Clergy Sexual Misconduct: Claims for Negligent Misrepresentation by Religious Institutions Are Neither Covered by Liability Insurance Nor Constitutionally Viable
In John Doe 1 v. Archdiocese of Milwaukee (Doe II),[i] the Wisconsin Court of Appeals recently held that negligent misrepresentation claims were not covered under a commercial general liability (CGL) policy where the claims alleged that the Archdiocese of Milwaukee misrepresented that children were safe in the presence of certain priests. Relying on the Wisconsin Supreme Court’s decisions in Everson v. Lorenz[ii]and Stuart v. Weisflog’s Showroom Gallery, Inc. (Stuart II),[iii] the court concluded that the Archdiocese’s representations of safety were volitional acts that could not be characterized as accidental and, therefore, the plaintiffs’ damages were not caused by an “occurrence” as required for coverage under the CGL policy.[iv]
The Archdiocese filed a petition for review of Doe II on December 23, 2010; however, the Archdiocese's subsequent filing for Chapter 11 bankruptcy[v] significantly reduces, if not eliminates, the likelihood of supreme court review in this instance. Nonetheless, this insurance coverage issue is likely to work its way to the supreme court again.[vi] This article addresses not only why Doe II is correct, but why the United States and Wisconsin Constitutions mandate a similar result.
II. Doe I
Doe II, a consolidation of ten appeals involving thirteen underlying lawsuits, has its genesis in Doe I,[vii]an earlier case with the same caption. In Doe I, the plaintiffs sued the Archdiocese for negligent supervision, asserting that the Archdiocese improperly retained and insufficiently supervised Siegried Widera, a Roman Catholic Priest, and “knew or should have known of Widera’s dangerous and exploitative propensities as a child sexual exploiter and/or as an unfit agent.”[viii] The plaintiffs also claimed fraud based on the Archdiocese’s alleged intentional misrepresentation that it was unaware Widera had a history of sexually molesting and was a danger to children.[ix] The plaintiffs contended that they did not discover, nor in the exercise of reasonable diligence should have discovered, that the Archdiocese negligently supervised Widera or knew of Widera’s history of sexually abusing children until 2004, the year that the John Doe plaintiffs learned of Widera’s prior sexual assault conviction.[x]
In considering the plaintiffs' claims, the supreme court concluded that only the negligent supervision claims were barred by the statute of limitations.[xi] The Doe I court determined that the negligent supervision claims were controlled by its prior decisions in Pritzlaff v. Archdiocese of Milwaukee[xii] and John BBB Doe v. Archdiocese of Milwaukee,[xiii] which held that negligent supervision claims are derivative of the underlying sexual molestation, and thus accrue no later than the last incident of assault.[xiv] Because the Doe I plaintiffs’ negligent supervision claims had accrued at least 23 years earlier, the court held that those claims were barred by the statute limitations. The court further held that the tolling periods due to the plaintiffs’ minority age at the time of the underlying assaults were insufficiently long to save the claims,[xv]and declined to toll the statute of limitations based on the plaintiffs’ repressed memories.[xvi]
By contrast, the Doe I court noted that intentional fraud claims are not derivative of the underlying sexual misconduct, and accordingly do not accrue at the time of the last incident of assault. Instead, intentional fraud claims accrue when the aggrieved party discovers facts constituting the fraud (or discovers facts that would lead an ordinary person to investigate whether fraud occurred).[xvii] Doe I thus held that the critical question for purposes of the fraud claims was “when the plaintiffs knew or should have known of the Archdiocese’s alleged knowledge of the priests’ past histories of sexual molestation of children.”[xviii] Because the complaints did not provide sufficient facts for the lower courts to conclusively determine when the claims for fraud accrued, Doe I held that those claims had been improperly dismissed.[xix]
III. Plaintiffs’ Quest to Establish Insurance Coverage
A. Negligent Misrepresentation Claims: Negligent Supervision Redux
Although affirming dismissal of the plaintiffs’ negligent supervision claims, Doe I left their fraud claims intact. On remand, the Doe I plaintiffs amended their complaints to add claims for negligent misrepresentation.[xx]
The amended complaints alleged that: (1) the Archdiocese represented to the plaintiffs and their families that the priests at issue did not have histories of molesting children and were not a danger to children; (2) the Archdiocese owed a duty of care to the plaintiffs because it should have known that the priests would have access to the children, including the plaintiffs, and that parents and children would “‘place their utmost trust in [the priests]’”; and (3) the Archdiocese “‘failed to use ordinary care in making the representation or in ascertaining facts related to the priests.’”[xxi] More specifically, the amended complaints alleged that the Archdiocese’s failures included:
failure to ask [the priests] whether [they] sexually molested children, failure to ask [the priests’] co-workers whether [the priests] molested children or whether they had any concerns about [the priests] and children[,] . . . failure to have a sufficient system to determine whether [the priests] molested children and whether [the priests were] safe, failure to train its employees properly to identify warning signs of child molestation by fellow employees, and failure to investigate warning signs about [the priests] when they did arise.[xxii]
In short, the same conduct that might have supported the Doe I plaintiffs’ negligent hiring and supervision claims, were those claims not time-barred, was now being used as the basis for the negligent misrepresentation claims.
The Doe I plaintiffs were not alone in pursuing this litigation strategy. Indeed, the nine other cases underlying the consolidated Doe II appeal involved identical claims.[xxiii]
B. The Insurance Coverage Calculus
While there may also have been other considerations, it is likely that insurance coverage concerns were behind the plaintiffs’ inclusion of negligent misrepresentation claims against the Archdiocese. This is particularly true given that the Doe I plaintiffs’ only other viable claims were claims based on fraud or other clearly intentional conduct.
Standard form CGL policies typically provide coverage only for those damages or injuries that arise out of an “occurrence." An occurrence is defined, in turn, as “an accident . . . which results . . . in bodily injury . . . neither expected nor intended from the stand point of the insured.”[xxiv] Alternatively, such policies may define occurrence as “an accident” without an intentional acts limitation, but including an express coverage exclusion for injuries or damages that are expected or intended by the insured.
It is well-recognized that the foregoing policy terms preclude coverage for fraud and other intentional acts such as those alleged by the Doe I plaintiffs. Under Wisconsin Supreme Court precedent, an accident is “‘[a]n unexpected, undesirable event’ or ‘an unforeseen incident’ which is characterized by a ‘lack of intention.’”[xxv] Stated differently, an accident is “something that does not occur in the usual course of events or that could not be reasonably anticipated.”[xxvi]
Moreover, as reiterated by the court of appeals in A.O. Smith Corp. v. Allstate Ins. Co., an injury is considered “expected or intended” by the insured when (1) the conduct is an intentional act; and (2) the actor intended to harm or injure.[xxvii] Under certain circumstances, intent to injure may be inferred as a matter of law. The key question in determining when intent to injure may be inferred as a matter of law is whether the conduct alleged is “of such a nature that injury or harm is substantially certain to result.”[xxviii] “Deceit, by its nature, is an act from which an intention to cause harm must necessarily be inferred[;] . . . when fraud or deceit is committed, its natural and intended consequence is to do harm, and, whatever the harm might be, the conduct is not an ‘occurrence.’”[xxix]
Accordingly, following Doe I, clergy sexual abuse plaintiffs whose negligent supervision claims are time-barred require a new theory of liability for religious institutions that is also rooted in negligence. Otherwise, those plaintiffs risk losing the institutions’ CGL policies as additional sources for potential recovery.[xxx]
IV. Doe II
Whether or not negligent misrepresentation claims ultimately avoid the same statute of limitations hurdle that claims for negligent supervision face is an issue that has yet to be determined by the appellate courts.[xxxi] Regardless, the court of appeals held in Doe II that there is no insurance coverage for negligent misrepresentation claims against religious institutions because, regardless of their labeling, such claims are founded upon intentional and not accidental acts.[xxxii]
Doe II based its holding on Everson and Stuart II. In Everson, the plaintiff purchased a parcel in a subdivision from the defendant after the defendant mistakenly reported in the Real Estate Condition Report that the lot did not lie within a 100-year flood plain.[xxxiii] At the time of the purchase, the defendant had an occurrence-based CGL policy which defined occurrence as “an accident, including continuous or repeated exposure to the same general harmful conditions.”[xxxiv]
Everson held that, although the misrepresentation in the report was the result of a typographical error, mistaking lot 21 for 31 (the lot purchased), it did not fit the definition of “accident” for purposes of the liability insurance coverage.[xxxv] Rather, the defendant could only be held liable if he “asserted a false statement, and such an assertion require[d] a degree of volition inconsistent with the term accident.”[xxxvi] Everson determined that the misrepresentation was volitional and held that “where there is a volitional act involved in such a misrepresentation, that act removes it from [liability] coverage as an ‘occurrence.’”[xxxvii]
Stuart II subsequently affirmed Everson, holding that a building contractor’s misrepresentations about his qualifications and future performance, with the intent to induce homeowners to enter into a contract, did not constitute an occurrence under a CGL policy.[xxxviii] Rejecting arguments that the building contractor’s representations first ripened into a falsehood after the design and construction of the home addition were completed, and thus were distinguishable from the misrepresentations in Everson, Stuart IIheld that it is not important whether a specific result was intended at the time the representation was made. Rather, “what matters is whether the cause of the damage was accidental.”[xxxix]
Applying Everson and Stuart II to the case before it, Doe II held that the Archdiocese’s misrepresentations were not an accident for purposes of CGL coverage because “[t]he affirmative representation of safety by the Archdiocese did not occur by chance, nor was it unforeseen or unintended.” [xl] The court emphasized that the Archdiocese may not have intended to harm the plaintiff; however, “it certainly intended to keep its knowledge of the priests at issue to itself, ultimately leading to the plaintiffs’ injuries.”[xli] Accordingly, the Archdiocese demonstrated a degree of volition greater than that of the typographical error at issue in Everson.[xlii]
V. Affirming Doe II: The Constitutional Argument
Doe II represents a straightforward application of Everson and Stuart II. Yet its result is also supportable through the freedom of religion clauses in the U.S. and Wisconsin Constitutions.
A. The Ecclesiastical Abstention Doctrine
The First Amendment to the United States Constitution provides that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof. . . .”[xliii] Wisconsin’s Constitution provides:
The right of every man to worship Almighty God according to the dictates of his own conscience shall never be infringed; nor shall any man be compelled to attend, erect or support any place of worship, or to maintain any ministry, against his consent; nor shall any control of, or interference with, the rights of conscience be permitted, or any preference be given by law to any religious establishments or modes of worship….[xliv]
The words may differ; nonetheless, “both the federal and state constitutional provisions relating to freedom of religion are intended and operate to serve the same dual purpose of prohibiting the ‘establishment’ of religion and protecting the ‘free exercise’ of religion.”[xlv]
The ecclesiastical abstention doctrine is rooted in this dual purpose.[xlvi] First articulated by the U.S. Supreme Court in 1871 in Watson v. Jones,[xlvii] a case involving a property dispute between two factions of a church split along pro- and anti-slavery lines, the abstention doctrine’s purpose is to avoid entanglement of the civil justice system in matters touching upon the internal governance of religious institutions:
[I]t is easy to see that if the civil courts are to inquire into all these matters, the whole subject of the doctrinal theology, the usages and customs, the written laws, and fundamental organization of every religious denomination may, and must, be examined into with minuteness and care, for they would become, in almost every case, the criteria by which the validity of the ecclesiastical decree would be determined in the civil court. This principle would deprive these bodies of the right of construing their own church laws . . . and would in effect transfer to the civil courts . . . the decision of all ecclesiastical questions.[xlviii]
Accordingly, the courts are required to refrain from deciding matters going to the heart of ecclesiastical rule, custom, or law:
It belongs not to the civil power [of our court system] to enter into or review the proceedings of a spiritual court. The structure of our government has, for the preservation of civil liberty, rescued the temporal institutions from religious interference. On the other hand, it has secured religious liberty from the invasion of the civil authority. The judgments, therefore, of religious associations, bearing on their own members, are not examinable here.[xlix]
There are, of course, few decisions a religious association makes that bear more directly “on their own members,” or involve greater matters of internal church government, than those regarding the selection, discipline, and removal of its ministers. The U.S. Supreme Court has held in this regard that “[b]ecause the appointment is a canonical act, it is the function of the church authorities to determine what the essential qualifications of a chaplain are and whether the candidate possesses them.”[l]
Wisconsin law is in accord. In Pritzlaff v. Archdiocese of Milwaukee,[li] the Wisconsin Supreme Court held that the First Amendment precluded Wisconsin state courts from considering claims made by a plaintiff against the Archdiocese of Milwaukee for negligent hiring, retaining, training, or supervising of a priest. The plaintiff alleged that the priest coerced her into sexual relations and sought damages. The court refused to hear her claims, asserting that to do so would involve inquiry into the church’s ministerial selection and evaluation criteria, an inquiry that was constitutionally prohibited.[lii]
The supreme court re-affirmed the principle that the First Amendment prohibited negligent supervision claims arising out of the sexual misconduct of a priest in L.L.N. v. Clauder.[liii] In that case, the court held that, to afford relief to the plaintiff, it would have to inquire into the church’s tenants and canons, including its policy of disciplining and evaluating clergy.[liv] The court concluded such inquiry was not permitted under the First Amendment, stating that “this Court has no authority to determine or enforce standards of religious conduct and duty.”[lv]
B. The Abstention Doctrine and Claims for Negligent Misrepresentation
Pritzlaff and Clauder each involved adult victims of sexual misconduct. Although negligent supervision claims arising out of the sexual abuse of minors have since made their way to the Wisconsin Supreme Court on multiple occasions, the court has consistently decided those cases (and dismissed the claims) without resort to the free religion clauses of the Wisconsin and U.S. Constitutions.[lvi]
The principles underlying the ecclesiastical abstention doctrine, however, permit no distinction between cases involving assault against adult and minor victims. Pritzlaff expressly recognizes as much:
Examining the ministerial selection policy, which is infused with the religious tenets of the particular sect, entangles the court in the qualitative evaluation of religious norms. Negligence requires the court to create a “reasonable bishop” norm. Beliefs in penance, admonition and reconciliation as a sacramental response to sin may be the point of attack by a challenger who wants a court to probe the tort-law reasonableness of the church’s mercy toward the offender . . . . If negligent selection of a potential pedophile for the religious office of priest, minister or rabbi is a tort as to future child victims, will civil courts also hear Title VII challenges by the non-selected seminarian against the theological seminary that declines to ordain a plaintiff into ministry because of his psychological profile? How far shall the courts’ qualitative entanglement with religious selectivity extend?[lvii]
As the foregoing suggests, a court seeking to apply reasonableness standards will likely find itself asked to make sensitive judgments about the propriety of the defendant religious institution’s supervision and retention in light of its religious beliefs.[lviii] Moreover, “[a]ny award of damages would have a chilling effect leading indirectly to state control over the future conduct of affairs of a religious denomination” in (further) violation of the First Amendment.[lix]
Although Pritzlaff is couched in terms of negligent supervision claims, there is no meaningful distinction between those claims and the negligent misrepresentation claims at issue in Doe II for purposes of First Amendment analysis. To the contrary, the alleged acts or omissions of the Archdiocese that support the Doe II plaintiffs’ negligent misrepresentation claims are the same acts and omissions one would expect to see in a claim for negligent supervision.[lx] Because such claims would thus require court inquiry into and establishment of criteria for church law, practices, and policies governing the selection and retention of ministers, such claims may not be maintained under the U.S. and Wisconsin Constitutions.[lxi]
Relying on Everson and Stuart II, Doe II concluded that the Archdiocese’s alleged misrepresentations were volitional acts that did not meet the definition of “occurrence” as required for coverage under the Archdiocese's CGL policy. Everson and its progeny aside, there are additional, constitutional grounds for finding that the Doe II plaintiffs’ negligent misrepresentation claims against the Archdiocese do not result in coverage. In particular, because the U.S. Constitution and the Wisconsin Constitution preclude the court inquiry necessary to adjudicate the plaintiffs’ claims, those claims are unsustainable and should be dismissed. It follows that insurance coverage for the claims will be a moot issue.
[i] 2010 WI App 164, 330 Wis. 2d 666, ___ N.W.2d ___.
[ii] 2005 WI 51, 280 Wis. 2d 1, 695 N.W.2d 298.
[iii] 2008 WI 86, 311 Wis. 2d 492, 753 N.W.2d 448.
[iv] Doe II, 330 Wis. 2d 666, ¶¶ 12-13, 15.
[v] Annysa Johnson and Paul Gores, Archdiocese of Milwaukee files for bankruptcy protection, Milwaukee Journal-Sentinel (JSOnline January 4, 2011).
[vi] See, e.g., John Lee, Judge: Civil suit can proceed / Diocese accused of knowing of priest abuse, The Post-Crescent, (Dec. 9, 2010), at A3 (reporting court's holding that suit filed by Todd and Troy Merryfield may proceed against Diocese of Green Bay on claims diocese misrepresented that former priest John Feeney was not a risk to children).
[vii] 2007 WI 95, 303 Wis. 2d 34, 734 N.W.2d 827.
[viii] Id., ¶ 5.
[x] Id., ¶¶ 5-6. Doe I also entailed nearly identical claims brought by Charles Linneman against another Roman Catholic Priest, Franklyn W. Becker, arising out of Becker’s alleged sexual assault of Linneman when he was a child in 1982. Id., ¶¶ 7-8.
[xi] Id., ¶ 64.
[xii] 194 Wis. 2d 302, 533 N.W.2d 780 (1995).
[xiii] 211 Wis. 2d 312, 565 N.W.2d 94 (1997).
[xiv] Pritzlaff, 194 Wis. 2d at 312, 316-17 (alleged sexual coercion occurred while plaintiff was an adult); BBB Doe, 211 Wis. 2d at 343-44, 366 (alleged victims were minors at the time of the assaults).
[xv] Doe I, 303 Wis. 2d 34, ¶ 36.
[xvi] Id. (citing BBB Doe, 211 Wis. 2d at 357).
[xvii] Id., ¶ 51.
[xviii] Id., ¶ 62.
[xix] Id., ¶¶62-63.
[xx] See Dkt. #82, John Doe 1 v. Archdiocese of Milwaukee et al., Milwaukee County Circuit Court Case No. 05-CV-1351 (Dec. 30, 2008) (Am. Compl.).
[xxi] Doe II, 330 Wis. 2d 666, ¶ 2.
[xxiii] See id. (holding that the complaints in the thirteen consolidated cases “are substantively identical”).
[xxiv] See, e.g., A.O. Smith Corp. v. Allstate Ins. Co., 222 Wis. 2d 475, 487, 588 N.W.2d 285 (Ct. App. 1998) (quoting the policy before it).
[xxv] Smith v. Katz, 226 Wis. 2d 798, 820-21, 595 N.W.2d 345 (1999) (citing Doyle v. Engelke, 219 Wis. 2d 277, 289-90, 580 N.W.2d 245 (1998)).
[xxvi] Everson v. Lorenz, 2005 WI 51, ¶ 15, 280 Wis. 2d 1, 695 N.W.2d 298.
[xxvii] A.O. Smith, 222 Wis. 2d at 496 (citing Raby v. Moe, 153 Wis. 2d 101, 110, 450 N.W.2d 452 (1990)).
[xxviii] Id. at 498-99; see also Pachucki v. Republic Ins. Co., 89 Wis. 2d 703, 712, 278 N.W.2d 898 (1979) (holding that it is irrelevant if the harm that occurs is different or other than that intended; the only requirement is that some injury is intended).
[xxix] Id. at 501 (citation omitted).
[xxx] Insurance coverage is a matter of contract, with insurance policies interpreted according to the same rules that govern other contracts. School Dist. of Shorewood v. Wausau Ins. Cos., 170 Wis. 2d 347, 367, 488 N.W.2d 82 (1992). Thus, the effects of Doe I and other appellate precedent on the availability of insurance coverage for the alleged misconduct of religious institutions must be ultimately determined based on the terms of the policy in question.
[xxxi] At least one trial court has determined that negligent misrepresentation claims are not derivative of the underlying sexual assault(s) and, therefore, first accrue when the plaintiff knew or reasonably should have known of the Archdiocese’s alleged misrepresentations. Dkt. #109, John Doe 1 v. Archdiocese of Milwaukee et al., Milwaukee County Circuit Court Case No. 05-CV-1351 (July 29, 2009) (Tr. of July 23, 2009 Mtn. Hrg.), at 10. This issue was not raised on appeal in Doe II.
[xxxii] Doe II, 330 Wis. 2d 666, ¶¶ 12-13.
[xxxiii] Everson, 280 Wis. 2d 1, ¶¶ 4-5.
[xxxiv] Id., ¶ 12.
[xxxv] Id., ¶ 18.
[xxxvi] Id., ¶ 19.
[xxxvii] Id., ¶ 20.
[xxxviii] Stuart II, 311 Wis. 2d 492, ¶¶ 21-45.
[xxxix] Id., ¶ 40 (emphasis added). The court subsequently also found that the home contractor’s misrepresentations were as to his existing qualifications, knowledge and abilities, not just about future performance. Id., ¶ 41.
[xl] Doe II, 330 Wis. 2d 666, ¶ 12.
[xli] Id., ¶ 13
[xlii] Id., ¶ 14.
[xliii] U.S. Const., amend. I; see also Department of Human Resources v. Smith, 494 U.S. 872, 876-77 (1990) (holding that the First Amendment is applicable to the states by its incorporation into the Due Process Clause of the Fourteenth Amendment).
[xliv] Wis. Const., Art. I, § 18.
[xlv] Warren v. Nusbaum, 55 Wis. 2d 316, 332, 198 N.W.2d 650 (1972).
[xlvi] Presbyterian Church in the United States v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, 393 U.S. 440, 449 (1969).
[xlvii] 80 U.S. 679, 730-31 (1871).
[xlviii] Id. at 734.
[xlix] Id. at 730-31. The Free Exercise principles articulated in Watson were converted into First Amendment rule in Kedroff v. St. Nicholas Cathedral of Russian Orthodox Church in North America, 344 U.S. 94, 116 (1952).
[l] Gonzalez v. Roman Catholic Archbishop, 280 U.S. 1, 16 (1929).
[li] 194 Wis. 2d 302, 533 N.W.2d 780 (1995).
[lii] Id. at 325-31.
[liii] 209 Wis. 2d 674, 563 N.W.2d 434 (1997).
[liv] Id. at 690 (recognizing that “church doctrines and practices are intertwined with the supervision and discipline of clergy”).
[lv] Id. at 698 (quoting Roppolo v. Moore, 644 So.2d 206, 208 (La. Ct. App. 1994)).
[lvi] John Doe 67C v. Archdiocese of Milwaukee, 2005 WI 123, 284 Wis. 2d 307, 700 N.W.2d 180 (affirming dismissal on grounds that complaint was legally insufficient); Doe I, 303 Wis. 2d 34 (holding that negligent supervision claims were time-barred); BBB Doe, 211 Wis. 2d 312 (same).
[lvii] Pritzlaff, 194 Wis. 2d at 326-27 (quoting James T. O’Reilly & Joann M. Strasser, Clergy Sexual Misconduct: Confronting the Difficult Constitutional and Institutional Liability Issues, 7 St. Thomas L. Rev. 31, 37 (1994)).
[lviii] Id. at 329.
[lix] Id.; see also id. at 330 (finding unpersuasive the rationale of courts that have held religious bodies liable for negligent supervision where the body knew the individual clergyman was potentially dangerous).
[lx] See section III.A., supra.
[lxi] See Pritzlaff, 194 Wis. 2d at 330 (holding that “the tort of negligent hiring and retention may not be maintained against a religious governing body due to concerns of excessive entanglement, and that the tort of negligent training or supervision cannot be successfully asserted . . . because it would require an inquiry into church laws, practices and policies”).