Diamond State Ins. Co. v. Boys' Home Ass'n, Inc.

• Decision Date: 22 March 2016
• Docket Number: Case No. 3:13-cv-456-J-34PDB
• Parties: Diamond State Insurance Company, Plaintiffs, v. Boys' Home Association, Inc., d/b/a Boys' Home Association of Jacksonville, et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

172 F.Supp.3d 1326

Diamond State Insurance Company, Plaintiffs,

v.Boys' Home Association, Inc., d/b/a Boys' Home Association of Jacksonville, et al., Defendants.

Case No. 3:13-cv-456-J-34PDB

United States District Court, M.D. Florida, Jacksonville Division .

Signed March 22, 2016

Bruce A. Aebel, Christopher Hollman, Banker Lopez Gassler, Tampa, FL, for Plaintiffs.

Jeffery Merrell Wilkins, Wilkins Von Mertz, Jacksonville, FL, Howard M. Talenfeld, Talenfeld Law, Fort Lauderdale, FL, Joseph S. Kashi, Joseph S. Kashi, P.A., Plantation, FL, for Defendants.

ORDER

MARCIA MORALES HOWARD

, United States District Judge

THIS CAUSE is before the Court on Plaintiff/Counterdefendant Diamond State Insurance Company's Dispositive Motion for Summary Judgment (Doc. 50; Motion), filed on July 30, 2014. Defendant Boys' Home Association, Inc. (Boys' Home) filed a response and cross-motion for summary judgment on August 13, 2014. See Opposition to Plaintiff/Counterdefendant Diamond State Insurance Company's Dispositive Motion for Summary Judgment and Cross-Motion for Summary Judgment (Doc. 55; Boys' Home Response). In addition, Defendants A.D. and S.T. (the Parents), individually and on behalf of their adopted children, J.D. and W.D. (the Minor Children) filed a response to the Motion on September 2, 2014. See A.D. and S.T.'s Response to Diamond State's Motion for Summary Judgment (Doc. 60; Parents Response).¹ With leave of Court, see Order (Doc. 64), Diamond State Insurance Company (Diamond State) filed a reply in support of its Motion on September 17, 2014. See Plaintiff/Counterdefendant Diamond State Insurance Company's Reply Memorandum in Support of its Dispositive Motion for Summary Judgment (Doc. 66; Reply). At the request of the parties, the Court entered an Order (Doc. 67) staying this case on September 18, 2014. However, following an April 27, 2015 Telephonic Status Conference, see Minute Entry (Doc. 75), the Court lifted the stay and reactivated the case on May 6, 2015. See Order (Doc. 77). With the Court's permission, see Order (Doc. 82), Diamond State filed a supplemental reply brief to which the Parents filed a sur-reply. See Plaintiff/Counterdefendant Diamond State Insurance Company's Supplemental Memorandum in Support of its Dispositive Motion for Summary Judgment (Doc. 83; Supplemental Reply), filed October 8, 2015; Defendants' A.D. and S.T. Response in Opposition to Plaintiff, Diamond State's Supplemental Memorandum in Support of its Dispositive Motion for Summary Judgment (Doc. 84; Parents Sur-Reply), filed October 22, 2015. Accordingly, this matter is ripe for review.²

I. Background

This is an action for declaratory relief pertaining to an insurance coverage dispute between Diamond State, the insurer, and Boys' Home, its insured. See Complaint for Declaratory Relief and Demand for Jury Trial (Doc. 1-3; Complaint). Specifically, Diamond State issued a Commercial Insurance Policy to Boys' Home for the policy period spanning July 23, 2010, to July 23, 2011. See Complaint, Ex. B (Doc. 1-2; the Policy).³ The Policy consists of coverage parts for Commercial General Liability, and Professional Liability, and a retroactive coverage date of July 23, 2004. See Policy at 3, 5, 7.⁴ Significantly, the Policy is a “claims-made” policy such that “[c]overage is provided for liability if the claim for damages if [sic] FIRST MADE during the policy period on an event that occurred on or after the retroactive date, if any, and prior to the expiration date of the policy or Extended Reporting Period, if applicable.” See id. at 21, 31, 61. The Parents, on behalf of their Minor Children, initiated an action against Boys' Home in Florida state court alleging that the Minor Children suffered damages as a result of Boys' Home's negligence. See Complaint, Ex. A: First Amended Complaint (Doc. 1-1; State Complaint); see also A.D. & S.T. ex. rel. J.D. & W.D. v. Family Support Servs. of N. Fla., Inc., Case No. 16–2011–CA–002567–XXXX–MA (Fla. 4th Cir.Ct.2011) (Underlying Action).⁵ The State Complaint pertains to conduct allegedly occurring between October 21, 2004, and October 17, 2006. See State Complaint ¶¶ 46, 77. On April 26, 2013, Diamond State filed the instant lawsuit in which it seeks a declaratory judgment that the Policy provides no coverage as to both the duty to defend and the duty to indemnify for the claims asserted against Boys' Home in the Underlying Action. See generally Complaint. The Parents filed a Counterclaim (Doc. 16) against Diamond State on August 9, 2013, requesting a declaratory judgment that Diamond State has a duty to defend and indemnify Boys' Home with respect to the state claims. See Counterclaim at 6.

A. The Underlying Action⁶

The Parents make the following allegations against Boys' Home in the State Complaint. Boys' Home is “a licensed child-placing agency, authorized by [the Department of Children and Families (DCF) ] to conduct licensing studies of family foster homes and to certify to DCF that the home met its licensing requirements.” See State Complaint ¶ 13. On October 21, 2004, Annette Smith f/k/a Annette Ross (Smith) “submitted an application to [Boys' Home] to become a licensed foster parent.” Id.¶ 46. Despite having the relevant information, Boys' Home “failed to conduct an appropriate background screening, including criminal and abuse records history, on [Smith's] married name, the name of her former husband, and the name[s] of all of her biological children.” Id.¶ 49. If Boys' Home had conducted an appropriate background screening, it would have discovered that Smith's biological children were removed from her custody in 1992 as a result of verified allegations of abuse, which resulted in criminal abuse charges. Id.¶ 50. An appropriate background screening also would have revealed abuse allegations against Smith regarding her biological children in 2001 and 2002. Id.¶ 51. Boys' Home also failed to obtain written references from non-relatives and investigate Smith's “claim that she home-schooled her biological child.” Id.¶ 52. Because Boys' Home failed to properly screen Smith for the foregoing “disqualifying information,” it “licensed [Smith] to foster up to four (4) children on December 6, 2004.” Id.¶ 53.

On March 24, 2005, an agency acting on behalf of DCF, removed the Minor Children from the care of their biological mother and placed them in Smith's licensed foster home. See id.¶¶ 14-16. On April 6, 2005, two other foster children were removed from Smith's home as a result of abuse allegations. Id.¶ 54. The new foster mother for those children reported to Boys' Home on April 16, 2005, that one of the children had disclosed to her serious allegations of abuse perpetrated by Smith, but Boys' Home continued to license the Smith home. Id.¶¶ 55-56. Smith applied to renew her license in October of 2005, and Boys' Home “again failed to conduct an appropriate background screening.” Id.¶¶ 57-58. Notably, on October 26, 2005, Boys' Home received results “on the Central Abuse Hotline Record Search that indicated the prior abuse reports involving [Smith's] biological children,” which gave Boys' Home “actual or constructive knowledge” that Smith had lied during her initial application for licensure. Id.¶¶ 59-60. In addition, Smith lied about the reason the two children were removed from her home in April, but Boys' Home failed to review the prior year's abuse reports or its own file, and as such, failed to uncover the falsehoods. Id.¶¶ 62-63. Thus, Boys' Home did not take that report and the subsequent allegations into consideration during the re-licensure process. Id.¶ 63. On December 6, 2005, Boys' Home re-licensed Smith to care for two foster children, it increased her licensing capacity to four children on January 11, 2006, and on May 20, 2006, Boys' Home placed two additional foster children in the Smith home without conducting the assessments and obtaining the approvals required by DCF procedures. Id.¶¶ 65-69. Notably, in April 2006, another abuse report alleged physical abuse of a foster child in the Smith home. Id.¶ 67.

In June 2006, “there was an abuse report against Smith” involving her biological child, at which time an investigation revealed the prior abuse reports regarding Smith's abuse of her biological children in 1991, 2001, and 2002. Id.¶¶ 70-71. Although DCF provided this information to Boys' Home, Boys' Home took no action and continued to license Smith. Id.¶¶ 72-73. Finally, on October 6, 2006, another abuse report was made against Smith regarding the physical abuse of a foster child, and during the course of this investigation, all six of the foster children in the Smith home, including the Minor Children, disclosed “severe physical and emotional abuse and neglect.” Id.¶¶ 74-75. The investigation verified the abuse allegations and all of the children were removed from the Smith home. Id.¶ 76. Boys' Home revoked Smith's license on October 17, 2006, as a result of the verified abuse, and in November 2006, Smith was arrested and charged with criminal child abuse and contributing to the delinquency of a minor. Id.¶¶ 77-78. Ultimately, Smith pled guilty to the charge of contributing to the delinquency of a minor in January 2007. Id.¶ 78.

In Count I of the State Complaint, the Parents assert a claim for negligence against Boys' Home. See id.¶¶ 123-126. Pursuant to the foregoing allegations, the Parents allege that Boys' Home breached its duty to: (1) conduct a licensing study of Smith and certify to DCF that she met all of the DCF licensing requirements, (2) conduct an appropriate screening of Smith's background, (3) request Abuse Registry clearances for Smith, (4) conduct an employment history check and check references, (5) conduct an annual re-licensing study, (5) seek and obtain a waiver prior to placement of additional foster children in the Smith home, (6) deny, suspend, and/or revoke the foster home license upon discovery that Smith lied during the application process, and (7) deny, suspend,...