Legal issues and case law continue to emerge from the Jerry Sandusky matter.   The Second Mile, a charitable organization run by Sandusky, submitted a claim to its Directors and Officers insurance carrier.   As we previously posted, The Second Mile’s insurer, Federal Insurance Company, has been vigorously opposing Sandusky’s claims that it owes him any coverage for the underlying civil and criminal litigation.

Although the Middle District of Pennsylvania previously denied Federal’s motion for judgment on the pleadings, Judge Yvette Kane recently granted Federal’s summary judgment motion.  Judge Kane held that Federal was not obligated to cover Sandusky’s legal fees since Sandusky’s crimes did not take place in his capacity as an employee or executive of the charity, a standard required by the applicable Federal policy.  In fact, Judge Kane explained that the fact that Sandusky met and allegedly abused victims “during the course of activities of Second Mile” does not impart a duty on Federal because Sandusky’s abuse of the children was “personal in nature, and performed in his individual capacity.”

Sandusky opposed the motion and requested additional time for discovery to review Federal’s claims files, its underwriting manuals and other Federal policies that Federal used to exclude sex abuse or molestation from coverage.  Judge Kane denied this request on the basis that subsequent discovery “will not alter the court’s conclusion that the Federal policy does not cover the acts in question.”

As this case proceeds, WCM will continue to provide updates on the court’s decisions.

Thanks to Remy Cahn for her contribution to this post.  If you would like more information please write to

The U.S. District Court in Pennsylvania recently addressed the issue of whether multiple claims arising from a single shipment of an allegedly defective product constitutes a single “occurrence” for coverage purposes in the case of Cincinnati Insurance Co. v. Devon International, Inc.

In 2006, Devon International Inc., an import company, received an order for Chinese drywall from one of its customers, North Pacific Group.  Devon filled this order by purchasing drywall from a Chinese manufacturer.  The purchased drywall was shipped to Devon via one shipment. Once Devon received this shipment, it in turn, delivered the drywall to North Pacific.  By 2009, a number of plaintiffs had sued North Pacific for damages allegedly sustained between 2008 and 2009 in connection with claims that the drywall contained an improper amount of sulfur.  North Pacific requested that Devon defend and indemnify it against these claims.

During the period at issue Devon was insured by Cincinnati Insurance Co. under two separate “occurrence” based commercial general liability policies.  Cincinnati and Devon disagreed over the extent to which Cincinnati was required to provide Devon with a defense and indemnification in litigation stemming from the single shipment of allegedly defective drywall.  The main dispute was whether the underlying claims against Devon arose out of a single occurrence or multiple occurrences. 

In order to determine the number of occurrences, the court applied the “cause” test that looks to the cause of the injury.  Specifically, if all claims stem from one proximate cause and the insured had some control over the cause, then this would constitute a single occurrence.  Applying this test, the Court concluded that the underlying claims all originated from the single shipment of allegedly defective drywall.  Additionally, Devon had some control over the cause of the injuries because it chose to purchase and distribute the defective drywall.  Thus, for coverage purposes, the Court held there was only one “occurrence” and since some plaintiffs claimed damages as early as 2008, the court further ruled that Devon’s 2008-2009 policy was the one triggered since coverage is triggered under an “occurrence” based policy when the negligent act first manifests itself.  

Special thanks to Colleen Hayes for her contributions to this post.  For more information, please contact Nicole Y. Brown at .