Bohrer v. Church Mut. Ins. Co.

• Decision Date: 21 September 1998
• Docket Number: No. 97SC240,97SC240
• Citation: 965 P.2d 1258
• Parties: 98 CJ C.A.R. 4918 Christa G. BOHRER, Petitioner, v. CHURCH MUTUAL INSURANCE COMPANY, Respondent.
• Court: Colorado Supreme Court

Page 1258

965 P.2d 1258

98 CJ C.A.R. 4918

Christa G. BOHRER, Petitioner, v. CHURCH MUTUAL INSURANCE COMPANY, Respondent.

No. 97SC240.

Supreme Court of Colorado En Banc.

Sept. 21, 1998.

As Modified on Denial of Rehearing Oct. 26, 1998.

Seelen & Associates, Joyce Seelen, Stephen C. Rench, Denver, for Petitioner.

Senter Goldfarb & Rice, L.L.C., William L. Senter, Peter H. Doherty, Denver, for Respondent.

Justice HOBBS delivered the Opinion of the Court.

Christa G. Bohrer (Bohrer) appeals from the court of appeals unpublished opinion in Bohrer v. Church Mutual Insurance Co., No. 95CA1692 (Colo.App. Jan. 30, 1997), affirming the order of the District Court for the City and County of Denver denying and dismissing her traverse in a garnishment proceeding against Church Mutual Insurance Company (Church Mutual).

Bohrer obtained a judgment against Daniel DeHart (DeHart) for compensatory damages in the amount of $187,500 on claims of outrageous conduct and breach of fiduciary duty. Bohrer then attempted to collect the judgment against DeHart from Church Mutual, the insurer for DeHart's employers, the First Methodist Church of Greeley (Church) and the Rocky Mountain Conference of the United Methodist Church (Conference). The district court denied Bohrer's request for garnishment of insurance proceeds in accordance with the coverage, determining that DeHart was not an insured person under the terms of the policy.

The court of appeals affirmed the district court's order denying and dismissing the traverse on different grounds. It held that the damages Bohrer sought through her counseling claim were so intertwined with the charge of sexual misconduct as to render them inseparable and, therefore, excluded under the policy. See Bohrer, No. 95CA1692, slip op. at 4. We granted Bohrer's petition for certiorari to decide whether this policy "should be interpreted to defeat all coverage when only some activities fall within an exclusion to that coverage."

We now hold that allocation of the jury's compensatory damage award against DeHart between the covered counseling activities and the excluded sexual misconduct is necessary to effectuate the terms of the insurance policy. Accordingly, we remand for a hearing and determination by the district court on the traverse in the garnishment proceeding.

I.

Bohrer began counseling with DeHart, the Church's youth minister, in May of 1983 when she was twelve. She first sought advice from DeHart's wife, who felt unable to handle her emotional problems. DeHart's wife encouraged her husband to assist Bohrer. Bohrer had family and self-esteem problems, and had contemplated suicide. According to Bohrer, DeHart almost immediately began confiding in her regarding personal problems of his own. Through the end of 1983, Bohrer regularly met with DeHart in his office at the Church and told him that she felt worthless and unlovable. According to Bohrer, DeHart confirmed that she was a bad person but informed her that he had a gift from God that enabled him to love even someone as bad as she was.

Throughout this first year of counseling, DeHart continued to confide in Bohrer regarding his marital problems and disagreements he had with the Church's other minister. Bohrer testified that DeHart also criticized her mother and other people she was close to, leaving her feeling isolated and dependent upon him. No physical contact occurred in this first year.

Bohrer said that sometime towards the summer of 1984, DeHart began sitting closer to her, occasionally putting his arm around her or putting a hand on her leg. He also began telling Bohrer about sexual problems he was having with his wife. Bohrer was thirteen at the time. In February of 1985, twenty-one months after the counseling relationship commenced, DeHart initiated intimate fondling and, in June of 1985, DeHart engaged Bohrer in sexual intercourse after attending a church-related event in Fort Collins. The sexual relationship continued intensively until 1988 when Bohrer was eighteen and began her college education.

After beginning counseling at college, Bohrer approached the Church and the Conference regarding DeHart's behavior and also filed a criminal complaint against him. DeHart eventually pled guilty to one felony count of sexual assault on a child by a person in a position of trust and one misdemeanor count of third degree sexual assault. The court placed DeHart on probation for the felony and work release for the misdemeanor. The court also ordered restitution in an amount to be determined later.

Bohrer filed a civil suit against DeHart, the Church, and the Conference. After obtaining jury verdicts and judgments against all three defendants, ¹ Bohrer initiated a garnishment action in the district court against Church Mutual to collect the $187,500 compensatory damage award against DeHart.

Both the Church and the Conference held insurance policies covering their clergy during the period of DeHart's relationship with Bohrer. The Church and the Conference settled claims against them while petitions for certiorari were pending before this court. Payment of those settlement amounts by Church Mutual is not now before this court. In addition, the $187,500 punitive damages award against DeHart is not at issue. The garnishment action in the district court sought insurance proceeds only for the compensatory award against DeHart.

The court of appeals determined that the personal injury and property damage coverage of the policy did not apply to the claims against DeHart because DeHart's actions were intentional, not accidental, and were outside the coverage. See Bohrer, No. 95CA1692, slip op. at 3-4. The court of appeals also determined that the sexual misconduct coverage available to the Church and Conference did not apply to DeHart because of that coverage's exclusion prohibiting payment on behalf of "any person who personally participated in any act of sexual misconduct or sexual molestation." Id. at 5. Bohrer did not appeal either of these determinations by the court of appeals.

Therefore, only the counseling liability coverage is at issue in this case. The relevant portion of the insurance contract provides:

The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of any acts, errors, or omissions of the insured, arising out of counseling activities of the insured or counseling activities of others for which the insured is liable. ²

...

This insurance does not apply: ... (9)[to] liability resulting from any actual conduct of a sexual nature.

Church Mutual denied coverage for the claims against DeHart by its answer to the writ of garnishment. Bohrer filed her traverse, claiming that the counseling relationship led to all of the damages and should be covered. The district court dismissed the garnishment action because DeHart was "not an insured under the subject policy." The court of appeals affirmed, but on different grounds, holding that the damages sought for the counseling activities were "so intertwined with the charge of sexual misconduct as to render them inseparable." Bohrer, No. 95CA1692, slip op. at 4.

II.

We reverse. We hold that DeHart is an insured person under the policy as to his counseling activities. Bohrer holds a judgment against DeHart for compensatory damages based on his counseling and sexual misconduct activities. Because the counseling relationship predated and continued for a period of time prior to the sexual conduct, the causes are separable. Hence, we also hold that the compensatory damages awarded against DeHart in the tort case must be allocated between the coverage and the exclusion. On remand, in order to effectuate the insurance policy's plain meaning, the district court shall hold a hearing on Bohrer's traverse and determine how the jury's compensatory award against DeHart is to be allocated between the period of counseling activities and the period of excluded sexual conduct.

A. The Insurance Policy

Insurance policies are contracts. Interpretation of an insurance contract is a matter of law which we review de novo. See State Farm Mut. Auto. Ins. Co. v. Stein, 940 P.2d 384, 387 (Colo.1997). General rules of contract interpretation apply; we accord contract terms their plain and ordinary meanings. See id.; see also Carroll v. CUNA Mut. Ins. Soc'y, 894 P.2d 746, 749-50 (Colo.1995) (construing common meaning of words to fulfill reasonable expectations of ordinary person purchasing policy). We should avoid disrupting the parties' settled expectations and the purposes for coverage as expressed or implied in the insurance policy. See O'Connor v. Proprietors Ins. Co., 696 P.2d 282, 285 (Colo.1985).

An insurance contract must be construed in favor of coverage and against limitations when provisions within the policy conflict with one another or are ambiguous. See Ryder Truck Rental, Inc. v. Guaranty Nat'l Ins. Co., 770 P.2d 1380, 1382 (Colo.App.1989). Exclusionary clauses that insulate certain conduct from coverage must be written in clear and specific language, see American Family Mut. Ins. Co. v. Johnson, 816 P.2d 952, 953 (Colo.1991), and are to be interpreted against defeat of the coverage. See, e.g., State Auto. & Cas. Underwriters v. Beeson, 183 Colo. 284, 291, 516 P.2d 623, 626 (1973).

The insurance contract at issue in this case is unambiguous; the plain and ordinary meanings of the terms regarding coverage and exclusion from coverage can be given effect. DeHart is an insured under the policy since he was a "minister" at the time the coverage was in effect. The policy insures "any employee occupying a position scheduled in the 'Schedule of Positions Covered.' " The Schedule of Positions Covered names "ministers" as insured persons.

Under the policy, Church Mutual insured DeHart against liability arising from "any acts, errors, or omissions of the insured, arising out of counseling activities." While DeHart's...