State Farm Fire & Cas. Co. v. GHW

• Decision Date: 04 November 2014
• Docket Number: Case No. 2:13–cv–01184–MHH.
• Citation: 56 F.Supp.3d 1210
• Parties: STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff, v. GHW, III, Katherine S. Weaver, George Weaver, Jr., and M.J., a minor by and through her mother and next friend, N.J., Defendants.
• Court: U.S. District Court — Northern District of Alabama

56 F.Supp.3d 1210

STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff

v.GHW, III, Katherine S. Weaver, George Weaver, Jr., and M.J., a minor by and through her mother and next friend, N.J., Defendants.

Case No. 2:13–cv–01184–MHH.

United States District Court, N.D. Alabama, Southern Division.

Signed Nov. 4, 2014.

A. David Fawal, Matthew A. Barley, Butler Snow LLP, Birmingham, AL, for Plaintiff.

Steve R. Burford, Bradley J. McGiboney, Simpson McMahan Glick & Burford PLLC, Gayle L. Douglas, Heninger Garrison Davis LLC, Birmingham, AL, for Defendants.

MEMORANDUM OPINION AND ORDER

MADELINE HUGHES HAIKALA, District Judge.

In this declaratory judgment action, plaintiff State Farm Fire and Casualty Company asks the Court to declare that under the terms of a homeowners insurance policy and an umbrella policy that State Farm issued to defendants George Weaver, Jr. and Katherine Weaver, State Farm does not have a duty to defend or indemnify the Weavers' son, GHW III, in an underlying state court action. The other defendant in this case, M.J., a minor by and through her mother and next friend, N.J., is the plaintiff in the state court action.

State Farm has moved for summary judgment. (Doc. 16). Citing an intentional acts exclusion, State Farm asks the Court to hold that the company has no obligation to provide a defense for GHW III in the state court action because Alabama's inferred intent rule establishes, as a matter of law, that GHW III intended to harm M.J. when he purportedly molested her. The inferred intend rule states that “in cases involving sexual abuse of children, intent to injure is inferred as matter of law regardless of claimed intent.” State Farm Fire & Cas. Co. v. Davis, 612 So.2d 458, 463 (Ala.1993) (internal quotations and citation omitted). Because the Court concludes that the Alabama Supreme Court would not apply the per se rule to GHW III as a matter of law under the circumstances of this case, the Court denies State Farm's motion as it relates to State Farm's duty to defend.

State Farm also asks the Court to hold as a matter of law that the notice that the Weavers provided of a potential loss was untimely so that State Farm has no duty to defend GHW III. The Court finds that questions of fact exist concerning the timeliness of notice. Therefore, the Court denies State Farm's summary judgment motion on this ground. The Court defers ruling on State Farm's duty to indemnify.

I. STANDARD OF REVIEW

“The court shall grant summary judgment if the movant shows 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). When considering a summary judgment motion, the Court must view the evidence in the record in the light most favorable to the non-moving party. Hill v. Wal–Mart Stores, Inc., 510 Fed.Appx. 810, 813 (11th Cir.2013). “The court need consider only the cited materials, but it may consider other materials in the record.” Fed.R.Civ.P. 56(c)(3).

II. RELEVANT FACTS

A. Underlying Incident and Complaint

On April 21, 2007, GHW III spent the night at a friend's house. M.J. was staying at the house too. (Doc. 16–1, ¶ 3). At the time, M.J. was nine years old, and GHW III was 14 years old. (Sealed Doc. 34, p. 15; Sealed Doc. 33–10, p. 2).¹ During the evening of April 21 or the morning of April 22, GHW III attempted to have sexual intercourse with M.J. (Doc. 16–1, ¶¶ 4–8). The circumstances surrounding the event are disputed. (Sealed Doc. 33–5, pp. 9–12).

About a month later, M.J. told her mother what happened. Her mother notified police and gave them a statement on May 28, 2007. (Sealed Doc. 33–2). Police arrested GHW III on June 21, 2007 and charged him with first-degree rape. (Sealed Doc. 33–10, p. 2). GHW III pled “true” to the charge and was placed on probation on September 18, 2007. (Id. ).

A mental health coordinator for Jefferson County Family Court evaluated GHW III on July 5, 2007. She concluded that GHW III did not need “residential treatment, but could certainly benefit from some out-patient treatment.” (Sealed Doc. 33–3, p. 5). The mental health coordinator referred GHW III to a clinical psychologist who examined him on August 15, 2007. (Sealed Doc. 33–4). The psychologist commented that GHW III had “social problems and thinking problems” and that he had “some difficulty getting along and being liked by his peers.” (Id. at 3). She concluded that GHW III has “mild to moderate impulse control deficits and anger management issues.” (Id. at 4). She also found that GHW III “has little understanding of exactly why his offense [sic] behavior was wrong, and he has difficulty accepting complete responsibility for the offense.” (Id. ).

As part of her evaluation, the psychologist gave GHW III the Millon Adolescent Clinical Inventory test, which is “an objective personality inventory designed specifically for adolescents.” (Id. at 3). GHW III's responses to the MACI test revealed that he had “moderate problems with impulse control.” (Id. ). Adolescents who responded like GHW III on the MACI test “tend to be careless, impatient, reckless and have temper tantrums at times. Such teenagers do no [sic] plan or consider the consequences to their actions.” (Id. ).

In May 2011, Mr. Weaver received a letter from an attorney representing M.J. The letter stated that M.J. would be seeking civil damages. In the letter, M.J.'s attorney requested information regarding the Weavers' homeowners insurer. (Doc. 17–1, Ex. A). State Farm contends that the letter from M.J.'s attorney constituted the first notice that State Farm received of the claim against GHW III. (Doc. 17–1, ¶ 5; Doc. 17–1, Ex. A).

On May 30, 2013, M.J., by and through her mother and next friend, N.J., filed a complaint against GHW III in the Circuit Court of Jefferson County, Alabama. (Doc. 16–1). M.J. asserted claims against GHW III for: (1) negligent and wanton infliction of emotional distress, (2) negligent and wanton invasion of privacy, (3) negligent and wanton assault and battery, (4) negligent and wanton false imprisonment, and (5) negligence. (Doc. 16–1, ¶¶ 4–9). M.J. contends that she suffered the following injuries as a consequence of GHW III's alleged conduct: physical injuries to her genitalia, mental anguish, permanent injuries, loss of enjoyment of life, and past and future medical expenses “in an effort to cure and/or assist [M.J.] with tolerating her injuries.” (Doc. 16–1, p. 2). M.J. seeks compensatory and punitive damages in the state court action against GHW III. (Doc. 16–1, p. 3).

In deposition testimony in the state court action, GHW III stated that, at the time of the alleged sexual assault, he did not consider the consequences of his actions. He explained:

Q: Do you believe that [your actions were] an invasion of her privacy?

A: Yes, ma'am.

Q: Do you believe that it had the potential to cause her emotional distress?

A: Yes, ma'am.

Q: I understand that that is as you are sitting her today as a 21 year old. When you were 13 or 14—

A: I wouldn't.

Q: —did you consider that that was a possibility?

A: No, ma'am.

Q: Did you consider the consequences of your actions at that time?

A: No, ma'am.

(Sealed Doc. 33–5, p. 13).

B. Applicable Policy Language

Mr. and Mrs. Weaver purchased a Homeowners Policy of Insurance, Policy No. 01–CV–1166–6, and a Personal Liability Umbrella Policy, Policy No. 01–B4–4303–6, from State Farm. (Doc. 17–1, ¶ 3). GHW III is an insured under both policies. (Id. ). The policies were in effect from January 16, 2007 to January 16, 2008. (Id. ). The Weavers seek coverage under the policies for GHW III's defense in the state court action. The Court focuses its analysis on the umbrella policy.

The umbrella policy states that “[i]f a suit is brought against any insured for damages because of a loss to which this policy applies, we will provide a defense to the insured at our expense by counsel of our choice when the basis for the suit is a loss that is not covered by any other insurance policy but is covered by this policy.” (Doc. 16–3, p. 13). The umbrella policy defines “loss” as “an accident, including injurious exposure to conditions, which results in bodily injury or property damage ...” or “the commission of an offense, or series of similar or related offenses, which result in personal injury....” (Doc. 16–3, p. 3). The umbrella policy defines “personal injury” as “injury caused by one or more of the following offenses: a. false arrest, false imprisonment, wrongful eviction, wrongful detention, malicious prosecution; b. libel, slander, defamation of character or invasion of rights of privacy.” (Doc. 16–3, p. 4).

The umbrella policy does not provide coverage for bodily injury or property damage that is expected or intended by the insured or that is the result of willful and malicious acts. (Doc. 16–3, p. 4). The policy also excludes coverage for personal injury when the insured “act[s] with specific intent to cause harm or injury.” (Doc. 16–3, p. 4). The umbrella policy requires an insured to “immediately” notify State Farm in the event of a loss for which the policy might provide coverage. (Doc. 16–3, p. 17).²

III. DISCUSSION

In this declaratory judgment action, the Court must determine whether State Farm has a duty “to defend and/or indemnify GHW, III for claims [that M.J.] made against him” in the underlying state court action based on GHW III's purported sexual molestation of M.J. (Doc. 1, pp. 5–6). It is too early for the Court to address the indemnity issue because the state court action against GHW III remains pending. See Assurance Co. of Am. v. Legendary Home Builders, Inc., 305 F.Supp.2d 1266, 1270 (S.D.Ala.2003) (“[A]n insurer's duty to indemnify is not ripe for adjudication in a declaratory judgment action until the insured is in fact held liable in the underlying suit.”) (citations omitted); see also Harleysville Mut. Ins. Co. v. Dapper, LLC, 2010 WL 2925779, *4 (M.D.Ala. July 21, 2010) (“If Dapper wins [in state court], the indemnification issue is moot and the Court...