Bhd. Mut. Ins. Co. v. Evangelical Free Church of Am.

• Court: U.S. District Court — Eastern District of Missouri
• Writing for the Court: STEPHEN R. CLARK, UNITED STATES DISTRICT JUDGE
• Citation: Bhd. Mut. Ins. Co. v. Evangelical Free Church of Am., 572 F.Supp.3d 694 (E.D. Mo. 2021)
• Decision Date: 12 November 2021
• Docket Number: Case No. 4:21-cv-00086-SRC
• Parties: BROTHERHOOD MUTUAL INSURANCE COMPANY, Plaintiff(s), v. EVANGELICAL FREE CHURCH OF AMERICA, et al., Defendant(s).

572 F.Supp.3d 694

BROTHERHOOD MUTUAL INSURANCE COMPANY, Plaintiff(s),

v.EVANGELICAL FREE CHURCH OF AMERICA, et al., Defendant(s).

Case No. 4:21-cv-00086-SRC

United States District Court, E.D. Missouri, Eastern Division.

Signed November 12, 2021

Christian A. Preus, Pro Hac Vice, Bassford Remele PA, Minneapolis, MN, Debbie S. Champion, Stephen J. Barber, Rynearson Suess LLC, St. Louis, MO, for Plaintiff.

Angela B. Kennedy, Patrick J. Kenny, Armstrong Teasdale LLP, St. Louis, MO, Katie Pfeifer, Pro Hac Vice, Ed Magarian, Pro Hac Vice, Dorsey and Whitney LLP, Minneapolis, MN, for Defendant Evangelical Free Church of America.

Anthony W. Hafner, Brian E. McGovern, McCarthy Leonard PC, Town and Country, MO, for Defendant Adolf Mark Friz.

Matthew S. Darrough, Thompson Coburn LLP, St. Louis, MO, for Defendant John Doe.

Isaac William Straub, Larry David Fields, Kutak Rock LLP, Kansas City, MO, for Defendant Zurich American Insurance Company.

Memorandum and Order

STEPHEN R. CLARK, UNITED STATES DISTRICT JUDGE

Brotherhood seeks a declaration that it has no duty to defend the Evangelical Free Church of America, known as the EFCA, or pastor Adolf Friz against a lawsuit pending in state court. In that suit, minor John Doe levies several sexual-abuse-related claims against pastor Friz.

Doe also brought a single claim against the EFCA—intentional failure to supervise clergyman Friz. To prevail against the EFCA in the underlying suit, Doe must prove that the EFCA knew that harm was certain to result from its alleged intentional failure to supervise Friz. Brotherhood's policy explicitly excludes coverage for loss resulting from intentional acts, and Brotherhood therefore has no duty to defend or indemnify the EFCA. Brotherhood nonetheless may owe Friz a duty of defense under the policy, but because the parties did not brief that issue, the Court leaves it for another day.

I. Background

A. The underlying lawsuit

The Court provides the following undisputed factual allegations for purposes of this Order. Doe filed a lawsuit in state court against his pastor, Friz, the EFCA, and others, in October 2020. Doc. 1-1. Doe alleges that Friz groomed him for future sexual abuse beginning in late 2008 when Doe was thirteen years old and continuing through 2010. Id. at ¶ 42. Doe alleges that Friz groomed him by complimenting and touching him, and by hugging him "for peculiarly long periods of time." Id. at ¶ 45. After this, Doe alleges that, in December 2009, Friz molested him by engaging "in sexual misconduct, touching groping and fondling [his] body and genitals through his clothes." Id. at ¶¶ 42, 45. Friz has denied that he assaulted Doe. Friz Answer at ¶¶ 44, 45, 47, Doe v. Friz , No. 20SL-CC05266 (St. Louis Cnty. Cir. Ct. Dec. 17, 2020). Doe further alleges that the EFCA "knew that harm was certain or substantially certain to result from its failure to supervise Friz." Doc. 1-1 at ¶ 84. The EFCA denies all the "allegations of knowledge and liability asserted by Doe." Doc. 43 at p. 3; Doc. 20 at ¶¶ 18–21, 35, 50, 70. The EFCA also denies any employer-employee relationship with Friz. Doc. 20 at ¶¶ 18–21, 35, 50, 70.

Doe brought four counts in his state-court lawsuit: 1) sexual battery against Friz; 2) childhood sexual abuse against Friz; 3) negligence per se against Friz; and 4) intentional failure to supervise clergy against the EFCA, the regional EFCA district, the local EFCA church itself, as well as individual members of the congregation's church council.

B. The insurance dispute

Brotherhood issued an insurance policy to the EFCA with multiple coverages; the general commercial liability coverage included additional coverage for sexual acts. In this case, Brotherhood seeks declaratory judgments on various issues: in count 1, that it has no obligation to defend or indemnify the EFCA in the underlying lawsuit because the only count levied against the EFCA in the underlying lawsuit is necessarily excluded from coverage by the expected-or-intended exclusion in the policy; in count 2, that it has no obligation to defend or indemnify the EFCA in the underlying lawsuit because the events giving rise to the underlying lawsuit began before the policy period began; in counts 3, 4, and 5, that it has no obligation to defend or indemnify Friz because of various exceptions set out in the policy; and in count 6, that it is entitled to recover from Zurich all amounts it has paid in defense of the underlying lawsuit.

After all defendants answered the complaint, Docs. 10, 12, 20, 28, Brotherhood moved for judgment on the pleadings. Doc. 33. The Court notes that Friz did not file an opposition to the motion but the Church and Doe did, and Brotherhood filed a reply. Docs. 43–44, 49. In the motion, Brotherhood did not clearly articulate the specific counts on which it seeks judgment, but its motion only seeks declarations against the EFCA and Friz. Its brief also does not address its claim in count 6 against Zurich, presumably explaining why Zurich did not respond to the motion. For this reason, to the extent Brotherhood seeks judgment on count 6, the Court denies the motion without prejudice.

C. The policy

This case centers on the sexual-acts-liability coverage, which obligates Brotherhood to

pay all sums which a covered person becomes legally obligated to pay as damages due to bodily injury , personal injury or emotional injury to which this coverage applies. The event or events causing the bodily injury or emotional injury [ ] must constitute a sexual act arising out of the operation of your organization; and must take place in the coverage territory during [t]he policy period .

Doc. 1-2 at p. 163.

For purposes of the motion, Brotherhood concedes that Friz comes within the definition of "covered person," that the acts Doe alleges are "sexual acts" within the meaning of the policy, and that the alleged acts took place in the coverage territory during the policy period. Doc. 34 at pp. 3, 12–13.

However, many exclusions apply to this coverage. Some exclusions apply only to the sexual-acts-liability coverage, and these appear on the sexual-acts-liability-coverage form itself, but the coverage form also incorporates various exclusions from other parts of the policy. For example, the top of the sexual-acts-liability-coverage form includes a text box set off from all of the other text; in that box, a disclaimer appears, stating that the coverage "is subject to the terms of" other coverages, and the text box includes in bold and all caps "PLEASE READ THIS CAREFULLY [.]" Doc. 1-2 at p. 163.

Similar language appears for a second time at the top of the list of exclusions on the sexual-acts-liability-coverage form:

Each of the exclusions set forth in the Exclusions section of the Commercial Liability Coverage Form (GL-100) and the Liability and Medical Coverage Form (BGL-11) apply to each of the Additional Coverages provided by this endorsement, unless otherwise modified herein.

Id. at p. 166.

One of the exclusions listed on form BGL-11 excludes "loss of any kind that is expected by, directed by, or intended by any insured or by any covered person ." Id. at p. 235. The parties have termed this the expected-or-intended exclusion, and they dispute whether this exclusion applies at all to the sexual-acts-liability coverage. If the exclusion applies, the parties further dispute whether it excludes coverage in this case.

II. Standard

Rule 12(c) of the Federal Rules of Civil Procedure provides that after the pleadings are closed, a party may move for judgment on the pleadings. "Judgment on the pleadings should be granted only if the moving party clearly establishes that there are no material issues of fact and that it is entitled to judgment as a matter of law." Porous Media Corp. v. Pall Corp. , 186 F.3d 1077, 1079 (8th Cir. 1999). A motion under Rule 12(c) is determined by the same standards applied to a motion under Rule 12(b)(6). Ginsburg v. InBev NV/SA , 623 F.3d 1229, 1233 n.3 (8th Cir. 2010).

When the plaintiff moves for judgment on the pleadings, the court accepts as true "all well-pleaded material allegations of the pleadings of the opposing party[,]" Nationwide Mut. Ins. Co. v. Harris Med. Assocs., LLC , 973 F. Supp. 2d 1045, 1050–51 (E.D. Mo. 2013), even if it appears that "actual proof of those facts is improbable," Bell Atl. Corp. v. Twombly , 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The principle that a court must accept as true all of the allegations contained in the non-moving party's pleading does not apply to legal conclusions, however. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Although legal conclusions can provide the framework for a pleading, the pleader must support them with factual allegations. Id. at 679, 129 S.Ct. 1937. The court reviews the plausibility of the claim or defense "as a whole, not the plausibility of each individual allegation." Zoltek Corp. v. Structural Polymer Grp. , 592 F.3d 893, 896 n.4 (8th Cir. 2010).

"When considering a motion for judgment on the pleadings (or a motion to dismiss under Fed. R. Civ. P. 12(b)(6) ), the court generally must ignore materials outside the pleadings, but it may consider some materials that are part of the public record or do not contradict the complaint as well as materials that are necessarily embraced by the pleadings." Porous Media Corp. , 186 F.3d at 1079 (internal citations omitted); see also Cent. Telecomms., Inc. v. City of Jefferson City, Mo. , 589 F. Supp. 85, 91 (W.D. Mo. 1984) ("The scope of a court's inquiry on a Rule 12(b)(6) motion is limited to the pleadings.").

III. Discussion

A. Choice of law

The parties agree that either Minnesota or Missouri law governs the insurance-contract interpretation, and that these laws do not substantively differ, at least on the issues presented in this motion. Thus, the parties advise that at this stage, the Court need not definitively determine which state's laws govern the contract. See, e.g. , Williams v. Silvola , ...