Insurer Needn't Pay Archdiocese for Abuse-related Death Claim Settlement
By Judy Greenwald
January 30, 2014
A Fireman's Fund Insurance Co. unit is not obligated to pay for settlement of a wrongful death claim filed against the Archdiocese of St. Louis in connection with a man's suicide allegedly caused by a priest's sexual abuse because the archdiocese could not be held legally liable for the claim, says an appellate court.
Allen Klump, the father of Christopher Klump, filed a wrongful death suit against the Archdiocese of St. Louis in state court in June 2003, charging that a priest employed by the archdiocese had sexually molested his son, which eventually led to Christopher's suicide, according to Wednesday's ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Chicago Insurance Co. v. Archdiocese of St. Louis; Robert J. Carlson, Archbishop, Father Michael S. McGrath.
According to a news report, Mr. Klump charged in his suit that his 30-year-old son killed himself as a direct result of the sexual abuse he had suffered as a preteen in the 1980s at the hands of a priest during outings billed as spiritual counseling. The report said the accused priest was suspended by the archdiocese in 1997.
The parties subsequently entered into a settlement for an undisclosed amount that released the archdiocese from any future liability associated with the alleged misconduct, according to the ruling. The archdiocese then sought indemnification for its loss.
The archdiocese held excess liability insurance policies with Lloyd's of London and The London Cos. as a primary excess carrier and with Chicago-based Chicago Insurance Co., a unit of Fireman's Fund, as a secondary excess carrier, according to the ruling.
The Chicago Insurance policy defined loss under its policy as “the sums paid as damages in settlement of a claim or in satisfaction of a judgment for which the insured is legally liable.”
Chicago Insurance denied the archdiocese's demand for coverage and filed an action in federal court in St. Louis seeking a declaration that its policy did not provide coverage for the underlying litigation, and moving for summary judgment.
The court ruled in Chicago Insurance's favor, saying that because the wrongful death claim in the underlying complaint alleged a form of negligence against a religious organization, the archdiocese could not be held legally liable under Missouri Supreme Court precedent, according to the appellate ruling.
“If the insured could not be held legally liable, the court reasoned, the Archdiocese failed to establish that a defined 'loss' occurred,” said the appellate ruling.
A three-judge panel of the 8th Circuit unanimously agreed with the lower court. The Missouri Supreme Court has held “that negligence-based actions against a religious organization that require a court to evaluate the reasonableness of religious doctrine, policy and administration offend the First Amendment and cannot be maintained,” said the ruling.
“Notwithstanding the Archdiocese’s assertions to the contrary, we are aware of no authority, and the Archdiocese cites none, that allows a settling insured to recover under an indemnity policy where governing law does not permit the claimant’s underlying cause of action against the insured,” said the appellate panel, in affirming dismissal of the case.