Dodge v. Legion Ins. Co.

• Decision Date: 19 April 2000
• Docket Number: No. 99 CIV. 10563(SAS).,99 CIV. 10563(SAS).
• Parties: Tiffany DODGE, Plaintiff, v. LEGION INSURANCE COMPANY and Mark Morrison, Defendants.
• Court: U.S. District Court — Southern District of New York

102 F.Supp.2d 144

Tiffany DODGE, Plaintiff, v. LEGION INSURANCE COMPANY and Mark Morrison, Defendants.

No. 99 CIV. 10563(SAS).

United States District Court, S.D. New York.

April 19, 2000.

Michael P. Eisenman, Miller & Eisenman, LLP, New York City, for plaintiff.

W. Robert Devine, Ivone, Devine & Jensen, LLP, Lake Success, NY, for defendant Legion Insurance Company.

OPINION AND ORDER

SCHEINDLIN, District Judge.

Tiffany Dodge brings this action for a declaratory judgment against Legion Insurance Company ("Legion") and Mark Morrison. Dodge seeks a declaration that Legion, Morrison's liability insurance carrier, is obligated to indemnify Morrison, Dodge's former psychiatrist, for any judgment Dodge may obtain in an action against Morrison now pending in Supreme Court Putnam County. In that action, Dodge is seeking damages for injuries caused by Morrison's alleged sexual contact with Dodge while she was his patient.

Dodge moves for summary judgment pursuant to Federal Rule of Civil Procedure 56. Dodge argues that Legion is estopped from disclaiming coverage because it did not promptly notify Dodge of its intent to disclaim coverage, and thus failed to comply with the notice requirement of section 3420(d) of the New York Insurance Law.¹ Dodge further argues that allowing indemnification here is consistent with the public policy of New York, which forbids indemnification for intentionally caused injuries but does not bar indemnification for the accidental consequences of intentional conduct.

Legion cross-moves for summary judgment declaring that it is not obligated to indemnify Morrison. Legion argues that Morrison's alleged intentional misconduct is beyond the scope of the insurance policy as written, and that failure to give notice cannot create coverage where none exists. Legion also contends that public policy bars indemnification here because an intent to injure Dodge must be inferred from the intentional nature of Morrison's inherently harmful conduct. For the following reasons, Legion's motion is granted.

I. Background²

A. The Underlying Dispute

At the time of the events giving rise to the underlying action, Morrison was a psychiatrist licensed to practice medicine in the State of New York. See Plaintiff and Defendant Legion's Amended Rule 56.1 Statement of Stipulated Facts ("Pl. & Def. 56.1") ¶¶ 3-4. Morrison had specialized in psychiatry since his graduation from New York Medical College in 1980. See Deposition of Mark Morrison ("Morrison Dep."), Ex. B to 2/22/00 Affidavit of W. Robert Devine, Attorney for Defendant Legion ("Devine Aff."), at 7. By 1984, he had completed a psychiatric internship and residency at the New York Medical College Westchester County Medical Center. See id. After completing his residency, Morrison held several professional positions at various county, state and community health agencies. See id. at 8, 9-10, 12-13, 16-17.³ In addition, Morrison maintained a private psychiatric practice, which he operated from a building adjacent to his residence in Brewster, New York. See id. at 8.

Dodge became Morrison's patient in late 1993. See Pl. & Def. 56.1 ¶ 1. She first consulted Morrison because she was suffering from headaches. See Morrison Dep., Ex. B to Devine Aff., at 24-25. During the course of her therapy, Dodge told Morrison that she had been sexually abused in her childhood and raped at the age of fourteen. See id. at 63, 65; Examination Before Trial of Tiffany Dodge ("Dodge Exam."), Ex. A to Devine Aff., at 37-38, 60-61. As the therapy progressed, Morrison's diagnosis began to change and he eventually concluded that the underlying causes of Dodge's headaches were depression and an anxiety disorder; he also suspected a multiple personality disorder. See Morrison Dep., Ex. B to Devine Aff., at 50, 67-68.

As part of the treatment, Morrison engaged Dodge in relaxation training. See id. at 75; Pl. & Def. 56.1 ¶ 6. It was during the relaxation training, Dodge claims, that Morrison initiated a sexual relationship with her. See Dodge Exam., Ex. A to Devine Aff., at 117, 120. Dodge alleges that during several of her office visits, at Morrison's request, she and Morrison engaged in a variety of sexual activities. See id. at 117, 120-21, 125-26. According to Dodge, the sexual relationship with Morrison made her feel vulnerable and ashamed. See id. at 128. When she suggested that she would tell somebody about the relationship, Morrison threatened to have her committed to a psychiatric institution and her young son placed in foster care. See id. at 128-31; Pl. & Def. 56.1 ¶ 11. Morrison, on the other hand, denies having ever had any sexual contact with Dodge or having ever threatened her. See Morrison Dep., Ex. B to Devine Aff., at 89-90.

Dodge terminated her therapy in July 1995. See Pl. & Def. 56.1 ¶ 1. Shortly thereafter, Morrison's relationship with Dodge became the subject of disciplinary and criminal proceedings against him. After a hearing, the Board of Professional Medical Conduct found that from approximately June 1994 to May 1995 Morrison engaged in sexual activities with Dodge during therapy sessions, while Dodge was in a deeply relaxed state. See Pl. & Def. 56.1 ¶¶ 8-9. The Board also found that Morrison had advised Dodge that sexual relations with him would improve her sex life. See id. ¶ 10. On December 30, 1996, the Office of Professional Medical Conduct of the State of New York Department of Health ("the OPMC") revoked Morrison's license to practice medicine. See id. ¶ 13. Based on Morrison's conduct with Dodge, the OPMC found Morrison guilty of negligence, gross negligence, fraudulent practice, engaging in sexual conduct with a patient, moral unfitness, willful harassing, abusing or intimidating patients and failing to maintain accurate records. See id. ¶¶ 14-15. Then on January 24, 1997, Morrison was convicted of thirteen counts of sexual abuse in the third degree in violation of section 130.55 of the New York Penal Law. See id. ¶ 16. Twelve of the thirteen counts were related to Morrison's sexual activities with Dodge while Dodge was his patient. See id. ¶ 17.

On or about August 26, 1996, Dodge sued Morrison in the Supreme Court of the State of New York, asserting claims of medical malpractice, negligent infliction of emotional distress, and reckless and wanton conduct ("the underlying action"). See id. ¶¶ 20-21. In that action, currently scheduled for trial on April 24, 2000, Dodge seeks damages for injuries caused by Morrison's inappropriate sexual activities with her from July 1994 to May 1995. See id. ¶¶ 27-28.

B. The Legion Policies

Legion was Morrison's professional liability insurance carrier during 1994 and 1995. See Pl. & Def. 56.1 ¶ 22.⁴ During the events complained of in the underlying action, Morrison was covered by two Legion policies. The first policy was in effect from May 1, 1994 to May 1, 1995 ("1994 Policy"); the second policy was in effect from May 1, 1995 to May 1, 1996 ("1995 Policy").⁵ See 1994 Policy at Declarations; 1995 Policy at Declarations.

The two policies are similar in their most significant respects. First, both cover only claims for injuries arising out of "occurrences" that take place during the policy period. See 1994 Policy at 7; 1995 Policy at 1.⁶ The two policies' definitions of an "occurrence" are almost identical. The 1994 policy defines an occurrence as "an act, error or omission in psychiatric services rendered that is neither expected nor intended from the standpoint of [the psychiatrist] and which (a) takes place during the Policy Period and (b) results from a Covered Activity." 1994 Policy at 10 (emphasis added). Similarly, the 1995 policy states that an "occurrence" is "an error or omission in [p]sychiatric [s]ervices rendered by a [psychiatrist] that (a) is neither expected nor intended by the [psychiatrist], and (b) takes place during the Policy Period." 1995 Policy at 1 (emphasis added).

Second, the two policies contain identical sets of exclusions, including exclusions for the following types of claims:

H. [A]ny claim for or award of punitive, multiplied, or exemplary damages, or any damages imposed as a punishment of the party against whom they are awarded ....

I. Any claim, damages or cause of action, based in whole or in part on, or involving a claim of Undue Familiarity as defined herein, if Undue Familiarity is an essential element of such claim, damages or cause of action, irrespective of the manner in which such claim, damages or cause of action is characterized.

J. Any claim, damages or cause of action, based in whole or in part on actual or alleged mishandling of the transference or counter-transference phenomena, harassment or abandonment, where the [psychiatrist] is alleged to have engaged in, or has engaged in, Undue Familiarity with the Claimant, as the terms Undue Familiarity and Claimant are defined herein.

K. Any claim, damages or cause of action arising out of or in connection with any dishonest, fraudulent, criminal, maliciously or deliberately wrongful acts or omissions, or violations of law committed by the [psychiatrist].

1994 Policy at 6; see also 1995 Policy at 4. Both policies define "undue familiarity" as follows:

"Undue Familiarity" means, with respect to a patient, a former patient, or a member of the patient's or former patient's immediate family or household (hereinafter the "Claimant"), any actual or alleged sexual or social relationship between a [psychiatrist] and the Claimant or any actual or alleged physical contact by a [psychiatrist] of such Claimant, or any other demonstrated intention or act for the purpose of sexual gratification or stimulation, including but not limited to, with respect to such Claimant any actual or alleged mishandling of the transference or counter-transference phenomena, harassment, and abandonment.

1994 Policy at 10; see also 1995 Policy at 8.

C. Legion's Reservation of Rights Letters

On September 24, 1996, Morrison notified Legion...