Fourth Circuit: No Coverage for Defrocked Priest’s Sexual Abuse

Ranta v. Catholic Mut. Relief  Soc’y of Am.
(4th Cir. (S.C.) July 24, 2012)

The Fourth Circuit recently upheld a denial of coverage to a Catholic priest accused of sexually abusing the plaintiff, finding that the molestation did not amount to an “occurrence” within the meaning of the policy.

The plaintiff filed suit against Wayland Yoder Brown, a defrocked Catholic priest and convicted pedophile, the Roman Catholic Diocese of Savannah, and the Diocese’s former and current bishops, alleging that Brown sexually molested, raped, and physically assaulted him as a minor from 1978 to 1982, resulting in years of psychological damage with physical manifestations. The plaintiff ultimately reached a “Settlement Agreement and Release” with the Roman Catholic Diocese of Savannah, whereby he agreed to release “any and all” claims against the named defendants, with the exception of Brown, as well as the defendants’ insurers, including Catholic Mutual. In return, the defendants agreed to pay the plaintiff $4.24 million “in full settlement and discharge of all claims which are, or might have been, the subject matter of the Complaint.”

The plaintiff subsequently filed a motion for summary judgment against Brown, who was not a party to the Settlement Agreement. In response, Brown pled his Fifth Amendment right against self-incrimination. The court granted the plaintiff’s summary judgment on all causes of action, awarding him $50 million in actual damages and $50 million in punitive damages based upon “the violent and severe sexual abuse” suffered by the plaintiff, the pain and suffering that resulted, and the extensive and substantial medical care incurred.

The plaintiff then filed a declaratory judgment action against Catholic Mutual, seeking a declaration that it was obligated to indemnify Brown for the $100 million judgment against him. Catholic Mutual argued that it had no such duty to indemnify because Brown’s acts did not constitute an “occurrence.” The district court agreed and the Fourth Circuit affirmed. In so ruling, the Fourth Circuit rejected the plaintiff’s argument that Brown’s conduct was negligent because he knew or should have known he was a danger to children, yet failed to protect the plaintiff from him, thereby breaching his fiduciary duties as a priest. The court noted that sexual abuse is intentionally injurious as a matter of law and, therefore, does not amount to an “occurrence” within the meaning of the policy.

For a copy of the decision, click here..

Joanna M. Roberto and Carrie P. Appler

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