Coverage and Liability Issues in Sexual Misconduct Claims

MINNESOTACoverage Trigger & Number ofOccurrencesIntentional Acts ExclusionsPerpetrator:Non-perpetrator:Sexual Misconduct ExclusionsIn a case where a priest sexually abused a minor male over an eightyearperiod, the negligent supervision of the priest can constitutean occurrence during each policy period in which the minor wasmolested. Diocese of Winona v. Interstate Fire & Cas. Co., 89 F.3d1386 (8th Cir. 1996). An “occurrence” is not the time when thewrongful act was committed, but when the victim was actually injured.Redeemer Covenant Church of Brooklyn Park v. Church Mut. Ins. Co..,567 N.W.2d 71 (Minn. Ct.App.1997).Intent to injure, for purposes of intentional acts exclusion in aninsurance policy, is inferred as matter of law from acts of sexual abuse.Allstate Ins. Co. v. S.F. 518 N.W. 2d 37 (Minn. 1994) (Insured’s act offalse imprisonment of his daughter while he sexually assaulted herwas inextricably linked with his overall intentional plan to sexuallyassault her and therefore excluded). This is true even if they actsare committed by a minor who allegedly lacked subjective intent toinjure. Illinois Farmers Ins. Co. v. Judith G., 379 N.W. 2d 638 (Minn.Ct. App. 1986); See also Auto-Owners Ins. Co. v. Todd, 547 N.W.2d696 (Minn. 1996). However, the inferred intent rule does not apply tosituations where the perpetrator suffers from mental illness. B.M.B. v.State Farm Fire & Casualty Co., 664 N.W.2d 817 (Minn. 2003).Where diocesan and archdiocesan officials knew priest had previouslymolested minors, there was no “occurrence” within the terms of theinsurers’ policies and they were not entitled to coverage for the timeafter they learned of the molestation. Diocese of Winona v InterstateFire & Cas. Co., 89 F.3d 1386 (8th Cir. 1996). Where a policy has a“joint obligations clause” which provided that the “responsibilities, actsand failures to act of [an] insured person will be binding upon another[insured]”, there was no coverage for a negligent supervision claimarising from a sexual assault. Allstate Ins. Co. v. Steele, 74 F. 3d 878(8th Cir. 1996).Minnesota courts interpret sexual misconduct exclusions broadly soas to guard against indemnifying for intentional and criminal acts.See D.W.H. v. Steele, 512 N.W.2d 586 (Minn. 1994) (No coveragefor sexual assault by minor resident of foster care home on anotherresident); See also State Farm Fire & Cas. v. Williams, 355 N.W.2d421 (Minn. 1984) (No coverage for nonconsensual sexual acts); MorkClinic v. Fireman’s Fund Ins. Co., 575 N.W.2d 598 (Minn. Ct. App.1998) (Professional liability policy does not cover damages causedby sexual misconduct of a physician); Metropolitan Property and Cas.Ins. Co. and Affiliates v. Miller, 589 N.W.2d 297 (Minn. 1999) (No dutyto defend and indemnify insured for negligently failing to warn of orprevent sexual molestation).– 34 –