Pacific Ins. Co. v. Catholic Bishop of Spokane

• Decision Date: 24 April 2006
• Docket Number: No. CV-05-0075-JLQ.,CV-05-0075-JLQ.
• Citation: 450 F.Supp.2d 1186
• Parties: PACIFIC INSURANCE COMPANY, et al., Plaintiffs, v. CATHOLIC BISHOP OF SPOKANE, et al., Defendants.
• Court: U.S. District Court — District of Washington

450 F.Supp.2d 1186

PACIFIC INSURANCE COMPANY, et al., Plaintiffs, v. CATHOLIC BISHOP OF SPOKANE, et al., Defendants.

No. CV-05-0075-JLQ.

United States District Court, E.D. Washington.

April 24, 2006.

COPYRIGHT MATERIAL OMITTED

Charles R. Ekberg, Lane Powell PC, Seattle, WA, Elizabeth Rose Butler Kennar, Ralph Howard Palumbo, Summit Law Group PLLC, Seattle, WA, James B. Shein, Lewis S. Rosenbloom, McDermott, Will & Emery LLP, Chicago, IL, Laura K. McNally, Maile H. Solis-Szukala, Matthew O. Sitzer, Patrick R. Malone, Philip C. Stahl, Grippo & Elden LLC, Chicago, IL, Miles W. Hughes, McDermott Will & Emery LLP, Chicago, IL, Lewis S. Rosenbloom, Miles W. Hughes, McDermott, Will & Emery LLP, Chicago, IL, for Plaintiffs.

Christie L. Snyder, James R. Murray, Mark A. Wilner, Gordon Murray Tilden LLP, Seattle, WA, Daniel William Short, Gregory J. Arpin, Michael John Paukert, Shaun McKee Cross, Paine, Hamblen, Coffin, Brooke & Miller, Michael C. Geraghty, Turner, Stoeve & Gagliardi PS, David E. Eash, Ewing Anderson PS, Spokane, WA, Diane Luise Polscer, Gordon & Polscer LLP, Seattle, WA, Jed William Morris, Bryce James Wilcox, Lukins & Annis PS, Spokane, WA, Dennis Smith, Randy Alan McCaskill, Sally E. Metteer, Wilson Smith Cochran Dickerson, Dillon Edward Jackson, Foster, Pepper & Shefelman PLLC, Michael T. Pfau, Gordon, Thomas, Honeywell, Malanca, Peterson & Daheim LLP, Seattle, WA, Kevin P. Kamraczewski, Patrick C. Maxcy, Robert B. Millner, Sonnenschein, Nath & Rosenthal LLP, Chicago, IL, Nancy L. Isserlis, Winston & Cashatt, Spokane, WA, Robert A Meyers, Thomas Martin Jones, Cozen O'Connor, Seattle, WA, Ronald Kent, Sonnenschein, Nath & Rosenthal LLP, Los Angeles, CA, for Defendants.

MEMORANDUM OPINION AND ODER DENYING (1) OREGON AUTO'S MOTION FOR SUMMARY JUDGMENT BASED ON NO "ACIDENT" AND (2) CNA'S MOTION FOR PARTIAL SUMMARY JUDMENT ON ALL CHILD SEXUAL ABUSE CLAIMS AGAINST THE DIOCESE OF SPOKANE INVOLING PATRICK O'DONNELL BASED ON NO "ACCIDENT"

QUACKENBUSH, Senior District Judge.

BEFORE THE COURT are two summary judgment motions: (1) Cross-Defendant Oregon Auto's Motion For Summary Judgment Based On No "Accident" (Ct. Rec.138), and (2) Plaintiff Pacific Insurance Company's Motion for Partial Summary Judgment on All Child Sexual Abuse Claims Against the Diocese of Spokane Involving Patrick O'Donnell Based on No "Accident" (Ct.Rec.155). Oral argument was heard on both motions on March 20, 2006. Jed W. Morris and Diane L. Polscer represented the Cross-Defendant, Oregon Auto Insurance Company (hereinafter "Oregon Auto"). Philip C. Stahl, Matthew O. Sitzer, and Elizabeth Kennar represented the Plaintiff, Pacific Insurance Company (hereinafter "CNA"). James R. Murray and Gregory J. Arpin represented the Cross-Claimant, Catholic Bishop of Spokane (hereinafter "Diocese").

INTRODUCTION

With its summary judgment motion, Oregon Auto seeks a declaration that the alleged negligence of the Diocese in connection with the alleged sexual abuse by Diocesan priests is not an "accident" under Washington law, and Oregon Auto therefore has no duty to defend or indemnify the Diocese under the policies at issue in this action. Oregon Auto argues that whether there was an "accident" is an objective determination and because the incidents which caused the injury—the alleged acts of sexual abuse by Diocesan priests—are not "accidents" as a matter of law, there is no coverage for such acts for the perpetrator priests, nor for the coinsured Diocese for the claims of negligent hiring, supervision, or retention of such priests. If successful in its motion, Oregon Auto asks that the Diocese's coverage cross-claims be dismissed with prejudice and without costs.

The Diocese objects to Oregon Auto's motion explaining that it "seeks coverage only for the claims asserting that the Diocese acted negligently with respect to its hiring and oversight of the priests who committed sexual abuse," not "for the claims directly against the priests for their sexual abuse or for those claims against the Diocese based on respondeat superior liability." (Ct.Rec.144, p. 5) (emphasis in original). The Diocese states that it has never disputed that coverage would be unavailable to the individual priests for their acts of sexual abuse. (Ct.Rec.144, pg.10). Instead, the Diocese argues that the real issue of coverage is whether the Diocese's alleged acts of negligent hiring and supervision constitute "occurrences."

After Oregon Auto's motion was filed, CNA filed a motion for partial summary judgment seeking a ruling from the court that CNA has no duty to defend or indemnify the Diocese under CNA's policies for claims arising out of alleged sexual abuse perpetrated by Patrick O'Donnell (hereinafter "O'Donnell"). CNA argues that there is no genuine issue of material fact that each of the Diocese's supervisory acts concerning O'Donnell were deliberate and therefore did not constitute an "accident." If successful in its motion, CNA asks that the Diocese's coverage cross-claims be dismissed with prejudice and without costs. In response, the Diocese argues that although its acts can be characterized as volitional, the alleged acts of negligence, of which it is accused, were unintentional and unexpected.

As Oregon Auto and CNA are the parties moving for summary judgment, the evidence and inferences therefrom are viewed in the light most favorable to the Diocese. The facts are undisputed except where otherwise stated.

BACKGROUND

Inherited from 19th century English common law, the majority of United States courts had a long history of court and statutory rulings immunizing eleemosynary, charitable, and religious organizations from judgments against them by reason of alleged tortious conduct by it or its agents. The theory behind such immunity included a concern that donors to such institutions needed assurance that their donated monies would be used for the charitable and religious purposes for which it was intended, rather than for legal damages to claimants against such institutions. By 1938, at least forty of the then fortyeight states had adopted some form of charitable institution immunity. Victor E. Schwartz & Leah Lorber, Defining the Duty of Religious Institutions to Protect Others: Surgical Instruments, Not Machetes, Are Required, 74 U. CIN. L.REV. 11, 13 (2005). Included in those forty states was the state of Washington which, commencing in 1895, recognized such immunity. Richardson v. Carbon Hill Coal Co., 10 Wash. 648, 655-56, 39 P. 95 (1895). The Richardson opinion and its progeny relied upon the public policy reasoning that because funds donated to charities were held in trust for the purposes for which they were contributed, these funds should not be used to pay for damages arising from the negligence of the trustee or its agents.

The charitable immunity rule continued in the state of Washington for almost 70 years despite many state and federal statutory and caselaw actions doing away with it. The lead case in such challenges was authored by then Judge (later Justice) Rutledge in President and Dirs. of Georgetown Coll. v. Hughes, 130 F.2d 810 (D.C.Cir.1942). Judge Rutledge stated in part that:

The rule of immunity is out of step with the general trend of legislative and judicial policy in distributing losses incurred by individuals through the operation of an enterprise among all who benefit by it rather than in leaving them wholly to be borne by those who sustain them.

Id. at 827.

Despite the abrogation of charitable immunity in the Georgetown College opinion, many courts and legislatures, including those of the state of Washington, resisted ongoing efforts by claimants and their attorneys to have charitable immunity overturned. The state of Washington was one of the last to overrule such immunity and it was not until the year 1964 that the Supreme Court of this state did so in Friend v. Cove Methodist Church, 65 Wash.2d 174, 178-79, 396 P.2d 546 (1964). One of the reasons given by the court in the Cove Methodist opinion abrogating the immunity rule was that "liability insurance is available at reasonable cost." Id at 176, 396 P.2d 546. Following the landmark Cove Methodist decision, most charitable institutions, including the Diocese of Spokane, commenced and continued the purchase of comprehensive liability policies such as those herein involved.

According to the Diocese, it purchased general liability coverage policies CP 10500 and CP 16200 from Oregon Auto, which provided coverage from February 1, 1972, until February 1, 1976. (Oregon Auto St. Fact ¶ 1; Diocese St. Fact ¶ 3). The Diocese asserts that these policies covered "the Diocese and all priests for auto, premises and personal activities, with liability limits of $200,000/$1,000,000 for bodily injury." (Diocese St. Fact ¶ 3). However, the submitted documents only refer to "comprehensive liability coverage for the parish and all Priests ..." (Ex. V, p. 245, 257, 259, 261). On the face of the documents, it is unclear to which parish or parishes or priests they might apply. The Diocese asserts that "secondary evidence confirms that the `Catholic Bishop of Spokane' ... is the named insured on the policies." (Diocese St. Fact ¶ 3). That "secondary evidence," however, consists of correspondence and automobile insurance forms that do not specifically refer to general liability insurance. (Ex. V, p. 255, 256, 258, 260).

During discovery, the Diocese produced exemplar forms used by Oregon Auto from 1971 through 1976, which were approved for use in Washington by the Washington State Insurance Commissioner, (Diocese St. Fact ¶ 4), and, according to the Diocese, evidence the contents of the policies the Diocese allegedly held. (Oregon Auto St. Fact ¶ 2). The forms provide that Oregon Auto is obligated "[t]o pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damages to which this insurance applies,...