Under Virginia Law, Despite the Separation of Insureds Provision, Insurer has No Duty to Defend Suit Alleging Insured is Liable Under Respondeat Superior for Intentional Acts of Agent

On July 10, 2015, the Fourth Circuit Court of Appeals held that an insurer had no duty to defend the insured university in a suit alleging that the insured participated in a kidnapping plot. The court found that the insurer had no duty to defend because the suit was based on the intentional acts of the insured’s employees.

In this case, the plaintiff alleged that the insured participated in a plot to kidnap the student in order to remove the student and keep her separated from the plaintiff (the student’s biological mother’s former same sex partner). The child was born to two women in 2002 in a same-sex union, with both women being the child’s legal parent/guardians. The biological mother later converted to Christianity and moved away. The biological mother believed that homosexuality was sinful and sought to prevent the plaintiff from contacting her daughter. Facing the possibility that courts might transfer custody to the other mother, the biological mother took her daughter to Nicaragua. The complaint alleged that the insured, one of its employees, and others assisted the student’s biological mother in taking the child to Nicaragua.

The policy held by the university contained a separation of insureds provision, which requires a court to evaluate a claim by each named insured individually. The court found that such provision does not displace the Virginia rule that an insurer has no duty to defend against a suit alleging the insured is liable for the intentional acts of its agents under a theory of respondeat superior.  The complaint alleged only intentional acts and therefore found that the complaint did not arise from an “occurrence,” and therefore no coverage was owed.

Liberty Univ., Inc. v. Citizens Ins. Co. of America, United States District Court for the Fourth Circuit, July 10, 2015