Maine Supreme Court Rules on Abuse Exclusion

January 27, 2005

Sexual abuse of a minor falls within an insurance coverage exclusion for injuries resulting from “actual or threatened abuse or molestation,” the Maine Supreme Judicial Court ruled recently in its first interpretation involving the question.

Maine Bonding & Casualty Co. insured the Chalet Motel where one of the motel owners sexually exploited Sarah and Bianca when they were aged 13 and 12. They brought an action against the motel and the motel owners for negligence, negligent infliction of emotional distress, and other claims. They obtained a stipulated judgment for $2 million dollars but were unable to collect against the motel owner’s insurer.

They filed an action contending that Superior Court erred in its summary judgment for Maine Bonding and for concluding that their claims in the underlying action fell within the exclusionary language in the insurance policy. Sarah and Bianca appealed that ruling but the state Supreme Court has affirmed the judgment.

The high court noted that the term “abuse” is not defined in the policy, nor does the policy limit abuse to sexual or physical activity or to conduct involving minors. Plaintiffs had argued that the term was ambiguous and thus there was room to conclude that the actions of the motel owner did not fall under the exclusion. But the court rejected that reasoning.

“We disagree with Sarah and Bianca’s contention that the term ‘abuse’ is hopelessly broad and ambiguous. As applied to this case, the term unambiguously precludes coverage.”

The court said that fact that the word “abuse” may have more than one definition does not by itself mean its use in the policy exclusion is ambiguous. It said most people would recognize that the term includes sexual exploitation of minor children.

“Regardless of what other conduct falls within the scope of the ‘abuse or molestation’ exclusion, it certainly includes the conduct at issue here,” the court ruled.

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