Great Am. Ins. Co. v. Sea Shepherd Conservation Soc'y, an Or. Nonprofit Corp.
| Decision Date | 23 May 2014 |
| Docket Number | Case No. C13-1017RSM |
| Court | U.S. District Court — Western District of Washington |
| Parties | GREAT AMERICAN INSURANCE COMPANY, an Ohio corporation, Plaintiff, v. SEA SHEPHERD CONSERVATION SOCIETY, an Oregon nonprofit corporation PAUL WATSON, MARINE GAEDE, BEN ZUCKERMAN, LANI BLAZIER, PETER RIEMAN, ROBERT WINTNER, BOB TALBOT, and SUSAN HARTLAND, DefendantS. |
THIS MATTER comes before the Court on Motion for Summary Judgment by Plaintiff Great American Insurance Company ("Great American"). Dkt. # 10. Great American moves the Court for a declaratory judgment that it has no duty to defend or indemnify Defendants with regard to contempt proceedings in an underlying lawsuit for which Defendants seek coverage under a liability insurance policy. The Court heard oral argument from the parties on May 9, 2014. Having reviewed the parties' briefs in support and opposition as well as the remainder of the record, the Court grants Plaintiff's Motion and enters judgment in favor of Great American for the reasons stated herein.
This insurance coverage action involves coverage under two liability Policies issued by Great American for defense costs incurred by Defendant Insureds. Great American issued to Defendant Sea Shepherd Conservation Society ("Sea Shepherd") a first ExecPro Nonprofit Solution Policy for the period of June 23, 2011 to June 23, 2012 (the "2011 policy") and a secondsubstantively identical Policy for the period of June 23, 2012 to June 23, 2013 (the "2012 Policy"). The instant coverage dispute arises out of contempt proceedings in a lawsuit filed against Defendants Sea Shepherd and its founder Paul Watson on December 8, 2011 by the Institute for Cetacean Research ("ICR"), which enjoined Defendants from attacking ICR whaling research vessels. See The Institute of Cetacean Research, et al. v. Sea Shepherd Conservation Society, et al., Case No. 2:11-cv-02043-RAJ, appeal docketed, No. 12-352266 (9th Cir. Apr. 10, 2012) (the "ICR Litigation"). Great American seeks declaratory judgment that, under the terms of the Policies and under the law of the State of Washington, it has no duty to defend or indemnify Defendants for costs incurred in the ICR litigation, including contempt proceedings, based on the lack of timely notice and a Policy exclusion precluding coverage for claims arising out of damage to tangible property. Plaintiffs argue that coverage is warranted for the contempt proceedings as a timely reported "Claim," which they contend is independent of, and jurisdictionally separate from, the ICR Litigation.
Sea Shepherd's 2011 and 2012 Policies both set forth Great American's duty to defend its Insureds, as well as its limits. Each Policy is described on its first page as a "Claims Made and Reported Policy" and on its Declarations page as a "Claims Made Policy." See Dkt. ## 1-1 & 1-2, at pp. 1, 4. Section I of the Policies obligates Great American to pay for Loss and Costs of defense for any "Claim" first made during the "Policy Period" against any Insured Person and/or Organization for a Wrongful Act. See Id. at p. 4. The Policies define "Claim," in relevant part, as:
A civil proceeding, including any appeals therefrom, made against any Insured seeking monetary or non-monetary (including injunctive) relief commenced by service of a complaint or similar pleading.
Id. at § III.A(2), p. 5. The Policies further set forth the definition of a Wrongful Act as, in relevant part, "actual or alleged error, misstatement, misleading statement, act or omission, neglect or breach of duty." Id. at § III.R(1), p. 8. "Related Wrongful Acts" are defined as those which are "causally connected by reason of any common fact, circumstance, situation, transaction, casualty, event or decision." Id. at § III.O, p. 7.
Several provisions limit the scope of coverage under the Policies. Principally at issue in this action are the requirements for timely notice of a Claim and Exclusion IV.D, one of thirteen distinct exclusion provisions set forth in the Policies. Notice requirements under the Policies are provided in Section VII, according to which:
Id. at § IV.D, p. 9. The reach of the Exclusions section as a whole is limited by a non-imputation clause, providing that: "With respect to this section of the Policy, no fact pertaining to or conduct by any Insured Person shall be imputed to any other Insured Person...". Id. at § IV, p. 10.
On December 8, 2011, ICR filed suit against Defendants Sea Shepherd and Paul Watson in the U.S. District Court for the Western District of Washington. ICR subsequently filed a motion for preliminary injunction, which Judge Jones rejected on March 19, 2012. See Great American Insurance Co. v. Sea Shepherd, et al., 860 F.Supp. 2d 1216 (W.D. Wash. 2012), rev'd, 725 F.3d 940 (9th Cir. 2013).
The details of ensuing events are provided by the Report and Recommendation of the Appellate Commissioner appointed for the ICR Litigation contempt proceedings, filed January 31, 2014. See Dkt. #97. In reliance on Judge Jones's ruling, Watson and other members of the Sea Shepherd Board prepared to conduct the ninth annual whale defense campaign, entitled "Operation Zero Tolerance" ("OZT"). See Dkt. # 97, p. 6. Sea Shepherd took the leading administrative role, organizing its foreign chapters and four vessels in a whale defense campaign designed to prevent capture of whales by ICR in the Southern Ocean. Sea Shepherd of Australia ("SSAL"), an independent foreign entity, took a leading role in preparing for OZT logistics. See id. at pp. 2, 7. The majority of OZT funding had been secured when the Ninth Circuit Court of Appeals issued a sua sponte injunction pending appeal on December 17, 2012, enjoining Sea Shepherd and Watson from physically attacking or endangering any ICR vessels or approaching them within 500 yards. See Great American, 702 F.3d 573.
Following news of the injunction, the Sea Shepherd Board of Directors consulted with counsel and formulated a strategy to comply with the injunction and withdraw from OZT. The Board included Watson, who also served as paid Executive Director, and volunteer members Lani Blazier, Marnie Gaede, Bob Talbot, Robert Wintner, Ben Zukerman, and Peter Rieman, all of whom are Defendants in the instant action. Defendant Susan Hartland, who joined Sea Shepherd in January 2012 as administrative director, also took part. The resulting "separation strategy" called for Sea Shepherd to sever financial ties with OZT. Dkt. # 97, at pp. 15-20. Watson immediately submitted his resignation, and the Board transferred the ships and equipment under its ownership to SSAL. Id. at pp. 22-26.
The OZT took place, initiating several alleged violations of the preliminary injunction between January 29 and February 28, 2013. Id. at pp. 31-39. The majority of the alleged violations involved incursions on the safety perimeter established by the injunction, as well as two collisions.Watson remained on the Steve Irwin vessel in an observer capacity, and was thereby on the vessel when it breached the safety perimeter. Id. at pp. 29, 38-39.
The Ninth Circuit issued its decision in the ICR Litigation on February 25, 2013, reversing the district court and ordering the injunction to continue under further order of the court. See Great American, 708 F.3d 1099. On June 7, 2013, the Ninth Circuit issued its mandate and returned jurisdiction of the ICR Litigation to the Western District. See Case No. 12-35266, Dkt. # 161.
On February 11, 2013, ICR filed a motion for contempt against Sea Shepherd, as well as a motion to appoint a special master to conduct contempt proceedings, based on alleged violations of the injunction that took place during the OZT. On February 21, 2013, the Ninth Circuit referred the contempt motion to the Appellate Commissioner. See Dkt. # 97 at p. 40. ICR amended its motion for contempt on March 6, 2013, to allege additional violations and include Defendant Watson and seven non-parties (five current directors of Sea Shepherd, former director Rieman, and administrative director Hartland). On April 12, 2013, ICR filed the controlling Second Amended Motion for Contempt ("SAMC") against the same individuals, alleging four additional violations. Dkt. # 1-4.
The Ninth Circuit entered a scheduling order for the contempt proceedings on April 16, 2013, providing for discovery and a separate hearing before the Appellate Commission. See Dkt. # 88, Ex. 2. On January 31, 2014, the Appellate Commissioner issued the Report and Recommendation in the contempt proceeding following a hearing that took place from October 28 through November 6, 2013. See Dkt. # 97. The R&R recommended that the Defendants should not be found liable...
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