Sex abuse case not covered in policy

Tuesday, June 8, 2004 | 10:08 a.m.

SUN CAPITAL BUREAU

CARSON CITY -- The Nevada Supreme Court ruled Monday that a homeowner's liability insurance policy does not cover sexual misconduct.

The court said that the policy of Fire Insurance Exchange did not cover a case in which an adult child committed statutory sexual seduction with a 12-year-old neighbor girl.

Milton Hernandez, 19, who lived with his parents, Gonzalo and Maria Villalobos, pleaded guilty to four counts of statutory sexual seduction with the girl in Las Vegas.

The parents of the girl sued Hernandez and his parents on grounds they failed to supervise him. The Villaloboses assigned defense of the action to the Fire Insurance Exchange that wrote a homeowner's liability insurance policy on their residence.

District Judge Michael Douglas, who has since joined the Nevada Supreme Court, ruled the insurance policy covered the parents but that Hernandez was not insured.

The insurance policy obligated Fire Insurance Exchange to defend against and pay damages for lawsuits brought against the Villaloboses.

The Supreme Court, with Douglas not participating, ruled that the sexual seduction was an intentional act and not an occurrence as defined by the terms of the policy.

The court also said the policy specifically excludes coverage for any actual or alleged injury or medical expenses related to child molestation.

The court ordered the case back to District Court and ordered the court to enter a summary judgment in favor of Fire Insurance Exchange on grounds it was not obligated to defend or indemnify the Villaloboses.