Roman Catholic Diocese of Brooklyn v. National Union Fire Insurance Co. of Pittsburgh, PA

The mother of a girl who said she was molested by Reverend James Smith sued the Roman Catholic Diocese of Brooklyn (the Diocese) (plaintiff) for negligent hiring and supervision. The abuse allegedly occurred on multiple occasions over a six-year period in several church areas, Smith’s vehicle, and two homes. The Diocese settled the lawsuit for $2 million and demanded reimbursement from its insurers. National Union Fire Insurance Company of Pittsburgh, PA (National Union) (defendant) provided the Diocese primary coverage under consecutive one-year commercial general-liability policies the first three years the abuse occurred. (Another insurer not named in the lawsuit provided coverage the remaining years.) The National Union policies covered damages resulting in bodily injury during the policy period, with a liability limit of $750,000 and a self-insured retention (SIR) of $250,000 for each occurrence. The policy did not include a clause showing the parties intended to aggregate multiple incidents into a single occurrence. The parties agreed National Union was liable for damages over $250,000 for each occurrence within a policy year, capped at $750,000. The Diocese sued National Union seeking indemnity for the settlement. National Union argued that the incidents of abuse were separate occurrences, requiring the Diocese to pay the $250,000 SIR for each one before National Union had to cover the remainder. The Diocese countered that the abuse counted as a single occurrence, requiring only one SIR. The trial court found the abuse constituted a single occurrence. The appellate court reversed, finding it was multiple occurrences each requiring an SIR, but granted the Diocese leave to appeal to New York’s highest court.