When Years of Abuse Count as One Occurrence

The district court worried that an insured could change the meaning of “occurrence” whenever the money changed. Judge Gregory Phillips’s answer was blunt: “This could happen. So what?”

An insured facing a large retained limit might insist that several injuries arose from one occurrence, allowing the losses to be added together until coverage began. The same insured, facing a per-occurrence cap in another case, might call each injury a separate occurrence and multiply the available limits. The preferred meaning would move with the money.

The Tenth Circuit treated that flexibility as the price of language capable of carrying both meanings. Utah law resolves ambiguity in an insurance policy in favor of coverage. When the insurer chooses words that support two reasonable readings, Phillips wrote, it has invited the insured to play “heads I win tails you lose.” The solution belongs at the drafting table: “Ambiguous provisions thus carry a high price.”

That rule revived a coverage claim arising from years of child sexual abuse in West Virginia. Michael Jensen abused children between 2007 and 2011. Some of his victims and their families later sued the Church, Jensen’s parents, and local Church officials, alleging that adults who could have protected the children failed to report warnings, restrict his access, or tell families about his prior conduct. The Church contested that account of its role. The case settled during trial, before a jury decided what Church officials knew or what legal responsibility followed.

The West Virginia lawsuit concerned what adults knew and failed to do. The Utah lawsuit concerned what National Union and ACE had promised to cover. The first ended without a verdict. The Tenth Circuit answered the ambiguity question and returned the remaining coverage issues to Utah with the Church’s reading established as reasonable.

A settlement before judgment

The history began in Provo, Utah, in 2004. Jensen was thirteen when he groped two thirteen-year-old classmates on separate occasions. Prosecutors charged two felonies; he pleaded guilty to two misdemeanors. Some of the later West Virginia plaintiffs alleged that the Church had “put its thumb on the scale” to obtain that result. They pointed to Jensen’s grandfather, a high-ranking Church official, and to another prominent official’s presence at the juvenile proceeding. One of Jensen’s friends later testified that Jensen said his grandfather had “helped him get out of the trouble.” The Church contested the inference that it had intervened.

Months later, the Jensen family moved to Martinsburg, West Virginia. Jensen’s father joined the Stake High Council, which advises local Church leaders and assists with communications and discipline. His mother became president of the Relief Society, the Church’s women’s organization, and offered her son as a babysitter to other Church families. While babysitting and staying in those families’ homes from 2007 through 2011, Jensen sexually abused several children. He was convicted of sexual assault and sexual abuse in 2013.

Some of the children and their families sued Jensen, his parents, Church officials, and Church entities for negligence, fraud, intentional infliction of emotional distress, and civil conspiracy. They sought to introduce evidence concerning Jensen’s Utah offenses, what adults knew, and the Church’s practice of annotating membership records to restrict people considered a risk to children.

A trial judge excluded much of that evidence and granted summary judgment to the Church defendants on the conspiracy claim. In 2017, the Supreme Court of Appeals of West Virginia reversed in Jane Doe-1 v. Corporation of the President. The court held that the disputed evidence belonged before a jury, including evidence from which jurors could assess what Church officials knew and whether Church actors and the Jensen family had worked together to conceal the danger.

The case proceeded to trial and, in 2018, ended in a confidential settlement with the remaining plaintiffs before verdict. FLOODLIT, citing later coverage filings, reported a $32 million settlement and more than $27 million in Church defense costs. The Tenth Circuit omitted the actual settlement amounts and retained limits from its opinion under a protective order designed to preserve the children’s identities and the confidentiality of the agreements.

During the trial, the Church asked National Union and ACE to cover the settlement and defense costs. Both refused.

What one occurrence was worth

After the settlement, the Church sued both insurers for breach of contract in federal court in Utah. For each occurrence, the Church had to absorb a retained limit before coverage began. The opinion illustrated the mechanics with round numbers: with a $100 retained limit, a $99 loss leaves the insurer owing nothing, while a $101 loss obliges it to pay one dollar.

No settlement with a single victim exceeded the applicable retained limit. The settlements exceeded it when added together. The number of occurrences therefore controlled whether the losses could be combined to reach the insurers’ layer of coverage.

National Union and ACE focused on Jensen’s assaults. Different children were abused at different times and in different places. Each child’s injury, the insurers argued, arose from a separate occurrence. On that reading, the retained limit applied anew to each victim and never triggered coverage.

The Church focused on the conduct alleged against it. Its potential liability rested on its own alleged failures: warnings withheld, access left unrestricted, suspected abuse unreported, and available safeguards unused. The Church argued that those failures created one continuing dangerous condition. The settlements could then be aggregated as losses arising from one occurrence.

U.S. District Judge Tena Campbell accepted the insurers’ reading, adopting an analogy ACE would defend on appeal. The Church’s theory, on this view, cast Jensen as a bad driver whom the Church negligently hired and who injured several people in a single crash. His repeated assaults looked instead like a driver negligently allowed back on the road despite repeated accidents. Each assault was a separate occurrence, and each retained limit stood alone.

The insurers used the analogy to argue that each assault was a separate occurrence. The Tenth Circuit looked instead to the policy text because Utah law did not permit the court to resolve ambiguity by appealing to “common sense.”

The language National Union and ACE chose

Both policies defined an occurrence to include an accident involving “continuous or repeated exposure to substantially the same general harmful conditions.” National Union’s policy then provided that all such exposure “will be deemed to arise out of one Occurrence.”

ACE’s policies went further, treating such exposure as one occurrence “regardless of the frequency or repetition thereof, or the number of claimants.” ACE’s wording shifted across the policy years, but ACE did not argue that the changes affected the appeal.

The Church called the “dangerous environment” created by its alleged failures the shared harmful condition. Each child, it argued, encountered the same danger: adults and Church safeguards that failed to restrict Jensen or warn families. National Union’s deeming clause could group those exposures as one occurrence. ACE’s language strengthened the argument by saying frequency, repetition, and the number of claimants would not divide it.

The panel assumed the district court’s per-victim reading was plausible and held that the Church’s single-occurrence reading was also plausible. It declined to rank them: “We hold only that it is plausible,” Phillips wrote. Under Utah law, two plausible readings make a clause ambiguous, and an ambiguous insurance clause is read in favor of coverage.

National Union and ACE cited decisions counting each assault or victim as a separate occurrence. The opinion identified three approaches: some courts count a continuing failure to protect as one occurrence; others count separate abuse as separate occurrences; and a third group finds similar language ambiguous and applies the insured’s reasonable reading. The panel noted that one of the multiple-occurrence cases involved a policy without a deeming clause.

The disagreement among courts reinforced the conclusion that the language was ambiguous. Utah law required the court to adopt the Church’s interpretation because it plausibly fit the policy language, even if it was not the best reading and other courts had read the same clause differently.

The district court had also relied on Lee v. Interstate Fire & Casualty Co., a clergy-abuse coverage case decided under Rhode Island law, where the Seventh Circuit declined to read ambiguity against a drafter in a dispute between two insurers. Phillips distinguished that setting. One insurer had followed the other’s form and was treated as equally responsible for its wording; the protection Utah gives an insured purchasing coverage was absent. Here the dispute was between insurers and their insured.

The opinion leaves the sophisticated-insured argument untouched. The district court did not decide whether the Church’s wealth and bargaining power should alter Utah’s rule, and no party raised the issue on appeal.

ACE against ACE

ACE’s insistence that the policies had only one possible meaning faced a problem from ACE’s own litigation elsewhere.

In a New Jersey coverage case involving the Diocese of Trenton, ACE argued that 87 actions involving 212 victims, with allegations reaching back to the 1940s, could arise from one longstanding policy of concealing sexual abuse. ACE described that alleged policy as the “proximate, uninterrupted and continuing cause” of the victims’ injuries.

The financial incentives were reversed. In New Jersey, a single-occurrence theory could confine many claims within one liability cap. In Utah, the same theory could let the Church aggregate losses past a retained limit. ACE adopted that continuing-concealment theory there and described a per-victim reading as unambiguous here.

Phillips used the Trenton filing as evidence against ACE’s claim of clarity. The same insurer had treated decades of alleged concealment and hundreds of victims as one continuing cause. The Utah policies still had to be read on their own terms, but ACE’s New Jersey position made its assertion of a single, unambiguous meaning in Utah difficult to sustain.

Phillips cited ACE’s Trenton position in rejecting its claim that the Utah policies had only one possible meaning. The insurers could have defined one occurrence per victim, assault, or policy period; they had not done so.

Coverage after remand

The reversal establishes that the Church’s one-occurrence reading is reasonable under Utah law. It does not establish that either insurer must pay, because the policies contain other coverage requirements.

National Union argues that its policy expired before most of Jensen’s abuse. ACE argues that settlements involving injuries across several policy periods cannot be combined, that some claimed emotional injuries do not qualify as bodily injury, and that it bears no responsibility for the Church’s defense costs. The district court entered summary judgment without deciding those issues, so the Tenth Circuit left them for remand. The Church also did not appeal the dismissal of its bad-faith claim against ACE. The aggregation issue may prove decisive: the Church’s single-condition theory spans several policy years.

The opinion also draws a line around the underlying facts. Because the West Virginia case settled before verdict, no jury determined the Church’s role in Jensen’s access to the children. The Tenth Circuit said only that the Church was “potentially liable.” The district court and National Union pointed to evidence suggesting officials should have known the risk; the Church answered that the record did not show its officials received most of the alleged warnings.

The West Virginia case ended before jurors decided whether the Church had failed to protect the children. Yet the Church’s theory under the policies treats those alleged failures as the one occurrence linking every payment. Any coverage payment would allocate the bill; the underlying allegations remained unadjudicated.

On remand, National Union and ACE may press the defenses the Utah district court never reached. They must do so under policies that, as a matter of law, can be read the way the Church reads them.