Insurance — Homeowners – Negligence & Loss of Services – Molestation – Duty to Defend & Indemnify

North Carolina Farm Bureau Mutual Insurance Co. v. Phillips (Lawyers Weekly No. 011-302-17, 13 pp.) (Donna Stroud, J.) Appealed from Wake County Superior Court (G. Bryan Collins Jr., J.) N.C. App.

Holding: Defendant John Doe 236’s claims against the defendant-homeowners are based on his allegations that defendant Beverly Phillips sexually molested Doe’s minor daughter while she was entrusted to the care of defendant Victoria Phillips. Since the insurance policy that plaintiff issued to the Phillipses says, “Bodily injury does not mean bodily harm … that arises out of … the actual, alleged or threatened sexual molestation of a person,” the claims raised by defendant Doe did not result from “bodily injury” as defined by the policy. Therefore, Doe’s action is not “a suit seeking damages” resulting “from bodily injury,” and plaintiff has no duty to defend or indemnify the Phillipses.

We reverse the trial court’s conclusion that there was coverage under the policy, and we remand for entry of a declaratory judgment that plaintiff has no duty to defend or indemnify the Phillipses.