American & For. Ins. v. Church Sch., Diocese of Va., Civ. A. No. 86-0297-R.
| Decision Date | 29 September 1986 |
| Docket Number | Civ. A. No. 86-0297-R. |
| Citation | 645 F. Supp. 628 |
| Parties | AMERICAN AND FOREIGN INSURANCE COMPANY, Plaintiff, v. CHURCH SCHOOLS IN the DIOCESE OF VIRGINIA, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Virginia |
Henry H. McVey, III, John M. Oakey, Jr., Christopher C. Spencer, McGuire, Woods & Battle, Richmond, Va., for plaintiff.
Sa'ad El-Amin, Richmond, Va., for defendants Loree Anitra Johnson and Judy Johnson.
Samuel W. Hixon, III, A. Peter Brodell, Williams, Mullen & Christian, Richmond, Va., Margaret L. Bacigal, for defendants Church Schools in the Diocese of Virginia, Allen W. Becker, Peggy Ross, Susan E. Goff and Amy Archinal.
Plaintiff is a New York corporation engaged in the business of insurance, whose principal place of business is in Charlotte, North Carolina.
Defendant Church Schools in the Diocese of Virginia is a Virginia corporation whose principal place of business is in Virginia.
The individually named defendants are each citizens of the Commonwealth of Virginia.
Jurisdiction is premised on 28 U.S.C. § 1332 and 28 U.S.C. §§ 2201 and 2202.
The matter comes before the Court on the plaintiff insurance company's motion for summary judgment. Having been fully briefed and argued, the motion is ripe for disposition.
This suit brought by the American and Foreign Insurance Company ("American") seeks a declaration that it has no duty to defend or indemnify Church Schools in the Diocese of Virginia ("Church Schools") and several of its teachers and staff members against a suit brought by a student, Loree Anitra Johnson, and her mother, Judy Johnson, against St. Catherine's School and the individually named defendants in the instant suit. Church Schools is a corporation operating several schools in Virginia, including St. Catherine's School. Church Schools carries a liability insurance policy issued by plaintiff which insures the schools, their teachers and staff members, under certain circumstances.
For convenience, the Court's reference to Church Schools in this memorandum is intended to include each of the named defendants.
The Johnsons' suit arises from an incident which allegedly occurred at St. Catherine's on September 27, 1985. Loree Johnson, a St. Catherine's student then age 11, alleges that she fell off of her stool in art class. In the course of getting up, her art teacher, defendant Archinal, squeezed her buttocks in a sexually suggestive manner. The Johnsons allege that when they reported the incident to the Director of the Middle School, defendant Ross, and the Headmaster, defendant Becker, these individuals engaged in a cover-up and failed to fully and fairly investigate the incident. They claim that a meeting was held at which Loree was humiliated and Mrs. Johnson was harassed. The Johnsons further allege that Becker and Ross, along with the school chaplain, defendant Goff, humiliated Loree at a schoolwide assembly by giving a sermon about how a jealous little school girl had ruined the life of a schoolteacher by falsely claiming sexual abuse.
Loree and her mother filed a Motion for Judgment in Richmond Circuit Court on March 1, 1986. In their suit against St. Catherine's and the individual defendants, they alleged counts of assault and battery and intentional infliction of emotional distress and sought compensatory and punitive damages for Loree's and Mrs. Johnson's mental anguish and humiliation.
On March 19, 1986, Church Schools notified its local insurance agent of the lawsuit, who conveyed this information to American on March 21, 1986. In a letter dated March 25, 1986, American informed Church Schools that it "reserve(d) the right to set up any and all defense(s) of non-coverage" with respect to "a claim being presented on behalf of Loree Anitra Johnson for (1) assault and battery, (2) intentional emotional harm occurring as a result of an occurrence on or about 9/25/85." It based its reservation of rights on claims of untimely notice of the claim and non-coverage of intentional acts.
The Johnsons filed an Amended Motion for Judgment in the Richmond Circuit Court on September 16, 1986. While adding no new counts to their previously alleged assault and battery and intentional infliction of emotional distress claims, the Johnsons did add allegations of negligent "improper sexual contact" and negligent infliction of emotional distress. The amended motion for judgment was brought to the Court's attention for the first time in the hearing on the instant motion for summary judgment on September 17, 1986.
American filed its declaratory judgment action in this Court on May 9, 1986, asking for a declaration that it owed no duty to defend or indemnify Church Schools or its employees against the Johnsons' lawsuit. American provided three grounds for its proposed declaration: (1) failure of a condition precedent to coverage under the policy, claiming Church Schools had failed to provide notice of the occurrence "as soon as practicable"; (2) lack of coverage under the policy provision covering "bodily injury ... caused by an occurrence"; (3) lack of coverage under the provision covering "personal injury" arising out of "a publication or utterance ... of a libel or slander or other defamatory or disparaging material, or ... in violation of an individual's right of privacy."
In its answer, in addition to denying American's claims of untimely notice and lack of coverage, Church Schools raised the affirmative defenses of waiver and estoppel, claiming that the reservation of rights letter failed to reserve the right to contest coverage of the sermon incident, but raised only the sexual assault incident itself.
American filed the instant Motion for Summary Judgment on August 29, 1986, seeking judgment in its favor on the grounds of non-coverage under both the bodily injury and personal injury policy provisions. Church Schools, in opposition to the motion, claims coverage under both provisions and waiver of non-coverage of at least the sermon incident.
The parties raise no factual dispute as to the literal content of the Johnsons' Motion for Judgment, Amended Motion for Judgment, or the insurance policy covering Church Schools. Therefore, the Court is presented solely with the legal issue of the proper interpretation to be given the bodily injury and personal injury coverages under the policy and whether the scope of either or both of these provisions encompasses the Johnsons' claims, creating a duty on American to defend the lawsuit. A finding that such claims were not covered does not, however, end the matter, for the Court must determine whether American is estopped from raising non-coverage as a defense.
Because this action is before the Court pursuant to its diversity jurisdiction, state law applies. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Since the insurance policy was issued and delivered in Virginia and all relevant acts and omissions occurred in Virginia, Virginia law applies to this dispute. Maryland Casualty Co. v. Burley, 345 F.2d 138 (4th Cir.1965).
Under Virginia law, coverage is determined by examining whether the allegations of the motion for judgment fall within the scope of the policy's coverage. Travelers Indemnity Co. v. Obenshain, 219 Va. 44, 46, 245 S.E.2d 247, 249 (1978).1 Only if it clearly appears that the claims set forth in the motion for judgment are not covered is the insured relieved of its duty to defend. If coverage is in doubt, the insurance company must defend. Travelers, supra, 219 Va. at 46, 245 S.E.2d at 249 (citing London Guar. Co. v. C.B. White & Bros., 188 Va. 195, 198-200, 49 S.E.2d 254, 255-56 (1948)). Further, the Court must examine the allegations of the Amended Motion for Judgment, as any new or different causes of action raised therein also could create a duty to defend. See Bernard v. Gulf Ins. Co., 542 S.W.2d 429, 431 (Tex.Civ.App. 1976). As the insurance policy in the instant case specifically provides, as long as the allegations in the Motion for Judgment present potentially covered claims, the insurer must defend even if the allegations in fact are groundless, false or fraudulent.
Thus, in the instant case, the Court must examine the allegations of the Johnsons' Motion for Judgment and Amended Motion for Judgment to determine whether they present claims within the scope of the policy's coverage. The parties agree that, if coverage exists, it is found under either the Comprehensive General Liability Insurance provisions covering "bodily injury" or the Broad Form Comprehensive General Liability provisions covering "personal injury" arising from the commission of certain enumerated torts.2
The Comprehensive General Liability coverage obligates American to pay "all sums which the insured shall become legally obligated to pay as damages because of ... bodily injury ... caused by an occurrence." The parties' dispute concerns whether the Johnsons allege: (1) a bodily injury, (2) caused by an occurrence.
The insurance policy defines "bodily injury" as "bodily injury, sickness or disease." American contends that this term connotes physical injuries to the body, as opposed to emotional injuries to the person, and that the Johnsons' claims are not covered because they allege purely emotional harm. In response, Church Schools argues that it is the type of claim alleged and not the basis of the damages sought that should determine coverage. Because the Johnsons allege a battery, which requires some type of body contact, such claim, so Church Schools contends, fits within the definition of "bodily injury." The policy makes no references to "body contact."
While the Virginia courts have not interpreted the term "bodily injury," courts that have interpreted this language have determined that it limits policy coverage to...
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