Interstate Fire & Casualty Co. v. Roman Catholic Church of the Diocese of Phoenix
761 F.3d 953
9th Cir.2014Background
- Diocese of Phoenix settled four lawsuits alleging sexual abuse by priests and sought indemnification under Interstate Fire & Casualty Co. (IFC) excess policies that followed Lloyd’s of London form.
- Lloyd’s policy defined “Assured” to include the Diocese and "any official, trustee or employee" acting within duties, and insured against personal-injury liability for occurrences during the policy period.
- The policy contained an assault-and-battery exclusion: "THIS INSURANCE DOES NOT APPLY—(a) to liability of any Assured for assault and battery committed by or at the direction of such Assured..."
- District court construed the exclusion to bar only the offending priest (i.e., "such Assured" = the insured who committed the act) and granted summary judgment to the Diocese.
- IFC appealed, arguing "any Assured" plus "such Assured" means the exclusion bars coverage for all insureds (including innocent co-insureds) if any insured committed the excluded act.
- Ninth Circuit majority reversed: applying ordinary meaning of "any" and "such" under Arizona law, the exclusion precludes coverage for innocent co-insureds; attorneys’ fees award vacated and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the assault-and-battery exclusion bar coverage for innocent co-insureds when the policy excludes "liability of any Assured ... committed by or at the direction of such Assured"? | "Such Assured" refers only to the specific insured who committed or directed the assault/battery; therefore innocent co-insureds remain covered. | "Such Assured" refers back to "any Assured;" the exclusion, read plainly, bars coverage for any insured if the excluded act is committed by any insured. | Reversed district court: exclusion applies to innocent co-insureds; if any insured commits excluded act, others cannot recover. |
Key Cases Cited
- Am. Family Mut. Ins. Co. v. White, 204 Ariz. 500, 65 P.3d 449 (Ariz. Ct. App.) (interpreting "any insured" exclusion to bar coverage for claims attributable to excludable acts of any insured)
- Brown v. United States Fidelity & Guar. Co., 194 Ariz. 85, 977 P.2d 807 (Ariz. Ct. App.) ("any insured" language encompasses all persons insured under the policy)
- Phelps Dodge Corp. v. Brown, 112 Ariz. 179, 540 P.2d 651 (Ariz. 1975) (words in insurance policy given their ordinary meaning; read policy as whole)
- Sales v. State Farm Fire & Cas. Co., 849 F.2d 1383 (11th Cir. 1988) ("any insured" unambiguously expresses intent to prohibit recovery by innocent co-insured)
- Spartan Petroleum Co. v. Federated Mut. Ins. Co., 162 F.3d 805 (4th Cir. 1998) ("such" refers back to the immediately preceding referenced item)