act unless some additional, unexpected, independent, and unforeseen
happening occurs that produces the damage” (Merced, supra, 213 Cal.App.3d at
p. 50), and today’s opinion is correct that finding Doe’s injury was the result of an
accident caused by J&M’s conduct is consistent with this language in Merced.
However, Merced’s application of the law is mistaken. If one were to accept the
insured’s claim that he had an honest belief that the victim consented to the sexual
conduct, then the injury to the victim could be an “ ‘ “unexpected, unforeseen, or
undesigned happening or consequence” ’ ” resulting from the insured’s conduct.
(Delgado, supra, 47 Cal.4th at p. 308.) To use Merced’s language, there would be
an “aspect in the causal series of events leading to the injury or damage” —
namely, the fact that the victim was not consenting — that was “unintended by the
insured” and a “matter of fortuity” from the perspective of the insured. (Merced,
at p. 50.) The Court of Appeal’s conclusion that there was “[n]o additional,
unexpected, independent or unforeseen act [that] occurred” (ibid.) overlooks the
fact that the insured claimed he did not realize that the victim was not consenting.
The result in Merced is better explained by the fact that the court implicitly
rejected the insured’s contention that he honestly believed that the victim was
consenting. The court stated that “[a]ll of the acts, the manner in which they were
done, and the objective accomplished occurred exactly as [the insured] intended.”
(Merced, supra, 213 Cal.App.3d at p. 50.) If the insured believed the victim to be
nonconsenting, then the insured’s acts were intentional, not accidental, and no
insurance coverage would ensue. But insofar as Merced is understood to hold that

6
a mistake in apprehending another’s consent (or lack thereof) can categorically
never give rise to an accident, that is inconsistent with our law on the meaning of
“accident.”
In all other respects, I join the opinion of the court.

LIU, J.

7
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Liberty Surplus Insurance Corporation v. Ledesma & Meyer Construction Company
__________________________________________________________________________________

Unpublished Opinion
Original Appeal
Original Proceeding XXX on request pursuant to rule 8.548, Cal. Rules of Court
Review Granted
Rehearing Granted

__________________________________________________________________________________

Opinion No. S236765
Date Filed: June 4, 2018
__________________________________________________________________________________

Court:
County:
Judge:

__________________________________________________________________________________

Counsel:

Shernoff Bidart Echeverria, Michael J. Bidart, Ricardo Echeverria; The Ehrlich Law Firm and Jeffrey I.
Ehrlich for Defendants and Appellants.

Steven W. Murray as Amicus Curiae on behalf of Defendants and Appellants.

Kasowitz Benson Torres and Brian P. Brosnahan for Franciscan Friars of California, Inc., and Province of
the Holy Name, Inc., as Amici Curiae on behalf of Defendants and Appellants.

Weinstein & Numbers, Barron L. Weinstein, Charles H. Numbers and Shanti Eagle for California Catholic
Conference and Association of Christian Schools International as Amici Curiae on behalf of Defendants
and Appellants.

Andrade Gonzalez, Sean A. Andrade, Stephen V. Masterson; Jones Day, David W. Steuber and Tara C.
Kowalski for the Los Angeles Unified School District as Amicus Curiae on behalf of Defendants and
Appellants.

IP Business Law and Antonio R. Sarabia II for National Center for Victims of Crime as Amicus Curiae on
behalf of Defendants and Appellants.

Covington & Burling, David B. Goodwin, Michael S. Greenberg and Marienna H. Murch for United
Policyholders as Amicus Curiae on behalf of Defendants and Appellants.

McCormick, Barstow, Sheppard, Wayte & Carruth, Patrick Fredette and Christopher Ryan for Plaintiffs
and Respondents.

Crowell & Moring and Brendan V. Mullan for Complex Insurance Claims Litigation Association and
American Insurance Association as Amici Curiae on behalf of Plaintiffs and Respondents.
Counsel who argued in Supreme Court (not intended for publication with opinion):

Jeffrey I. Ehrlich
The Ehrlich Law Firm
16130 Ventura Boulevard, Suite 610
Encino, CA 91436
(818) 905-3970

Patrick Fredette
McCormick, Barstow, Sheppard, Wayte & Carruth
7647 North Fresno Street
Fresno, CA 93720
(559) 433-1300