Citations
- 16 F. Supp. 3d 636
Full opinion text
MEMORANDUM OPINION
NORMAN K. MOON, District Judge.
This case comes before the Court upon the parties’ cross motions for summary judgment (dockets nos. 39 and 42), filed on January 31, 2014. Liberty University, Inc. (“Plaintiff” or “Liberty”) filed this action, seeking a declaration from this Court that Citizens Insurance Company of America, Hanover American Insurance Company, and Hanover Insurance Company (collectively, “Defendants” or “Hanover”) have a duty to defend Liberty against claims made in an amended complaint by Janet Jenkins (“Jenkins Complaint”) in the United States District Court in the District of Vermont, based on insurance policies issued by Hanover to Liberty. In its June 28, 2013 amended complaint (“Amended Complaint”), Liberty seeks reimbursement of the costs, fees, and expenses Hanover allegedly owes Liberty for breaching its duty to defend and indemnify under the policies. Hanover disputes that Liberty is covered under the policies at issue. This Court heard argument on the fully-briefed motions for summary judgment on February 27, 2014.
Jurisdiction over this case is proper pursuant to 28 U.S.C. § 1332, as the parties are completely diverse and the amount in controversy exceeds $75,000. Personal jurisdiction and venue are also proper in this Court. For the reasons stated below, I find Hanover has a duty to defend Liberty under all the insurance policies at issue, in relation to the Jenkins Complaint, filed on Nov. 26, 2012, in Jenkins v. Miller et al., No. 2:12-cv-00184-wks, in the District of Vermont. I will therefore grant Liberty’s motion for summary judgment (docket no. 39) in full, and deny Hanover’s motion for summary judgment (docket no. 42) in full.
I.Background
Liberty University is a Virginia corporation that operates Liberty University and the Liberty University School of Law in Lynchburg, Virginia. Citizens Insurance Company of America, Hanover American Insurance Company, and Hanover Insurance Company are corporations organized under the laws of Michigan and New Hampshire, which regularly conduct business in Virginia and have principal places of business in Michigan and Massachusetts. Each of these companies issued at least one insurance policy to Liberty that underlies this dispute.
Four different policies issued to Liberty are at issue: (1) the Commercial General Liability (“CGL”) Policy, number ZZR 4908180-00, issued by Hanover American Insurance Company for the policy period of February 1, 2009, to February 1, 2010; (2) the Umbrella Policy (“2009-2010 Umbrella Policy” or “CGL Umbrella Policy”), number UHR 4908175-00, issued by Hanover Insurance Company for the policy period of February 1, 2009, to February 1, 2010; (3) the School and Educators Legal Liability Endorsement (“SELL Endorsement”) to the 2012-2013 commercial general liability policy, number ZBR-4908180-03, issued by Citizens Insurance Company of America for the policy period of February 1, 2012, to February 1, 2013; and (4) the 2012-2013 Umbrella Policy (“2012-2013 Umbrella Policy”), number UHR 4908175-03, issued by Hanover Insurance Company for the policy period of February 1, 2012, to February 1, 2013. Am. Compl. ¶¶ 8-10; Defs.’ Mot. for Summ. J. ¶¶ 8-9.
The 2009-2010 CGL Policy provides coverage for claims made against Liberty for “bodily injury,” “property damage,” and “personal and advertising injury” arising from an “occurrence” taking place during the policy period. Pl.’s Mot. for Summ. J. 10; J.A. Ex. B. The CGL Umbrella Policy is effective for the same dates as the CGL Policy and provides coverage for “the ‘ultimate net loss’ in excess of the ‘retained limit’ ” for the same eventualities: bodily injury, property damage, and personal and advertising injury, defined in the same way as in the CGL Policy. CGL Umbrella Policy, J.A. Ex. C, at H-0015-H-0016, H-0018-H-0019, H-0027-H-0028, H-0031. Since the CGL and CGL Umbrella Policies apply here to the same eventualities, with the same exclusions and definitions, Liberty and Hanover have adopted their arguments for the CGL Policy and rely on those arguments as to whether the CGL Umbrella Policy covers Liberty and creates a duty for Hanover to defend. See PL’s Mot. for Summ. J. 21; Defs.’ Mot. for Summ. J. 18; Defs.’ Resp. to Pl.’s Mot. for Summ. J. 20.
The 2012-2013 SELL Endorsement covers claims made against Liberty that were first asserted in the relevant policy period and based on “wrongful acts” by Liberty. PL’s Mot. for Summ. J. 10; J.A. Ex. D. As with the CGL Umbrella Policy, the parties rely on their arguments regarding the SELL Endorsement as to whether the SELL Endorsement to the 2012-2013 Umbrella Policy provides coverage for any “wrongful acts” by Liberty. See PL’s Mot. for Summ. J. 25; Defs.’ Mot. for Summ. J. 31; Defs.’ Resp. to PL’s Mot. for Summ. J. 23-24; J.A. Ex. E, at H-0325-H-0326, H-0329-H0330, H-0338-H-0341, H-0343, H-0358-H-0360, H-0371.
The parties have summarized the facts pertinent to this case in their motions for summary judgment, and they were enumerated in the Jenkins Complaint. In 2002, Janet Jenkins (“Jenkins”) and Lisa Miller (“Miller”) were united in a same sex civil union in Vermont when their daughter Isabella Miller-Jenkins (“Isabella”) was born. PL’s Mot. for Summ. J. 6; Jenkins Compl. ¶ 19. In 2004, Miller converted to Christianity, began to believe that “homosexuality was sinful and that Isabella should be shielded from exposure to the ‘lifestyle,’ ” and moved with Isabella to Winchester, Virginia. PL’s Mot. for Summ. J. 7; Jenkins Compl. ¶ 20. Miller sought to legally dissolve her civil union with Jenkins in 2004 and between 2004 and 2009, Miller and Jenkins “were engaged in litigation regarding their respective parental rights and custody over Isabella.” PL’s Mot. for Summ. J. 7; Jenkins Compl. ¶¶ 19-20. During this time, Miller repeatedly violated the orders of courts in Vermont and Virginia that granted Jenkins certain custody and visitation rights.
Beginning in 2004, Liberty University and its related law firm, Liberty Counsel, LLC, began to represent Miller in her custody and dissolution disputes. The Jenkins Complaint alleged that Miller’s “lead attorneys were Dean of the [Liberty] Law School Mathew Staver, and Rena Lin-devaldsen, a law professor there.” Jenkins Compl. ¶22. In April 2007, Miller and Jenkins’ civil union was dissolved after a final, contested hearing at which Miller swore to “comply with court orders” regarding Jenkins’ contact with Isabella. Jenkins Compl. ¶ 23. Miller complied with many such court orders throughout 2007, but in the spring of 2008 she moved with Isabella to Lynchburg, Virginia, joined Thomas Road Baptist Church (“TRBC”), and thereafter was “counseled by church members and pastors not to allow contact between Isabella and Janet Jenkins.” Jenkins Compl. ¶¶ 24-25. TRBC allegedly provided Miller “with housing, a job [at Liberty Christian Academy,] and a vehicle.” Jenkins Compl. ¶ 25. According to the Jenkins Complaint, “Liberty University is held out as a ‘related ministry’ of Thomas Road Baptist Church,” but the church is a separate corporation in Virginia. Jenkins Compl. ¶ 16.
At TRBC, Miller developed a friendship with TRBC member Linda Wall, who allegedly agreed Miller should “flee with Isabella” and later helped to organize the “Protect Isabella Coalition [ (“PIC”) ] ... to prevent court ordered contact between Isabella Miller-Jenkins and Janet Jenkins.” Jenkins Compl. ¶¶ 22, 26-27. “Upon information and belief,” the Jenkins Complaint alleged that “President of Liberty University, Jerry Falwell, Jr. donated substantial sums to the PIC to enable it to produce television and radio commercials condemning the parent-child contact between Janet Jenkins and Isabella Miller-Jenkins as an act of tyranny.” Jenkins Compl. f 27. Miller’s “attorneys had established a Facebook site and other social media to solicit donations to their organization on behalf of Lisa Miller, and the Facebook site was also used to promote the activities of Lisa Miller and the PIC.” Jenkins Compl. ¶ 27.
In 2009, after Miller defied various court orders regarding visitation between Jenkins and Isabella, motions were filed and hearings were held in the Vermont and Virginia courts on the future status of Isabella’s custody and on whether to hold Miller in contempt. Jenkins Compl. ¶¶ 28-31. Allegedly, “by the late summer of 2009, Lisa Miller and her co-conspirators had devised a plan to kidnap Isabella and avoid detection by infiltrating the Beachy Amish-Mennonite Christian Brotherhood to enable [Miller’s] abduction of Isabella.” Jenkins Compl. ¶ 34. On August 25, 2009, a Virginia court held Miller in contempt and “fined her $100 per day for any future days of missed contact” between Isabella and Jenkins. Jenkins Compl. ¶ 31. Miller appeared at the hearing and held a press conference, at which her attorneys Staver and Lindevaldsen were present. On September 4, 2009, after a hearing at which Miller’s attorneys appeared by telephone, a Vermont court ordered contact between Jenkins and Isabella from September 25, 2009 until September 27, 2009. Jenkins Compl. ¶ 32.
Beginning in late May 2009, Miller allegedly began making contact with individual defendants who were involved with Response Unlimited, Inc., and the Beachy Amish-Mennonite Christian Brotherhood (hereinafter “Brotherhood”) to arrange transportation and living arrangements for herself and Isabella outside of the United States. This included initially making contact in May 2009 with Philip Zodhiates (“Zodhiates”) at Response Unlimited, Inc., and on September 21, 2009, being transported to the Canadian border, in disguise, by Zodhiates. Jenkins Compl. ¶¶ 29, 34-36. Zodhiates allegedly also conspired with the Brotherhood to purchase plane tickets and arrange transportation from Canada to Nicaragua, where Miller and Isabella would take up secret residence with the Brotherhood. Jenkins Compl. ¶¶ 36-39. Jenkins alleged she had not seen or heard from Isabella since Isabella was taken in 2009. Jenkins Compl. ¶ 40.
None of the individual defendants who allegedly aided Miller in taking Isabella to Nicaragua were alleged to have been acting as agents or employees of Liberty University. The Jenkins Complaint drew a few connections between these defendants and Liberty University. First, although the complaint acknowledged that Staver and Lindevaldsen “have at all times maintained that they did not know [Miller’s] location ... [and] that she simply stopped communicating with them and disappeared,” the Jenkins Complaint suggested that Staver, and perhaps Lindevaldsen, communicated with Philip Zodhiates as Zo-dhiates returned from taking Miller and Isabella to the Canadian border:
[P]hone records ... showed phone calls made from Philip Zodhiates’s cell phone between 1:28pm and 1:30pm on September 22, 2009, to a cell phone with an Orlando area code that is registered to Liberty Counsel, a landline registered to Liberty Counsel, and a landline registered to Liberty University. Mathew Staver, Dean of Liberty University, splits his time between Lynchburg, Virginia and Orlando, Florida. At the time that the calls were made, Philip Zodhi-ates was still en route back to Virginia after depositing Lisa Miller and Isabella near the Canadian border.
Jenkins Compl. ¶¶ 57-58.
The Jenkins Complaint also alleged on information and belief that “law school employees who spoke to Victoria [Hyden/Zho-diates] about Lisa Miller’s whereabouts were too intimidated to come forward to law enforcement for fear of angering Dean Staver [but not Liberty] and losing their jobs.” Jenkins Compl. ¶ 59. Hyden/Zho-diates allegedly knew Miller’s whereabouts, but was still employed by Liberty Law School as of November 2012. In contrast, while Miller and Isabella were missing, “Dean Staver fired several members of the admissions and financial aid departments who were under his supervision,” and Staver and Lindevaldsen pursued Miller’s appeals through 2010, “stating that they had advance instructions from Lisa Miller as to her wishes for the ongoing litigation.” Jenkins Compl. ¶ 59.
Otherwise, the Jenkins Complaint tied Liberty to Isabella’s disappearance through general allegations directed at all of the defendants and through specific allegations involving “Victoria Hyden f/k/a Victoria Zhodiates” (hereinafter “Victoria Hyden” or “Hyden”). Jenkins Compl. ¶ 13. Victoria Hyden was identified as an “employee and agent of both Liberty University, Inc., and its related ministry Thomas Road Baptist Church, Inc., and Response Unlimited, Inc.,” Zhodiates’ daughter, “an employee of Response Unlimited, Inc., and also a ‘student worker’ at Liberty University.” Jenkins Compl. ¶¶ 13, 41, 49. The Jenkins Complaint alleged on information and belief that in 2009, Hyden:
[S]ent an email ... to her coworkers at the law school requesting donations for supplies to send to Lisa Miller to enable her to remain outside the country. Lisa Miller’s attorney, Matthew Staver was the Dean of the Law school and Ms. Zodhiates’s boss.... On September 20, 2009, both Philip Zodhiates and Victoria Hyden called Lisa Miller’s father, Terry Miller in Tennessee to assist in arranging her and Isabella’s transportation from a Walmart parking lot in Lynch-burg, Virginia to Waynesboro, Virginia, from whence they would depart for Canada and Nicaragua the next day.
Jenkins Compl. ¶ 41. Allegedly, Victoria Hyden also “knew of Lisa Miller’s whereabouts.” Jenkins Compl. ¶ 59.
The Jenkins Complaint also alleged that Staver and Lindevaldsen publicly advocated for Miller outside their roles as legal counsel. Lindevaldsen allegedly founded and administrated a “Facebook site called ‘Only One Mommy’ ... to solicit donations and support for the case.” Jenkins Compl. ¶ 43. “[Staver and Lindevaldsen] also routinely instructed their Law School students that the correct course of action for a person in Lisa Miller’s situation would be to engage in ‘civil disobedience’ and defy court orders.” Jenkins Compl. ¶ 47.
After alleging these activities by Staver and Lindevaldsen, the Jenkins Complaint described public statements made by pastors and members of TRBC regarding civil disobedience and the Miller case, and concluded:
Hence, Defendants TRBC and its related ministry Liberty University encouraged its agents to disregard state laws governing parental rights, particularly Vermont’s law giving rights to members of same-sex families. The TRBC and Liberty University through its public declaration promoted, condoned and explicitly ratified its agent’s tortuous, racketeering activity. These agents and employees have followed this direction, making TRBC and Liberty University liable in respondeat superior for the consequences.
Jenkins Compl. ¶ 149.
Finally, Lindevaldsen published a book entitled Only One Mommy: A Woman’s Battle for Her Life, Her Daughter, and Her Freedom: The Lisa Miller Story, about Miller and the case, “citing portions of Lisa Miller’s personal diaries which Lin-devaldsen has stated were entrusted to her before Lisa Miller disappeared.” Jenkins Compl. ¶ 160. Lindevaldsen and Staver promoted this book on radio and television, and Lindevaldsen publicly criticized law enforcement and the federal government for their pursuit of Miller and Isabella. Jenkins Compl. ¶ 160.
Based on these allegations, the Jenkins Complaint then generally alleged that Liberty conspired to kidnap Isabella, racketeered to kidnap Isabella, and conspired to violate Jenkins and Isabella’s civil rights:
Based on the foregoing, all of the Defendants named herein, in both their individual capacities and as agents of TRBC, Liberty University, Response Unlimited, Inc., and CAM are liable for conspiring with Lisa Miller to kidnap Isabella Miller-Jenkins, assure her continued detention outside the State of Vermont, and for conspiring with Kenneth Miller to participate in the affairs of the [Brotherhood] through a pattern of racketeering activity. Defendants are also liable for conspiring to violate Janet Jenkins’ and Isabella Miller Jenkins’ rights to a parent-child relationship on account of Isabella having two mothers instead of a mother and a father....
Jenkins Compl. ¶ 162. In each count, the Jenkins Complaint alleged that either Lisa Miller or Kenneth Miller “did conspire with, and was aided and abetted by[, inter alia,] ... Victoria Hyden, f/k/a Victoria Zodhiates, individually and as agent of Response Unlimited, Inc,, [sic] and Liberty University, ... Thomas Road Baptist Church and its related ministry Liberty University.” Jenkins Compl. ¶¶ 64, 72, 75. Liberty was thus generally implicated alone and through its alleged agent Hyden, in Count I (Intentional Tort of Kidnapping), Count III (Violation of RICO), and Count IV (Conspiracy to Violate Civil Rights).
As a result of these legal violations, the Jenkins Complaint alleged that Jenkins suffered “extreme emotional distress and the loss of her daughter’s companionship,” has “incurred legal fees and lost business as a result of having to close her daycare center in order to attend contempt and other Court hearings, an[d] meetings with law enforcement necessary to locate her daughter ... [and] has also been unable to collect court ordered fines.” Jenkins Compl. ¶¶ 78-79.
Isabella was alleged to have suffered “emotional distress as a result of the abduction,” including from “living in isolation and having a difficult time,” with her “freedom of movement severely restricted by the [Brotherhood],” and experiencing a “standard of living ... far below what even the poorest children in the United States experience.” Jenkins Compl. ¶ 80. Isabella also allegedly suffered “the loss of emotional and financial support from her mother, Janet Jenkins,” including “child support from one or both parents based on her needs and best interests,” which used to be “$250 per month.” Jenkins Compl. ¶ 81. The Jenkins Complaint also alleged in 2012 that Isabella was “currently being deprived of an education, medical and dental care and the support of her extended family, including grandparents Ruth and Claude Jenkins. All of these factors currently and will in the future result in an injury to Isabella’s property and future business and employment.” Jenkins Compl. ¶ 81.
II. Legal Standard
A. Summary Judgment
Federal Rule of Civil Procedure 56(a) provides that a court should grant summary judgment (or partial summary judgment) “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” “As to materiality ... [o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In order to preclude summary judgment, the dispute about a material fact must be “ ‘genuine,’ that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. See also JKC Holding Co. v. Washington Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir.2001). However, if the evidence of a genuine issue of material fact “is merely colorable or is not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 250, 106 S.Ct. 2505. In considering a motion for summary judgment under Rule 56, a court must view the record as a whole and draw all reasonable inferences in the light most favorable to the nonmoving party. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322-24,106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir.1994).
When faced with cross-motions for summary judgment, the standard is the same. The court must consider “each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir.2003) (quotations omitted). If the court finds that there is a genuine issue of material fact, both motions must be denied. “But if there is no genuine issue and one or the other party is entitled to prevail as a matter of law, the court will render judgment.” Trigo v. Travelers Commercial Ins. Co., 755 F.Supp.2d 749, 752 (W.D.Va.2010).
B. Virginia Insurance Law
This insurance contract dispute is before the Court under its diversity jurisdiction, and therefore state law will apply. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Virginia is the forum state, so its choice-of-law rules govern and mandate that “generally, the law of the place where an insurance contract is written and delivered controls issues as to coverage.” Pennsylvania Nat. Mut. Cas. Ins. Co. v. Block Roofing Corp., 754 F.Supp.2d 819, 822 (E.D.Va.2010) (citing Capitol Environmental Servs., Inc. v. North River Ins. Co., 536 F.Supp.2d 633, 639 (E.D.Va.2008) and Buchanan v. Doe, 246 Va. 67, 431 S.E.2d 289, 291 (1993)). Here, the parties do not dispute that the contract was delivered in Virginia, nor that Virginia law governs this dispute over its terms.
Virginia applies the “Eight Corners Rule” to determine whether an insurer has a duty to defend its insured. This rule “requires a court to compare the four corners of the insurance policy against the four corners of the underlying complaint.” Id. at 822-23. A duty to defend “arises whenever the complaint [against the insured] alleges facts and circumstances, some of which, if proved, fall within the risk covered by the policy” or would be “potentially covered by the policy.” See id.; VEPCO v. Northbrook Property & Cas. Ins., 252 Va. 265, 475 S.E.2d 264, 265 (1996) (quoting Lerner v. Safeco, 219 Va. 101, 245 S.E.2d 249, 251 (1978)).
A burden-shifting framework governs duty to defend disputes. First, the insured must establish a prima facie case that coverage should be triggered. Block, 754 F.Supp.2d at 823 (citing Maryland Cas. Co. v. Cole, 156 Va. 707, 158 S.E. 873, 876 (1931)). “Yet this burden is not especially onerous since the insurer must defend unless it clearly appears from the initial pleading the insurer would not be liable under the policy contract for any judgment based upon the allegations.” Id. If the insured meets that initial burden, the insurer must then prove any policy exclusions should apply to bar coverage. Id. ,
Finally, courts construing insurance contracts in Virginia must “give the language its plain and ordinary meaning and enforce the policy as written,” if that language “is clear and unambiguous.” Id. Policy provisions are not ambiguous simply because the parties disagree about their meanings, but only if the language is “capable of more than one reasonable meaning,” in context. Id. For unambiguous provisions, “[w]ords that the parties used are normally given their usual, ordinary and popular meaning,” such that “[n]o word or clause in the contract will be treated as meaningless if a reasonable meaning can be given to it,” with the “presumption that the parties have not used words needlessly.” City of Chesapeake v. States Self-Insurers Risk Retention Grp., Inc., 271 Va. 574, 628 S.E.2d 539, 541 (2006). In Virginia, any ambiguities must be construed against the insurer. Block, 754 F.Supp.2d at 823 (citing Craig v. Dye, 259 Va. 533, 526 S.E.2d 9 (2000)). Exclusionary language is also “construed most strongly against the insurer and the burden is upon the insurer to prove that an exclusion applies. Reasonable exclusions not in conflict with statute will be enforced, but it is incumbent upon the insurer to employ exclusionary language that is clear and unambiguous.” Am. Reliance Ins. Co. v. Mitchell, 238 Va. 543, 385 S.E.2d 583, 585 (1989) (citations omitted).
III. Discussion
The parties do not dispute the content of the Jenkins Complaint or the content of the insurance policies at issue. Whether these undisputed material facts give rise to Hanover’s duty to defend is a matter of law, which this Court will interpret in the context of the Jenkins Complaint and the contracts at issue.
A. 2009-2010 CGL and CGL Umbrella Policies
The CGL Policy provides coverage for claims made against Liberty for bodily injury, property damage, and personal or advertising injury arising from an occurrence that took place during the policy period, from February 2009 through February 2010. J.A. Ex. B. Under the CGL Policy, “bodily injury” is defined as “bodily injury, disability, sickness or disease sustained by a person, including death resulting from any of these at any time. ‘Bodily injury’ includes mental anguish or other mental injury resulting from bodily injury.” CGL Policy, J.A. Ex. B, at HAIC-0189. “Property damage” means “[physical injury to tangible property, including all resulting use of that property,” or “[floss of use of tangible property that is not physically injured.” CGL Policy, J.A. Ex. B, at HAIC-0210-HAIC-0211. “ ‘Occurrence’ means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” CGL Policy, J.A. Ex. B, at HAIC-0197. The CGL Policy excludes from coverage “ ‘Bodily injury’ or ‘property damage’ expected or intended from the standpoint of the insured.” CGL Policy, J.A. Ex. B, at HAIC-0198.
The CGL Policy also provides coverage for “sums that the insured becomes legally obligated to pay as damages because of ‘personal and advertising injury’ to which [the CGL Policy] applies.” CGL Policy, J.A. Ex. B, at HAIC-0201. “Personal and advertising injury” must be “caused by an offense arising out of [Liberty’s] business,” defined as “injury including consequential ‘bodily injury’, arising out of one or more of the following offenses:”
a. False arrest, detention, or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf o fits owner, landlord or lessor;
d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services;
e. Oral or written publication, in any manner, of material that violates a person’s right of privacy;
f. The use of another’s advertising idea in your ‘advertisement’; or
g. Infringing upon another’s copyright, trade dress or slogan in your ‘advertisement.’
CGL Policy, J.A. Ex. B, at HAIC-0201-HAIC-0202, HAIC-0210. Coverage for personal and advertising injury is excluded under the “Knowing Violation of Rights Of Another” exclusion if that injury was “caused, by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict ‘personal and advertising injury.’ ” CGL Policy, J.A. Ex. B, at HAIC-0202. Personal and advertising injury “arising out of a criminal act committed by or at the direction of the insured ” is also excluded from coverage in the “Criminal Acts” exclusion. CGL Policy, J.A. Ex. B, at HAIC-0202.
Finally, the 2009 CGL Policy contains a “separation of insureds” clause that provides:
Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage part to the first Named Insured, this insurance applies:
a. As if each Named Insured were the only Named Insured; and
b. Separately to each insured against whom claim is made or ‘suit’ is brought.
CGL Policy, J.A. Ex. B, at HAIC-0208.
The CGL and CGL Umbrella Policies contain two different coverage provisions. The first is Coverage A, under which Liberty is insured for “bodily injury” or “property damage” related to an “occurrence” that is not excluded as an expected or intended occurrence. Coverage B provides separate coverage for “ ‘personal and advertising injury’ caused by an offense arising out of [Liberty’s] business,” and not excluded as having been caused or directed by Liberty’s knowing violation of the rights of another or by Liberty’s commission or direction of criminal acts. CGL Policy, J.A. Ex. B, at HAIC 0201, HAIC-0202, HAIC-0210.
1. Coverage A of the CGL Policy
a) “Bodily Injury” under Coverage A of the CGL Policy
The 2009 CGL and CGL Umbrella policies define “bodily injury” as: “bodily injury, disability, sickness or disease sustained by a person,” including “mental anguish or other mental injury resulting from bodily injury.” CGL Policy, J.A. Ex. B, at HAIC-0189 (emphasis added). Hanover argues the Complaint does not allege covered bodily injury, only non-qualifying emotional distress and physical deprivation that allegedly occurred outside the policy period.
As of November 26, 2012, the Jenkins Complaint alleged that: “on information and belief, Isabella is currently being deprived of ... medical and dental care.” J.A. Ex. A, at 17; Jenkins Compl. ¶ 81. The CGL Policy defines bodily injury as “bodily injury, disability, sickness or disease sustained by a person, including death resulting from any of these at any time. ‘Bodily injury’ includes mental anguish or other mental injury resulting from bodily injury.” CGL Policy, J.A. Ex. B, at HAIC-0189. Hanover is correct that the CGL Policy, under Virginia law and by its terms, excludes coverage for emotional distress or other emotional injury not “resulting from bodily injury.” CGL Policy, J.A. Ex. B, at HAIC-0189 (emphasis added). Federal courts have long found that, under Virginia law, insurance contracts providing coverage for “bodily injury” do not cover emotional distress. See, e.g., West American v. Isle of Wight, 673 F.Supp. 760, 765 (E.D.Va.1987) (‘“bodily injury’ encompasses ... actual physical harm ... but not emotional distress-”); American v. Church Schools, 645 F.Supp. 628, 632-33 (E.D.Va.1986) (“In giving the ‘bodily injury’ coverage its plain meaning, it simply does not cover the ... claim for purely emotional injury.”). The wording of the CGL Policy bolsters this general conclusion by specifying exactly when coverage for “bodily injury” would encompass coverage for “mental anguish or other mental injury;” that is, when the emotional distress “resultfs] from bodily injury.” CGL Policy, J.A. Ex. B, at HAIC-0189. Liberty’s contention that emotional distress is commonly encompassed by the definitions of “sickness or disease” thus proves unavailing.
Hanover is also correct that the alleged deprivations of medical and dental care, standing alone, do not qualify as bodily injuries under the policies at issue. In Rockingham Mutual Insurance Company v. Davis, 58 Va.Cir. 466, 2002 WL 737474 (Va.Cir.Ct.2002), a Virginia Circuit Court found that allegations claiming a man forcefully grabbed a woman’s arm and caused her momentary pain sufficiently alleged qualifying “bodily injury” under an insurance policy that defined “bodily injury” as “bodily harm, sickness or disease, including required care, loss of services and death that results.” Id. at *3. The court found no “requirement of permanency or external manifestation; it is sufficient if physical pain is experienced.” Id. (emphasis added). As for the phrase’s plain meaning, Black’s Law Dictionary defines “bodily injury” as “[p]hysieal damage to a person’s body.” Black’s Law Dictionary (9th ed.2009). Likewise, the common definitions of “disease,” “disability,” and “sickness” all refer to physical conditions that affect a person’s ability to function in a normal, healthy manner.
A deprivation of medical and dental health care, especially over time, could lead to or result in physical damage to a person’s body, or to an unhealthy physical condition or illness. But the Jenkins Complaint did not allege these deprivations led to any specific physical damage, pain, or harm to Isabella. Therefore, the Jenkins Complaint did not allege “bodily injury” as defined under Virginia law and as understood in its plain and ordinary meaning.
b) “Property Damage” under Coverage A of the CGL Policy
Property damage under the CGL Policy means “physical injury to tangible property” or “loss of use of tangible property that is not physically injured.” CGL Policy, J.A. Ex. B, at HAIC-0210-HAIC-0211. The Jenkins Complaint alleged Jenkins and Isabella suffered “injury to their business or property, including legal fees, investigative fees, court costs, and unpaid child support obligations and deprivation of personal property.” Jenkins Compl. ¶ 73 (emphasis added). Jenkins also allegedly lost business from closing the daycare she owned to attend court proceedings involving Isabella’s custody, among other economic losses. Jenkins Compl. ¶ 79. The Jenkins Complaint further speculated that Isabella’s “freedom of movement is severely restricted by the Nicaragua Brethren and Lisa Miller and that her standard of living is far below what even the poorest children in the United States experience.” Jenkins Compl. ¶ 80.
In Virginia, “any ‘potentiality’ that the plaintiffs allegations may state a claim covered by the insurance policy triggers the insurance company’s duty to defend.” Premier Pet Prods., LLC v. Travelers Property Cas. Co., 678 F.Supp.2d 409, 416 (E.D.Va.2010). Black’s Law Dictionary defines “tangible property” as “[property that has physical form and characteristics.” Black’s Law Dictionary (9th ed.2009). In contrast, “intangible property” is “property that lacks a physical existence ... including] stock options and business goodwill.” Black’s Law Dictionary (9th ed.2009). “[T]angible personal property” encompasses “[c]orporeal personal property of any kind; personal property that can be seen, weighed, measured, felt, or touched, or is in any other way perceptible to the senses, such as furniture, cooking utensils, and books.” Black’s Law Dictionary (9th ed.2009).
I find that the Jenkins Complaint alleged that Isabella suffered a “deprivation of personal property” that qualifies as a “loss of use of tangible property that is not physically injured” under the CGL Policy. From the facts alleged in the Jenkins Complaint, it is clear Isabella used to possess certain items in the United States, like books, toys, clothing, and other material goods, that she can no longer use in Nicaragua. See, e.g., Jenkins Compl. ¶42 (alleging TRBC elders “packed up the personal belongings of Lisa Miller in two bags” after she fled the United States with Isabella and had them delivered to Miller in Nicaragua). Isabella lost the use of this tangible personal property when she was abducted in September 2009. The Jenkins Complaint therefore potentially stated a claim for covered tangible personal property loss that would fall within the policy period if it resulted from an “occurrence” within that period. See CGL Policy, J.A. Ex. B, at HAIC-0211 (“All such loss of use [of tangible property that is not physically injured] shall be deemed to occur at the time of the ‘occurrence’ that caused it.”).
At the very least, Liberty has made a prima facie case that coverage should be triggered under the Jenkins Complaint. See Block, 754 F.Supp.2d at 823. Hanover will have a duty to defend Liberty against the Jenkins Complaint if that complaint stated a non-excluded “occurrence” under the CGL Policy. See Nat’l Fruit Prod. Co., Inc. v. Fireman’s Fund Ins. Co., 178 F.3d 1285, at *3 (4th Cir.1999) (“if coverage is in doubt, the insurance company must defend,” unless “it is clear that an insurance company would not be liable under its contract for any judgment based upon the assertions in the underlying complaint”).
c) “Occurrence” under Coverage A of CGL Policy
The CGL Policy defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” CGL Policy, J.A. Ex. B, at HAIC-0197. Virginia law has interpreted “occurrence” as synonymous with “accident” and found the terms “refer to an incident that was unexpected from the viewpoint of the insured.” AES Corp. v. Steadfast Ins. Co., 283 Va. 609, 725 S.E.2d 532, 536 (2012). A court should analyze:
[N]ot whether the action undertaken by the insured was intended, but rather whether the resulting harm is alleged to have been reasonably anticipated or the natural or probable consequence of the insured’s intentional act.
Id. (emphasis added). Hanover therefore has a duty to defend if the Jenkins Complaint alleged acts by Liberty that would naturally and probably result in the alleged harm to Isabella and Jenkins. Put another way, this Court determines whether Liberty was alleged to have committed acts it could have reasonably anticipated would result in the abduction of Isabella and resulting harm to both her and Jenkins.
Virginia law holds that “an intentional act is neither an ‘occurrence’ nor an ‘accident’ and therefore is not covered by the standard policy.” AES Corp. v. Steadfast Ins. Co., 283 Va. 609, 725 S.E.2d 532, 536 (2012). But it draws a distinction, noting that “even though the insured’s action starting the chain of events was intentionally performed, when the alleged injury results from an unforeseen cause that is out of the ordinary expectations of a reasonable person, the injury may be covered by an occurrence policy provision.” Id. Overall, this means that:
[T]he dispositive issue in determining whether an accidental injury occurred is not whether the action undertaken by the insured was intended, but rather whether the resulting harm is alleged to have been reasonably anticipated or the natural or probable consequence of the insured’s intentional act. For coverage to be precluded under a CGL policy because there was no occurrence, it must be alleged that the result of an insured’s intentional act was more than a possibility; it must be alleged that the insured subjectively intended or anticipated the result of its intentional act or that objectively, the result was a natural or probable consequence of the intentional act.
Id. (internal citations omitted).
Since the Jenkins Complaint made claims for only intentional torts, two issues determine whether Liberty’s alleged actions qualify as occurrences under the policy. First: whether the Jenkins Complaint alleged sufficient intentional acts committed directly by Liberty, such that it could have anticipated the harm to Isabella and Jenkins. If it could have reasonably anticipated that harm based on its alleged direct actions, there would be no occurrence under the CGL Policy. Second: whether Liberty’s agents and employees’ expectations can be imputed to Liberty if sufficient direct expectations and conduct are not attributable. In other words, if Liberty’s agents and employees were alleged to have committed intentional torts, the issue is whether those agents’ reasonable anticipations of harm may be imputed to Liberty such that there was no occurrence under the CGL Policy.
Hanover analogizes the Jenkins Complaint to that in National Fruit Prod. Co., Inc. v. Fireman’s Fund Insurance Company, 178 F.3d 1285, 1999 WL 270033, at *2-3, *5 (4th Cir.1999). In National Fruit, the complaint alleged intentional sexual harassment and assault by an employee for which an employer would be held liable. Id. at *5. The Fourth Circuit found that since the complaint alleged only (a) intentional conduct by an employee, and (b) liability by the employer for that intentional conduct, defendant insurers had no duty to defend or indemnify. There was no “occurrence” or “accident” under that policy when the conduct alleged was entirely intentional, found the Fourth Circuit, noting the complaint did not “allege that [plaintiff] acted negligently in a breach of duty.” Id. at *5. Instead, the complaint was “remarkably void of the type of ‘knew or should have known’ language that would put [the insurer] on notice that [the claim] might sound in negligence.” Id. at *5.
Likewise, in State Farm Fire & Casualty Company v. Frank, 2011 WL 1883987 (E.D.Va.2011), a court found that:
[B]ecause intentional acts are neither ‘accidents’ nor ‘occurrences,’ such conduct does not trigger a liability insurer’s duty to defend. Claims of respondeat superior asserted against an employer for an employee’s intentional acts likewise do not impose a duty to defend.
Id. at *10. If the complaint had alleged negligent hiring or retention of the employee, that could have triggered coverage, the State Farm court found. Id. Accord Am. & Foreign Ins. Co. v. Church Sch. in Diocese of Virginia, 645 F.Supp. 628, 633 (E.D.Va.1986) (finding “allegations of intentional torts are not covered and impose no duty to defend” under a policy requiring an “occurrence,” but finding new allegations alleging negligence, despite questions about their validity, stated claim for an “occurrence”).
The actions of an employee may be imputed to an employer under an insurance contract, such that in some cases an insurance company would have no duty to defend an employer for claims based on the intentional torts of its employees. See, e.g., National Fruit, 1999 WL 270033, at *5; State Farm Fire & Casualty Co. v. Frank, 2011 WL 1883987, at *10; Am. & Foreign Ins. Co. v. Church Sch. in Diocese of Virginia, 645 F.Supp. at 633. Yet, the “separation of insureds” provision of the CGL Policy prevents this Court from imputing the intentions of Liberty’s alleged agents and employees Hyden, Staver, or Lindevaldsen to Liberty. Even without that provision, the Jenkins Complaint alleged insufficient facts to hold Liberty vicariously liable for Hyden, Staver, or Lindevaldsen’s actions under agency or respondeat superior theories. The Jenkins Complaint also did not sufficiently allege that Liberty was directly liable for the intentional torts, as is required to avoid the duty to defend. The Jenkins Complaint does allege facts giving rise to a potentially covered claim under the policy: an incident that was unexpected from Liberty’s viewpoint, and resulting harm that Liberty could not have reasonably anticipated. Therefore, the Jenkins Complaint alleged an occurrence under the CGL Policy. See CGL Policy, J.A. Ex. B, at HAIC-0197; AES Corp., 725 S.E.2d at 536.
1) “Separation of Insureds” Provision
The CGL Policy contains a “separation of insureds” provision which states:
Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage part to the first Named Insured, this insurance applies:
a. As if each Named Insured were the only Named Insured; and
b. Separately to each insured against whom claim is made or ‘suit’ is brought.
CGL Policy, J.A. Ex. B, at HAIC-0208. An “insured” under the CGL Policy is defined to include “ ‘volunteer workers’ only while performing duties related to the conduct of your business, or your ‘employees’, other than either your ‘executive officers’ ... but only for acts within the scope of their employment by you while performing duties related to the conduct of your business.” CGL Policy, J.A. Ex. B, at H-0205.
This Court could find no Virginia precedent interpreting a separation of insureds provision in an insurance contract. However, a separation of insureds clause is a common fixture in many contemporary insurance contracts, and appears to derive from a “severability of interests” clause that used to appear frequently in insurance contracts. See generally Davis v. Nat’l Indem. Co., 135 Ga.App. 793, 219 S.E.2d 32, 34 (1975) (noting severability of interests provisions in insurance contracts were inserted to make it “clear and certain that the named insured and the omnibus or additional insureds were to be treated separately, and that the exclusions or other coverage tests should apply to the particular insureds seeking coverage.”); Sacharko v. Ctr. Equities Ltd. P’ship, 2 Conn.App. 439, 479 A.2d 1219, 1222 (Conn.1984) (“Severability of interests provisions were adopted by the insurance industry to define the extent of coverage afforded by a policy issued to more than one insured.”). Virginia courts have interpreted “severability of interests” provisions, and the case law provides some insights about how Virginia law might treat a modern separation of insureds clause. See Bankers & Shippers Ins. Co. of New York v. Watson, 216 Va. 807, 224 S.E.2d 312, 316 (1976); Transit Casualty Company v. Hartman’s, Incorporated, 218 Va. 703, 239 S.E.2d 894, 895-97 (1978).
Two decisions from the Supreme Court of Virginia illustrate that an exclusion in an insurance contract might not apply to one of multiple insureds because a sever-ability of interests clause in the contract would require each insured to be considered separately for each exclusion. In Bankers & Shippers Insurance Company v. Watson, 216 Va. 807, 224 S.E.2d 312, 316 (1976), the court found the severability of interests clause meant that the phrase “the insured” in an insurance policy meant “the person claiming coverage.” The named insured sought coverage for wrongful death claims of those who died in a vehicle struck by the named insured’s employee, who was driving the named insured’s tractor trailer at the time. Id. at 808-09, 224 S.E.2d 312. A provision of the named insured’s policy excluded him from coverage in part because the named insured owned the tractor trailer. Id. at 315, 317, 224 S.E.2d 312. The Supreme Court of Virginia found the insurance company was nevertheless liable for the wrongful death claims because the named insured’s employee claimed coverage. Id. at 815, 224 S.E.2d 312. The severability of interests clause meant that the employee had to be considered separately, and the exclusion for owners of the tractor trailer did not apply to the employee. Id. at 814-15, 224 S.E.2d 312.
In Transit Casualty Company v. Hartman’s, Incorporated, 218 Va. 703, 239 S.E.2d 894, 895-97 (1978), the Supreme Court of Virginia declined to find that the “severability of interests” provision in an insurance contract allowed an owner of property to collect from its liability insurer for damages its property sustained in a collision between two of the named insured’s employees. Id. at 895. The owner of the property collected once for the damages from his collision insurance carrier, and that carrier sought to collect the money it had paid him from his separate liability insurance carrier after the negligent employee driver could not satisfy the debt. Id. The company claimed the liability carrier should cover the incident because the employee was an insured under the policy and did not own the tractor trailer involved in the collision; therefore, the exclusion would not apply to the employee and he would be covered under the policy. Id. at 895. Importantly, the court compared Transit Casualty’s facts with those of Bankers & Shippers before finding no coverage.
The court explained that its interpretation of the severability of interests clause in Bankers & Shippers
gave effect to the severability of interests clause by recognizing each insured as separate and distinct from every other insured qualifying as such under the policy. The result of this recognition ... is that an exclusion clause which refers to ‘the insured’ is limited in its application to the insured claiming coverage.
Id. at 896. That “fair” construction did not “enlarg[e] the obligations undertaken originally by the insurer,” but still allowed the “severability of interests clause to serve its designed purpose of making certain that, when a claim is asserted by a member of the public against a permissive user [of an automobile], the latter becomes ‘the insured,’ with respect to that claim, under the named insured’s liability insurance contract.” Id. at 897. Unlike the interpretation in Bankers v. Shippers, the court refused to find in Transit Casualty that the named insured’s collision insurance company could essentially recover under what was supposed to be a more limited liability policy in the name of the negligent employee, “permit[ting] a windfall” to the named insured and “enlarging] the obligations originally undertaken by the insurer.” Id.
Since Transit Casualty, courts in Virginia and other states have continued to interpret insurance contracts with sever-ability of interests provisions, and more recently separation of insureds clauses, to serve two goals: (1) to apply exclusions distinctly to each “insured” separately under the policy, regardless of whether another insured would be excluded; and (2) to ensure that when the contract seeks to limit the insurance company’s obligations, courts defer to the clearly expressed intent of the parties. For the first goal, courts carefully construe each possible insured separately under exclusions referring to “the insured,” resulting in coverage for named insureds for incidents caused by other insureds who would not receive coverage. See, e.g., Unigard Mut. Ins. Co. v. Argonaut Ins. Co., 20 Wash.App. 261, 579 P.2d 1015, 1018-19 (1978) (finding “the courts have uniformly considered [that] there are separate contracts with each of the insureds, [such that] an excluded act of one insured does not bar coverage for additional insureds who have not engaged in the excluded conduct,” and that parents were covered for the intentional torts of their son despite an intentional acts exclusion); Tri-S Corp. v. W. World, Ins. Co., 110 Hawai'i 473, 135 P.3d 82, 92 (2006) (finding in “accordance with the majority rule,” that “the insured” in a policy’s exclusion for bodily injury to an employee of an insured did not exclude coverage for an executive officer of the corporation, as he was considered a separate insured under the policy’s “separation of insureds” clause).
However, for the second goal, courts carefully read the language of policy exclusions. If an exclusion refers to “the insured,” and the contract contains a separation of insureds clause or a severability of interests clause, an individual insured may be covered despite another insured’s exclusion. But if the exclusion refers to “an insured” or “any insured,” courts often find that the exclusion of one insured can cause the exclusion of all insureds and a resulting lack of coverage under the policy. The district court in Pacific Insurance Company v. Catholic Bishop of Spokane, 450 F.Supp.2d 1186 (E.D.Wash.2006), carefully parsed this difference. Collecting cases, it found that when an exclusion referred to “ ‘the insured,’ coverage is only precluded when, in fact, the act proximately causing the injury was the direct and intentional wrongful act of the named insured seeking coverage.” Id. at 1202. In Pacific Insurance, a Catholic diocese received coverage under an occurrence-based comprehensive general liability policy, despite the alleged wrongful, intentional sexual abuse committed by its employee priests, also insureds under the policy. Id. at 1198-99, 1205. See also GEICO v. Moore, 266 Va. 155, 580 S.E.2d 823, 823, 830 (2003) (finding husband, co-insured and co-owner of automobile, could not recover on behalf of his wife for injuries he sustained due to his wife’s negligent driving, despite severability of interests clause, because policy excluded damages resulting from “personal injury to any insured”) (emphasis added); King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 188-92 (Tex.2002) (finding coverage for employer for negligent hiring, training, and supervision under occurrence-based policy, for damages resulting from intentional conduct of employees, due to a separation of insureds clause).
Overall, the cases show that when an insurance contract contains a severability of interests or separation of insureds clause, courts consider each insured separately under the contract in determining whether provisions excluding “the insured” from coverage apply to that particular insured. A named insured’s employees or agents can often be considered “insureds” under the insurance contract, resulting in their conduct being considered separately from that of the named insured. This can result in a named insured being covered despite the exclusion of those other insureds. Indeed, the United States Court of Appeals for the Fourth Circuit appears to be following this trend, as it recently found in an unpublished order that a separation of insureds clause
may require us to approach the question of coverage solely from [an employer’s] perspective. Given this approach, we may conclude the thefts were ‘accidents’ because [the employer] neither intended nor reasonably could have foreseen that its employees would engage in intentionally tortious conduct.
IFCO Sys. N. Am., Inc. v. Am. Home Assur. Co., 502 Fed.Appx. 342, 347 (4th Cir.2013) (unpublished). The Fourth Circuit certified a question to the Georgia Supreme Court in IFCO about how it should interpret a separation of insureds clause under an occurrence-based commercial general liability policy. At issue was whether an insurance company had a duty to defend an employer for intentional tort claims against its employees. The Fourth Circuit found it necessary to certify the question of Georgia law because the court was “required to address a novel issue of local law which is determinative in the case before [us].” Id. at 344-45, 347.
At the very least, the CGL Policy’s “separation of insureds” clause creates an ambiguity in the contract that this Court must and will construe in favor of Liberty, the insured. See Res. Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631, 636-37 (4th Cir.2005) (“A policy provision is ambiguous when, in context, it is capable of more than one reasonable meaning,” and “if an ambiguity exists, it must be construed against the insurer.”); IFCO, 502 Fed.Appx. at 346-47. The ambiguity is whether the expectations of Liberty’s agents and employees would be imputed to Liberty under the contract. If they were so imputed, Liberty should have reasonably anticipated or foreseen the incident of Isabella’s abduction. Hanover would have no duty to defend against the Jenkins Complaint under the CGL Policy in these circumstances, because Isabella’s abduction would not qualify as an “occurrence” under the CGL Policy. The “separation of insureds” clause could very well require this court to separate the intent of Liberty’s agents and employees from Liberty’s own, as in Pacific Insurance, King, and IFCO. I conclude that in the present circumstances, I must separate Liberty’s expectations from those of its tortfeasor employees. In the alternative, I construe this ambiguity regarding the “separation of insureds” clause in favor of Liberty, and I find that Hanover has a duty to defend Liberty under the CGL Policy, Coverage A, for occurrence-based property damage.
2) Allegations of Authorization, Scope of Employment, and Direct Liability
An employer can be held vicariously hable for the actions of its employees in respondeat superior, or for the actions of agents through the doctrines of agency. In Virginia, agency “is defined as a fiduciary relationship arising from ‘the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and the agreement by the other so to act.’ ” Hartzell Fan, Inc. v. Waco, Inc., 256 Va. 294, 505 S.E.2d 196, 200-01 (1998). A principal may manifest consent expressly, or authority may be implied “to the extent reasonably necessary for the agent to have in order to carry out his express authority, ... within the customs and usages of a trade, ... [or] in an emergency to protect the principal’s interest. The law may also imply actual authority from a course of conduct” in which the principal appears to manifest assent to the agent exercising powers not expressly granted. United States v. Fulcher, 188 F.Supp.2d 627, 635 (W.D.Va.2002). Liability in respondeat superior is limited to situations where an employee’s act “was within the scope of his employment, ie., was fairly and naturally incident to his employer’s business, was done while he was engaged upon his employer’s business, and was done with a view to further his employer’s interests.” Roughton Pontiac Corp. v. Alston, 236 Va. 152, 372 S.E.2d 147, 149 (1988). A principal “is bound by [its] agent’s previously unauthorized act if [it] ratifies the act by accepting its benefits with full knowledge of the relevant facts, or, if upon learning of the act, [it] fails to properly disavow it.” Kilby v. Pickurel, 240 Va. 271, 396 S.E.2d 666, 668-69 (1990) (internal citations omitted).
a. Insufficient allegations of vicarious liability for employees’ intentional torts
This case involves only conclusory allegations that tie Liberty to the actions of its alleged agents and employees. Although Hanover cites case law in which insurers had no duty to defend employers for the intentional sexual abuse torts of employees, those cases are inapposite. All the cases cited by Hanover involve sexual assaults and harassment perpetrated on one employee by another employee, or on a student by a teacher, in the school or workplace, and during the school or work day. See National Fruit, 1999 WL 27003B, at *2; State Farm Fire & Casualty Co. v. Frank, 2011 WL 1883987, at *1-2; Am. & Foreign Ins. Co. v. Church Sch. in Diocese of Virginia, 645 F.Supp. at 630. Clear ties of respondeat superior bound the employer-insured persons in those cases to the intentional torts of their employees, and imputation of their tortfeasor employees’ expectations followed as a natural consequence.
In contrast, the Jenkins Complaint alleged no facts supporting direct participation by Liberty itself in the intentional torts or conspiracies to commit intentional torts, in which Hyden, Staver, and Lindevaldsen were allegedly involved. Although the Jenkins Complaint claimed these persons acted as agents or employees of Liberty in committing intentional torts, it does so only in conclusory fashion and provides no facts to support allegations of vicarious liability. Hyden was alleged to be
a ‘student worker’ at Liberty University [who] ... [o]n information and belief ... sent an email [in 2009] to her coworkers at the law school requesting donations for supplies to send Lisa Miller to enable her to remain outside the country. Lisa Miller’s attorney, Matthew Staver was the Dean of the Law school and [Hyden’s] boss.... Hyden [also] called Lisa Miller’s father ... to assist in arranging her and Isabella’s transportation from a Walmart parking lot in Lynchburg, Virginia, to Waynesboro, Virginia, from whence they would depart for Canada and Nicaragua the next day.
Jenkins Compl. ¶41. Lindevaldsen and Staver allegedly represented Miller in Virginia and Vermont courts while working for Liberty University “and its related law firm, Liberty Counsel, LLC,” and “established a Facebook site and other social media to solicit donations to their organization on behalf of Lisa Miller, and the Facebook site was also used to promote the activities of Lisa Miller and the [Protect Isabella Coalition], whose mission included “preventing] court ordered contact” between Isabella and Jenkins. Jenkins Compl. ¶¶ 22, 27. “Upon information and belief, the President of Liberty University, Jerry Falwell, Jr. donated substantial sums to the [Protect Isabella Coalition] to enable it to produce television and radio commercials condemning the parent-child contact between Janet Jenkins and Isabella Miller-Jenkins as an act of tyranny.” Jenkins Compl. ¶ 27.
Furthermore, Staver and Lindevaldsen allegedly “routinely instructed their Law School students that the correct course of action for a person in Lisa Miller’s situation would be to engage in ‘civil disobedience’ and defy court orders.” Jenkins Compl. ¶ 47. TRBC members made public statements after Isabella’s disappearance, which were quoted in the Jenkins Complaint. The Jenkins Complaint followed those allegations by alleging that Liberty and TRBC were “[h]ence” liable for these actions as principals and employers because they
encouraged its [sic] agents to disregard state laws governing parental rights ... [and] through its [sic] public declaration promoted, condoned, and explicitly ratified its [sic] agent’s tortious, racketeering activity. These agents and employees have followed this dir