Category: Insurance

Second Circuit Rules That Hartford Archdiocese is Entitled to Insurance Coverage for Prior Sexual Abuse by its Priests

Case Name: Hartford Roman Catholic Diocesan Corp. v. Interstate Fire & Cas. Co. – Second Circuit

Date of Opinion: September 19, 2018

Opinion by: Judge Jacobs

Summary:

The Roman Catholic Archdiocese of Hartford (“Archdiocese”) purchased excess indemnity insurance policies from Interstate Fire & Casualty Company (“Interstate”) for the period between September 1, 1978 and September 1, 1985. The Archdiocese later sought reimbursement from Interstate for damages that it had to pay in a settlement agreement with four claimants seeking compensation for sexual abuse inflicted by priests in the Diocese. Interstate refused to pay on grounds that the priests’ molestation was not covered by the policy, because the policy had an exclusion for “assault and battery committed by or at the direction of such assured.” Interstate argued that the priests were among the assured, and so the policy did not cover their molestation (a form of assault and battery).

The Archdiocese ultimately sued in the United States District Court for the District of Connecticut, alleging that Interstate had breached its contract, breached the covenant of good faith and fair dealing, and violated the Connecticut Unfair Insurance Practices Act and the Connecticut Unfair Trade Practices Act. The District Court ruled for the Archdiocese on the breach of contract claim, but for Interstate on the other claims. Both sides appealed.

The Second Circuit affirmed in full. As to the breach of contract claim, the court found that the “assault and battery” exclusion was inapplicable here, because it only applied to an assured “acting within the scope of his duties,” and the assailant priests (even if they could be considered assureds) were not acting within the scope of their duties. Similarly, the wording excluded coverage only to those assured who actually committed or directed the assault, and did not exclude coverage to the other assureds (such as the Archdiocese). Continue reading