Appeal from the Circuit Court of Cook County. No. 88 CH 10547. Honorable Everette A. Braden and Thomas P. Durkin, Judges Presiding.
Released for Publication November 10, 1997.
The Honorable Justice O'brien delivered the opinion of the court. Cahill, J., and Theis, J., concurring.
The opinion of the court was delivered by: O'brien
The Honorable Justice O'BRIEN delivered the opinion of the court:
The defendant, Interstate Fire Insurance Company (Interstate), appeals from orders entered on cross-motions for summary judgment in a declaratory action determining (1) that the repeated sexual molestation of a minor by a negligently supervised priest affiliated with the plaintiff, the Roman Catholic Diocese of Joliet, Illinois, a trust (Diocese), constituted a single "occurrence" under policies issued by the defendants, and that (2) Interstate must indemnify the Diocese for all sums of money over and above a $75,000 self-insured retention (SIR) and $100,000 in primary insurance provided jointly by Underwriters at Lloyd's of London (80%) and Centennial Insurance Company (20%) (collectively referred to as Lloyd's). We reverse.
The underlying lawsuit arose out of a sexual relationship between a priest affiliated with the Diocese and, a female minor resulting in criminal action against the priest and a civil action against the Diocese for negligent supervision of the abusive priest. The Diocese reached a settlement in the civil action and made payments of $300,000 to the minor and $150,000 to the minor's parents for parental loss of consortium.
Thereafter, the Diocese filed this declaratory action seeking reimbursement from its insurers. The complaint alleged, inter alia:
"9. That in July of 1985, an 'accident, or happening, or event' took place which resulted in personal injury to an individual, who alleged that the proximate cause of the injury was the alleged negligence of the Diocese, which negligence also allegedly resulted in aggravating the injury in August of 1986."
A review of the policies attached to the complaint reveals that the Diocese maintained the following insurance coverage:
Period Diocese Lloyd's Interstate
I 9/1/84-9/1/85 $75,000 $100,000 $4.8 million
II 9/1/85-9/1/86 $100,000 $100,000 $4.8 million.
The Lloyd's policies are typical "occurrence" type policies which contain the following insuring agreement:
"Lloyd's] hereby agree[s] * * * to indemnify the [Diocese] for all sums which the [Diocese] shall be obligated to pay by reason of the liability imposed upon the [Diocese] by law * * * for damages * * * as more fully defined by the term 'ultimate net loss' on account of personal injuries * * * arising out of any occurrence happening during the period of Insurance."
The Lloyd's policies define "occurrence" as:
"an accident or happening or event or a continuous or repeated exposure to conditions which unexpectedly and unintentionally results [sic ] in personal injury, or a damage to property during the policy period. All such exposure to substantially the same general conditions existing at or emanating from one location shall be deemed one occurrence."
Although the Interstate policies generally follow the form of the corresponding Lloyd's policies, Interstate modified its liability as of September 1, 1985, by the addition of an endorsement excluding coverage for claims arising from the Diocese's failure to control or prevent acts of sexual or physical abuse or molestation by any employee of the Diocese.
Based upon the foregoing, the Diocese sought $100,000 from Lloyd's, and $250,000 of from Interstate, in reimbursement for the $450,000 in settlements paid to the minor and her parents.
Interstate answered the complaint, stating:
"9. In answer to the allegations contained in Paragraph 9, Defendant admits that an incident allegedly occurred in July of 1985 resulting in personal injury to an individual and that the individual also alleged that the proximate cause of the injury was the alleged negligence of THE DIOCESE, which negligence also allegedly resulted in an aggravation of the injury in August of 1986 and thereafter."
The parties filed cross-motions for summary judgment. The trial court conducted a hearing on the motions at which ...