Federal ruling results mixed in clergy abuse insurance case

Minnesota Lawyer [St. Paul MN]

October 31, 2023

By Laura Brown

An insurance company that issued primary and umbrella policies to the Missionary Oblates of Mary Immaculate sought declaration from the U.S. District Court that it need not pay out claims stemming from sexual abuse. The U.S. District Court’s decision in TIG Insurance Company v. Missionary Oblates of Mary Immaculate was a mixed bag, offering victories for both the insurance company and the sexual abuse survivors.

The Rev. James Vincent Fitzgerald was a priest with Oblates, a missionary religious congregation of the Catholic Church, from 1950 to 2009. As an Oblates priest, he was assigned to multiple locations throughout the country, including eight stints in Minnesota. Fitzgerald’s inappropriate behavior was first noticed in 1963, when he tore the bottom of a young girl’s bathing suit. A few years later, after he was moved, he shared a bed with a boy and undressed in front of the child.

Intervenors, who appeared anonymously as “Does,” alleged that Fitzgerald sexually abused them, beginning in the mid-to-late 1970s. One of the intervenors was allegedly molested daily, and he attempted suicide as a result of the abuse.

TIG Insurance issued Missionary Oblates two three-year primary policies that were effective from June 1, 1973, until June 1, 1979. It also issued at least three excess umbrella policies that were effective from June 1, 1973, until June 1, 1978. Under the policy, it is stated that “The company will pay as damages because of bodily injury or property damage to which this insurance applies, caused by an occurrence.” An “occurrence” was defined as “an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.”

One question before the court was whether a reasonably prudent person who was in the Oblates’ position would have or should have known that it was substantially probable that Fitzgerald would have abused the intervenors.

TIG argued that the abuses suffered by the individuals were not covered “occurrences” as defined by the TIG policies. It asserted that a reasonable juror would have concluded that the Oblates knew of Fitzgerald’s proclivities before the abuse happened and should have expected the harm that Fitzgerald caused.

However, the court disagreed with TIG, maintaining that a reasonable juror could find that the Oblates reasonably did not possess a high degree of certainty that Fitzgerald would abuse children before the intervenors’ abuse occurred.

“In sexual abuse cases, insurance companies constantly point to an early Eighth Circuit decision applying Minnesota law to support their contention that claims against religious institutions for negligent supervision and retention of a sexual predators are not covered under general liability policies if the institution had any earlier knowledge of abuser’s wrongdoing.  With his careful analysis of the facts of the Oblates case, Judge Tostrud has demolished the insurer’s argument,” commented Timothy Burns, partner at Burns Bair LLP. “By winning on this issue in one of the most difficult places to win on it, we sent a clear message to insurers around the country that, on behalf of our grievously injured clients, we will fight you in the hardest places, and justice will prevail.”

Although the court denied that motion to dismiss, it ultimately granted summary judgment to TIG on the issue that the abuse suffered by some of the Does did not trigger coverage under the policies. Under the language of the policy, the company agreed to pay damages “because of bodily injury or property damage to which this insurance applies, caused by an occurrence.” Additionally, “bodily injury” is defined as “bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.”

Some of the Does did not offer testimony that they were physically injured due to the abuse. Instead, they alleged that they sustained psychological harm. For instance, one Doe described being almost sodomized, but he maintained that he was not physically injured by the encounter.

The Does asserted that interpreting “bodily injury” as excluding sexual abuse of a minor would ignore the impact of the abuse. Specifically, the Does claimed that there was a link between psychological and physical injury. The court held that some of the sexual abuse survivors suffered psychological harm rather than physical injury. It explained that, under controlling Minnesota rule, emotional distress does not constitute bodily injury unless “accompanied by appreciable physical manifestations.”

Counsel for TIG did not respond to request for comment.

“Years ago, many insurers promised to stand in the shoes of religious institutions and pay for the harm they would cause,” said Burns. “It is important for sexual abuse survivors that insurers live up to this promise.