Sweet Home Central School District v. Aetna Commercial Insurance

Green, J. P., and Pigott, Jr., J.

(dissenting). Because we disagree with the majority’s conclusion that defendants, Aetna Commercial Insurance Company and Aetna Casualty and Surety Company (Aetna), have no duty to defend or indemnify plaintiff, Sweet Home Central School District of Amherst and Tonawanda (Sweet Home), we respectfully dissent for two reasons.

First, the policies define an “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “In deciding whether a loss is the result of an accident, it must be determined, from the point of view of the insured, whether the loss was unexpected, unusual and unforeseen (see, Miller v Continental Ins. Co., 40 NY2d 675, 677)” (Allegany Co-op Ins. Co. v Kohorst, 254 AD2d 744 [emphasis supplied]; cf., General Acc. Ins. Co. v Zazynski, 229 AD2d 920, 921). “In determining whether an act is an occurrence, the policy terms must be read ‘narrowly, barring recovery only when the insured intended the damages’ ” (Dryden Mut. Ins. Co. v Brockman, 259 AD2d 947, 948, quoting Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 649). Here, although the complaint in the underlying action alleges intentional acts of assault and sexual abuse by the teacher, it alleges only the negligent hiring, retention and supervision of that teacher by Sweet Home. The complaint in the underlying action alleges conduct by the teacher that was outside the scope of his employment, and thus Sweet Home cannot be liable on the basis of respondeat superior (see, Judith M. v Sisters of Charity Hosp., 93 NY2d 932; Kenneth R. v Roman Catholic Diocese, 229 AD2d 159, 161, lv dismissed 91 NY2d 848, cert denied 522 US 967). Therefore, because the complaint in the underlying action does not allege any intentional conduct on the part of Sweet Home, the complaint alleges an occurrence within the meaning of the policies (see, Walker Baptist Church v Aetna Cas. & Sur. Co., 178 AD2d 923, 924; Allstate Ins. Co. v Klock Oil Co., 73 AD2d 486, 488).

To interpret the term “occurrence” in the manner of the ma*951jority renders superfluous the exclusion in the policy for acts either intended or expected by the insured. It is well settled that, in construing a policy, “the court must examine ‘the entire contract to determine its purpose and effect and the apparent intent of the parties’ ” (Meyers & Sons Corp. v Zurich Am. Ins. Group, 74 NY2d 298, 303, quoting Murray Oil Prods. v Royal Exch. Assur. Co., 21 NY2d 440, 445), and that “a policy’s terms should not be assumed to be superfluous or to have been idly inserted” (Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46, 50, affd 66 NY2d 1020; see also, Handelsman v Sea Ins. Co., 85 NY2d 96, 101, rearg denied 85 NY2d 924). In our view, the majority’s affirmance is inconsistent with those established principles.

Aetna’s reliance upon this Court’s decision in Board of Educ. v Continental Ins. Co. (198 AD2d 816) is misplaced. In that case, the school district was charged with sexual harassment by an employee based upon the conduct of another employee. We held that, although the complaint against the school district was couched in terms of negligence, the gravamen of the complaint was intentional acts and violations of State and Federal statutes by the school district itself. Here, however, the gravamen of the complaint against Sweet Home is negligence, and thus Sweet Home is entitled to coverage under the policies. To the extent that the First Department’s decision in Public Serv. Mut. Ins. Co. v Camp Raleigh (233 AD2d 273, lv denied 90 NY2d 801) is to the contrary, we would decline to follow it.

Secondly, we believe Aetna’s reliance upon Mount Vernon Fire Ins. Co. v Creative Hous. (88 NY2d 347) and U.S. Underwriters Ins. Co. v Val-Blue Corp. (85 NY2d 821) is likewise misplaced. In those cases, the Court of Appeals interpreted exclusions in policies for claims based upon or arising out of an assault or battery whether or not committed by or at the direction of the insured. In determining that the exclusion in each case applied, the Court of Appeals adopted a “but for” test, concluding that the claim that the employer negligently failed to maintain safe premises could not be established without proving the underlying assault. Here, by contrast, we are asked to interpret the term “occurrence”. We reject Aetna’s argument that the “but for” test should be extended to that analysis. There is no indication in either Mount Vernon or Val-Blue that the Court of Appeals intended to abrogate the case law concerning the interpretation of the term “occurrence”.

The policies contain an exclusion for bodily injury or property damage “expected or intended from the standpoint of the insured.” Because no evidence was presented that Sweet Home *952expected or intended the acts upon which the underlying complaint is based, that exclusion does not apply (cf., Dryden Mut. Ins. Co. v Brockman, supra; Mattress Discounters v United States Fire Ins. Co., 251 AD2d 384, lv denied 92 NY2d 817). We would, therefore, reverse the judgment, deny the cross motion, grant the motion and grant judgment in favor of Sweet Home declaring that Aetna is obligated to defend and indemnify Sweet Home in the underlying action. (Appeal from Judgment of Supreme Court, Erie County, Glownia, J. — Summary Judgment.) Present — Green, J. P., Hayes, Pigott, Jr., Scudder and Balio, JJ.