Yesterday, New York State’s highest court, for the “first time,” ruled on the meaning of “occurrence” in the context of multiple incidents of sexual abuse of a minor by a priest that spanned several years and policy periods. In Roman Catholic Diocese of Brooklyn v. National Union Fire Insurance Company, 2013 NY Slip Op 03264 (May 7, 2013), the New York Court of Appeals found that, in the context of sexual abuse of a minor by a priest, multiple acts of sexual abuse constitute multiple occurrences.
The underlying action alleged that a Diocese priest repeatedly molested a minor at different locations over a period of six years. The Diocese settled the underlying action, and then sought settlement reimbursement from one of its general liability insurers, National Union. National Union disclaimed coverage, prompting the Diocese to file a declaratory judgment action.
In the declaratory judgment action, National Union filed a summary judgment motion arguing that each incident of sexual abuse constituted a separate occurrence that was subject to a separate self-insured retention (SIR), and the settlement should be paid pro rata across each of the implicated policies. The trial court denied the motion, and on appeal the Appellate Division reversed. This appeal ensued.
As a “threshold matter,” the Court of Appeals determined that National Union did not waive the issues involving SIR exhaustion and allocation under NY Insurance Law § 3420(d) because they are not defenses used to disclaim coverage. Because there was no statutory duty to disclose a liability limitation, National Union was not barred from arguing the application of the SIR and allocation.
The Court of Appeals then turned to the central issue in the case, stating that this was the “first time” it was addressing the meaning of “occurrence” in this context. The court’s analysis began by reviewing the policy, noting that “occurrence” was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” It found no policy language evincing an intent to aggregate separate incidents into a single occurrence. Consequently, the court applied the “unfortunate event” test. In doing so, the court concluded that the multiple incidents of sexual abuse were not part of a singular causal connection, and lacked the requisite temporal and spatial closeness to join them into a single occurrence. The court also indicated that the “continuous or repeated exposure” language in the definition of occurrence was more likely designed to deal with environmental losses, rather than “priests and choirboys.” The court held that the Diocese must exhaust a separate SIR for each occurrence.
The instant case provides guidance on when multiple incidents will be considered multiple occurrences under New York law. Interestingly, in his dissent, Judge Graffeo posits that the multiple incidents constitute a single occurrence because they stem from the repeated or continuous exposure of the child to the same negligently hired and supervised priest. Judge Graffeo further writes that the analysis adopted by the plurality “suggests that each act of sexual abuse involving the same victim constitutes a separate occurrence.” Despite Judge Graffeo’s reading of the plurality opinion, it would seem possible that multiple incidents could be aggregated into a single occurrence under a different set of facts and with different policy language. Time will tell.