American Home Assur. Co. v. Cohen
| Citation | 881 P.2d 1001,124 Wn.2d 865 |
| Decision Date | 06 October 1994 |
| Docket Number | No. 61196-3,61196-3 |
| Court | United States State Supreme Court of Washington |
| Parties | , 63 USLW 2336 -Appellee, v. David COHEN, dba Totem Lake Counseling Service, Defendant, and Theresa D. Scott and Joseph W. Scott, Defendants-Appellants. Supreme Court of Washington, En Banc |
David A. Summers, Edmonds, for appellants.
Roberta N. Riley, Seattle, amicus curiae for appellee on behalf of Northwest Women's Law Center, NOW Legal Defense and Education Fund, Stop Abuse by Counselors, and Boston Associates to Stop Treatment Abuse.
Russell C. Love, Laurie D. Kohli, Seattle, amicus curiae for appellee on behalf of Washington Defense Trial Lawyers.
Gary N. Bloom, Bryan P. Harnetiaux, Spokane, Amanda H. DuBois, Seattle, amicus curiae for appellants on behalf of Washington State Trial Lawyers Ass'n.
This case is before us on two questions certified to this court by the United States Court of Appeals for the Ninth Circuit. At issue is whether a professional liability insurance policy, which limits the coverage available to a person Pursuant to the Federal Court Local Law Certificate Procedure Act, RCW 2.60, the United States Court of Appeals for the Ninth Circuit submitted the following statement as stipulated facts:
injured by the sexual misconduct of an insured psychologist, violates this state's public policy.
American Home Assurance Company ("American Home") is an insurance company incorporated in the state of New York. Dr. David Cohen is a psychologist licensed to practice in the state of Washington. American Home issued to Dr. Cohen a policy of psychologist's professional liability insurance, with a liability limit of $1,000,000 ("Policy"). The Policy contains exclusions and a $25,000 liability sublimit under a special provision concerning sexual misconduct. The [pertinent] exclusionary clause [paragraph (p) ] and the special provision at issue are set forth in the Policy as follows:
[...] NOTE ALSO THAT A SMALLER LIMIT OF LIABILITY APPLIES TO JUDGMENTS OR SETTLEMENTS WHEN THERE ARE ALLEGATIONS OF SEXUAL MISCONDUCT (SEE THE SPECIAL PROVISION "SEXUAL MISCONDUCT" IN THE POLICY).
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This policy does not apply:
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(p) to any wrongful act committed with knowledge that [it] was a wrongful act.
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1. Sexual Misconduct--The total limit of the Company's liability hereunder shall not exceed $25,000 in the aggregate for all damages with respect to the total of all claims against any insured(s) involving any actual or alleged erotic physical contact, or attempt thereat or proposal thereof:
(a) by any Insured or by any other person for whom any Insured may be legally liable; and ...
In the event any of the foregoing are alleged at any time, either in a complaint, during discovery, at trial or otherwise, any and all causes of action alleged and arising out of the same or related courses of professional treatment and/or relationships shall be subject to the aforesaid $25,000 aggregate limit of liability and to all other provisions of this clause. The aforesaid $25,000 aggregate limit of liability shall be part of, and not in addition to, the limits of liability otherwise afforded by this policy.
Thus, under the special provision of the Policy, all claims involving sexual misconduct are subject, in the aggregate, to sublimits of $25,000. Furthermore, once sexual misconduct is alleged, all claims arising out of the same or related course of treatment, whether involving sexual misconduct or not, are subject to the same $25,000 sublimits.
In January 1992 Theresa and Joseph Scott brought an action against Dr. Cohen in the King County Superior Court of Washington claiming professional negligence, breach of fiduciary duty, and loss of consortium. In their original complaint, the Scotts alleged that while Theresa Scott was in psychotherapy treatment under the care of Dr. Cohen, Dr. Cohen committed a number of acts amounting to professional negligence and breach of fiduciary duty. The Scotts amended their complaint to assert nine separate claims of malpractice, namely, that he (a) failed to anticipate two suicide attempts which he should have known were likely to occur; (b) failed to provide competent treatment for several of Ms. Scott's problems; including without limitation, her desire for self-mutilation; her bulimia; and her history of sexual assaults and abuse; (c) negligently encouraged or permitted Ms. Scott to develop an unhealthy dependence on him while she was his client; (d) made unprofessional statements to her about her husband; (e) abandoned her therapeutically and discontinued treating her without referring her to another therapist, notwithstanding that he knew or should have known that she needed continued psychotherapy; (f) mishandled transference and induced her to engage in sexual intercourse with him; (g) continued to bill the Scotts' health insurance carrier and Ms. Scott's mother after the relationship had become sexualized and therapy was no longer being provided; (h) failed to discontinue the sexual relationship with Ms. Scott after she expressed to him her feelings of guilt and despair over their sexual activities together and (i) threatened to take his own life when she discontinued the relationship and revealed her intention to disclose their relation to her husband.
American Home is currently defending Dr. Cohen in the state action subject to a reservation of rights. On May 19, 199, before trial, the King County Superior Court issued an order to stay the state court proceedings. On June 8, 1992 American Home [had] filed a complaint in the United States District Court for the Western District of Washington seeking declaratory relief against Dr. Cohen and the Scotts. American Home moved for summary judgment in the district court, seeking a declaration that the Policy excludes coverage for the alleged sexual misconduct by Dr. Cohen or, in the alternative, that the Policy's special provision concerning sexual misconduct limits American Home's liability to $25,000 for all claims arising out of the therapeutic relationship between Dr. Cohen In an order filed March , 1993 the district court made three rulings, 1 two of which have been appealed to the Ninth Circuit Court of Appeals:
and Ms. Scott, including those alleging non-sexual misconduct. The Scotts filed a cross motion for summary judgment seeking a declaration that (1) the Policy provides coverage for the claims alleging sexual misconduct, (2) the sexual misconduct provision, which has a $25,000 sublimit, is void as against public policy, or in the alternative, (3) that the claims alleging non-sexual misconduct by Dr. Cohen are subject to the Policy limit of $1,000,000. Dr. Cohen failed to file an answer to American Home's complaint, and was dismissed from the district court action.
1. The court denied American Home's motion for summary judgment excluding coverage for errors involving sexual misconduct. The district court found the Policy ambiguous, and granted the Scotts' motion for a summary declaration that the Policy affords coverage for sexual misconduct. This ruling by the district court has not been challenged on appeal to the Ninth Circuit Court of Appeals.
2. The district court denied the Scotts' motion for a declaration that the $25,000 sublimit on sexual misconduct claims violates Washington state public policy, and instead ruled that those provisions do not violate Washington state public policy. The Scotts have challenged this ruling on appeal.
3. The district court denied American Home's motion for a declaration that all of the Scotts' claims, in the aggregate, are subject to the $25,000 sublimit, and ruled that the $25,000 sublimit on claims of non-sexual misconduct arising out of the same course of treatment as the sexual misconduct is void as against Washington state public policy. American Home has filed a cross-appeal of this ruling.
In their notice of appeal, the Scotts contend that the district court erred in finding that the $25,000 sublimit on claims of sexual misconduct alone does not violate Washington state public policy. In the cross-appeal, American Home argues that the district court erred in finding that the $25,000 sublimit on claims of non-sexual misconduct arising out of the same course of treatment as the sexual misconduct is void as against Washington state public policy. The district court's finding that the Policy affords coverage for sexual misconduct has not been challenged on appeal.
(Citations to the trial court order omitted.) Order [of certification], (Jan. 25, 1994), at 2-7.
The Ninth Circuit Court of Appeals has certified two questions asking us to determine whether the provisions limiting coverage in instances where sexual misconduct is alleged are against the public policy of this state.
Amici briefs have been filed by the Washington Defense Trial Lawyers, by Washington State Trial Lawyers Association, and jointly by the Northwest Women's Law Center, Stop Abuse by Counselors, the National Organization for Women (NOW) Legal Defense and Education Fund, and the Boston Associates to Stop Treatment Abuse (BASTA).
1. Is it against the public policy of the state of Washington for an insurer to provide lesser coverage for a psychologist's sexual misconduct than it provides for the psychologist's non-sexual misconduct?
2. Is it against the public policy of the state of Washington for an insurer to provide lesser coverage for a psychologist's nonsexual misconduct where sexual misconduct is also alleged as having occurred in the same or related course of professional treatment, than the coverage that is provided where only non-sexual misconduct is claimed?
CERTIFIED QUESTION...
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