Judge rules that two insurance companies must defend Old Forge in sex abuse lawsuit

Jan. 30--Two insurance companies must defend Old Forge borough against a federal lawsuit filed by a woman who was sexually abused by two former police officers and a volunteer firefighter.

The ruling issued by Senior Judge John Braxton would require the Housing & Redevelopment Insurance Exchange and Excalibur Insurance Management Services to pay for the defense of the lawsuit, as well as any monetary damages. The companies have already appealed the decision to Commonwealth Court, however, leaving the coverage issue in limbo.

The borough sued the insurance companies last year, asking a judge to declare they had a duty to defend it against the lawsuit filed in November 2012 by an Olyphant woman who was the victim in criminal cases filed against former police chief Larry Semenza, former officer Jamie Krenitsky and former volunteer firefighter Walter Chiavacci.

Mr. Semenza was convicted in October of corruption of a minor and another offense based on the woman's claims she had a sexual relationship with him when she was a 15-year-old junior firefighter with an Old Forge fire company. Mr. Krenitsky and Mr. Chiavacci pleaded guilty to indecent assault for sexually abusing the girl.

The woman's lawsuit, which remains pending, seeks damages from the three men, as well as the borough, its Police Department and the fire company.

Attorneys for the Housing & Redevelopment and Excalibur insurance companies argued they did not have to defend the borough because the actions of the three men were intentional, which triggers an exclusion in the policy.

Gerard Karam, the borough's attorney, maintained the companies are obligated to cover the borough because the woman's lawsuit accused the borough of negligence for failing to properly supervise the men, which is an unintentional act.

The claims of an intentional act relate to Mr. Semenza, Mr. Krenitsky and Mr. Chiavacci, who are third-party defendants, Mr. Karam said. Other courts have held that injury caused by an intentional act of a third party does not necessarily preclude coverage for other defendants.

Judge Braxton's ruling, issued Jan. 10, sided with the borough. His order does not detail his reasoning in reaching that decision.

The case is one of two lawsuits the borough filed against insurance companies relating to defense of the sexual abuse lawsuit. The borough has a separate lawsuit pending in federal court against Aspen Specialty Insurance Co. No ruling has been issued yet in that case.

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