Coverage Never Available to a Sexual Predator

Sexual Assault Is Not An “Occurrence” Because The Consequent Harm Is Always Intended By The Insured

A state court action asserted nine causes against various defendants including Lewis Croft, all based on Croft’s sexual abuse of his granddaughters from 1994 to 2007. Only two counts, negligent infliction of emotional distress and sexual assault, are asserted directly against Croft. Croft holds a homeowners policy with State Farm.

In State Farm Fire & Casualty Company v. Lewis Croft, CV 19-28-M-DLC, United States District Court For The District Of Montana Missoula Division (April 24, 2020) State Farm asked the USDC to declare that its homeowners policy provides no coverage for claims or damages sought against Lewis Croft in an underlying state court action.


State Farm undertook Croft’s defense under a reservation of rights. State Farm then filed sued seeking a declaration that there is no coverage in the underlying action because sexual assault is not an “occurrence” under the policy and because there is a coverage exclusion for “bodily injury” “which is either expected or intended by the insured” or “which is the result of willful and malicious acts of the insured.” For these reasons, State Farm seeks a declaration that it has no duty to defend or indemnify Croft in the underlying action.

On July 2, 2019, State Farm served process on Croft. Croft failed to answer. On December 24, 2019, the clerk entered default. On March 2, 2020, State Farm moved for default judgment.


A district court has discretion to enter default judgment. Under Federal Rule of Civil Procedure 55(b), a district court considering whether default judgment is appropriate should consider the following factors:

  1. the possibility of prejudice to the plaintiff,
  2. the merits of the claims,
  3. the sufficiency of the complaint,
  4. the amount of money at stake,
  5. the possibility of factual disputes,
  6. whether default is due to excusable neglect, and
  7. the policy favoring decisions on the merits.

The court accepted the factual allegations in the complaint as true.

Applying the required factors, the court noted that the first factor, the possibility of prejudice to the plaintiff, weighs in favor of granting default judgment. Because Croft has not answered the Amended Complaint, the Court’s failure to grant default judgment would leave State Farm without a remedy. The second and third factors inquire into the merits of the claim and the sufficiency of the complaint, both of which support entering default judgment. The Amended Complaint is certainly sufficient. The allegations in the Amended Complaint, taken as true, state meritorious claims.

The underlying action sought damages for harm caused by Croft’s sexual assault of his two granddaughters. State Farm’s Amended Complaint asserts that there is no coverage for damage caused by sexual assault because it is not an “occurrence” within the meaning of the policy and because sexual assault falls within a coverage exclusion as a “bodily injury” “which is either expected or intended by the insured” or “which is the result of willful and malicious acts of the insured.”

In Montana, it is well-settled that a sexual assault is not an “occurrence” because the consequent harm is intended by the insured. By extension, sexual assault would fall within the coverage exclusion as an “intended” “bodily injury.” Accordingly, State Farm is correct. There is no coverage under the policy.

Nevertheless, the duty to defend is broader than the duty to indemnify. Unless there exists an unequivocal demonstration that the claim against an insured does not fall within the insurance policy’s coverage, an insurer has a duty to defend.

There is no duty to defend because Croft pled guilty to sexual assault. The lack of factual dispute in the underlying action provides an unequivocal demonstration that coverage does not exist. In this case, the second and third factors readily support entering default judgment.

The fourth factor considers the amount of money at stake weighed against the culpability of the Defendants’ conduct. In the present suit, State Farm does not seek any damages.

The fifth and sixth factors—possible factual disputes and excusable neglect—also favor entering default judgment. Because Croft did not answer State Farm’s Amended Complaint, no facts are in dispute. And, because Croft was properly served more than nine months ago, it is unlikely that Croft’s failure to answer results from excusable neglect.

The final factor, the policy favoring a decision on the merits, generally weighs against entering default judgment. Croft’s failure to answer makes any other disposition impractical. Having weighed each of the factors, the Court found that default judgment is appropriate.

State Farm has no duty to defend or indemnify Lewis Croft in the underlying case under the State Farm policy at issue.


State Farm, with an obvious ground for refusing coverage – the insured was convicted of sexual assault of his granddaughters – still protected itself by filing a declaratory relief action that Croft did not answer since he knew he could not defend the action. Although over-kill, the declaratory relief action protected State Farm from claims from Croft and from his victims.

© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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