Insurance Co. Challenges $30 Million Abuse Settlement for Ballet School

Petrov Ballet School LLC in New Jersey is at the center of a legal battle stemming from claims of sexual abuse by the school’s owner. Former students allege the owner sexually abused them from 2011 to 2019, with lawsuits stating that the institution and other instructors “created and/or permitted the opportunity” for such acts to occur. These lawsuits were consolidated in January 2022, accusing the school of failing to act despite being aware of ongoing misconduct.

The allegations extend beyond the owner to include claims of systemic negligence by other employees. Plaintiffs assert that the school ignored clear warning signs, enabling the abuse over nearly a decade.

The Insurance Dispute: Markel’s Denial of Coverage

The legal battle expanded when Markel Insurance Co., Petrov Ballet School's insurer, refused to cover a $30 million consent judgment related to these claims. Markel filed a federal lawsuit asserting that the claims fall under exclusions for abuse and molestation outlined in their commercial general liability and umbrella insurance policies.

Markel also noted that it had previously disclaimed coverage when the underlying lawsuits were filed between August and October 2021. Despite this, the ballet school moved forward with a $30 million consent judgment, agreeing with the plaintiffs that they would seek payment solely from the insurer. Markel maintains that it properly denied coverage and has asked the U.S. District Court for the District of New Jersey to affirm its decision.

The Legal Arguments

Markel’s denial hinges on two primary arguments. First, the abuse and molestation exclusions explicitly bar coverage for claims stemming from such acts. Second, the insurer contends that the allegations do not qualify as an “occurrence” under the policy's definitions. Specifically, Markel argued that the school’s actions—or lack thereof—constituted intentional or knowing conduct, which falls outside the policy’s scope.

The underlying lawsuits claimed the school and instructors failed to take action against known abuse, further supporting the insurer's assertion that these were not accidental incidents requiring coverage.

What’s Next? Legal Implications and Broader Context

As Markel seeks a court ruling affirming its right to deny coverage, the case could have significant implications for liability insurance in abuse-related lawsuits. Should the court side with Markel, it may embolden insurers to adopt stricter interpretations of policy exclusions in future cases.

While the ballet school’s liability is largely uncontested given the consent judgment, the pending decision on insurance coverage leaves the plaintiffs’ ability to collect damages uncertain. This case also underscores the critical role of clear policy language in disputes involving sensitive allegations, such as those of abuse.

With Markel represented by Hinshaw & Culbertson LLP, the outcome of this lawsuit could shape legal and insurance practices concerning institutional liability for abuse.