Exclusions In Policy – How To Interpret

Duncanville insurance lawyers have to be able to read an insurance policy and understand how the courts will interpret the language found in the policy. The Amarillo Court of Appeals issued an opinion in July of 2015, that deals with this issue. The opinion is styled, Doe #1, Doe #2 and Doe #3, v. National Union Fire Insurance.
The trial court granted summary judgment in favor of National Union and this appeal followed.
National Union issued a CGL policy to Watchtower Bible and Tract Society Et al. Watchtower sought coverage for coverage from conduct of a sexual nature, including the sexual abuse of minors.
It appears undisputed that the insureds sought coverage under Coverage A, under which National Union agreed to “pay those sums that the insured becomes legally obligated to pay because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” Regarding the exclusions found under Coverage A, there appear paragraphs “a” through “n.”
Endorsement MS #2 is entitled “Clergy Counseling Professional Liability Coverage.” Following the title is the statement that “this Endorsement modifies such insurance as is afforded by the provisions of the policy relating to Comprehensive General Liability Insurance.” The endorsement’s remaining language reads:
It is agreed that:
1. The definition of bodily injury is amended to include any acts, errors, or omissions of the insured arising out of counseling activities of the insured.
2. The PERSONS INSURED provision is amended to include any cleric, elder or ministerial servant designated as such by the named insured while giving counsel within the scope of his duties as such.
3. The Exclusions are replaced by the following: This insurance does not apply to:
a) liabilityassumedbytheinsuredunderanycontractoragreement.
b) liability on account of bodily injury to or sickness, disease or death of any employee of the insured arising out of and in the course of his employment or to any obligation for which the insured or any carrier as his insurer may be held liable under any Worker’s Compensation, Unemployment Compensation or Disability Benefits Law or under any similar law.
c) liability resulting from the rendering of medical, radiological, surgical, dental or nursing treatments, including shock therapy and the prescription, utilization, furnishing or dispensing of drugs or medical, radiological, surgical, dental or nursing supplies or appliances.
d) liability resulting from the insured’s commitment to a psychiatric institution.
e) the ownership, maintenance, operation, use, loading or unloading of any motor vehicle, trailer, semi-trailer, watercraft of [sic] aircraft.
f) liability resulting from the acts, errors or omissions of the insured as a member of a formal accreditation or professional board or committee of any hospital or professional society.
g) liability resulting from an insured accepting and/or undertaking custodial care or responsibility of a patient pursuant to request, instruction, authorization or direction of any governmental agency, authority, board or officer having such authority or responsibility.
h) liability resulting from any actual or alleged conduct of sexual nature.
i) injury arising out of willful violation of a penal statute or ordinance committed by or with the knowledge or consent of any insured.
j) any dishonest, fraudulent or criminal act or omissions of any insured.
All other terms, conditions, and premiums remain the same.
In addition the policy issued contains an endorsement MS #14, which states, “In consideration of the premium charged, it is hereby understood and agreed that MS #2 ‘Clergy Counseling Professional Liability Coverage’ is amended as follows: 3. ‘The Exclusions for this coverage part only are replaced by the following:'” Nothing comes thereafter except a final sentence providing: “All other terms and conditions remain unchanged” and a blank signature line.
Neither the sexual conduct exclusion nor the willful violation of law exclusion on which National Union relies appears in the list of exclusions stated in the CGL policy’s Coverage A. National Union relies instead on exclusions listed in the MS #2 endorsement. The endorsement’s exclusion list includes paragraph (h), excluding “liability resulting from any actual or alleged conduct of a sexual nature,” and paragraph (i), excluding “injury arising out of willful violation of a penal statute or ordinance committed by or with the knowledge or consent of any insured.”
To reach its position that the two exclusions stated in the endorsement apply to the insureds’ claims, National Union points to the endorsement’s language stating that the “Exclusions are replaced” by those listed in the endorsement. It contends that by the endorsement’s language, the parties expressed an intention to apply the endorsement’s listed exclusions to all the policy’s coverage for bodily injury and property damage liability, replacing for all purposes the exclusions listed in the CGL form’s Coverage A. The insureds’ pleadings asserted that the endorsement’s “Exclusions are replaced” wording also can be read to apply its listed exclusions only to liability arising under the clergy counseling professional liability coverage, and asserted the endorsement language was therefore ambiguous. They contended that the 1992 endorsement MS #14 was intended to clarify what was unclear in MS #2, that the endorsement’s exclusions were limited to coverage provided under the clergy counseling professional liability coverage.
By its grant of summary judgment, the trial court implicitly determined that the policy language was reasonably susceptible to only one reading, and that the one reading was that given it by National Union. This court could not agree that the reading given the policy by National Union is its only reasonable reading.
The court found the language of the MS #2 endorsement ambiguous.