Diocese's Insurance Does Not Cover Abuse Claims

By Tim Hull
Courthouse News Service
July 30, 2014

http://www.courthousenews.com/2014/07/30/69973.htm

 (CN) - The Catholic Diocese of Phoenix's insurance policy does not cover sexual abuse claims, the 9th Circuit ruled Wednesday.
     After settling with four men who say they were sexually abused by priests in the 1970s and 80s, The Roman Catholic Diocese of Phoenix sought indemnification for excess liability from its insurance company, Interstate Fire & Casualty Company.
     The insurer shot back with its own request for a judgment stating that the Diocese's policy excluded liability for assault and battery.
     U.S. District Judge Neil V. Wake ruled for the Diocese in Phoenix, finding that the exclusion applied only the offending priests and did not necessarily deny coverage for sexual abuse claims.
     A divided appellate panel reversed on Wednesday.
     The question came down to the relative meanings of the words "any" and "such".
     Judge Wake had concluded that the policy, which in part excludes "liability of any Assured for assault and battery committed by or at the direction of such Assured", meant that only the "assured who committed or directed the assault and battery" was excluded.
     However, the appellate panel agreed 2-1 with the insurer's reading, which excludes "those who allegedly committed the assault and battery as well as innocent co-insureds."
     "Based on the ordinary meaning of this exclusion and consistent with Arizona law, we conclude that 'the language 'any insured' ... express[es] a contractual intent to prohibit recovery by innocent co-insureds," wrote Judge M. Margaret McKeown for the majority.
     "The Diocese maintains that the phrases 'any Assured' and 'such Assured' should be 'presumed to have different meanings' and that IFC should have used language clearly communicating a limitation of coverage," McKeown added. "Yet the Diocese's reading can only be reached by ignoring the plain meaning of the exclusion and jumping to the conclusion that the text is unclear. This effort to infuse ambiguity into an otherwise clear agreement is unavailing."
     Writing in dissent, Judge D.W. Nelson argued that the lower court's reading made more sense.
     "Under the plain meaning of the word 'such,' I believe that the exclusion therefore only excludes coverage for assureds who committed or directed the assault or battery giving rise to liability," he wrote. "I would hold that the policy exclusion does not apply in this case and would reach the parties' remaining arguments."
     According to the insurance company's 2009 complaint for declaratory relief, the Diocese paid about $1.3 million in 2007 to settle two claims in California alleging sexual abuse by Father John Giandelone. The complaint also states that the Diocese paid $1.8 million to settle claims in Arizona alleging abuse by Fathers Mark Lehman, Dale Fushek and Phil Baniewicz.
     Attorney Andrew Jacob represented the Diocese in Phoenix. He did not return a request for comment on Wednesday.