Insurance Law - Sex-Abuse Coverage

Chicago Daily Law Bulletin
May 6, 1998

The 7th U.S. Circuit Court of Appeals has reversed a ruling by U.S. District Judge Richard Mills of the Central District of Illinois.

The Roman Catholic Diocese of Springfield sought a declaratory judgment obligating their insurers to defend it in a state court action filed by the parents of children allegedly abused by a former parish priest.

Defendant Maryland Casualty Co. was the general liability insurer for the diocese from December 1977 until December 1991. The primary liability policies provided that the insurer would indemnify and defend the diocese for claims arising from bodily injury and property damage caused by an occurrence."

Bodily injury" included a bodily injury, sickness or disease sustained by any person" during the policy period.

From about 1978 through 1981, it was alleged that Joseph Havey, then associate pastor at St. Agnes Parish and school, sexually abused a number of boys entrusted to his supervision. In 1993, five of the priest's alleged victims, now adults, filed suit in state court against the priest and the diocese. The trial court dismissed on the basis that the case was barred by the statute of limitations. That ruling was affirmed by a state appeals court, and the Illinois Supreme Court denied leave to appeal.

In May 1995, another claim was filed, this time by parents of two of the plaintiffs in the previous case. The parents argued that they did not learn of the abuse until, or soon after, May 29, 1993. The diocese tendered defense of the case to its insurers. All the insurers refused to assume defense of the diocese.

The trial judge granted Maryland Casualty judgment on the pleadings, finding that the injuries claimed by the parents did not occur during the period of time that Maryland insured the diocese.

The trial judge found unpersuasive the diocese's effort to analogize the parents' case to asbestos litigation and other suits concerning injuries that do not manifest until years after exposure to a harmful agent.

The 7th Circuit reversed. The court said that it would be easy to imagine that the parents of the 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 that time.

The court noted that the complaint identified a variety of harms that the children suffered as a result of the abuse: severe and medically diagnosable emotional distress; embarrassment; loss of self-esteem; disgrace; humiliation; psychological injury; loss of enjoyment of life; and wage loss and deprivation of earning capacity.

Surely some of these injuries occurred during the period of Maryland's coverage," the court said. Common sense suggests that these injuries could in turn have resulted in concrete, identifiable harm to the parents within the same period."

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

Roman Catholic Diocese of Springfield v. Maryland Casualty Co., et al., No. 97-2482. Judge Ilana D. Rovner wrote the court's opinion with Judges Walter J. Cummings and Kenneth F. Ripple concurring. Released March 17, 1998. (12 pages) 0077


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