On Tuesday, the Supreme Court of California will hear oral argument in the case of Liberty Surplus Insurance v. Ledesma & Meyer Construction, case no. S236765. The court likely will decide whether there can be coverage under a general liability policy for negligent supervision claims, a decision which could have a significant impact on California policyholders across a range of industries. In addition, the court may clarify the definition of “accident” in a broader sense, settling a lower court split over whether the unintended consequences of intentional acts can constitute an “occurrence” under general liability insurance policies.

Ledesma involves an insurance dispute between a contractor, Ledesma & Meyer (L&M), and its insurers, Liberty Surplus Insurance Corp. and Liberty Insurance Underwriters, Inc. (Liberty). One of L&M’s employees, Darold Hecht, was found to have sexually abused a student while working on a construction project at a middle school in San Bernardino, California. The student sued L&M and the school, and ultimately obtained a judgment against L&M for negligent hiring, supervision and retention of Hecht.