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Roman Catholic Diocese of Brooklyn v. National Union Fire Ins. Co. of Pittsburgh, PA.

Court of Appeals of New York

March 19, 2013, Argued; May 7, 2013, Decided

No. 69

Opinion

 [*143]  [**668]  [***810] Rivera, J.

 This insurance coverage dispute involves the apportionment of liability for a settlement between the Roman Catholic Diocese of Brooklyn (the Diocese), and a minor plaintiff in an underlying civil action charging sexual molestation by a priest. We agree with the Appellate Division that the incidents of sexual abuse constituted multiple occurrences, and that any potential liability should be apportioned among the several insurance policies, pro rata. We therefore affirm.   

In November 2003, Jeanne M. N.-L., individually and as mother and natural guardian of Alexandra L., a minor under the age of 18 years, commenced a civil action against the Diocese  [****2] and one of its priests. The complaint, as amplified by the bill of particulars, alleged that the priest sexually abused Alexandra on several occasions from August 10, 1996 through May 2002, and that the molestation took place in several locations including the rectory, office and other areas of a church in Queens, New York; the priest's vehicle; the plaintiff's home; and a home in Amityville, New York.

In August 2007, the Diocese settled the action for $2 million and "additional consideration." The appeal before us involves a dispute between the Diocese and defendant National Union Insurance Company of Pittsburgh, Pa. (National Union), one of its insurance carriers, regarding the Diocese's demand for reimbursement for the settlement.

National Union provided primary insurance to the Diocese, and issued three consecutive one-year commercial general liability policies for August 31, 1995 to August 31, 1996; August 31, 1996 to August 31, 1997; and August 31, 1997 to August 31, 1998. Nonparty Illinois National Insurance Company provided primary coverage for the next three years from August 31, 1998 to August 31, 2001. Defendant Westchester Fire Insurance [**669]  [***811]  Company, who settled with the Diocese and is not a party on  [*144]  this appeal, provided  [****3] excess umbrella coverage for all seven years under consecutive annual policies. The National Union policies provide coverage for damages resulting in bodily injury during the policy period, and include a liability limitation of $750,000 and a $250,000 self-insured retention (SIR) applicable to each occurrence.1 The parties, thus, agreed that for each occurrence resulting in bodily injury within the policy period, National Union would be liable for covered damages after the first $250,000 (in excess of the SIR), and its liability would cap at $750,000.

When the Diocese sought coverage under the 1996-1997 and 1997-1998 National Union policies, National Union responded  [****4] by letter dated July 15, 2004, disclaiming coverage based on, inter alia, two exclusionary provisions referring to sexual abuse,2 and also asserted that   the "policies have $750,000 policy limits  [*145]  over a $250,000 self-insured retention," and coverage is applicable only if the "bodily injury" occurred during the policy period. In response to a subsequent request for coverage under the 1995-1996 policy, National Union again disclaimed   coverage in a December 1, 2004 letter, based on the previously cited exclusionary provisions.3 

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21 N.Y.3d 139 *; 991 N.E.2d 666 **; 969 N.Y.S.2d 808 ***; 2013 N.Y. LEXIS 1186 ****; 2013 NY Slip Op 3264; 2013 WL 1875302

 [1]  Roman Catholic Diocese of Brooklyn et al., Appellants, v National Union Fire Insurance Company of Pittsburgh, Pa., Respondent, et al., Defendant.

Subsequent History: Related proceeding at National Union Fire Ins. Co. of Pittsburgh, PA v. Roman Catholic Diocese of Brooklyn, 2017 N.Y. Misc. LEXIS 687 (N.Y. Sup. Ct., Feb. 27, 2017)

Prior History: Appeal, by permission of the Appellate Division of the Supreme Court in the Second Judicial Department, from an order of that Court, entered September 20, 2011. The Appellate Division (1) reversed, on the law, so much of an order of the Supreme Court, Kings County (Martin M. Solomon, J.), as had (a) denied those branches of the motion by defendant National Union Fire Insurance Company of Pittsburgh, Pa., which were for summary judgment, in effect, declaring that the alleged acts of sexual abuse in the underlying action constitute multiple occurrences, that the settlement amount and any "additional consideration" are to be allocated on a pro rata basis over seven policy periods, and that the plaintiffs must exhaust a $250,000 self-insured retention for each commercial general liability policy implicated; and (b) granted those branches of plaintiffs' cross motion which were for summary judgment dismissing defendant's fourth and sixth affirmative defenses; (2) granted those branches of defendant's motion; (3) denied those branches of plaintiffs' cross motion; and (4) remitted the matter to the Supreme Court, Kings County, for the entry of a judgment, among other things, declaring that the alleged acts of sexual abuse in the underlying action constitute multiple occurrences, that the settlement amount and any "additional consideration" are to be allocated on a pro rata basis over seven policy periods, and that the plaintiffs must exhaust a $250,000 self-insured retention for each commercial general liability policy implicated. The following question was certified by the Appellate Division: "Was the decision and order of this Court dated September 20, 2011, properly made?"

Roman Catholic Diocese of Brooklyn v. National Union Fire Ins. Co. of Pittsburgh, Pa., 87 A.D.3d 1057, 930 N.Y.S.2d 215, 2011 N.Y. App. Div. LEXIS 6432 (N.Y. App. Div. 2d Dep't, 2011)

Disposition: Order affirmed, with costs, and certified question answered in the affirmative.

CORE TERMS

occurrence, policies, coverage, sexual abuse, policy period, retention, priest, plurality, insurer, bodily injury, unfortunate event, single occurrence, pro rata, self-insured, exposure, supervision, disclaimer, conditions, parties, repeated exposure, spanned, sexual, implicated, allocated, causal, cases, molestation, aggregate, occurring, hiring

Insurance Law, Claim, Contract & Practice Issues, Estoppel & Waiver, Delays Barring Estoppel & Waiver, General Overview, Commercial General Liability Insurance, Exclusions, Policy Interpretation, Coverage, Deductibles, Business Insurance, Multiple Insurers