AIG Prop. Cas. Co. v. Green

• Decision Date: 08 November 2016
• Docket Number: Civil Action No. 15–30111–MGM
• Citation: 217 F.Supp.3d 415
• Parties: AIG PROPERTY CASUALTY COMPANY, Plaintiff, v. Tamara GREEN, Therese Serignese, Linda Traitz, Louisa Moritz, Barbara Bowman, Joan Tarshis, Angela Leslie, Kristina Ruehli, Katherine Mae Mckee, and William H. Cosby, Jr., Defendants.
• Court: U.S. District Court — District of Massachusetts

217 F.Supp.3d 415

AIG PROPERTY CASUALTY COMPANY, Plaintiff,

v.Tamara GREEN, Therese Serignese, Linda Traitz, Louisa Moritz, Barbara Bowman, Joan Tarshis, Angela Leslie, Kristina Ruehli, Katherine Mae Mckee, and William H. Cosby, Jr., Defendants.

Civil Action No. 15–30111–MGM

United States District Court, D. Massachusetts.

Signed November 8, 2016

Rebecca R. Weinreich, Stephen V. Kovarik, Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, CA, William A. Schneider, Taylore E. Karpa, Morrison Mahoney LLP, Boston, MA, for Plaintiff.

Joseph Cammarata, Matthew W. Tievsky, Cchaikin, Sherman, Cammarata & Siegel, P.C., Washington, DC, Andrew M. Abraham, Abraham & Associates, P.C., Megan C. Deluhery, Carole C. Cooke, Todd & Weld LLP, Boston, MA, F. William Salo, Law Office of F. William Salo, Jeffrey L. Schulman, Mikaela Gallagher–Whitman, Law Offices of Liner LLP, New York, NY, Francis D. Dibble, Jr., Jeffrey E. Poindexter, Elizabeth S. Zuckerman, Bulkley, Richardson & Gelinas, Springfield, MA, Kim Umanoff, Kirk A. Pasich, Liner LLP, Los Angeles, CA, for Defendants.

MEMORANDUM AND ORDER REGARDING WILLIAM H. COSBY'S MOTION TO DISMISS OR, IN THE ALTERNATIVE, FOR JUDGMENT ON THE PLEADINGS, AND PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

MASTROIANNI, United States District Judge

I. INTRODUCTION

In this action, AIG Property Casualty Company ("AIG") seeks a declaration that it has no duty to defend or indemnify William H. Cosby, Jr. under two insurance policies in relation to three defamation cases which are or were also pending in this court: Green v. Cosby , Case No. 14–cv–30211–MGM, Ruehli v. Cosby , Case No. 15–cv–13796–MGM, and McKee v. Cosby , Case No. 15–cv–30221–MGM.¹ AIG contends the insurance policies provide no coverage as to the defamation cases because of exclusions for expenses "arising out of" sexual misconduct. After AIG amended its complaint, Cosby filed a motion to dismiss or, in the alternative, for judgment on the pleadings, asserting the sexual misconduct exclusions do not unambiguously apply to the defamation cases so as to bar coverage.² AIG, for its part, has filed a motion for summary judgment, arguing it is entitled to affirmative relief as a matter of law based on the sexual misconduct exclusions. For the following reasons, the court will grant Cosby's motion in part and deny AIG's motion.

II. BACKGROUND AND PROCEDURAL HISTORY

The following facts come from AIG's amended complaint, attachments thereto, and official public records in the form of judicial documents. See Grajales v. Puerto Rico Ports Auth. , 682 F.3d 40, 44 (1st Cir. 2012).³ AIG issued Massachusetts Homeowners Policy No. PCG 006004261 ("Massachusetts Policy") and Personal Excess Liability Policy No. PCG 006235889 ("Excess Policy") to Cosby. (Dkt. No. 95, Am. Compl. ¶¶ 16, 20.) Both policies were in effect from January 1, 2014 to January 1, 2015. (Id. ¶¶ 17, 21.) The policies require AIG to "pay damages [Cosby] is legally obligated to pay for personal injury or property damage caused by an occurrence covered by this policy anywhere in the world." (Id. ¶¶ 19, 23.)⁴ The policies define "personal injury" as including "[b]odily injury"; "[s]hock, emotional distress, mental injury"; "[i]nvasion of privacy"; and "[d]efamation, libel, or slander." (Id. , Exs. A and B, at pt. I.) The Massachusetts Policy also requires AIG to "pay the costs to defend [Cosby] against any suit seeking covered damages for personal injury or property damage, even if the suit is false, fraudulent, or groundless." (Id. ¶ 19.) And the Excess Policy states AIG "will defend [Cosby] against any suit seeking damages covered by Excess Liability ... under this policy and where ... [t]he underlying insurance has been exhausted by payment of claims [or] [n]o underlying insurance applies... even if the allegations of the suit are groundless, false, or fraudulent." (Id. , Ex. B., at pt. IV.A.)

The Massachusetts Policy contains an exclusion which states that it "does not provide coverage for liability, defense costs or any other cost or expense for ... [p]ersonal injury arising out of any actual, alleged, or threatened by any person: (a) sexual molestation, misconduct or harassment; ... or (c) sexual, physical or mental abuse." (Id. ¶ 19.) Similarly, the Excess Policy contains an exclusion stating it "does not provide coverage for liability, defense costs or any other cost or expense ... [a]rising out of any actual, alleged or threatened: a. Sexual misconduct, molestation or harassment ... or c. Sexual, physical or mental abuse." (Id. ¶ 17, Ex. B, at pt. V.B.3.) The court will refer to these two exclusions as the "sexual misconduct exclusions."

On December 10, 2014, Tamara Green filed a complaint against Cosby for defamation. (Am. Compl. ¶ 26; Green v. Cosby , Case No. 14–cv–30211–MGM, Dkt. No. 1.) An amended complaint, which added Therese Serignese and Linda Traitz as plaintiffs along with Green, was filed on January 5, 2015, and a second amended complaint was filed on April 21, 2015. (Am. Compl. ¶ 27; Green v. Cosby , Case No. 14–cv–30211–MGM, Dkt. Nos. 13, 48.) On June 26, 2015, AIG commenced this declaratory judgment action directed at the Green case and the allegations contained in the second amended complaint therein. (Dkt. No. 1, Compl.)

On November 9, 2015, Kristina Ruehli filed a complaint against Cosby for defamation. (Am. Compl. ¶ 92, Ex. D.)⁵ On November 13, 2015, a third amended complaint was filed in the Green case, adding as plaintiffs Louisa Moritz, Barbara Bowman, Joan Tarshis, and Angela Leslie, and adding claims for invasion of privacy (false light) and intentional infliction of emotional distress on behalf of all the plaintiffs. (Am. Compl. ¶ 28, Ex. C.) And on December 21, 2015, Katherine Mae McKee filed a complaint against Cosby for defamation. (Am. Compl. ¶ 100, Ex. E.)⁶ The underlying plaintiffs in the Green , Ruehli , and McKee cases alleged that many years ago Cosby sexually assaulted them and they subsequently disclosed the assaults to the public. The underlying plaintiffs further allege that in 2014⁷ Cosby, directly or through spokespeople, falsely and publicly denied the accusations, thereby defaming them and, as to the Green plaintiffs, placing them in a false light and intentionally inflicting emotional distress. (Am. Compl. ¶¶ 30–105.) AIG filed its amended complaint in this action, seeking declaratory relief as to its duty to defend and indemnify Cosby regarding the three defamation cases, on March 31, 2016.

Meanwhile, on June 26, 2015 (the same day AIG commenced this action), AIG brought a separate declaratory judgment action in the United States District Court for the Central District of California, AIG Prop. Cas. Co. v. Cosby , Case No. CV 15–04842–BRO (RAOx) ("California Action"), regarding its insurance obligations as to a similar defamation case filed against Cosby in California state court, Dickinson v. Cosby , case no. BC58090. The California Action involves the same Massachusetts Policy and Excess Policy as in this case, as well as a California Homeowners Policy. (Dkt. No. 19, Ex. C.) Moreover, the plaintiff in Dickinson also claimed that Cosby sexually assaulted her years ago and that Cosby's public denial of that accusation renders him liable for defamation, false light, and intentional infliction of emotional distress. (Dkt. No. 111, Ex. A.) AIG claimed in the California Action, as it does here, that the sexual misconduct exclusions preclude coverage because the allegedly defamatory statements which form the basis of the claims in Dickinson "aris[e] out of" sexual misconduct. (Dkt. No. 19, Ex. C.)

The court granted Cosby's motion to dismiss in the California Action, holding AIG has a duty to defend Cosby in Dickinson because the sexual misconduct exclusions do not unambiguously bar coverage. AIG Prop. Cas. Co. v. Cosby , 2015 WL 9700994 (C.D. Cal. Nov. 13, 2015). Notably, the court applied California law to the coverage dispute. It reasoned as follows:

Here, the policies arose in both California and Massachusetts. However, where the applicable rules of law of the potentially concerned jurisdictions do not materially differ, the Court may proceed to apply the law of the forum.... The party arguing that foreign law governs has the burden to identify the applicable law.... [AIG] asserts that Massachusetts and California law ought to govern this case, but represents that the laws of those states do not conflict. Therefore, the Court will apply California law, the law of the forum here.

Id. at *3 n.2 (internal citations and quotation marks omitted). The court explained that under California law, "both [AIG's] broad interpretation and [Cosby's] narrow interpretation of ‘arising out of’ are reasonable." Id. at *5. Under Cosby's narrow interpretation, which the court found supported by a line of California cases, "the injuries Dickinson allegedly suffered originate from [Cosby's] statements, which have only an attenuated factual connection with sexual misconduct. Sexual misconduct may be the subject matter of [Cosby's] statements, but [Cosby's] statements, not his alleged sexual misconduct directly caused the injury for which Dickinson now seeks relief." Id. at *6. The court also noted that a separate sexual misconduct exclusion in the Excess Policy applicable to "Limited Charitable Board Directors and Trustees Liability" bars coverage for damage "arising out of, or in any way involving , directly or indirectly, any alleged sexual misconduct." Id. at *5 (emphasis added). Accordingly, the court explained, if AIG "wished to exclude a claim ‘in any way involving’ sexual misconduct," which "language is unquestionably broader" than the exclusions at issue, "it could have included such language," and AIG's "decision not to do so suggests that a narrow interpretation" is reasonable. Id. Because the "arising out of" language in the sexual misconduct exclusions is "reasonably susceptible to [Cosby's] narrow interpretation, and thus, ambiguous," and "[a]ny ambiguous...