Roman Catholic Diocese of Brooklyn v. National Union Fire Insurance
21 N.Y.3d 139, 991 N.E.2d 666 (2013)
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Rule of Law:
Under a commercial general liability policy, numerous incidents of sexual abuse of a minor over several years constitute multiple occurrences, not a single occurrence. Liability for such continuous harm must be allocated on a pro rata basis across all implicated policy periods.
Facts:
- A priest employed by the Roman Catholic Diocese of Brooklyn sexually abused a minor, Alexandra L., on multiple occasions from August 1996 through May 2002.
- The abuse occurred in various locations, including a church rectory, the priest's vehicle, the plaintiff's home, and another home in Amityville, New York.
- During this period, the Diocese was covered by a series of consecutive one-year commercial general liability insurance policies.
- National Union Insurance Company of Pittsburgh, Pa. issued three of these policies, covering the period from August 31, 1995, to August 31, 1998.
- Each National Union policy included a $750,000 liability limit and a $250,000 self-insured retention (SIR) applicable to 'each occurrence'.
- In 2007, the Diocese settled a civil action brought by the victim's family for $2 million plus 'additional consideration'.
- The Diocese subsequently sought reimbursement for the settlement from National Union under its policies.
Procedural Posture:
- The Roman Catholic Diocese of Brooklyn filed a declaratory judgment action against National Union Insurance Company in New York Supreme Court (the trial court) to secure indemnification for a settlement.
- National Union moved for partial summary judgment, arguing the abuse constituted multiple occurrences requiring multiple self-insured retentions (SIRs) and that liability should be allocated pro rata.
- The Diocese cross-moved for partial summary judgment, arguing National Union waived these defenses and that the abuse was a single occurrence.
- The Supreme Court granted the Diocese's motion, finding National Union had waived its defenses and that the abuse constituted a single occurrence.
- National Union appealed to the Appellate Division of the Supreme Court (the intermediate appellate court).
- The Appellate Division reversed the trial court's order, ruling that the abuse constituted multiple occurrences and liability must be allocated pro rata.
- The Appellate Division granted the Diocese leave to appeal to the Court of Appeals (the state's highest court).
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Issue:
Under a commercial general liability policy, do numerous incidents of sexual abuse of a minor by a single individual over several years constitute multiple occurrences, and must liability for a settlement be allocated pro rata across all implicated policy periods?
Opinions:
Majority - Rivera, J.
Yes, the numerous incidents of sexual abuse constitute multiple occurrences, and liability must be allocated on a pro rata basis. Applying the 'unfortunate event' test, the court determined that incidents of abuse spanning a six-year period and occurring in multiple locations lacked the requisite temporal and spatial closeness to be considered a single occurrence. The court rejected the argument that the Diocese's negligent supervision was the single cause, clarifying that the test focuses on the nature of the incidents giving rise to damages, not the sole proximate cause. The policy language defining an occurrence as 'continuous or repeated exposure to substantially the same general harmful conditions' was deemed inapplicable, as a person is not a 'condition' in the way environmental hazards are. Because the incidents are multiple occurrences, each one triggers a separate self-insured retention (SIR) for the policy period in which it occurred. Finally, the court held that pro rata allocation is the appropriate method for apportioning liability because the injuries occurred over multiple policy periods and it is impossible to attribute the specific damage to any single period.
Concurring - Smith, J.
No, the abuse constitutes a single occurrence, but Yes, liability must still be allocated pro rata, leading to the same result. The ongoing abuse should be viewed as a single, multi-year occurrence. However, under the precedent of Consolidated Edison, when an injury from a single occurrence is incurred over several policy periods, the liability must be allocated pro rata to each policy. Consequently, the self-insured retention in each policy must be applied against the portion of the injury allocated to it. This means that while there is only one 'occurrence' in theory, a new retention is applied for each policy year, effectively achieving the same financial outcome as the majority's multiple-occurrence finding.
Concurring-in-part-and-dissenting-in-part - Graffeo, J.
No, the abuse constitutes a single occurrence, and while pro rata allocation is correct, only one self-insured retention should apply for the entire multi-year period. The majority misapplied the 'unfortunate event' test. The 'incident' giving rise to liability was the child's continuous exposure to the same negligently supervised priest, which fits the policy's definition of a single occurrence. The abuse was frequent and causally connected by the Diocese's ongoing negligence. The policy's definition of 'occurrence' lacks language restricting it to a single policy period, so the multi-year course of abuse should be treated as one occurrence triggering only one SIR. The majority's holding that each act of abuse is a new occurrence would lead to an absurd result where the Diocese would face dozens of SIRs for a single lawsuit, an outcome the parties could not have intended.
Analysis:
This decision significantly clarifies how New York's 'unfortunate event' test applies to long-tail claims involving repeated intentional torts, such as sexual abuse. By classifying each act of abuse as a separate occurrence, the court prevents insureds from stacking years of liability onto a single policy to trigger only one deductible or self-insured retention. This ruling reinforces the pro rata allocation method for continuous injuries, ensuring that each insurer is only responsible for the portion of harm that occurred during its policy period. The decision has major financial implications for institutions facing historical abuse claims, increasing their out-of-pocket costs and limiting their ability to concentrate losses under a single, favorable policy.
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