Darlington School is a small private boarding school in Rome, Georgia, about one hour northwest of Atlanta. Its website boasts that it will prepare student for a world they will be changing, with “wisdom, service, and honor.”¹ But the school allegedly has a dark history as well. At least 20 of its alumni have alleged that they were sexually abused by a teacher, Roger Stifflemire, when they were students in the 1970s and 1980s. There were other predators as well.²

In 2021, this group of 20 plaintiffs settled lawsuits alleging sexual abuse claims against Darlington School. Those settlements, now the subject of an insurance coverage case in Georgia, are worth insurers’ attention.³

The 20 plaintiffs claimed the school had received multiple complaints about inappropriate conduct by Stifflemire and others yet did nothing to protect the students upon whom the alleged predators continued to prey. In fact, according to reports, Stifflemire remained on Darlington’s faculty for another 15 years and then went on to teach 11  more years elsewhere.⁴ Stifflemire, also a defendant in the litigation, is still alive and has denied the allegations.⁵

Darlington and Stifflemire tendered the lawsuits to a group of insurers, most of which issued policies that covered periods long after the abuse was alleged to have taken place. Not surprisingly, those insurers denied coverage, asserting numerous coverage defenses. They did not file declaratory judgment actions, however, to protect themselves from being set up for future liability by the plaintiffs and their own policyholders.

The plaintiffs settled their lawsuits in exchange for Darlington and Stifflemire’s assignment of all rights under their insurance policies. Reportedly, Darlington contributed $6 million as additional consideration for its full release.⁶ Stifflemire, allegedly the main perpetrator of the abuse, contributed nothing⁷ but stipulated to a consent judgment against him in the amount of $345 million, which happened to be the total listed policy limits.⁸ The plaintiffs then filed individual lawsuits in Georgia state court against the seven insurance companies that issued the policies, where the cases were consolidated for proceedings against the insurers.

Last month, the insurers made their case to the Georgia Court of Appeals as to why they should not have to pay the $345 million that the plaintiffs are now seeking to collect.⁹ The parties argued a number of issues before the court, including whether the consent judgment should be rejected as collusive because there were no facts presented to establish damages. The insurers argued that, when the only fact was that the amount of the judgment was equal to the total policy limits, the consent judgment should be seen as collusive on its face.

Coverage Issues

Also at issue was whether the policies were triggered solely by mental anguish experienced by the plaintiffs during the policy periods but resulting from the sexual abuse and resulting physical injuries that they experienced many years before. Again, most of the policies at issue covered periods long after the alleged abuse took place. They covered periods when the plaintiffs were no longer students, but rather were adults, still suffering emotionally from the abuse they claimed to have experienced.¹⁰

Typically, insurance coverage is provided for sexual abuse claims only when the sexual abuse itself took place within the policy period, thereby causing “bodily injury” sufficient to trigger the policy. Policies in later years, after the abuse concluded, are typically not triggered. This application distinguishes coverage for sexual abuse claims from traditional long-tail claims like asbestos, where courts developed theories of “continuing injury” to trigger multiple years of coverage.

All the Darlington policies at issue defined term “bodily injury” to include conditions like “emotional distress or anguish,” or “mental anguish [or] mental injury,” as long as those conditions result from a preceding “bodily injury.” As one judge observed, the policies did not specifically say that the preceding bodily injury itself had to also take place within the policy period. Thus, the plaintiffs argued that their “mental anguish,” caused by their abuse decades earlier, fit neatly into the policies’ definitions of “bodily injury” and was therefore sufficient, by itself, to trigger coverage.

It was difficult to read the panel and predict an outcome in this case. However, if the court holds there is in fact coverage based on mental anguish taking place within the policy period, one fear is that it might open coverage under Commercial General Liability (CGL) policies – not only for sexual abuse claims but for potentially any other type of bodily injury claim as well.

Would it make sense for a plaintiff injured in an auto accident to have access not only to the full policy limit for the policy on the risk when she was injured, but also to additional policy limits if she claimed to have suffered “mental anguish” resulting from the accident in the years that followed? An adverse ruling from the Georgia Court of Appeals might start us down that slippery slope.