The bankruptcy court found there were multiple occurrences when several victims alleged sexual abuse by various priests within the Diocese. Diocese of Duluth v. Liberty Mut. Group, 2017 Bankr. LEXIS 908 (Bankr. D. Minn. March 30, 2017).
The Diocese filed a petition under chapter 11 as a result of liabilities arising from negligence claims asserted by victims of sexual abuse by priests. An adversary proceeding was filed by the Diocese against its insurers seeking declaratory relief. The Diocese filed a motion for partial summary judgment to establish the legal standard to determine the number of occurrences under the CGL policies which insured the Diocese.
The Diocese argued that under Minnesota law, the "actual-injury" rule applied. Here, there was an occurrence when sexual abuse occurred. Each act of abuse constituted a separate occurrence. The insurers argued there was one occurrence because liability arose from one ongoing act of alleged negligence by the Diocese in negligently supervising its priests.
The Minnesota Supreme Court had held that an occurrence was not when the wrongful act was committed, but when the complaining party was actually injured. When damages were a result of occurrences that were discrete and identifiable events, the triggered policies were those that were in effect when the damages occurred. When both the damages and the occurrence events were continuous over a period of time and were so intermingled and unidentifiable, there was one continuous occurrence. Allocation of liability between policies that were in effect during the time period would apply.
Here there were numerous victims who were sexually abused by several priests. There were specific occurrences that were discrete and identifiable events - the priests' sexual abuse of the victims. Each victim suffered an injury and had readily identifiable damage on each separate occasion of sexual abuse. The sexual abuse was what caused the damages to the victims. Therefore, under the actual-injury rule, the occurrence was the time when the victims were sexually abused by the priests. There were separate occurrences for each separate sexual abuse for each victim and each priest. The victims each suffered separate abuse and it was this occurrence that triggered the policy that was at risk at that time.
Therefore, the Diocese's motion for partial summary judgment was granted.
