Church, Not Insurers Pay, in Phoenix Priest Abuse

The Catholic Diocese of Phoenix cannot claim indemnity insurance coverage to pay for court settlements of four alleged cases of priests sexual abuse of young boys, a federal appeals court held Wednesday.

The 9th U.S. Circuit Court of Appeals, in a 2-1 vote, reversed a trial judge’s holding in favor of the church.   The opinion does not name the amount of the settlement, but in one instance the Phoenix diocese is believed to have settled for $100,000 in 2006.

The excess liability policies excluded “liability of  any assured for assault and battery committed by or at the direction of such assured.”  The question for the appeals court was whether “any” applied to the church or only to the offending priest.

The district court held the exclusion applied only to the priest.  The appeals court overturned the decision saying the ordinary meaning of the exclusion was consistent with Arizona law that precluded coverage for “any assured,” which would mean exclusion of insurance protection for both the person who committed the assault as well as innocent co-insureds.

The lawsuit began after the Diocese settled four lawsuits for alleged sexual abuse by its priests.  The Diocese sought a court declaration that it should be indemnified from liability by its insurer Lloyd’s of London.

But Lloyd’s policy said the  coverage did not apply to “any assured” for assault and battery and that not only meant the priests but the Catholic church as well, according to the majority.

In dissent, Judge Dorothy Nelson said she believes the plain language of the policy excludes coverage only for individuals who commit or direct assault and battery and she would affirm the district court.

Both Judge Margaret McKeown, writing the majority, and Nelson agreed, the entire case turned on the meaning of “any assured.”

It has been estimated there have been as many as 3,000 civil lawsuits filed against the Catholic Church in the U.S. over claims of sexual abuse by priests, some resulting in multi-million dollar settlements.

In 1998, the Diocese of Dallas paid nearly $31 million to a dozen victims of one priest.  From 2003 to 2009 another 375 cases, with nearly 1,600 claimants allegedly produced payments of $1.1 billion by the church, according to a 2011 ABC review of cases.

Case:  Interstate Fire & Casualty co. v. Roman Catholic Church of the Diocese of Phoenix, No. 12-17195



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