National Fire and Cas. Co. v. West By and Through Norris
| Citation | 107 F.3d 531 |
| Decision Date | 24 February 1997 |
| Docket Number | No. 96-2090,96-2090 |
| Parties | NATIONAL FIRE AND CASUALTY COMPANY, Plaintiff-Appellee, v. Mary A. WEST, a Minor Child, by and through her Parent and Next Friend, Rita NORRIS, Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
William W. Kurnik (argued), Kurnik, Cipolla & Barasha, Arlington Heights, IL, for Plaintiff-Appellee.
Thomas C. Doehrman, Conour & Doehrman, Thomas R. Ruge (argued), Lewis & Kappes, Indianapolis, IN for Defendant-Appellant.
Before WOOD, JR., RIPPLE and KANNE, Circuit Judges.
National Fire & Casualty Company ("National Fire") issued to the Town of Frankton, Indiana ("Frankton") a Local Government General Liability insurance policy. Under the policy, National Fire agreed to defend and indemnify Frankton and its employees for Bodily Injury Liability and Personal Injury Liability, subject to a number of exclusions. Officer James Bradley Waymire, a Frankton police officer, engaged in a course of conduct with Mary Amanda West, a minor, that led to his pleading guilty to five felony counts of child molestation. Ms. West, through her parent, brought a § 1983 action against the town and Officer Waymire for these incidents. National Fire then instituted this diversity action seeking a declaratory judgment that it need not indemnify or defend Officer Waymire for his actions because they fall within the policy's exclusions. For the reasons that follow, we affirm the judgment of the district court.
A. Facts
Officer Waymire was hired by the Frankton Police Department on April 10, 1991. Over the course of eighteen months, Officer Waymire engaged in criminal conduct with respect to Ms. West that led to the officer's pleading guilty to five counts of felony child molestation. Several, although not all, of these events took place during the policy period. 1
On September 1, 1994, Ms. West filed suit under 42 U.S.C. § 1983 in district court, alleging that Officer Waymire, the Town of Frankton and the Frankton Police Department
had violated her constitutional and civil rights. She also alleged that Frankton and the Frankton Police Department negligently had hired and employed Officer Waymire and that Officer Waymire intentionally had committed the torts of assault and battery, invasion of privacy, and intentional infliction of emotional distress, for which Frankton was also liable under the theory of respondeat superior.
Frankton purchased from National Fire a Local Government General Liability Policy ("LGGL Policy") under which National Fire agreed to provide coverage for Frankton and its employees 2 for Bodily Injury Liability and Personal Injury Liability. The policy at issue covered the period from October 1, 1992 to October 1, 1993 and provided coverage subject to a number of exclusions. Coverage A (Bodily Injury Liability) 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
LGGL Policy at 2. "Occurrence" is defined by the policy as "an event, including continuous or repeated exposure to conditions, which results in bodily injury ... neither expected nor intended from the standpoint of the insured." Id. at 10 (italics omitted).
Coverage C (Personal Injury Liability) of the policy 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 injury (herein called "personal injury") sustained by any person ... and arising out of one or more of the following offenses committed in the conduct of the named insured's operations:
(A) False arrest, false detention or false imprisonment....
Id. at 6. There is an exclusionary provision that applies to Coverage C in its entirety: "This insurance does not apply ... to personal injury arising out of the willful violation of a penal statute or ordinance committed by or with the knowledge of any insured...." Id. National Fire also issued an endorsement to Coverage C (Civil Rights and Assault and Battery Endorsement), which added coverage for damages incurred pursuant to 42 U.S.C. § 1983 due to personal injuries arising from the violation of constitutional or civil rights. This endorsement in turn contains an exclusion applicable only to the coverage added by the endorsement: The insurance provided by the civil rights endorsement to Coverage C "shall not apply to ... [f]raudulent, criminal or malicious acts." R.17, Ex.B.
On October 3, 1994, National Fire instituted the present declaratory judgment action against Officer Waymire and Ms. West. It sought a declaration that National Fire did not have the duty to defend or indemnify Officer Waymire for his actions. 3 Officer Waymire was served in this suit, but failed to enter an appearance. On June 5, 1995, National Fire filed a motion for summary judgment, which the district court granted on April 2, 1996.
The district court noted that the effective period of the policy, October 1, 1992 through October 1, 1993, excluded the events that occurred between the officer and Ms. West in May or June of 1992. In considering whether Ms. West contended that the policy covered Waymire's actions under Coverage A because it provided coverage for damages for bodily injuries caused by an "occurrence," an event neither expected nor intended from the standpoint of the insured. Ms. West insisted that whether the injuries were intended or expected from the standpoint of the insured is a subjective inquiry and that because Officer Waymire allegedly did not intend to injure Ms. West (he allegedly thought the relations he had with Ms. West were consensual), her injuries were caused by an "occurrence." Thus, according to Ms. West, National Fire would be obligated under Coverage A to defend and indemnify Officer Waymire. She further asserted that the "criminal act" exclusion to Coverage C was ambiguous and, if read to exclude Officer Waymire's actions from coverage, would be void because it would render the coverage under the endorsement illusory.
Officer Waymire's actions during the effective time period were covered by the policy, the court considered separately the two Coverages, A and C, and concluded that his actions were not covered.
The district court rejected both of Ms. West's submissions. It disagreed with Ms. West's interpretation of the phrase "expected or intended" and concluded that, even under the most restrictive interpretation of these terms, the Supreme Court of Indiana would likely infer, as a matter of law, a subjective intent to injure in situations, like this one, " 'in which the insured has engaged in sexual misconduct with a minor.' " R.28 at 9 (quoting Wiseman v. Leming, 574 N.E.2d 327, 329 (Ind.Ct.App.1991)). Accordingly, the court found that Officer Waymire's actions were intended to cause Ms. West's injuries and that Coverage A of the policy therefore does not cover such acts.
The district court also rejected Ms. West's second contention. Giving the policy exclusion its plain meaning, the court reasoned that the officer's actions clearly would fall within the meaning of the phrase "criminal act." Thus, Officer Waymire's actions would be excluded from the § 1983 coverage. The court further held that the coverage, including this exclusion, was not illusory because it would provide coverage to the named insured and other insureds in a number of different situations.
We review a district court's decision to grant summary judgment de novo. Buckley Dement, Inc. v. Travelers Plan Adm'rs, Inc., 39 F.3d 784, 787 (7th Cir.1994) (citing Tolle v. Carroll Touch, Inc., 23 F.3d 174, 178 (7th Cir.1994)). "Summary judgment is proper only when 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.' " Cox v. Acme Health Servs., 55 F.3d 1304, 1308 (7th Cir.1995) (quoting Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986)). A fact is material only if it might affect the outcome of the case under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986). To determine whether summary judgment is appropriate, we view the evidence and draw all reasonable inferences therefrom in a light favorable to the non-moving party. Id.
In this diversity action, both parties agree that Indiana law governs our decision. Our duty then is to determine how this dispute would be resolved by the Supreme Court of Indiana. Cincinnati Ins. Co. v. Flanders Elec. Motor Serv., Inc., 40 F.3d 146, 150 (7th Cir.1994); Fidelity & Guar. Ins. Underwriters, Inc. v. Everett I. Brown Co., 25 F.3d 484, 486 (7th Cir.1994).
"Under Indiana law, the interpretation of an insurance policy presents a question of law to be decided by the court." Cincinnati Ins. Co., 40 F.3d at 151 (citing Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind.1992)). In a policy dispute, the insured has the burden of proving that the coverage applies, and the insurer, if relying on an exclusion to deny coverage, has the burden of demonstrating that the exclusion is applicable. Id. "Generally, in Indiana, contracts for insurance are subject to the same rules of interpretation as are other contracts." Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind.1985). If the policy's language is clear and unambiguous, it is to be given its plain and ordinary meaning. Id. (citing Spears...
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