Arch Ins. Co. v. U.S. Youth Soccer Ass'n, Inc.

• Decision Date: 12 May 2014
• Docket Number: No. 05-12-00596-CV,05-12-00596-CV
• Parties: ARCH INSURANCE COMPANY, Appellant v. UNITED STATES YOUTH SOCCER ASSOCIATION, INC., Appellee
• Court: Texas Court of Appeals

ARCH INSURANCE COMPANY, Appellant v. UNITED STATES YOUTH SOCCER ASSOCIATION, INC., Appellee

No. 05-12-00596-CV

Court of Appeals Fifth District of Texas at Dallas

Opinion filed May 12, 2014

Reversed and Remanded; Opinion Filed May 12, 2014

On Appeal from the 417th Judicial District Court

Collin County, Texas

Trial Court Cause No. 417-03007-2010

MEMORANDUM OPINION

Before Justices Bridges, Fillmore, and Lewis

Opinion by Justice Bridges

Appellant Arch Insurance Company ("Arch") appeals from the trial court's grant of summary judgment in favor of appellee United States Youth Soccer Association, Inc. ("USYSA"). In two issues, Arch alleges: (1) the summary judgment evidence proves that an exclusion within its liability insurance contract excludes coverage and a duty to defend USYSA in a grievance filed with the United States Soccer Federation (USSF) and (2) the summary judgment evidence fails to establish as a matter of law that all of the attorneys' fees awarded by the trial court were reasonable and necessary and incurred in the defense of USYSA in the USSF grievance. For the reasons expressed in this opinion, we reverse and remand to the trial court for further proceedings.

Background

USYSA is a nonprofit corporation that organizes and hosts a variety of youth soccer events for its organization members and its player members. USYSA is a member of the USSF, which is recognized by the United States Olympic Committee ("USOC") as the national governing board for soccer in the United States. The Amateur Sports Act, 36 U.S.C. §§220501-220529, governs the USOC and its recognition of national governing bodies. An affidavit from the Executive Director of the USYSA states the USYSA is a member of the USSF pursuant to provisions implemented by the USSF as required by the Amateur Sports Act.

Underlying Arbitration

On August 17, 2009, the National Association of Competitive Soccer Clubs d/b/a US Club Soccer ("US Club Soccer") and three members of US Club Soccer—Minnesota Thunder Academy, Coast Futbol Alliance, Inc., and Vitesse Soccer, Inc. (collectively the "grievance complainants")—filed a Grievance Complaint with the USSF against USYSA and five other USSF Organization Members—the Minnesota Youth Soccer Association, the North Dakota Youth Soccer Association, the South Carolina Youth Soccer Association, the Tennessee State Soccer Association, and the Wisconsin Youth Soccer Association (the "grievance respondents").

In the Grievance Complaint, the grievance complainants alleged that the grievance respondents, including the USYSA, failed to comply with their respective membership requirements as provided in the USSF bylaws. The grievance complainants alleged that USYSA breached these bylaws by instituting a number of policies, rules, procedures and practices that were designed to make it more difficult for children, coaches, teams and clubs to participate in the grievance respondents' events, and to restrict the grievance complainants' members from participating in USYSA soccer programs or USYSA member programs.

In their brief before us, the grievance complainants point out that the Grievance Complaint also contained allegations of discrimination in violation of the Amateur Sports Act. Specifically, the grievance complainants alleged "USYSA and some of its state association members have repeatedly discriminated against [the American Youth Soccer Organization] and its players and teams in violation of the [Amateur] Sports Act and the USSF Bylaws, Policies, rules and requirements." In particular, the grievance complainants stated the AYSO had to file several grievances to procure and maintain interplay rights in the USSF's bylaws.

In the Grievance Complaint, the grievance complainants asserted the grievance respondents failed to comply with the following USSF membership requirements as follows:

a. Violated USSF Bylaw 212(1)(1) by failing to comply with the USSF bylaws, policies and requirements;

b. Violated USSF Bylaw 213(1)(a)(3) by failing to abide by the USSF's binding rules, polices and bylaws, including Bylaw 603 governing interplay, which rules, polices and bylaws take precedence over the respective organizational and governing documents of the [grievance] respondents;

c. Violated USSF Bylaw 241(2) by engaging in conduct that is adverse to the best interests of soccer and the USSF;

d. Violated USSF Bylaw 603 by discriminating against the participation of players, teams, coaches and/or clubs based upon those player, coach, team and/or club's membership in or affiliation with another organization-including both taking negative actions against players, teams, coaches, and/or clubs affiliated with certain USSF Organization Members and giving preferential treatment to the players, teams, coaches and/or clubs affiliated with certain other USSF Organization Members;

e. Violated USSF Policy 601-7(1) by interfering with the opportunity of a player, coach or team to compete in a competition, including a game, scrimmage, tournament or league and denying permission for players, coaches and teams to travel to participate in competitions, including tournaments;

f. Violated USSF Policy 601-7(2) by implementing a bylaw, rule or policy that prohibits their respective members from participating in Unrestricted Tournaments;

g. Violated the February 16, 2003 resolution of the USSF Board of Directors that prohibits any USSF Organization Member from using insurance to prohibitplayers or teams from participating in competitions sponsored by any USSF Organization member or member thereof.

The grievance complainants requested that, "as a result of the [grievance] respondents' failure to comply with their respective membership requirements," that grievance respondents "immediately come into compliance with their membership obligations in the USSF and to cease and desist from any further discrimination against the [grievance] complainants" as follows:

a. Require that each [grievance] respondent fully comply with all of the USSF's bylaws, policies, rules and resolutions regarding interplay and immediately cease and desist all efforts to prevent, interfere or otherwise discourage interplay amongst USSF members;

b. Require that each [grievance] respondent immediately cease and desist all discriminatory practices and actions (both negative and preferential) with respect to USSF Organization Members and take all actions necessary to ensure that [grievance] respondents and their respective members treat all USSF Organization Members and their members equally;

c. Require that each [grievance] respondent fully comply, and take all actions necessary to ensure that each Respondent's members fully comply, with all of the USSF's bylaws, policies, rules and resolutions regarding the participation in tournaments, including USSF Policy 601-7, and allow the respective members of the [grievance] respondents (including members of members) to participate in Unrestricted Tournaments (sanctioned by the USSF or any USSF Organization Member) as members of such [grievance] respondent with full membership rights and benefits, including all insurance coverage provided by such [grievance] respondent to its members when competing in [grievance] respondent's own programs or the programs of other members of such [grievance] respondent;

d. Require that each [grievance] respondent immediately cease and desist all attempts to impede, restrict or prohibit their members from engaging in interplay with members of other USSF Organization Members by attempting to withhold or restrict membership benefits, including use of player cards, rosters and all insurance coverage such members receive when participating within the [grievance] respondents' respective programs or the programs of other members of the respective [grievance] respondents;

e. Require that each [grievance] respondent immediately cease and desist from requiring their respective members purchase additional insurance to (i) participate in programs sanctioned by other USSF Organization Members or (ii) host tournaments in which programs affiliated with other USSF Organization Members are eligible to participate (Unrestricted Tournaments);f. Require that each [grievance] respondent immediately cease and desist from requiring that members of AYSO, US Club Soccer and other USSF Organization Members purchase additional insurance through the [grievance] respondents in order to participate in Unrestricted Tournaments;

g. Require that each [grievance] respondent immediately cease and desist from assessing interplay fees in excess of the $25 per team fee permitted under USSF Bylaw 603;

h. Require that respondent USYSA take all actions necessary to ensure that all of its member state associations, and all of their respective members, comply with these same conditions and requirements of the Award and not discriminate against AYSO, US CIub Soccer, any member of AYSO or US Club Soccer or any member of any other USSF Organization Member; and,

i. Provide such other and further relief as the Hearing Examiner believes is just and equitable under the circumstances.

Arch Policy

Arch issued a claims made policy to USYSA for claims first made and reported during the September 1, 2008 to September 1, 2009 policy period (the "Policy"). Section IV.2(a) of the Policy contains the following exclusion with regard to Insuring Agreement C (the "Exclusion"):

The Insurer shall not be liable under COVERAGE C to make any payment for Loss as a result of a Claim made against an Organization for any actual or alleged obligation under or breach of any oral or written contract or agreement, including any liability of others assumed by the Organization under any such contract or agreement; provided, however, this exclusion shall not apply (i) to an actual or alleged breach of an implied contract in an Employment Claim, or (ii) to the extent the Organization would have been liable for such Loss in the absence of such contract or agreement.

Coverage Lawsuit

USYSA filed suit against Arch on...