A federal judge in Washington delivered mostly good news for insurance carriers on January 23, ruling that decades-old policies provide only narrow coverage in a case involving allegations of abuse at a Kiwanis-affiliated facility.
US District Judge Tiffany M. Cartwright granted only a sliver of what plaintiffs sought in their motion for partial summary judgment. She ruled that Guy Cornwell, who served as interim executive director of the Kiwanis Vocational Home in the late 1980s, had coverage under primary Chubb policies from November 1988 to November 1991. The coverage, however, applies only to Kiwanis activities or activities he performed on behalf of any named insured under those policies. Everything else the plaintiffs requested was denied, including coverage for co-defendant Charles McCarthy, coverage under the older USF&G and Granite State policies, and critically, any expansion of coverage under Washington's continuous trigger rule.
The case stems from former residents of the vocational home who allege they suffered physical and sexual abuse during the 1980s and 1990s. The facility was operated by a separate organization called Lewis County Youth Enterprises, though plaintiffs claim it was affiliated with Kiwanis as a major service project. After bringing lawsuits in Washington state court against Kiwanis, McCarthy, Cornwell and others, the plaintiffs obtained covenant judgments under which McCarthy and Cornwell assigned their rights against the insurers to the plaintiffs. This strategy, increasingly common in historical abuse cases, allowed plaintiffs to pursue coverage directly.
The court's analysis centered on precise policy wording in policies issued between 1977 and 1991 by USF&G, Granite State and Chubb. The USF&G primary policies from October 1977 to October 1985 listed Kiwanis members as named insureds, but also included an endorsement defining persons insured to include any member of the named insured only with respect to liability for activities of the named insured or activities performed by such member on behalf of the named insured. That limiting language proved fatal to much of the plaintiffs' case.
Plaintiffs faced an even more basic problem with the USF&G and Granite State policies. They couldn't prove McCarthy was a Kiwanis member during the policy periods, which ran from October 1977 to October 1985 for USF&G and October 1980 to October 1983 for Granite State. His deposition testimony was vague, stating only that he was a member just when the vocational home was formed and belonged to the Centralia Kiwanis Club for a short time. As for Cornwell, the plaintiffs conceded he didn't join Kiwanis until a few months after he began employment at the vocational home in 1986, after the USF&G and Granite State policies had expired.
Facing these obstacles, plaintiffs argued McCarthy and Cornwell qualified as Kiwanis affiliates under policy provisions covering subsidiaries and affiliates as named insureds. Judge Cartwright rejected this interpretation, examining the two terms together and noting that subsidiary specifically refers to a company wholly controlled by another. Reading affiliates in that context, the term refers to affiliated organizations, not individuals. The court found that plaintiffs' interpretation would create absurd results, effectively transforming Kiwanis into an unlicensed insurance broker providing coverage to its members for personal and professional risks unrelated to Kiwanis activities.
The biggest defeat for plaintiffs came on the continuous trigger issue. This doctrine is crucial in long-tail injury cases because it can dramatically expand available insurance by pulling in multiple policy years. Under Washington law, when an insured sustains continuous damages, all insurers providing coverage for any portion of the total time period of continuing damage are jointly and severally liable for the entire amount. Plaintiffs argued this should apply to continuous bodily injury, including emotional distress with physical manifestations, resulting from historical sexual abuse.
Judge Cartwright rejected the argument, finding plaintiffs had submitted insufficient evidence to support application of the continuous trigger rule at this stage. The court noted that Washington courts have applied the rule to undiscovered, progressively worsening conditions such as dry rot, leaching chemicals and water damage. Whether ongoing emotional distress from discrete acts of abuse constitutes the same type of continuous, worsening condition remains unclear. More fundamentally, plaintiffs lacked adequate evidence of continuing injury. Much of what they relied on had been stricken from the record because they failed to disclose those documents before filing their summary judgment motion.
The court found that plaintiffs' position would functionally require that any policy purchased at any time after an act of sexual abuse provides full coverage for the life of the victim, calling this an extraordinary proposition unsupported by the evidence.
The case is far from over. The court emphasized it was not deciding whether the insurers actually have a duty to indemnify anyone, as factual questions remain about whether Kiwanis International controlled Lewis County Youth Enterprises or had an agency relationship with the vocational home. Those issues are still being litigated in the underlying state court actions.
For carriers facing historical abuse claims on decades-old policies, the decision offers important guidance. Precise policy language limiting coverage to acts performed on behalf of the named insured can significantly narrow exposure. Insurers can challenge whether alleged insureds actually qualified for coverage during specific policy periods. And the continuous trigger doctrine has limits when applied to historical abuse claims without strong evidence of ongoing, progressively worsening injury during policy periods.
