Caci Intern. v. St. Paul Fire and Marine Ins.

• Decision Date: 14 May 2009
• Docket Number: No. 08-1885.,08-1885.
• Citation: 566 F.3d 150
• Parties: CACI INTERNATIONAL, INCORPORATED; CACI, Incorporated—Federal; CACI Premier Technology, Incorporated; CACI N.V., Plaintiffs-Appellants, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

566 F.3d 150

CACI INTERNATIONAL, INCORPORATED; CACI, Incorporated—Federal; CACI Premier Technology, Incorporated; CACI N.V., Plaintiffs-Appellants, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellee.

No. 08-1885.

United States Court of Appeals, Fourth Circuit.

Argued: March 26, 2009.

Decided: May 14, 2009.

ARGUED: John Edward Heintz, Kelley, Drye & Warren, LLP, Washington, D.C., for Appellants. Walter J. Andrews, Hunton & Williams, LLP, McLean, Virginia, for Appellee. ON BRIEF: David Laufman, Kelley, Drye & Warren, LLP, Washington, D.C., for Appellants. Brian J. Gerling, Hunton & Williams, LLP, McLean, Virginia, Reginald M. Skinner, Hunton & Williams, LLP, Richmond, Virginia, for Appellee.

Before WILKINSON and SHEDD, Circuit Judges, and DAVID A. FABER, Senior United States District Judge for the Southern District of West Virginia, sitting by designation.

Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Senior Judge FABER joined. Judge SHEDD wrote a dissenting opinion.

OPINION

WILKINSON, Circuit Judge:

CACI International ("CACI") appeals the district court's decision that its insurer, St. Paul Fire and Marine Insurance Company ("St. Paul"), had no duty to defend CACI against claims alleging torture and abuse at Abu Ghraib and other prisons in Iraq. CACI acknowledges that the insurance policies at issue in this case generally limit coverage to the United States and Canada. Still, CACI argues that some of the underlying claims implicate events that happened in the United States, and that other claims fall under an exception to the coverage provision for employees who were away from home for a "short time."

We agree with the district court that the underlying complaints cannot be read to allege events that happened in the coverage territory. Under well-established principles of insurance law, the place of the injury—not the place of some precipitating cause—determines the location of the "event" for coverage purposes. Further, the underlying complaints do not allege that any injuries resulted from the activities of a CACI employee who was in Iraq for a "short time." Requiring St. Paul to defend CACI on the mere possibility that some employee may have been briefly in Iraq would allow the policies' exception to non-coverage to swallow the rule. We thus decline to extend CACI's coverage beyond the plain terms of its policies and affirm the judgment of the district court.

I.

A.

In 2003, CACI International entered into three contracts with the United States government to provide logistical and intelligence support for U.S. operations in Iraq.^* This work included screening and interrogating detainees at Abu Ghraib and other prisons in Iraq. Also in 2003, CACI took out a one-year "Commercial General Liability Protection" policy with St. Paul, which provided that St. Paul would defend CACI against any suit for covered injuries or damage and would indemnify CACI for up to $2 million. See Policy TE09001851 ("Policy A"), March 31, 2003. CACI renewed this policy for an additional year in March 2004. For purposes of this case, the two policies are identical in all material respects and we will refer to them as "the policies."

The policies covered "bodily injury" that was "caused by an event." Policy A at 2. They in turn defined "event" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Id. They also obligated St. Paul to pay any legally required damages for "covered personal injury" that was "caused by a personal injury offense." Id. But with one exception, the policies limited coverage to specific geographic areas, stating:

We'll apply, and make payments under, this agreement:

• only in the coverage territory; and

• only for covered injury or damage that's caused by events or offenses which happen or are committed there.

Id. at 5. The "coverage territory" was defined as the United States, its territories and possessions, Canada, and Puerto Rico. But the policies also stated that:

[W]e'll also apply, and make payments under, this agreement in the coverage territory for covered injury or damage that's caused by events or offenses which happen or are committed in the rest of the world if:

...

• they result from the activities of a person whose home is in the coverage territory, but is away from there for a short time on your business....

Id. Therefore, the policies included a "short time" exception to the general bar on coverage outside the home territory.

In the summer of 2004, CACI was sued by two groups of former Iraqi detainees and their survivors who alleged torture and abuse by CACI employees at Abu Ghraib and other prisons in Iraq. The first suit accused CACI and another corporation of implementing an ongoing "torture conspiracy" that, it alleged, the defendants began in 2001 with the goal of profiting by extracting "intelligence" through torture. Al Rawi v. Titan Corp., No. 3:04-CV-01143, ¶¶ 72, 74, 76 (S.D. Cal. filed June 9, 2004) (the "Saleh complaint"). The complaint alleged that the torture conspiracy "exist[ed] separate and apart from the ongoing lawful operations" of the defendants, and included specific actions such as stripping detainees, threatening them with dogs, kicking them, and forcing them to watch family members being tortured. Id. ¶¶ 74, 90(b), (e), 91, 97(d). Finally, the complaint alleged negligent supervision and hiring on the part of CACI. Id. ¶¶ 274-76.

The second lawsuit made similar allegations. It claimed that CACI employees had beaten detainees, deprived them of food, stripped and photographed them, and forced them to witness violent attacks on their relatives. Ibrahim v. Titan Corp., No. 1:04-CV-1248, ¶¶ 36(a)-(b), 39(e)-(f), 44(d) (D.D.C. filed July 27, 2004) (the "Ibrahim complaint"). The complaint also alleged that CACI and other defendants had "engaged in an ongoing, multi-year pattern of criminal conduct for which the enterprise has earned ... millions of dollars in profits." Id. ¶ 60. Because of the similarities in the two complaints, the Saleh case was transferred to the U.S. District Court for the District of Columbia, where it was consolidated with Ibrahim for purposes of discovery. Saleh v. Titan Corp., 436 F.Supp.2d 55, 59-60 (D.D.C. 2006).

B.

When St. Paul received notice of these complaints, it notified CACI that it believed the alleged abuses did not implicate St. Paul's duty to defend or indemnify under the policies. In March 2008, CACI filed a declaratory judgment action in federal district court in Virginia, seeking a declaration that St. Paul was obligated under the policies to defend CACI in both lawsuits. St. Paul countered that it had no duty to defend or indemnify CACI. Both parties filed motions for summary judgment.

In July 2008, the district court granted St. Paul's motion for summary judgment and denied CACI's. See CACI Int'l v. St. Paul Fire & Marine Ins. Co., 567 F.Supp.2d 824, 835 (E.D.Va.2008). In considering whether St. Paul had a duty to defend, the district court applied the Eight Corners Rule, which requires courts "`to compare the four corners of the insurance policy against the four corners of the underlying complaint [to determine] if any allegations may potentially be covered by the policy.'" Id. at 829 (quoting Capitol Envtl. Servs., Inc. v. N. River Ins. Co., 536 F.Supp.2d 633, 640 (E.D.Va.2008)).

While affirming the importance of the Eight Corners Rule, the district court noted that few courts have discussed what evidence is "intrinsic" to the complaint and may be considered along with it. The court therefore compared the Eight Corners Rule to the "well-established Four Corners Rule," which limits what federal courts may consider when ruling on a Fed. R.Civ.P. 12(b)(6) motion to dismiss. Id. at 831. Under this rule, the Fourth Circuit has held that courts may consider the complaint itself and any documents that are attached to it. Id. (citing Sec'y of State for Def. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir.2007)). This circuit has also held that courts may consider a document that the defendant attaches to its motion to dismiss if the document "`was integral to and explicitly relied on in the complaint and if the plaintiffs do not challenge its authenticity.'" Id. (quoting Am. Chiropractic Ass'n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir.2004)). Applying those standards to the Eight Corners Rule, the district court concluded that it would consider documents outside the complaint if (1) they were attached to the complaint; or (2) the complaint explicitly relied on the documents and no party challenged their authenticity. Id. at 832.

The court therefore looked at two documents attached as Exhibits A and D to the Saleh complaint: a job posting for linguistic support positions with "Team Titan," a collaboration between CACI and other corporations; and a military report on Abu Ghraib that discussed the involvement of two CACI employees in abuses there. See id. The court also considered CACI's contracts with the U.S. government, which it concluded were "expressly incorporated into the complaints," noting that "several of [the detainees'] legal claims [were] predicated on the contractual relationships created by" the contracts. Id. Further, CACI had not challenged the contracts' authenticity and had even offered them as evidence to support its motion for summary judgment in the Saleh proceeding. See id. Finally, the district court noted that, in addition to the policies at issue here, CACI had a Global Policy with St. Paul that covered events outside the policies' coverage territory but specifically excluded Iraq. Although the Global Policy was not part of the underlying complaints, its provisions were described in a declaration attached as Exhibit E to CACI's complaint in the declaratory judgment action.

After comparing these documents— along with the complaints themselves—to the St. Paul policies, ...