IFC v. Roman Catholic Church, No. 12-17195 (9th Cir. 2014)
Annotate this CaseAfter the Diocese settled four lawsuits for alleged sexual abuse by its priests, the Diocese filed a declaratory judgment action seeking entitlement to indemnification under IFC's excess liability indemnity policies. The policy provided by IFC to the Diocese excludes "liability of any Assured for assault and battery committed by or at the direction of such Assured..." The court concluded that, based on the ordinary meaning of this exclusion and consistent with Arizona law, "the language 'any insured'... express[es] a contractual intent to prohibit recovery by innocent co-insureds." In this case, the assault and battery exclusions applied to innocent co-insureds. Accordingly, the court reversed the district court's judgment in favor of the Diocese, and vacated and remanded its grant of attorneys' fees and taxable costs.
Court Description: Arizona Insurance Law. The panel reversed the district court’s judgment in favor of the Roman Catholic Church of the Diocese of Phoenix, and vacated and remanded the district court’s grant of attorneys’ fees and taxable costs, in a diversity insurance coverage case concerning indemnity for the alleged sexual abuse of adolescent males by priests in the Diocese. Following the Diocese’s settlement of four lawsuits for alleged sexual abuse by its priests, the Diocese sought indemnification under its insurer’s excess liability indemnity policies. The policy excluded “liability of any Assured for assault and battery committed by or at the direction of such Assured . . . .” The district court construed the exclusion as applying only to the offending priest, and concluded that the exclusion did not foreclose coverage for the Diocese of the sexual abuse claims. The panel held, based on the ordinary meaning of the exclusion and consistent with Arizona law, because the exclusion precluded coverage for “any assured” the assault and battery exclusion categorically excluded coverage for both the insured who committed the assault and battery as well as innocent co-insureds. The panel remanded to the district court to determine whether the insurer was the “successful party” under Arizona law, and if so, whether to award attorneys’ fees. Judge D.W. Nelson dissented because she believes that the disputed policy provision excluded coverage only for those individuals who committed or directed an assault or battery, and she would affirm the district court.
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