Insurer Must Defend Diocese in Sex Abuse Case, Court Holds

By Brendan Stephens
Chicago Daily Law Bulletin
March 18, 1998

An insurance company must defend the Roman Catholic Diocese of Springfield in a lawsuit brought by parents of children allegedly abused by a former parish priest, a federal court of appeals has ruled.

The 7th U.S. Circuit Court of Appeals on Tuesday reversed U.S. District Judge Richard Mills of the Central District of Illinois, who had granted Maryland Casualty Co. judgment on the pleadings.

Mills had reasoned that the injuries claimed by the parents did not occur during the period of time -- from 1978 through 1981 -- that the company insured the diocese, the 7th Circuit opinion said.

The diocese had filed suit in U.S. District Court to require Maryland or two other insurance companies to defend it in the suit brought by the parents in Sangamon County Circuit Court, Ward, et al. v. Ryan, et al., No. 95 L 0343. Ward v. Ryan is still pending, according to the Sangamon County Circuit Court clerk's office.

Only if we were confident that no allegations in the Ward complaint were even potentially within the scope of the Maryland policies could we sustain the judgment below and declare that Maryland has no obligation to defend the diocese," Judge Ilana D. Rovner wrote for the three-judge 7th Circuit panel.

Although some of the injuries alleged in the Ward litigation post-date the coverage of the Maryland policies, the allegations of the complaint are also consistent with claims for injuries that may have occurred within the policy period," Rovner wrote, with Judges Walter J. Cummings and Kenneth F. Ripple concurring.

From about 1978 through 1981, it is alleged that Joseph Havey, then the associate pastor at St. Agnes Parish and School, sexually abused a number of boys under his supervision, the opinion said.

In 1993, five of the alleged victims, now adults, filed suit against Havey and the diocese in the 7th Judicial Circuit in Sangamon County, the opinion said. However, the trial judge dismissed the suit as barred by the statute of limitations and the Illinois Appellate Court affirmed the dismissal in an unpublished order. Doe v. Ryan, No. 4-95-0457 (Ill.App. 4th Dist. Dec. 15, 1995). The Illinois Supreme Court denied the plaintiffs leave to appeal.

In 1995, two other men claiming to have been abused by Havey each filed suit in Sangamon County against the former parish priest and the diocese, the 7th Circuit said. Green v. Ryan, et al., No. 95 L 157, and Black v. Ryan, et al., No. 95 L 158. Those cases are still pending, according to the diocese's briefs filed with the 7th Circuit.

In May 1995, two weeks after the Doe v. Ryan suit was dismissed, the parents of two Doe plaintiffs and the parents of plaintiffs Green and Black filed the Ward v. Ryan suit against Havey and the diocese, the 7th Circuit said.

The complaint in Ward ... alleges that because Havey admonished the children to never disclose the alleged abuse to anyone, the plaintiff parents remained ignorant of what Havey had done until or after May 29, 1993," the 7th Circuit opinion states.

The diocese tendered the defense of the Ward suit to Maryland and also to two other insurance companies that had policies in effect with the diocese in May 1993, the opinion said.

Maryland asserted that although the children were allegedly abused between 1978 and 1981, their parents were not injured until 1993, after its policies had expired, the opinion said. The other companies said the source of the injury was the alleged abuse to the plaintiffs' children, which occurred during the term of Maryland's coverage.

In District Court, Mills found that the parents were seeking to recover for injuries that did not occur during the period of Maryland's coverage.

The district judge also noted that the by claiming injury on May 29, 1993, the parents' claim appears to be designed to circumvent the statute of limitations that caused the children's lawsuit to be dismissed, the opinion said.

On appeal, the 7th Circuit assumed as the parties do" that if the parents of the allegedly abused children suffered injuries, they would at least potentially be the kinds of personal injuries" for which Maryland insured the diocese, Rovner wrote.

The parties also agree that Illinois law controls the case, Rovner noted.

Emotional distress and other trauma resulting from the 1993 disclosure would not fall within the scope of Maryland's policies, we are inclined to agree," Rovner wrote. We say that not simply because the injuries did not manifest until after the policies expired, but because there was no identifiable injury of that kind to the parents ... until they were told in 1993 what their priest had purportedly done to their children," Rovner wrote.

However, it is possible other injuries could trigger coverage, the court said.

Reading the complaint generously, it is easy to imagine that the parents of the allegedly abused children were in fact injured long before 1993, and within the period of Maryland's coverage, but that the parents simply remained in the dark as to the source of their injuries until then," Rovner wrote.

The complaint alleges a variety of harms that the children suffered, including severe and medically diagnosable emotional distress, disgrace, psychological injury and wage loss, Rovner said. Some of these injuries may have occurred during the period covered by Maryland, the opinion said.

Common sense suggests that these injuries could in turn have resulted in concrete, identifiable harm to the parents within the same period," Rovner wrote.

If the children required medical and psychological treatment at that time, for example, the parents would have borne the costs of that care," Rovner said. If the children became withdrawn as a result of the alleged abuse, their relationships with their parents almost certainly suffered.

Although the identified injuries are attributed in part to the 1993 revelations, as we have noted, they are also attributed directly to the alleged abuse by Havey ... and that allegation leaves the door open to claims for injuries that predate the expiration of the Maryland policies," Rovner wrote.

The case is Roman Catholic Diocese of Springfield, et al. v. Maryland Casualty Co., and TIG Insurance Co., and National Risk Retention Group, Inc., No. 97-2482.


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