TIG Insurance Company v. Missionary Oblates of Mary Immaculate

Background

This diversity case concerns insurance coverage for claims that Father James Vincent Fitzgerald sexually abused children. The intervenors are identified as Doe 86, Doe 121, Doe 155, Doe 329, Doe 330, Doe 371, and Doe 419. They claim that Fitzgerald, a priest affiliated with the Missionary Oblates of Mary Immaculate, abused them beginning in the mid-to-late 1970s.

TIG issued primary and umbrella insurance policies to the Oblates from June 1, 1973, through June 1, 1979, although the parties disputed whether TIG issued an umbrella policy covering June 1, 1978, through June 1, 1979. The Oblates tendered the intervenors’ claims to TIG. TIG sought declarations that its policies did not cover the claims, while the intervenors sought recovery from TIG under settlements with the Oblates. The claims of Does 155 and 419 had previously been dismissed by stipulation.

The parties agreed that Minnesota law governed. Summary judgment is appropriate when no genuine dispute of material fact exists and the moving party is entitled to judgment as a matter of law. At this stage, the court views the evidence and reasonable inferences in favor of the party opposing the motion.

First Motion: Expected Harm

TIG argued that the abuse claimed by Does 86, 121, 329, 330, and 371 was not a covered “occurrence.” The policies defined an occurrence as an accident resulting in bodily injury or property damage that was neither expected nor intended from the insured’s standpoint. Under Minnesota law, an injury is “expected” when the insured knew or should have known there was a substantial probability that the injury would occur.

TIG relied on evidence concerning earlier incidents involving Fitzgerald, including a 1963 incident in Illinois, a 1966 or 1967 incident in South Dakota, a reported 1974 allegation, Fitzgerald’s participation in a clinical pastoral education program, and generalized concerns about his relationships with young people. TIG argued that the Oblates’ knowledge of these matters meant they should have known that Fitzgerald was highly likely to abuse children again.

The court denied the motion. It found genuine disputes about what certain earlier incidents involved, whether a 1974 reference was mistaken, why Fitzgerald attended the clinical pastoral education program, and why he was transferred between assignments. The court also found that some evidence was indefinite and that the record did not show the same number of reported and admitted abuse incidents present in an earlier case relied on by TIG. A reasonable jury therefore could find that the Oblates did not know, or have constructive knowledge, of a substantial probability that Fitzgerald would abuse these intervenors.

The opinion notes uncertainty about whether Doe 121 was included in TIG’s first motion. TIG referred to Doe 121 in the motion but omitted Doe 121 from most of its supporting memorandum. The court assumed Doe 121 was included because there was no apparent reason otherwise and the alleged abuse occurred around the same time as the other claims.

Second Motion: Bodily Injury

TIG argued that Does 121 and 371 could not establish “bodily injury” under the policies. The policies covered damages because of bodily injury and defined that term as bodily injury, sickness, or disease sustained during the policy period.

Does 121 and 371 testified that they had not suffered physical injuries from Fitzgerald’s conduct. They relied on allegations in their amended complaint and bankruptcy proofs of claim describing depression, anxiety, post-traumatic stress disorder, substance use, suicidal thoughts or attempts, sleep problems, and other psychological or emotional effects. They did not provide separate evidence showing physical injury or appreciable physical effects of emotional distress.

Applying Minnesota law, the court held that “bodily injury” means physical injury and does not include purely mental or emotional distress. Emotional distress can qualify only when accompanied by appreciable physical manifestations. The court rejected the argument that physical contact during sexual abuse alone satisfied this requirement, explaining that the Minnesota cases cited by the intervenors did not establish that rule. The court also distinguished Minnesota cases addressing “personal injury” under a sexual-abuse statute, because that statute expressly included severe mental anguish.

The court granted TIG’s motion concerning Does 121 and 371, ruling that they had not shown a bodily injury or an emotional injury accompanied by appreciable physical manifestations and therefore had not shown that their claims fell within the TIG policies’ coverage. The court limited its discussion to injuries alleged to have occurred before June 1, 1979, because the intervenors did not oppose TIG’s argument concerning injuries after the policy period.

Third Motion: Existence of the 1978–1979 Umbrella Policy

TIG argued that the Oblates and intervenors had failed to prove that TIG issued an umbrella policy effective June 1, 1978, through June 1, 1979. The actual policy had not been found. Under Minnesota law, an insured may prove the existence and essential terms of a lost policy through circumstantial evidence.

The court held that the preponderance-of-the-evidence standard applied. It then found that the evidence could allow a reasonable jury to conclude that the policy existed and had materially the same terms as the 1977–1978 umbrella policy. The evidence included a handwritten policy number on the prior policy’s declarations page, a June 24, 1978 memorandum in which TIG sought reinsurance for an Oblates umbrella policy, payments from the Oblates to TIG during the relevant period, and similarities between the earlier TIG policy and the later umbrella policy issued by Integrity Insurance Company.

TIG challenged the handwritten policy number, the payment records, and the inferences from the reinsurance memorandum. The court found those arguments suitable for consideration by a jury rather than grounds for summary judgment. It denied TIG’s motion on the existence of the 1978–1979 umbrella policy.

Order

The court ordered that: