133 F.3d 363 (5th Cir. 1998), 96-10779, American States Ins. Co. v. Bailey

Docket Nº:96-10779.
Citation:133 F.3d 363
Party Name:AMERICAN STATES INSURANCE COMPANY, Plaintiff, and North River Insurance Co.; United States Fire Insurance Company; Western World Insurance Company, Inc., Intervenor Plaintiffs-Appellees Cross Appellants, v. H. Barry BAILEY, et al., Defendants, H. Barry Bailey, Defendant-Appellee, Cassie E. Allbaugh; Candis White; Allison Lovett; Ginger Pierson; Jay
Case Date:January 30, 1998
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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133 F.3d 363 (5th Cir. 1998)

AMERICAN STATES INSURANCE COMPANY, Plaintiff,

and

North River Insurance Co.; United States Fire Insurance

Company; Western World Insurance Company, Inc.,

Intervenor Plaintiffs-Appellees Cross Appellants,

v.

H. Barry BAILEY, et al., Defendants,

H. Barry Bailey, Defendant-Appellee,

Cassie E. Allbaugh; Candis White; Allison Lovett; Ginger

Pierson; Jayne Gardner; Ruby Woolridge; Patchez Fox

Weldon Haynes, Reverend; William Longsworth, Reverend; The

First United Methodist Church of Fort Worth, Inc.; Kay

Johnson; Dorayne Levin; Gail Cooke; J. Charles Shelley,

Intervenor Defendants-Appellants Cross Appellees.

No. 96-10779.

United States Court of Appeals, Fifth Circuit

January 30, 1998

Page 364

[Copyrighted Material Omitted]

Page 365

Charles T. Frazier, Jr., Julia Fields Pendery, Cowles & Thompson, Dallas, TX, for Intervenor Plaintiffs-Appellees Cross-Appellants North River Ins. Co. and U.S. Fire Ins. Co.

Robert G. Hogue, Dallas, TX, Nisha Poth Byers, Christopher Jay Harrington, Touchstone, Bernays, Johnston, Beall & Smith, Dallas, TX, for Western World Insurance Company, Inc.

Susan E. Hutchinson, Molloy, Lewis & Hutchinson, Fort Worth, TX, for H. Barry Bailey and Dorayne Levin.

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Michael Sean Quinn, Sheinfeld, Maley & Kay, Austin, TX, Paul E. Knisely, Broadus A. Spivey, Spivey, Grigg, Kelly & Knisely, Austin, TX, for Intervenor Defendants-Appellants Cross-Appellees.

Carol Ann Carson, Rickey J. Brantley, Jose, Henry, Brantley & Keltner, Fort Worth, TX, David L. Evans, Bourland, Kirkman, Seidler & Evans, Fort Worth, TX, for Weldon Haynes, William Longsworth, The First United Methodist Church of Fort Worth, Inc. and Kay Johnson.

D. Michael Wallach, Joseph M. Gallagher and Jennifer M. Andrews, Wallach & Moore, Fort Worth, TX, Christopher Jay Harrington, Touchstone, Bernays, Johnston, Beall & Smith, Dallas, TX, for Gail Cooke.

John Matthew Rogers, Kelli Noelle Arnold, Hill, Gilstrap, Moorhead, White, Bodoin & Webster, Arlington, TX, for J. Charles Shelley.

Appeals from the United States District Court for the Northern District of Texas.

Before KING and JONES, Circuit Judges, and KENDALL, District Judge. [*]

EDITH H. JONES, Circuit Judge:

This declaratory judgment suit was filed by three insurance carriers seeking a declaration that they have no duty to either defend or indemnify their insureds for claims that stem from allegations of sexual misconduct against the Reverend H. Barry Bailey. The district court granted summary judgment for the carriers. This appeal ensued. We find that the claims alleged against the carriers' insureds are excluded from coverage by the policies at issue. Therefore, the carriers have no duty to defend or indemnify their insureds, and we affirm.

I.

In February 1995, seven women (the "Allbaugh plaintiffs") filed suit in Texas district court against the Reverend H. Barry Bailey alleging a variety of tort claims which all stemmed from alleged sexual improprieties by Bailey. Bailey was the pastor-in-charge of the First United Methodist Church of Fort Worth ("FUMC").

In June 1995, Gail Cooke filed a separate suit in Texas district court against Bailey, FUMC, and four associate ministers of FUMC. 1 Her claims against Bailey were essentially the same as those of the Allbaugh plaintiffs. Her claims against FUMC and the four associate ministers were based on vicarious liability and the allegation that FUMC and the associate ministers knew or should have known of Bailey's conduct and should have attempted to stop or warn Cooke of his behavior. In August 1995, Dorayne Levin intervened in Cooke's state court suit.

In May 1995, American States Insurance Co. ("American States") filed this declaratory judgment action in federal court under diversity jurisdiction. In July 1995, North River Insurance Co. and United States Fire Insurance Co. (collectively "Crum & Forster") intervened in American States's declaratory judgment action. Western World Insurance Co. ("Western World") also intervened in July 1995. The Allbaugh plaintiffs, Cooke, Levin, FUMC, and the four associate ministers were all eventually joined as defendants in this federal suit. In May 1996, the district court granted the insurance carriers' motions for summary judgment, finding that they had a duty neither to defend nor to indemnify their insureds (Bailey, FUMC, and the four associate ministers) against the claims of the Allbaugh plaintiffs, Cooke, and Levin.

The Allbaugh plaintiffs, Cooke, Levin, FUMC, and the four associate ministers appealed the district court's grant of summary judgment. Before this court heard the case at oral argument, the Allbaugh plaintiffs, Cooke, and Levin settled with Bailey. Therefore, the only issues remaining before this court are Crum & Forster's and Western World's duty to defend or indemnify FUMC and the four associate ministers against the claims of Cooke and Levin. 2 Also

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before the court is the issue of whether the district court erred in finding that the Allbaugh plaintiffs, Cooke, and Levin are liable for all three insurance carriers' court costs.

II.

Cooke's and Levin's specific claims against FUMC and the four associate ministers are as follows:

1. intentional infliction of emotional and mental distress

2. breach of fiduciary duty, for which fiduciary duty is defined alternatively as the duty to discipline a pastor, the duty of trust and confidence between a parishioner and a pastor, or the duty to report Bailey's conduct to church authorities

3. negligent credentialing of Bailey

4. negligent hiring of Bailey

5. negligent assignment of pastoral charges to Bailey

6. negligent supervision of Bailey

7. negligent failure to warn others of known or knowable harassing and abusive behavior by Bailey

8. negligent dereliction of duties as ordained ministers and agents, servants, and employees of the United Methodist Church

9. negligent counseling

Although Cooke and Levin have settled with Bailey, their claims against him remain relevant to determining coverage as to FUMC and the four associate ministers. Cooke's and Levin's specific claims against Bailey are as follows:

1. battery

2. assault

3. false imprisonment

4. invasion of privacy

5. intentional infliction of emotional and mental distress

6. breach of fiduciary duty

7. negligence

8. negligent counseling

9. failure to warn plaintiffs of his sexual deviancy

10. defamation (Cooke only)

The alleged facts underlying Cooke's and Levin's claims against Bailey are also relevant to determining coverage. In general, Cooke and Levin contend that "[b]etween 1976 and 1994 the Reverend Barry Bailey continued to abuse his position as Pastor-in-Charge of the First United Methodist Church of Fort Worth, Inc., to force or induce women to engage with him in lewd, lascivious, obscene, and immoral sexual conduct, sexual abuse, and sexual harassment." Cooke describes the specific facts underlying her claims as follows:

3.15. During the 1976 to 1994 time-frame, Reverend Bailey initiated conversations with her, in person and by telephone, which were inappropriate, lewd, and obscene. During these conversations, Reverend Bailey persisted in inappropriate sexual discussions involving sexual affairs, graphic sexual acts ..., graphic sexual language, and personally insulting sexual language.

3.16. Reverend Bailey also exposed [himself] to Ms. Cooke on several occasions at the Church and even at the parsonage with his own wife in the next room.

3.17. Reverend Bailey also accosted Ms. Cooke at the Church on several occasions. In those encounters, Reverend Bailey inappropriately grabbed private areas of Ms. Cooke's body and on several occasions physically blocked her exit from offices or rooms on the Church property, forcing himself and his comments upon her.

...

3.19. Gail Cooke recently became aware of information which leads her to believe, and she does allege, that Reverend Bailey has made slanderous and defamatory statements about her to third persons, such statements being actionable under

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the legal theories of slander and defamation, for which she seeks recovery of damages herein.

Plaintiff's Third Amended Petition at 16-18. Levin describes the specific facts underlying her claims as follows:

3.20. At approximately 11 a.m. on September 1, 1993, Intervenor [Levin] presented herself to Reverend Barry Bailey for her meeting.... During this meeting with Reverend Bailey, Intervenor described that she was a victim of childhood sexual abuse and had suffered emotional and psychological injuries as a result of that abuse. Intervenor also disclosed to Reverend Bailey her sexual abuse by a therapist and her experiences which followed from that abuse. Reverend Bailey showed great interest in the specifics of how the therapist had abused Intervenor. He also inquired and showed great interest in how Intervenor's husband had been abusive to her during her marriage.

...

3.22. Additionally, Reverend Bailey advised Intervenor to "start saying yes to people who ask you out, and if a man wants to have sex with you, it's probably normal. If it does not work out, say yes to the next man who asks you out." Reverend Bailey also advised Intervenor to stop working on her sexual abuse counseling project and "get a job" because "you can't do anything to stop this." He also told Intervenor that he wanted to meet with her again and to schedule another appointment.

First Amended Plea in Intervention of Dorayne Levin at 16-17.

III.

As an...

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