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 asked what adults knew and failed to do.
The Utah lawsuit asked what National Union and ACE 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 did not ask which approach represented
the national consensus. It asked whether the Church’s interpretation
plausibly fit the words the insurers used. A plausible reading must be
adopted even if it is not the best one and even if other courts read the
same clause differently. The Church’s reading fit.

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.