The federal district court rejected the insured's argument and held that the policy's Limit of Liability section placed an annual cap on the aggregate limits available under the policy. Evanston Ins. Co. v. Roman Catholic Bishop of Orange, 2024 U.S. Dist. LEXIS 229122 (C.D. Cal. Dec. 17, 2024).
John OC-5 Doe (Doe) filed a lawsuit against the Roman Catholic Bishop of Orange (Bishop) and the Roman Catholic Archdiocese of Los Angeles seeking to impose liability for the alleged sexual molestation by Father Ramos and Father Widera. Evanston's predecessor-in-interest, Associated International Insurance Company (Associated), issued policies with periods of twelve months from 1977 to 1981. Doe alleged abuse by Ramos during the Associated policy period. The alleged abuse by Widera purportedly occurred after the Associated policy expired.
The lawsuit was settled in December 2023. Evanston took the position that the Associated policy had a $4 million annual aggregate limit and that there was only $2,585,750 in annual limits available for the 1979-1980 policy year to fund the settlement with Doe. Evanston agreed to contribute $2,585,750, less than the $4 million annual per occurrence limit of liability, toward the Doe settlement The Bishop accepted the settlement contribution for Evanston, but reserved all rights to pursue Evanston for the $4 million annual per occurrence limit.
Evanston filed suit seeking in Count I a declaration that the $4 million annual aggregate limit of liability under the Associated policy applied to all past and present sexual molestation claims made against the Bishop, and that once it paid its agreed-upon contribution to the Doe settlement, that Evanston would exhaust the indemnity obligation under the Associated policy for the 1979 to 1980 policy period. The Bishop filed a counterclaim, requesting a judicial determination that there was no annual aggregate under the Associated policy applicable to molestation claims, and that the annual per occurrence limit of liability under the Associated policy was $4,000,000. Evanston filed a motion to dismiss Count I of the counterclaim.
The Associated policy capped Evanston's liability to "only the excess thereof up to a further $[4 million] Ultimate Net Loss in respect of each occurrence subject to a limit of $ [4 million] in the aggregate for each annual period during the currency of this Policy, separately in respect of Products Liability and separately in respect of Occupational Injury." Evanston argued that the provision unambiguously contained an aggregate limit for general liability claims, including the sexual molestation claims at issue in the Doe lawsuit.
In other California appellate court decisions, courts found that similar language could not reasonably be interpreted to subject the insurer to the potential of unlimited liability. Following these prior decisions, the court found that the aggregate limit provision was unambiguous. The only reasonable interpretation was that the policy contained a $4 million aggregate limit for general liability claims, and separate aggregate limits for products liability and occupation injury. The Bishop's contrary interpretation would mean that Associated contracted to cap its liability at $4 million per ccurrence, but inexplicably set no ceiling on its annual aggregate liability for a series of occurrence giving rise to general liability. This reading of the aggregate limit provision was unreasonable and contrary to the plain language of the Associated policy. "Separate" did not mean "only."
Therefore, the court found that the Associated policy included a $4 million annual aggregate limit for general liability claims and separate annual aggregate limits for products liability and occupational injury. The court granted Evanston's motion and dismissed the Bishop's first counterclaim.
