State Farm Fire & Cas. Co. v. Pike

• Decision Date: 25 June 2019
• Docket Number: CIVIL ACTION NO. 17-40172-TSH
• Citation: 389 F.Supp.3d 94
• Parties: STATE FARM FIRE AND CASUALTY COMPANY, an Illinois Corporation, Plaintiff, v. Barbara PIKE, and Jane Doe, by and through her next friend, Kim Pike, Defendants.
• Court: U.S. District Court — District of Massachusetts

389 F.Supp.3d 94

STATE FARM FIRE AND CASUALTY COMPANY, an Illinois Corporation, Plaintiff,

v.Barbara PIKE, and Jane Doe, by and through her next friend, Kim Pike, Defendants.

CIVIL ACTION NO. 17-40172-TSH

United States District Court, D. Massachusetts.

Filed June 25, 2019

Kevin Truland, Morrison Mahoney LLP, Boston, MA, for Plaintiff.

Donald C. Keavany, Jr., Andrew P. DiCenzo, Christopher, Hays, Wojcik & Mavricos, LLP, Worcester, MA, Christopher M. Hennessey, Elizabeth A. Tully, Sasha N. Kopf, Cohen Kinne Valicenti & Cook, LLP, Pittsfield, MA, for Defendants.

ORDER AND MEMORANDUM ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (Docket No. 31)

HILLMAN, D.J.

John Pike ("Pike") sexually abused his granddaughter, Jane Doe. Subsequently, Jane Doe brought a claim against her grandmother and Pike's wife, Barbara Pike ("Barbara") for negligently allowing Pike to abuse her. Barbara sought defense and indemnity from her insurer, State Farm Fire and Casualty Company ("State Farm").

State Farm now seeks declaratory judgment that the policies do not provide coverage for abuse that occurred while the policies were not in effect and regardless of the number of incidents of abuse that occurred while the policies were in effect, only one "occurrence" or "loss" occurred under the meaning of the policies. Further, State Farm moves for summary judgment on Jane Doe's counterclaim that State Farm breached its duty to make a settlement offer where liability is reasonably clear.

For the reasons stated below, State Farm's motion (Docket No. 31) is denied.

Background

1. Abuse

This Court's review of the record is in the light most favorable to the party opposing summary judgment. Santiago-Ramos v. Centennial P.R. Wireless Corp. , 217 F.3d 46, 50 (1st Cir. 2000).

Jane Doe is a minor female resident of Massachusetts who was sexually abused by her grandfather, Pike. Jane Doe previously sued Pike and judgment was entered against him in the amount of $5,000,000. See Doe v. Pike , 15-CV-40057-TSH. Barbara, Pike's wife and Jane Doe's maternal grandmother, occasionally cared for Jane Doe while her mother, Kim Pike ("Kim"), was at work. Although Kim requested that Barbara supervise Doe, Pike would accompany Barbara to Jane Doe's home.

Pike sexually abused Jane Doe at her home. Jane Doe further alleges that abuse occurred at her homes in Upton and Centerville, Massachusetts, and Pike and Barbara's condo in Laconia, New Hampshire. Pike made Jane Doe do headstands and, while Jane Doe was upside down, put his mouth on her vulva. Pike admits that he performed oral sex on Doe up to six times. On one occasion in 2010, Pike kissed Doe and inserted his tongue into her mouth. Pike also made Jane Doe play the "penny game" where Pike would hide a penny in the foreskin of his penis and make Jane Doe find it. Jane Doe suffered significant and enduring emotional distress as a result of the abuse. She lost her motivation to attend school and her desire to socialize. The emotional distress also had physical manifestations and symptoms such as stomach pain, headaches, and nightmares.

Much of the abuse occurred while Barbara was supposed to be supervising Jane Doe but was instead napping, reading outside, or otherwise occupied. According to Jane Doe, Barbara was also present during some of the abuse. For instance, Doe described one incident when she was being molested by Pike under a blanket and Barbara walked in and made eye contact with her. Barbara, however, alleges that she first learned about the abuse when her son Scott called her in 2014. Barbara also observed Pike playing the "turn on the radio" game with his grandchildren, where Pike would twist their nipples. Jane Doe alleges Barbara watched Pike play this game with her. Barbara testified, however, that she did not specifically recall Pike playing the game with Jane Doe and that she thought the game was simply innocent horseplay. Barbara was also aware of the 1998 allegations against Pike of sexual abuse of another grandchild.

After the abuse began, Jane Doe attempted to avoid Barbara and Pike when they were at her home. She locked herself in her room and put duck-tape on the door. Jane Doe befriended neighbors so she could leave the home while Barbara and Pike were there. According to Jane Doe, Barbara became angry that Jane Doe avoided her and Pike and pressured Jane Doe to spend more time with them. Barbara never told Kim that she had left Jane Doe alone with Pike or informed Kim about the risk that Pike posed.

2. State Farm Policies

State Farm issued three insurance policies that are the subject of this litigation: A Condominium Unitowners Policy with an effective date of October 1, 2009, a Homeowners Policy with an effective date of September 23, 2009, and a Personal Liability Umbrella Policy with an effective date of October 1, 2009. See Docket No. 32-10, at 3-102.

On January 4, 2017, Jane Doe, as a third-party beneficiary under the Policies, sent a demand to State Farm pursuant to Mass. Gen. Laws ch. 93A and ch. 176D, demanding that State Farm make a fair and reasonable settlement offer. On February 28, 2017, State Farm refused to grant relief following receipt of Jane Doe's demand letter because Barbara's liability was not "reasonably clear." See Docket No. 32-10, at 109.

Standard of Review

Rule 56 of the Federal Rules of Civil Procedure provides that the court shall grant summary judgment if the moving party shows, based on the materials in the record, "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56. A factual dispute precludes summary judgment if it is both "genuine" and "material." See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is "genuine" when the evidence is such that a reasonable factfinder could resolve the point in favor of the nonmoving party. Morris v. Gov't Dev. Bank of Puerto Rico , 27 F.3d 746, 748 (1st Cir. 1994). A fact is "material" when it might affect the outcome of the suit under the applicable law. Id .

The moving party is responsible for "identifying those portions [of the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). It can meet its burden either by "offering evidence to disprove an element of the plaintiff's case or by demonstrating an ‘absence of evidence to support the nonmoving party's case.’ " Rakes v. United States , 352 F. Supp. 2d 47, 52 (D. Mass. 2005), aff'd , 442 F.3d 7 (1st Cir. 2006) (quoting Celotex , 477 U.S. at 325, 106 S.Ct. 2548 ). Once the moving party shows the absence of any disputed material fact, the burden shifts to the non-moving party to place at least one material fact into dispute. Mendes v. Medtronic, Inc. , 18 F.3d 13, 15 (1st Cir. 1994) (citing Celotex , 477 U.S. at 325, 106 S.Ct. 2548 ). When ruling on a motion for summary judgment, the court must "view the facts in the light most favorable to the non-moving party, drawing all reasonable inferences in that party's favor." Barbour v. Dynamics Research Corp. , 63 F.3d 32, 36 (1st Cir. 1995).

Discussion

1. Choice of Law

When a district court's jurisdiction is based upon diversity of citizenship, the court must apply the choice-of-law rules of the forum state. Klaxon v. Stentor Elec. Mfg. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). However, "[t]he first step in a choice of law analysis is to determine whether an actual conflict exists between the substantive laws of the interested jurisdictions." Reicher v. Berkshire Life Ins. Co. of Am. , 360 F.3d 1, 4 (1st Cir. 2004). The First Circuit has explained that when "the outcome is the same under the substantive law of either jurisdiction," there is no actual conflict and the court "need not resolve the [choice-of-law] issue." Lambert v. Kysar , 983 F.2d 1110, 1114 (1st Cir. 1993). The parties agree that New Hampshire and Arizona laws govern this dispute. Accordingly, I need not resolve this issue. See Artuso v. Vertex Pharma., Inc. , 637 F.3d 1, 5 (1st Cir. 2011) ("In determining which state's law applies, a diversity court is free to honor the parties' reasonable agreement.").

If the Court cannot discern any controlling New Hampshire or Arizona authority on a certain point, it must make an informed guess as to how the state's highest court would resolve the issue. Sanders v. Phoenix Ins. Co. , 843 F.3d 37, 42 (1st Cir. 2016). That "prediction may be guided, inter alia, by persuasive case law from other jurisdictions and relevant public policy considerations." Id. (quotation marks omitted).

2. Declaratory Judgment

The Declaratory Judgment Act, 28 U.S.C. §§ 2201 - 2202, is "an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant." Wilton v. Seven Falls Co. , 515 U.S. 277, 287, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (quoting Pub. Serv. Comm'n of Utah v. Wycoff Co. , 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952) ). It permits federal courts to award declaratory relief when an actual case or controversy is present. See Verizon New England, Inc. v. Int'l Broth. of Elect. Workers, Local No. 2322 , 651 F.3d 176, 187 (1st Cir. 2011) ("Requests for a declaratory judgment may not be granted unless they arise in a context of a controversy ‘ripe’ for judicial resolution."); Abbot Labs. v. Gardner , 387 U.S. 136, 148-49, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), abrogated on other grounds by Califano v. Sanders , 430 U.S. 99, 105, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977).

A duty to indemnify "arises only after the insured's liability has been established and is between the insurer and the insured," Wilkinson v. Citation Ins. Co. , 447 Mass. 663, 671, 856 N.E.2d 829 (2006), and must be "determined by the facts, which are usually established at trial." Travelers Ins. Co. v. Waltham Indus. Labs. Corp. , 883 F.2d 1092, 1100 (1st Cir. 1989). Accor...