American Center Intern. Labor v. Federal Ins. Co.

• Decision Date: 15 October 2007
• Docket Number: Civil Action No. 04-01523 (CKK).
• Citation: 518 F.Supp.2d 163
• Parties: AMERICAN CENTER FOR INTERNATIONAL LABOR SOLIDARITY, Plaintiff, v. FEDERAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Columbia

518 F.Supp.2d 163

AMERICAN CENTER FOR INTERNATIONAL LABOR SOLIDARITY, Plaintiff, v. FEDERAL INSURANCE COMPANY, Defendant.

Civil Action No. 04-01523 (CKK).

United States District Court, District of Columbia.

October 15, 2007.

Jeremiah A. Collins, Bredhoff & Kaiser, PLLC, Washington, DC, for Plaintiff.

Wallace Albert Christensen, Ross, Dixon & Bell, L.L.P., Washington, DC, for Defendant.

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY, District Judge.

This insurance coverage dispute arises out of Defendant Federal Insurance Company's ("Federal") denial of coverage for losses incurred by Plaintiff American Center for International Labor Solidarity ("ACILS") in the defense and settlement of an employment discrimination lawsuit. Federal denied coverage based on ACILS' failure to provide notice of its participation in related United States Equal Employment Opportunity Commission ("EEOC") proceedings which Federal asserted was a "claim" under the insurance policy. The central question in this case is whether the EEOC proceedings constituted a "claim," where "claim" is defined in the policy to include "a formal administrative or regulatory proceeding commenced by the filing of a notice of charges..." The Parties have filed cross-motions for summary judgment on this dispositive question. After a searching review of the Parties' submissions, exhibits, statutes and case law, the Court shall GRANT [18] Defendant's Motion for Summary Judgment and DENY [19] Plaintiffs Motion for Summary Judgment.

I: BACKGROUND

A. The Federal Insurance Policy

The underlying material facts are undisputed.¹ Federal issued a Not-for-Profit Organization Liability Policy ("Federal Policy" or "Policy") to ACILS on July 16, 2002. Def.'s Stmt. ¶ 1; Pl.'s Resp. ¶ 1. The Policy provides coverage to ACILS (and its directors, trustees, officers and employees) for claims first made between July 16, 2002 to July 16, 2003.² Id. The Policy defines "claim" to include a:

(i) written demand for monetary damages;

(ii) civil proceeding commenced by the service of a complaint or similar pleading;

(iii) criminal proceeding commenced by the return of an indictment, or

(iv) formal administrative or regulatory proceeding commenced by the filing of a notice of charges, formal investigative order or similar document.

Policy § 22; Pl.'s Stmt. ¶ 6; Def.'s Resp. ¶ 6.

The Policy requires ACILS to give notice to Federal of any claim "as soon as practicable" as "a condition precedent" to coverage. Federal Policy § 7; Pl.'s Stmt. ¶ 5; Def.'s Stmt. ¶ 5. Although Federal is obligated "to defend any Claim covered by this policy" and to cover all "Losses," Federal also has the right to "make any investigation it deems necessary" and "make any settlement of any Claim it deems expedient." Federal Policy §§ 1, 8. Finally, the Policy provides that all "Interrelated Wrongful Acts ... shall be deemed [one] Loss," and "Interrelated Wrongful Acts" are defined as "all causally connected Wrongful Acts." Federal Policy § 6; Def.'s Stmt. ¶ 7; Pl.'s Resp. ¶ 7.

B. The Nesbitt EEOC Charge And Lawsuit Against ACILS

On August 9, 2002, ACILS received a Notice of Charge from the EEOC indicating that a former employee, Mr. Rozell Nesbitt, had filed a Charge of Discrimination (the "Charge") against ACILS. Def.'s Stmt. ¶ 12; Pl.'s Resp. ¶ 12. The Charge alleged that ACILS had discriminated against Mr. Nesbitt on the basis of his race in violation of Title VII of the Civil Rights Act of 1964. Def.'s ¶ 13; Pl.'s Resp. ¶ 13. The EEOC's notice also stated that "[n]o action is required on [ACILS'] part at this time." Pl.'s ¶ 9.

On November 14, 2002, ACILS received a second Notice of Charge from the EEOC. Def.'s Stmt. ¶ 15; Pl.'s Resp. ¶ 15. Unlike the first notice, the EEOC enclosed a two-page "perfected" Charge that described Mr. Nesbitt's claims in more detail. Id. See also Def.'s Mot. for Summ. J. Ex. F (Nov. 14, 2002 Notice of Charge of Discrimination with attachments). Also unlike the first notice, the EEOC requested that ACILS either participate in mediation (described as a "voluntary, informal process" in the fact sheet attached to the EEOC notice) or forego mediation and submit to the EEOC a "statement of [ACILS'] position with respect to the allegations contained in this charge" ("Position Statement"). Def.'s Mot. for Summ. J. Ex. F; Pl.'s Stmt. ¶ 10; Def.'s Stmt. ¶ 16. ACILS declined mediation and asked its outside counsel to draft a Position Statement in connection with the Charge. Pl.'s Stmt. ¶ 11; Def.'s Stmt. ¶¶ 17-18, 20; Pl.'s Resp. ¶ 17. On December 19, 2002, ACILS' counsel submitted a 16-page Position Statement, with attachments, reciting ACILS' view of the facts and the law associated with Mr. Nesbitt's termination. See Def.'s Mot. for Summ. J. Ex. G (Dec. 19, 2002 Letter from M. Gilson and S. Brown to S. Leon). The Position Statement indicated that if ACILS' counsel were provided with additional information from the EEOC or Mr. Nesbitt, it would supplement the Position Statement. See, e.g., Id. at 10 ("We will respond promptly if provided the names of the `comparables' " and "[i]f Mr. Nesbitt identifies the relevant individuals, [ACILS] will respond").

The EEOC dismissed Mr. Nesbitt's Charge and issued a Right-to-Sue letter on September 16, 2003.³ Pl.'s Stmt. ¶ 13; Def.'s Stmt. ¶ 21. The letter stated that the EEOC was "unable to conclude that the information obtained establishe[d] violations of the statutes." Def.'s Mot. for Summ. J. Ex. H (Sept. 16, 2003 EEOC Dismissal and Notice of Rights).

On December 12, 2003, Mr. Nesbitt filed a lawsuit in United States District Court for the District of Columbia against ACILS and Harry G. Kamberis, ACILS' Executive Director. Pl.'s Stint. ¶¶ 2, 14; Def.'s Stmt. ¶ 25. Mr. Nesbitt's Charge and his lawsuit filed in district court contain materially similar allegations of discrimination. See Def.'s Mot. for Summ. J. Ex. F (Nov. 14, 2002 Notice of Charge of Discrimination with attachments) (alleging, inter alia, discrimination based on race); Def.'s Mot. for Summ. J. Ex. H (Dec. 12, 2003 Complaint) (alleging, inter alia, discrimination based on race); Def.'s Mot. for Summ. J. Ex. D at 185 (Feb. 8, 2005) (Deposition of Harry G. Kamberis) (acknowledging that "the allegations made in [Mr. Nesbitt's] lawsuit arise out of the same facts and circumstances that underlie the EEO[C] Charge of Discrimination").

C. ACILS' Claim For Coverage

On January 20, 2004, ACILS notified Federal via letter that Mr. Nesbitt had filed a lawsuit against the company and Mr. Kamberis. Pl.'s Stint. ¶ 15; Def.'s Stmt. ¶ 30. In its letter, ACILS requested Federal's consent to have ACILS' outside counsel (the same counsel that drafted its EEOC Position Statement) handle the lawsuit because "time is of the essence in preparing an Answer to the Complaint." Pl.'s Mot. for Summ. J. Ex. F (Jan. 20, 2004 Letter from K. Doherty to Federal). ACILS did not reveal to Federal that its outside counsel had knowledge of the matter due to its handling of the EEOC Charge (although the letter does make reference to its counsel being "familiar with the facts that gave rise to [the] lawsuit"), nor did it reference the EEOC Charge itself. Id.

ACILS' January 20, 2004 letter was the first notification that Federal received concerning Mr. Nesbitt's claims of discrimination against ACILS. Def.'s Stmt. ¶ 30; Pl.'s Resp. ¶ 30. Federal was not informed of the two EEOC Charges that ACILS had previously received in 2002. Def.'s ¶ 22; Pl.'s Resp. ¶ 22. Federal also had not been notified that ACILS had decided to forego informal mediation with the EEOC and have its counsel submit a Position Statement on ACILS' behalf. Def.'s ¶ 24; Pl.'s Resp. ¶ 24.

On March 31, 2001, after learning of the EEOC Charge, Federal denied coverage under the Policy because "[t]he Claim submitted to Federal for coverage on or about January 21, 2004 involves a Claim that [Mr. Nesbitt] initially filed against ACILS in July 2002." Def.'s Mot. for Summ. J. Ex. J (Mar. 31, 2004 Letter from E. Flanagan to K. Doherty); Def.'s Stint. ¶ 31; PL's Resp. ¶ 31. Federal stated that "ACILS failed to satisfy the condition precedent of notifying Federal of the claim `as soon as practicable' as required by the Policy." Id. After several additional letters were exchanged between the Parties, Federal confirmed its denial of coverage on June 9, 2004 because "ACILS failed to notify [Federal] of this Claim `as soon as practicable.'" Def. Mot. Ex. K (June 9, 2004 Letter from E. Flanagan to J. Collins); Def.'s Stmt. ¶ 32; Pl.'s Resp. ¶ 32. This suit followed on September 28, 2004. Def.'s Stmt. ¶ 33; Pl.'s Resp. ¶ 33.

II: LEGAL STANDARD

A party is entitled to summary judgment if the pleadings, depositions, and affidavits demonstrate that there is no genuine issue of material fact in dispute and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Tao v. Freeh, 27 F.3d 635, 638 (D.C.Cir.1994). Under the summary judgment standard, Defendant, as the moving party, "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any' 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). Plaintiff, in response to Defendants' motion, must "go beyond the pleadings and by [its] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. 2548.

Although a court should draw all inferences from the supporting records submitted by the nonmoving party, the mere existence of a factual dispute, by itself, is not sufficient to bar summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, ...