Allstate Ins. Co. v. Berge

Decision Date06 November 2007
Docket NumberNo. 1:06-cv-060.,1:06-cv-060.
PartiesALLSTATE INSURANCE COMPANY, Plaintiff, v. Paul and Cheri SERGE, o/b/o Ashley Berge, deceased, and Claude and Marleen Streeper, and Mark Streeper, Defendants.
CourtU.S. District Court — District of North Dakota

Michael J. Morley, Morley Law Firm, Grand Forks, ND, for Plaintiff.

Rodney E. Pagel, Pagel Weikum, PLLP, Steven L. Latham, Larson Latham Huettl, LLP, Bismarck, ND, for Defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

DANIEL L. HOVLAND, Chief Judge.

Before the Court is the Plaintiff's Motion for Summary Judgment filed on October 1, 2007. The defendants, Paul and Cheri Berge, filed a response in opposition to the motion and a cross-motion for summary judgment on October 12, 2007. The Plaintiff filed reply briefs on October 24, 2007, and November 5, 2007. Defendants Claude and Marleen Streeper filed a response on October 29, 2007. For the reasons outlined below, the Plaintiff's motion is granted, and the Defendants' motion is denied as moot.

I. BACKGROUND

This is a coverage dispute involving the interpretation of an exclusionary clause in an insurance policy. The plaintiff, Allstate Insurance Company (Allstate), filed a declaratory judgment action seeking a ruling that its named insureds under a condominium owners insurance policy, defendants Claude Streeper and Marleen Streeper, have no coverage and that Allstate has no duty to defend an action brought by the defendants, Paul Berge and Cheri Berge.

This case arises out of the death of 16-year-old Ashley Berge, the daughter of Paul Berge and Cheri Berge. On November 29, 2004, Mark Streeper, the 25-year-old son of Claude and Marleen Streeper, invited Ashley Berge and two of her friends over to the Streeper residence where Mark Streeper lived. Claude and Marleen Streeper were out of town during the day of November 29, 2004, and returned home late in the evening. See Docket No. 7, ¶ 4.

Additional guests arrived at the Streeper residence and, at some point in the evening, Mark Streeper and his guests began consuming alcohol that Mark had purchased. North Dakota v. Streeper, 727 N.W.2d 759, 761 (N.D.2007). Later that evening, several of Mark Streeper's guests said that they watched Mark "crush some pills, mix them with water, and then fill a syringe with the mixture." Id. Three witnesses said that Mark Streeper inserted the syringe in Ashley Berge's arm and injected the mixture. Id. Ashley Berge "crashed" at Mark Streeper's residence following an evening of drug and alcohol use. Around 11:30 a.m. the next morning, Mark Streeper was awakened by a telephone call from Ashley Berge's employer who was looking for her. Upon receiving the phone call, Mark Streeper was unable to awake Ashley Berge, and she was later pronounced dead at the scene by paramedics. The cause of death was an overdose of drugs and alcohol provided to Ashley Berge by Mark Streeper. The medical examiner determined that Ashley Berge was injected with a drug cocktail of Oxycodone, Methadone, and Zanax and, at the time of her death, had a blood alcohol concentration of 0.26 percent, which is more than three times the legal limit in North Dakota. See Docket No. 38, p. 3.

Mark Streeper was subsequently charged with and convicted of manslaughter in state court for the death of Ashley Berge. On appeal, the North Dakota Supreme Court affirmed the jury verdict. North Dakota v. Streeper, 727 N.W.2d 759 (N.D.2007). The Berges admit that Mark Streeper's actions were intentional or criminal.

The record reveals that Allstate Insurance Company had issued a condominium owners policy to Claude and Marleen Streeper. See Docket No. 38-3. The condominium owners policy covered the period of time from February 28, 2004, to February 28, 2005, and was in effect at the time of this incident on November 29, 2004. See Docket No. 38-2. Allstate contends that the Berge's claims are excluded from coverage for bodily injury that results from the intentional or criminal acts of any insured person. The Berges contend that the claims against Claude and Marleen Streeper are for "occurrences" separate and distinct from the actions of Mark Streeper and are not excluded. The Berges also contend that the criminal acts exclusion does not preclude coverage for all insured persons based on the criminal acts of a single insured.

II. STANDARD OF REVIEW

Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Rule 56 of the Federal Rules of Civil Procedure "mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322, 106 S.Ct. 2548. If the moving party has supported its motion for summary judgment, the nonmoving party has an affirmative burden placed on it to go beyond the pleadings and show a genuine triable issue of fact. Commercial Union Ins. Co. v. Schmidt, 967 F.2d 270, 271 (8th Cir.1992). However, the court considering a motion for summary judgment must view the evidence in the light most favorable to the non-moving party who enjoys "the benefit of all reasonable inferences to be drawn from the facts." Vacca v. Viacom Broadcasting of Missouri, Inc., et al., 875 F.2d 1337, 1339 (8th Cir.1989).

III. LEGAL ANALYSIS

This action is based on diversity jurisdiction. The Court will apply the substantive law of North Dakota. Paracelsus Healthcare Corp. v. Philips Med. Sys., 384 F.3d 492, 495 (8th Cir.2004). In the absence of controlling North Dakota law, the Court is obligated to predict what North Dakota law is based on "relevant state precedent, analogous decisions, considered dicta, ... and any other reliable data." Bockelman v. MCI Worldcom, 403 F.3d 528, 530 (8th Cir.2005) (quoting Bass v. Gen. Motors Corp., 150 F.3d 842, 846-47 (8th Cir.1998)).

It is well-established in North Dakota that the interpretation of an insurance policy is a question of law. Fisher v. American Family Mutual Ina. Co., 579 N.W.2d 599 (N.D.1998). The standard for construing an insurance contract in North Dakota is as follows:

Our goal when interpreting insurance policies, as when construing other contracts, is to give effect to the mutual intention of the parties as it existed at the time of contracting. We look first to the language of the insurance contract, and if the policy language is clear on its face, there is no room for construction. "If coverage hinges on an undefined term, we apply the plain, ordinary meaning of the term in interpreting the contract." While we regard insurance policies as adhesion contracts and resolve ambiguities in favor of the insured, we will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage. We will not strain the definition of an undefined term to provide coverage for the insured.

ACUITY v. Burd & Smith Const., Inc., 721 N.W.2d 33 (N.D.2006) (quoting Ziegelmann v. TMG Life Ins. Co., 607 N.W.2d 898 (N.D.2000)).

A. CONDOMINIUM OWNERS POLICY

The Condominium Owners Policy acquired by the Berges from Allstate provides family liability and guest medical coverage through the following provision:

Losses We Cover Under Coverage X:

Subject to the terms, conditions, and limitations of this policy, Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an occurrence to which this policy applies, and is covered by this part of the policy.

We may investigate or settle any claim or suit for covered damages against an insured person. If an insured person is sued for damages, we will provide a defense with counsel of our choice, even if the allegations are groundless, false or fraudulent. We are not obligated to pay any claim or judgment after we have exhausted our limit of liability.

See Docket No. 38-3, pp. 16-17 (emphasis in original). The family liability provision also contains an exclusion which reads as follows:

Losses We Do Not Cover Under Coverage X:

We do not cover any bodily injury or property damage intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions of any insured person. This exclusion applies even if:

a) Such insured person lacks the mental capacity to govern his/her conduct;

b) Such bodily injury or property damage is of a different kind or degree than intended or reasonably expected; or

c) Such bodily injury or property damage is sustained by a different person than intended or reasonably expected.

This exclusion applies regardless of whether or not such insured person is actually charged with or convicted of a crime.

Id. at 17 (emphasis in original).

For purposes of the Condominium Owners Policy, an "occurrence" is defined as follows:

9. "Occurrence" — means an accident, including continuous or repeated exposure to substantially the same general harmful conditions, during the policy period, resulting in bodily injury or property damage.

Id. at 3 (emphasis added).

The Condominium Owners Policy defines the term "insured person" as follows:

3. Insured Person(s) — means you and, if a resident of your house

a.) any relative; and

b.) any dependent person in your care.

Id. at 2 (emphasis in original). The policy provides the duties insured persons have to each other as follows:

The terms of this policy impose joint obligations on persons defined as an insured person. This means that the responsibilities, acts and failures to act of a person defined as an insured person will be binding upon another person defined as an insured person.

Id. at 3 (emphasis added).

B. CRIMINAL...

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