Oregon Federal District Court Rules that Allegations of Abuse to Multiple Children by the Same Alleged Abusers is One Occurrence

Knowledge Learning Corporation et al v. National Union Fire Insurance Company Of Pittsburgh, PA et al., Dkt No. 3:10-cv-00188-ST, Order of Summary Judgment (D. Or. November 30, 2010)

The issue before the court was whether six separate lawsuits against the insured alleging mental and physical abuse of multiple children in the same facility and the same classroom, by the same two instructors at the insured's learning centers could be deemed one occurrence under the primary policy language at issue.   Significantly, the insured was obligated to pay a $500,000 self-insured retention per occurrence and the primary policy provided $1M per occurrence limits and $5M aggregate limits.  The excess insurer, who provided $50M per occurrence/ aggregate limits, argued for a finding of multiple occurrences. 

Both the primary and the excess policy define "occurrence" in pertinent part as "an act or threatened act of abuse or molestation. All "bodily injury" and "personal and advertising injury" arising out of the acts of abuse or molestation by one person or two or more persons acting together toward anyone person will be deemed a single "occurrence." A series of related acts of abuse or molestation will be treated as a single "occurrence.""

The insured argued that the definition of "occurrence" breaks down as follows: "Sentence 1: A single "act" or "threatened act" of abuse is a single "occurrence" --without limitation as to the number of victims.  Sentence 2: Multiple acts of "abuse" (whether a "series" or "related acts" or not) by [a.] one person or [b.] two persons or more acting together, "toward any one person," is a single "occurrence." Sentence 3: Any "series of related acts of abuse" are a single "occurrence" --without limitation as to the number of victims."  While the excess insurer argued that the policy language means: "[S]eries of related acts" is not defined and there is no mention of multiple claimants anywhere in the definition. Thus, the reasonable interpretation of this provision is that it relates back to the prior sentence ... and attempts to address sexual abuse claims from an alternative direction. The definition of "occurrence" first addresses "bodily injury" arising from the abuse by one or more persons. Second, the definition addresses multiple acts of abuse against that same person. In other words, the definition addresses both the act(s) and the injury. Significantly, it does not reference multiple claimants, which would have been relatively simple to include in the definition. Importing multiple claimants into the definition of "occurrence" is not reasonable and not consistent with the language of the definition."

The trial court agreed with the insured and ruled,  "the best reading of the definition of "occurrence" is that the first sentence sets forth the general rule that one "act" = one "occurrence" and the latter two sentences set forth two different exceptions to the general rule. Accordingly, although the second and third sentences may overlap (for example, two perpetrators jointly engage in a series of related acts of abuse against the same victim), there are scenarios where the second sentence would apply and the third would not (one perpetrator abuses one victim in two very different ways). Furthermore, I find it notable that the second sentence specifically limits coverage for "bodily injury" caused by actions made "toward anyone person" whereas the third sentence grants broad coverage without limitation to the number of victims affected by the abusive acts.  See ORS 42.230 (the court may not insert words into a contract)."