The district court denied the motion for summary judgment, and explained in its decision that although Oregon courts had not reviewed the terms "abuse" or "molestation" in an insurance policy context, the plain and ordinary meanings of those terms required intentional conduct. The district court went on to say that the abuse or molestation provision in the insurance policy would limit the insurer's liability to $100,000 only if the alleged acts were performed intentionally. The court also found that the allegations contained actions that could include both intentional and nonintentional conduct, like and unduly rough play, which the court said "could certainly encompass nonintentional conduct", and bullying and harassment, which would be considered intentional conduct. This analysis supported the denial of the summary judgment request.

The district court rejected that contention because U.S. Fire failed to provide authority to support the argument, and that the policy failed to define "judgment" and "settlement" so the court had to rely on the dictionary definition of those terms which did not suggest that the payment into the courts registry was a payment of a judgment or a settlement.

The court decided that U.S. Fire still had a duty to defend Mother Earth School.

Editor's Note: Almost every court that has been presented with this policy language has come to a similar conclusion as this Oregon court. An insurer's duty to defend does not end until the limits are exhausted through the actual payment of judgments or settlements, or a combination of the two. This decision serves as a reminder to all insurers that the duty to defend generally cannot be abrogated, even if the obligation to pay policy limits for indemnity has become clear for the insurer.