Professional Services Exclusion Does Not Bar Diocese’s Sexual Abuse Claimsshoke2013
Sexual abuse does not constitute professional services.
The Bankruptcy Court for Minnesota, applying Minnesota law, held coverage for sexual abuse claims against a priest are not barred by a professional services exclusion in a Comprehensive General Liability Policy, because the abuse claims do not arise out of the priest’s professional service.
The Diocese of Duluth (the “Diocese”) filed a petition under Chapter 11 due to liabilities arising from negligence claims asserted by victims of sexual abuse by priests within the Diocese. The Diocese sought coverage from its insurer, Liberty Mutual Insurance Company (“Liberty Mutual”), for the negligence claims. Liberty Mutual denied coverage. The Dioceses filed an adversary proceeding against Liberty Mutual seeking declaratory relief. The Diocese moved for summary judgment regarding the applicability of a professional services exclusion found in the Liberty Mutual policies which stated: “It is further understood and agreed that no coverage is afforded by this policy for claims due to the rendering of any professional service or omission thereof.”
The Diocese argued that the exclusion does not apply because the claims for sexual abuse were not due to the rendering of a professional service. In contrast, Liberty Mutual argued that the professional service exclusion bars coverage for the underlying claims because the sexual abuse took place as a result of the claimants’ participation in church activities and because the claimants trusted the Diocese and the abuser priests due to the very nature of services provided by the church. According to the court, the case law is not clear regarding when harm is “due to the rendering of any professional services.” However, the court found that “[e]ven assuming that priests are professionals who occasionally provide professional services, in no world – legal or religious – would raping or sexually battering children be the rending of professional service.” Thus, the court ruled that the exclusion does not apply to the sexual abuse claims. Liberty Mutual argued that, even so, the professional service exclusion should apply to exclude coverage because the Diocese’s supervision of its priests is the rendering of professional services. The court disagreed and found that supervising an employee or other subordinate is not the rendering of professional services. Thus, the court granted the Diocese’s motion for summary judgment and ruled that the professional service exclusion does not apply to exclude the sexual abuse claims. Diocese of Duluth v. Liberty Mutual Group, BKY 15-50792, ADV 16-5012 (Bankr. D. Minn. Mar. 3, 2017).