Connecticut Court Holds Sexual Molestation Limitation Applicable

In its recent decision in Metropolitan Prop. & Cas. Ins. Co. v. Briggs, 2013 U.S. Dist. LEXIS 74885 (D. Conn. May 29, 2013), the United States District Court for the District of Connecticut had occasion to consider a homeowner’s insurer had a duty to defend its insured in connection with an underlying suit alleging sexual molestation.

The insured was alleged to have sexually assaulted a minor, while in the insured’s home, on repeated occasions during a two-year period.  The lawsuit alleged numerous physical and emotional injuries resulting from these incidents.  The insured sought a defense in connection with the suit from his homeowner’s insurer, Metropolitan Property & Casualty.  The Metropolitan policy provided coverage for bodily injury resulting from an occurrence.  The policy’s definition of bodily injury, however, expressly carved-out the following categories of harm:

a.   any of the following which are transmitted by you to any other person: disease, bacteria, parasite, virus or other organism; or

b.   the exposure to any such disease, bacteria, parasite, virus or other organism by you to any other person; or

c.   the actual, alleged or threatened sexual molestation of a person.

Metropolitan denied coverage to its insured on the basis that sexual molestation was an excluded category of bodily harm.  The insured, on the other hand, argued that the definition of bodily injury only excluded coverage for the “act” of sexual molestation, but did not exclude coverage for the harm resulting from molestation.   Specifically, the insured argued that “bodily injuries sustained as a result of sexual molestation should be covered by the policy,” at least for duty to defend purposes.

The court found the insured’s reading of the policy unreasonable, concluding that the insured’s strained interpretation of the policy definition of bodily injury would render moot all of the carved-out categories of harms.  As the court explained:

In addition to sexual molestation, the exclusionary provision excludes from the definition of bodily injury: disease, bacteria, parasite, virus or other organism. If we extend defendant's reasoning to these other excluded categories, insureds would be covered for bodily injury as a result of disease, bacteria, parasite, virus or other organism, despite that disease, bacteria, parasite, virus or other organism themselves, like sexual molestation, are clearly and explicitly excluded from coverage. This would render the exclusionary provision virtually meaningless.

Thus, finding that the only reasonable interpretation of the policy is that bodily injury resulting from sexual molestation is not an insured category of loss, the court granted summary judgment in favor of Metropolitan.

New York Court Holds Incidents of Sexual Molestation Separate Occurrences

In its recent decision in Roman Catholic Diocese of Brooklyn v National Union Fire Ins. Co. of Pittsburgh, PA, 2013 NY Slip Op 3264 (N.Y. May 7, 2013), the New York Court of Appeals – New York’s highest court – had occasion to consider whether repeated incidents of sexual molestation involving a single victim constituted multiple occurrences triggering multiple self-insured retentions.

The underlying suit alleged that a single priest molested a minor on numerous occasions during the period 1996 through 2002.  These incidents happened in several locations, including the rectory, office and other areas of a church in Queens, New York, the priest’s car, the plaintiff’s home, and another home.  The underlying action was settled for $2 million.  National Union issued three consecutive general liability policies to the Diocese that were potentially triggered by the underlying suit.  Each of the policies had a limit of liability of $750,000 and a per occurrence self-insured retention of $250,000.  National Union disclaimed coverage to the Diocese on the basis of a sexual abuse exclusion, and the application of the exclusion has not yet been determined by the lower court.  At issue before the Court of Appeals was the issue of whether the alleged acts of molestation could be considered a single occurrence triggering only a single retention, or multiple occurrences triggering multiple retentions.  The National Union policies defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  Further, each policy only provided coverage for bodily injury that occurred during the policy period.

The court acknowledged that the issue of whether several acts of sexual molestation constitute multiple occurrences was an issue of first impression for it.  The court nevertheless found guidance in its prior decisions involving number of occurrence questions, in particular its decisions in Arthur A. Johnson Corp. v Indemnity Ins. Co. of N. Am., 196 N.Y.S.2d 678 (N.Y. 1959); Appalachian Ins. Co. v General Elec. Co., 831 N.Y.S.2d 742 (N.Y. 2007). These decisions, explained the court, relied on the “unfortunate event” test to determine the number of occurrences, as opposed to simply looking at the proximate cause of the injuries or the number of injured parties.  This test, explained the court, looks to “whether there is a close temporal and spatial relationship between the incidents giving rise to injury or loss, and whether the incidents can be viewed as part of the same causal continuum, without intervening agents or factors.” 

Applying this test to the alleged underlying incidents of molestation, the court concluded that there was no “close temporal and spatial relationship” among these incidents from which it could conclude there was only a single occurrence.  As the court explained:

Applying the unfortunate event test we conclude that the incidents of sexual abuse within the underlying action constituted multiple occurrences. Clearly, incidents of sexual abuse that spanned a six-year period and transpired in multiple locations lack the requisite temporal and spatial closeness to join the incidents … While the incidents share an identity of actors, it cannot be said that an instance of sexual abuse that took place in the rectory of the church in 1995 shares the same temporal and spatial characteristics as one that occurred in 2002 in, for example, the priest's automobile.

In so concluding, the court rejected the Diocese’s argument that the incidents of molestation could be considered part of a “single continuum” resulting from the single occurrence of the Diocese’s failure to supervise.  The unfortunate events test, explained the court, required that the focus be on the nature of the incidents giving rise to the alleged harm.  Likewise, the court rejected the Diocese’s argument that the incidents could be considered “continuous or repeated exposure to substantially the same general harmful conditions.”  As the court explained:

In our view, sexual abuse does not fit neatly into the policies' definition of "continuous or repeated exposure" to "conditions". This "'sounds like language designed to deal with asbestos fibers in the air, or lead-based paint on the walls, rather than with priests and choirboys. A priest is not a 'condition' but a sentient being" … The settlement in the underlying claim addresses harms for acts by a person employed by the Diocese. The Diocese's argument that the parties intended to treat numerous, discrete sexual assaults as an accident constituting a single occurrence involving "conditions" is simply untenable.  (Internal citations omitted.)

In light of its holding regarding the number of occurrences, the court concluded that the Diocese was required to satisfy a separate $250,000 self-insured retention for each occurrence transpiring within each of the National Union policies, but only to the extent the occurrence resulted in “bodily injury” in that policy year.