Court backs carrier's interpretation of 'sexual abuse occurrence' definition In 1999, a counselor allegedly sexually and physically assaulted six children attending a YMCA youth camp in Texas. The children's parents and guardians sued the YMCA for negligent hiring practices. Three suits were settled for $6 million. The YMCA's general liability carrier contributed $1 million towards the settlement.

The carrier then filed a petition for declaratory judgment, asserting the $1 million payment toward the settled lawsuits exhausted the limits of its policy and that it had no duty to defend the YMCA in the remaining lawsuits. It contended that the incidents of sexual abuse alleged by all six children and the negligent hiring allegations against the YMCA were a single occurrence under the policy.

The YMCA countered that a separate new "occurrence" was triggered for each victim; therefore, it said the $2 million aggregate limits had not been exhausted. The YMCA also argued the carrier had a duty to defend against allegations of physical abuse that did not involve sexual abuse.