New York Court Finds Multiple Occurrences in Coverage Dispute Involving Abuse Claims

By: Cara Vecchione, Sedgwick New York

In Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. The Roman Catholic Diocese of Brooklyn, No. 653575/2014, 2017 WL 748834 (N.Y. Sup. Ct., N.Y. Cty. February 27, 2017), a New York trial court held that the Diocese must pay multiple self-insured retentions per year — one per occurrence — in a coverage dispute involving claims that foster care agencies affiliated with the Diocese negligently placed ten children with an abusive foster mother over a twenty-two year period.

The trial court tracked the reasoning of the Court of Appeals in a separate coverage dispute concerning claims of sexual abuse by a priest, Roman Catholic Diocese of Brooklyn v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 21 N.Y.3d 139 (2013). In Diocese of Brooklyn, the Court of Appeals made clear that the “unfortunate event” test should be applied to determine whether separate incidents are characterized as one occurrence, absent policy language demonstrating an intent to aggregate the incidents into a single occurrence. The Court of Appeals dismissed the argument that the acts of abuse should be deemed a single occurrence because they amounted to “continuous or repeated exposure to substantially the same general harmful conditions.” Applying the “unfortunate event” test, the Court of Appeals held that numerous incidents of molestation by the same priest against one plaintiff constituted multiple occurrences, in part because the acts of abuse took place in several locations over a six year period and were not precipitated by the same causal continuum.

Analyzing identical policy language, a New York trial court determined that the definition of occurrence did not reflect an intention to aggregate multiple incidents of abuse into a single occurrence. As the claims lacked the temporal and spatial commonalities required to constitute a single occurrence under the “unfortunate event” test, the trial court held that “the incidents of abuse suffered by each of the claimants constituted multiple occurrences and there was at least one ‘occurrence’ per claimant per policy period because the injuries suffered by each claimant were unique to that claimant in a given policy year and caused by separate incidents.” Consequently, the trial court ruled that the defense and settlement payments advanced by the Diocese’s insurers under a reservation of rights before this issue was resolved, must be allocated on a pro rata basis over the entire twenty-two year period, and the Diocese was obligated to pay a separate self-insured retention for each occurrence — that is, each instance of abuse to each victim during this time period.

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