Mississippi Court Holds No Coverage for Voyeurism Claim Under E&O Policy

In its recent decision in Tudor Ins. Co. v. Manchester Educ. Found., Inc., 2013 U.S. Dist. LEXIS 8458 (S.D. Miss. Jan. 22, 2013), the United States District Court for the Southern District of Mississippi had occasion to consider the application of an exclusion for bodily injury in a professional liability policy.

Tudor Insurance Company insured the Manchester Educational Foundation under an educational errors and omissions insurance policy.  Manchester operated the Manchester Academy in Yazoo, Mississippi.   During the time the Tudor policy was in effect, several former students brought suit for battery and invasion of privacy against the school, various administrators, and a teacher-coach whom the students claimed subjected them to unlicensed physical examinations and also spied on them while they were changing.  In a separate criminal proceeding, the perpetrator plead guilty to several counts of voyeurism and as a result was sentenced to fifteen years of probation and was required to register as a sex offender.

Tudor brought suit against Manchester and the various individual defendants, seeking a declaration that it had no coverage obligations in the underlying civil suit as a result of various policy exclusions, most notably an exclusion barring coverage for:

D.        any damages, whether direct, indirect or consequential, arising from or caused by, bodily injury, personal injury, sickness, disease or death, mental anguish or emotional distress[.]

Tudor settled with Manchester and each of the individual defendants with the exception of the perpetrator, who defaulted in the coverage action. 

Notwithstanding the default, the court considered the substantive coverage issue on Tudor’s motion for summary judgment, and agreed that the underlying civil suit constituted a claim falling wholly within the scope of the exclusion, noting that several courts, including the United States Courts of Appeals for the First and Fifth Circuits held similar exclusions applicable in analogous factual scenarios.  Winnacunnet Coop. Sch. Dist. v. Nat'l Union Fire Ins. Co., 84 F.3d 32 (1st Cir. 1996); Foreman v. Cont'l Cas. Co., 770 F.2d 487 (5th Cir. 1985).  As such, the court concluded that Tudor had no duty to defend or indemnify in connection with the underlying suit.