Pastor’s Sexual Misconduct Case Not Covered by Insurance Policy

Court decision sets important precedent.

Houg v. State Farm Fire and Casualty Company, 481 N.W.2d 393 (Minn. App. 1992)

Key point: Church insurance policies may not provide a legal defense of lawsuits brought against pastors by victims of sexual seduction. Further, any money damages awarded by a court against a pastor may not be covered under the church's policy.

In an important decision, a Minnesota appeals court concluded that a church insurance policy did not require the insurance company to defend a pastor who was sued by a women he had seduced.

The court also ruled that the insurance company would not have to pay any portion of a jury verdict against the pastor. This case began in 1984, when a woman (the "victim") became a member of a Lutheran church. She soon became an active member, teaching a Sunday School class and attending church-sponsored events. In 1985, she sought "marriage, family, emotional, and spiritual counseling" from the church's pastor. The victim later sued her church, denomination, and pastor. Her lawsuit contained the following allegations:

Beginning in approximately February 1985 [the pastor], as [the victim's] minister, therapist, and counselor, set out on a course of conduct designed to entice and seduce [the victim] into sexual relations. Ultimately, because of the disparity of the relationship, [the victim's] emotional vulnerability, the emotional dependence of [the victim] upon her [pastor] and through the use of psychotherapeutic deception, [the pastor] succeeded in seducing and coercing [the victim] to engage in sexual relations.

From February 1985 through March 1986, while continuing in his role as minister and counselor, [the pastor] regularly and repeatedly sexually abused and sexually exploited [the victim].

As a direct result of the sexual exploitation, sexual abuse and negligent and malicious counseling [the victim] has suffered and will continue to suffer great pain of mind and body, shock, emotional distress, embarrassment, loss of self-esteem, disgrace, humiliation, and loss of enjoyment of life.

The pastor admitted to having sexual relations with the victim on at least 30 occasions. However, he insisted that the victim had freely consented to the relationship. The victim vigorously denied that she consented to the relationship. Rather, as noted above, she insisted that she was incapable of giving consent to the sexual relationship because of her vulnerable psychological state and the pastor's position of authority over her.

The pastor turned the lawsuit over to the church's insurance company, assuming that the insurer would defend him and pay any verdict against him up to the policy limits. The insurer rejected the pastor's request, and informed him that it would neither defend him against the claims of the lawsuit or pay any portion of a verdict attributable to his misconduct.

The pastor sued the insurance company in an attempt to force it to defend him. A trial court agreed with the insurance company that it had no duty to defend the pastor, and the pastor appealed. The appeals court also agreed with the pastor. It noted that the church's insurance policy specified that the insurer was liable for any personal injury "caused by an occurrence to which this insurance applies." The policy defined the term occurrence as an act that "results in bodily injury . . . neither expected nor intended."

The court concluded that the pastor's repeated sexual exploitation of the victim resulted in personal injuries that were both "expected and intended," and accordingly they did not constitute an "occurrence" for which insurance coverage was available. The court observed: "We conclude [that the victim's] allegations that [the pastor] used his authority as a pastor and counselor to facilitate his sexual abuse of a psychologically vulnerable person creates an inference of an intent to injure and relieves [the insurance company] of its duty to defend."

The court also relied on a provision in the church's insurance policy denying any coverage "to liability resulting from any actual or alleged conduct of a sexual nature, [or] to any dishonest, fraudulent or criminal act or omission of any insured."

This case is an important development. First, it demonstrates that "consent" may not be an available defense to a minister (or any other church worker) who seduces a counselee—even if the sexual relationship is of a long duration. Second, it illustrates that clergy (or other church workers) who are sued by victims of their sexual misconduct may not have a legal defense provided by the church insurance company.

Further, the insurance company may have no legal obligation to pay any portion of a jury verdict rendered against a pastor in such a case. This is a very serious matter, since legal defense costs can be substantial, as can jury verdicts in cases of sexual seduction. Finally, note that this case only addressed the duty of a church insurance company to provide a defense to a pastor guilty of sexual misconduct. There was no dispute concerning the insurer's defense of the church.

In many of these cases, pastors are sued individually in addition to the church and in some cases (such as this one) a parent denomination. While the insurer may agree to defend (and indemnify) a church or denomination, it may have the right to refuse to defend or indemnify the pastor.

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