Catholic Religious Order Insured for Losses that Resulted from Molestation
In Empire Indemnity Ins. Co. v. Chicago Province of the Society of Jesus, the case began when Empire filed a declaratory judgment action (which FNIC, RLI, Mt. Hawley, and Pennsylvania General eventually joined) seeking a finding that there was no duty to defend the Jesuits against complaints filed by various alleged sexual abuse victims of defendant, Donald J. McGuire, a former priest and member of the Jesuits. FNIC issued a nonprofit, multiple-peril insurance policy effective from November 30, 1998, to November 30, 1999, and subsequently renewed the policy on an annual basis to November 30, 2004. The bodily injury coverage provided in pertinent part that FNIC would pay sums that the Jesuits became legally obligated to pay as damages due to “bodily injury or property damage to which this coverage applies.” This coverage was further limited to bodily injury and property damage occurring “during the Term of Coverage” and specifically excluded damages “expected or intended from the standpoint of the insured.” The sexual abuse or molestation coverage stated that FNIC would pay damages that the Jesuits become legally obligated to pay “arising out of any actual, threatened, intentional or unintentional sexual molestation of any person to which this coverage applies.” The sexual abuse/molestation coverage was also limited to sexual abuse or molestation occurring “during the Term of Coverage,” and under “Condition 1.a,” the coverage would be cancelled “if any executive officer, supervisory employee, director or trustee [had] actual knowledge of any act, incident or alleged act of sexual abuse or sexual molestation.” Pennsylvania General issued a one-year general liability policy beginning on November 30, 1990, and renewed the policy annually until November 30, 1998. The coverage for bodily injury liability excluded such injury “expected or intended from the standpoint of the insured,” except for bodily injury “resulting from the use of reasonable force to protect persons or property.” With respect to the pastoral counseling professional liability, coverage was excluded, inter alia, for damages arising out of: (i) “the willful violation of a penal statute * * * committed by or with the consent of the insured”; (ii) “the actual or alleged conduct of a sexual nature” (although Pennsylvania General agreed to defend the Jesuits in any suit seeking damages from such conduct until judgment was rendered); and (iii) dishonest, fraudulent, or criminal acts or omissions of the insured. Empire issued a one-year umbrella liability insurance policy beginning on November 30, 2002, and renewed the policy annually to November 30, 2005. The policy indemnified the Jesuits for bodily injury liability caused by an “occurrence” in excess of a retained limit. An occurrence was defined as an “accident, including continuous or repeated exposure to substantially the same harmful conditions.” The Empire policy also excluded coverage for bodily injury “either expected or intended from the standpoint of the insured.” RLI and Mt. Hawley both issued an umbrella liability policy to the Jesuits. RLI’s one-year policy began November 30, 1990, and was renewed annually to November 30, 2001. Mt. Hawley’s policy was effective from November 30, 2001, to November 30, 2002. Both policies provided bodily injury liability coverage, and as with the Pennsylvania General and Empire policies, they also excluded coverage for bodily injury “expected or intended from the standpoint of the insured.”
John Doe sued the Jesuits, alleging that they had been either sexually abused or sexually molested by McGuire, then a priest and member of the Jesuits who had also been a “teacher and scholastic adviser” at Loyola Academy, a high school operated by the Jesuits. The complaints all alleged negligence, intentional infliction of emotional distress, and fraud against the Jesuits. In August 2007, John Doe 116 filed a complaint against the Jesuits and McGuire, alleging that McGuire abused him from 1999 to 2003, while he was a minor. John Doe 116 also claimed that, in addition to transferring McGuire, the Jesuits confidentially settled other victims’ sexual abuse allegations against McGuire to avoid scandal. In October 2007, John Does 117 and 118, who are brothers, filed a joint complaint also alleging sexual abuse by McGuire while they were minors. In April 2008, John Doe 119 filed a complaint against McGuire and the Jesuits also alleging that he had been sexually abused by McGuire as a minor beginning in June, 1998. In February 2009, John Doe 129 and John Doe 130 each filed individual complaints also alleging that they had been sexually abused by McGuire as minors. John Doe 129 alleged that he had been molested by McGuire from 1988 to 1998, and John Doe 130 alleged McGuire sexually abused him between 1990 and 1995. In addition to the John Doe complaints, John and Jane Doe, the parents of John Does 117 and 118, filed a complaint against the Jesuits and McGuire in September, 2009, in the federal district court in Arizona. The John Doe parents’ complaint alleged negligence, loss of filial consortium, and intentional infliction of emotional distress and sought damages against the Jesuits and McGuire (whom they alleged the Jesuits supervised or employed) resulting from McGuire’s alleged sexual abuse of their sons. The insurers each filed various declaratory judgment actions seeking a finding that they had no duty to defend the Jesuits in the underlying lawsuits.
The issue before the court is whether a Catholic religious order is insured for potential losses that resulted from alleged molestation of minors by one of its priests. To determine whether the insurer has a duty to defend the insured, the court must look to the allegations in the underlying complaint and compare these allegations to the relevant provisions of the insurance policy.
The Jesuits contended that the complaints in the underlying litigation were “littered” with allegations that the Jesuits either should have known, should have been aware, or had constructive notice of McGuire’s prior sexual abuse of minors. They alleged that these allegations do not rise to the level of actual knowledge. Therefore, the “expected or intended” exclusion could not apply. However, the court stated that the terms “intended” and “expected,” as used in similar insurance policy exclusionary clauses, are not synonyms: an “expected” injury is merely one that should have been “reasonably anticipated” by the insured. Here, the factual section preceding the various counts of the complaints allege that the Jesuits were aware of McGuire’s abuse of minors in 1969 and had subsequently received numerous other complaints, all of which took place prior to the respective times of the John Does’ abuse. These allegations set forth that the Jesuits reasonably should have anticipated (or expected) McGuire’s abuse of the underlying John Doe plaintiffs. As such, the expected or intended exclusion applies.
Next, the Jesuits claim that the policies unambiguously proved that any injury occurring during the policy term (including lingering emotional or psychological injuries) is covered, regardless of when the harm giving rise to the injury occurred. In this case, the policy defined “sexual abuse or sexual molestation” in pertinent part as: “the infliction of harm of a sexual nature upon a person by any employee, agent or representative of [the Jesuits], whether such harm is physical, emotional or psychological.” The court does not agree with the Jesuit’s interpretation that the manifestation of emotional or psychological injury during a policy period would, under all circumstances, relate back to the infliction of the sexual abuse causing that injury. The precise act giving rise to coverage is the infliction of some type of harmful or inappropriate sexual contact, not the subsequent emotional or psychological ill effects from that contact, even if those ill effects persist long after the sexual contact occurred. To hold, as the Jesuits contend, would improperly transform this occurrence-based policy into a claims-based policy. The court, therefore, found that the claims are not covered under the FNIC policy.
Condition 1.a cancelled any subsequent sexual abuse coverage if a “supervisory employee” of the Jesuits had “actual knowledge of any alleged act of sexual abuse or sexual molestation” committed by any “employee, agent, representative or volunteer worker.” Furthermore, it is undisputed that McGuire, a teacher and scholastic adviser at Loyola Academy, was an employee of the Jesuits. The complaints alleged that supervisory employees (the president, principal, and the headmaster of the academy) had actual knowledge of an alleged act of sexual abuse by an employee, agent, representative, or volunteer worker. In light of these allegations, Condition 1.a barred any coverage for the underlying complaints.
Lastly, the Jesuits argued that questions of material fact existed regarding the content of Pennsylvania General’s policies; because Pennsylvania General, in support of its claims that it had no duty to defend or indemnify the Jesuits and in its subsequent motion for summary judgment, relied on generic, pre-printed policy forms, as opposed to actual, complete copies of its insurance agreements with the Society. Pennsylvania General has not found a full copy of its own actual policy that insured the Jesuits. Pennsylvania General, as the plaintiff, had the burden to provide as much of the written documents, as necessary, to the determination at hand, which meant the entire policies, not just portions. As a result, absent proof by Pennsylvania General that the attached documents were the best evidence of the Jesuits’ policies, the documents were insufficient, and Pennsylvania General had failed to meet its burden.
The court held that the underlying complaint: (i) alleged facts that triggered either the “expected or intended” or the “Condition 1.a” exclusion; or (ii) alleged injuries that took place outside of the policies’ effective dates.
Empire Indemnity Ins. Co. v. Chicago Province of the Society of Jesus, 2013 WL 1952701 (Ill. App. 1 Dist.) (This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1)).
