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Zurich need not defend school board in sex abuse lawsuit


A Zurich Insurance Group Ltd. unit is not obligated to defend a New Jersey school board in a case in which a fired teacher charged with child abuse in one of its schools went on to commit abuse at another school.

Montville Township Board of Education in Montville, New Jersey, hired a first-grade teacher and track coach in September 1998 who resigned in June 2010 after several reports and investigations of his alleged sexual abuse against students, according to Friday’s ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Montville Township Board of Education v. Zurich American Insurance Co.

In September 2010, he was hired by the Cedar Hill Prep School in Somerset, New Jersey. In March 2012, while still employed by Cedar Hill, he was arrested and indicted on charges of abusing a number of Montville students between 2005 and 2008 and a Cedar Hill student between 2010 and 2011. According to a news report, the teacher was later sentenced to 14 years in prison.

In January 2015, a Cedar Hill student who had previously sued the teacher and the school for the teacher’s abuse added Montville as a defendant, alleging the school district knew about the abuse, failed to notify the authorities and agreed to withhold his history of sexual abuse from prospective employers.

Montville’s insurer, Zurich unit Zurich American, refused to defend the school district under a “prior known acts exclusion” in the abusive acts section of its insurance policy.

Montville filed suit in U.S. District Court in Newark, New Jersey, which ruled in the insurer’s favor. The ruling was affirmed by a unanimous three-judge appeals court panel.

Montville said the complaint in the case is “ambiguous enough” that the lawsuit’s allegations “do not definitively fall” within the prior acts exclusion. “We, however, disagree because there is no ambiguity in the plain language of the Complaint when considered as a whole,” said the ruling.

“A plain reading of the allegation’s in the Complaint unequivocally brings them within the ambit of the Prior Known Acts Exclusion,” it said.

The ruling also ruled against the school district’s claim that there is extrinsic evidence Montville did not know about the teacher’s abusive acts before the policy’s effective date, on the basis it had failed to raise this issue before the District Court.

Attorneys in the case could not immediately be reached for comment.

California K-12 schools and districts are seeing significant increases in liability insurance rates and shrinking coverage availability due to the escalating values associated with sexual abuse and molestation settlements and awards, experts say. 


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