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UNITED STATES FID. & GUAR. CO. v. OPEN SESAME CHIL

April 29, 1993

UNITED STATES FIDELITY & GUARANTY COMPANY, a foreign corporation, Plaintiff,
v.
OPEN SESAME CHILD CARE CENTER, an Illinois not-for-profit corporation, Jane Doe, Parent and Next Friend of John Doe, a minor, Eladio Reyes, Tri-County Opportunities Council and Anthony Smith, Defendants.



The opinion of the court was delivered by: PHILIP G. REINHARD

 INTRODUCTION

 On September 30, 1992, plaintiff United States Fidelity & Guaranty Co. (USF&G) filed a two-count complaint against defendants Open Sesame Child Care Center (Open Sesame), an Illinois not-for-profit corporation; Jane Doe, Parent and Next Friend of John Doe, a minor; Eladio Reyes; Tri-County Opportunities Council (Tri-County); and Anthony Smith. USF&G is seeking declaratory relief pursuant to 28 U.S.C. § 2201 that it has no duty to defend and indemnify defendants in a pending state court action. This court has jurisdiction pursuant to 28 U.S.C. § 1332.

 USF&G has filed a motion for summary judgment pursuant to Fed. R. Civ. P. 56 against all defendants regarding both counts, to which defendants Open Sesame, Tri-County and Anthony Smith have responded. Open Sesame has filed a cross-motion for summary judgment pursuant to Rule 56. Defendants Tri-County and Anthony Smith have filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6).

 FACTS

 USF&G seeks declaratory relief regarding a special multi-peril insurance policy issued to Open Sesame and in effect between October 25, 1985, and October 25, 1986. At the center of USF&G's request for relief is a state court action. On May 30, 1991, Jane Doe, as parent and next friend of John Doe, a minor, filed an eight-count complaint against Reyes, Open Sesame, Tri-County and Smith in the circuit court of the 18th circuit, State of Illinois (the DuPage County lawsuit). *fn1" In this complaint, Jane Doe alleges Reyes, an employee of Open Sesame, molested the minor child during the summer of 1986 while at Open Sesame's day care center.

 After receiving notice of the DuPage County lawsuit, Open Sesame timely notified USF&G of the lawsuit and requested a defense and indemnification. By letter dated June 12, 1991, USF&G agreed to defend Open Sesame subject to a reservation of its rights under the policy. According to the insurance policy, USF&G promised to:

 
pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
 
A. bodily injury or
 
B. property damage
 
to which this insurance applies, caused by an occurrence, and the Company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage. . . .

 (See Complaint, Exh. A).

 The policy defines an "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured." (Complaint, Exh. A).

 CONTENTIONS

 USF&G contends the acts forming the basis for the DuPage County lawsuit do not constitute an "occurrence" as defined by the insurance policy because Reyes' sexual abuse, and all actions flowing therefrom, were intentional. USF&G also asserts that Reyes is not a named insured to the policy; therefore, it owes no duty to defend nor indemnify him in the state court action. Finally, USF&G asserts it is not ...


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