A federal appeals court has upheld a lower court ruling in favor of the Hartford Roman Catholic Diocese in a coverage dispute with a Fireman’s Fund Insurance Co. unit related to abuse by priests, in which the diocese was awarded nearly $1 million.

Fireman’s Fund unit Interstate Fire & Casualty Co., which is based in Chicago, had issued second-layer excess lability contracts between 1978 and 1985 for the diocese, according to Wednesday’s ruling by the 2nd U.S. Circuit Court of Appeals in New York in Hartford Roman Catholic Diocesan Corp. v. Interstate Fire & Casualty Co.

The insurer is appealing an August 2016 judgment by the U.S. District Court in New Haven that held that Interstate breached its contractual duty to indemnify the dioceses with respect to four claims. The court had awarded the archdiocese $945,265 plus interest.

According to the ruling, the archdiocese had a self-insured retention; the first excess layer was furnished by Lloyd’s underwriters and other London market insurers and by New York-based Centennial Insurance Co. The second excess layer was furnished by Interstate, which followed form to Lloyd’s.

Among the issues discussed in the ruling is whether an assault and battery policy exclusion applied. “Interstate argues that, because the priests who committed the molestation are assureds under the contract along with the Archdiocese, coverage is rendered unavailable to the Archdiocese by the assault and battery exclusion…in the underlying Lloyd’s contract.”

The Archdiocese argued “that the Exclusion applies only to a person ‘acting within the scope of his duties,’ and that the assailant priests were not acting within the scope of their duties when they committed assault.”

“We agree with the Archdiocese on the reading of the contract and therefore need not consider ambiguity,” said the ruling.

The ruling also upheld dismissal of the Archdiocese’s charge that the Interstate had violated the Connecticut Unfair Insurance Practices Act in its handling of the claims.