Phila. Indem. Ins. Co. v. Great Falls Rescue Mission
| Decision Date | 12 July 2021 |
| Docket Number | CV 20-116-GF-DLC |
| Citation | 548 F.Supp.3d 995 |
| Parties | PHILADELPHIA INDEMNITY INSURANCE CO., Plaintiff and Counter-Defendant, v. GREAT FALLS RESCUE MISSION, Defendant and Counter-Plaintiff, and R.B., S.G., and M.G. Intervenor-Defendants and Counter-Plaintiffs. |
| Court | U.S. District Court — District of Montana |
Christopher C. Voigt, Crowley Fleck PLLP, Billings, MT, for Plaintiff and Counter-Defendant.
Eric Biehl, Church Harris Johnson & Williams, Great Falls, MT, for Defendant and Counter-Plaintiff.
John C. Heenan, Heenan & Cook, Billings, MT, for Intervenor-Defendant and Counter-Plaintiff R.B.
David A. Mattingley, Bryan, Distefano & Mattingley, PLLP, Kalispell, MT, John C. Heenan, Heenan & Cook, Billings, MT, for Intervenor-Defendants and Counter-Plaintiffs M.G., S.G.
Before the Court is Intervenor-Defendants and Counter-Plaintiffs R.B.’s, S.G.’s, and M.G.’s ("Intervenors") Motion for Judgment on the Pleadings. (Doc. 14.) Based on the pleadings, Intervenors seek judgment on their declaratory counterclaim that Plaintiff and Counter-Defendant Philadelphia Indemnity Insurance Company ("PIIC") violated Montana law by exhausting policy limits through settlement with only one of several injured parties instead of interpleading available insurance funds. A hearing was held on June 25, 2021. (Doc. 40.) For the reasons stated herein, the Court will deny the motion.
In June 2016, the Great Falls Rescue Mission sponsored a youth camp. (Doc. 1 at 3–4.)2 It is alleged that during the event, a volunteer camp assistant sexually molested several minor-aged girls. (Id. at 3–4.) At this time, the Great Falls Rescue Mission was insured by two policies issued by PIIC. (Id. at 5.) Relevant here, is a commercial generally liability policy with a $1,000,000 aggregate limit, which, through an endorsement, specifically covers liability stemming from sexual molestation ("CGL Policy"). (Doc. 1 at 5–7; 13 at 4; 16 at 2.)
In August 2017, one alleged victim, Z.M., sued the Great Falls Rescue Mission for damages stemming from the abuse. (Docs. 1 at 4; 13 at 6; 16 at 4.) In response, the Great Falls Rescue Mission tendered a claim to PIIC and PIIC provided a defense. (Doc. 1 at 4.) This case was prosecuted in state court and on May 6, 2019, shortly before trial, counsel for the Great Falls Rescue Mission demanded that PIIC settle Z.M.’s lawsuit for the CGL Policy's limit of $1,000,000. (Id. at 11; see also Doc. 1-1.)
Counsel for PIIC responded to this demand by notifying the Great Falls Rescue Mission that, in its view, if it were to tender policy limits to settle Z.M.’s lawsuit, the CGL Policy would likely not provide any additional coverage or defense "as to any subsequent claims ... by individuals who do or may contend that they suffered abuse or damages as a result of the actions by the same individual raised in this claim." (Doc. 1-2 at 1.) Great Falls Rescue Mission's counsel responded that the organization had given "careful consideration to making its demand" and reiterated its request that PIIC settle Z.M.’s lawsuit for the CGL Policy's limits. (Id. )
Based on the foregoing, PIIC tendered the CGL Policy's $1,000,000 limit and settled Z.M.’s lawsuit. (Doc. 1 at 5.) Prior to tendering limits to settle Z.M.’s lawsuit, PIIC was aware there were potentially other claimants who were also abused, but the parties agree none of these other claimants had put PIIC on notice of a claim.3 (Doc. 1 at 4.) Despite the existence of multiple potential claimants, no interpleader action was ever filed by PIIC prior to settling Z.M.’s lawsuit. (Doc. 13 at 6–7; 16 at 4.) Following the settling of Z.M.’s lawsuit through payment of policy limits, Intervenors asserted claims against the Great Falls Rescue Mission based on events occurring in June 2016. (Doc. 1 at 5.)
Because Intervenors seek judgment on the pleadings, it is necessary to address the claims at issue in this case. PIIC commenced this action against the Great Falls Rescue Mission on December 7, 2020, alleging that following its exhaustion of policy limits in settlement of Z.M.’s lawsuit, "four additional" parties had come forward and asserted claims against the CGL Policy. (Doc. 1 at 5.) Accordingly, PIIC seeks a declaration that, among other things, it has no duty to defend Great Falls Rescue Mission against these new claims and that the CGL Policy's limits have been exhausted. (Id. at 9–10.)
Intervenors were subsequently permitted to enter this action as defendants. (Doc. 9.) Upon intervening as a defendant, Intervenors answered PIIC's complaint and asserted several declaratory counterclaims. (See generally Doc. 13.) Relevant here, Intervenors seek a declaration that: (1) PIIC "violated its duties to Intervenors under Montana law by failing to follow Montana's interpleader rule and exhausting the entirety of its aggregate policy by paying one of several similarly-situated claimants;" (2) PIIC "is estopped from asserting that the policy limits applicable to Intervenors’ claims are exhausted;" and (3) each Intervenor is "entitled to up to $1,000,000 under the subject policies." (Id. at 9–10.) The Great Falls Rescue Mission has also answered PIIC's complaint and asserted several counterclaims. (See generally Doc. 19.)
"After the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). "A judgment on the pleadings is a decision on the merits," 3550 Stevens Creek Assocs. v. Barclays Bank of Cal. , 915 F.2d 1355, 1357 (9th Cir. 1990), and is only "properly granted when there is no issue of material fact in dispute, and the moving party is entitled to judgment as a matter of law." Fleming v. Pickard , 581 F.3d 922, 925 (9th Cir. 2009).
As noted above, in adjudicating a motion for judgment on the pleadings, this Court accepts as true all "allegations of fact by the party opposing the motion" and construes them "in the light most favorable to that party." General Conf. Corp. of Seventh-Day Adventists v. Seventh-Day Adventist Congregational Church , 887 F.2d 228, 230 (9th Cir. 1989). Accordingly, when a party moves for judgment on the pleadings as to their own claim, the motion will be denied if "the answer raises issues of fact that, if proved, would defeat recovery." Id. Moreover, "if the defendant raises an affirmative defense in his answer it will usually bar judgment on the pleadings." Id. Applying the foregoing principles, the Court concludes judgment on the pleadings is unwarranted.
The central issue presented by Intervenors’ motion for judgment on the pleadings is whether PIIC flouted the duties owed to them under Montana law by failing to interplead policy limits before exhausting such limits through settlement of Z.M.’s lawsuit.4 Intervenors argue that it did, and that, as relief, this Court should apply equitable principles to permit them each to pursue up to $1,000,000 in coverage from PIIC. Predictably, PIIC disagrees, arguing that Intervenors lack standing, or alternatively, that their claims are unripe, that it owed no duties to Intervenors under Montana law, and that even if it did, it had no obligation to interplead prior to settling Z.M's lawsuit. Because issues of standing and ripeness implicate this Court's subject matter jurisdiction, it will address them first.
This Court's jurisdiction is limited to actual cases or controversies. U.S. Const. art. III, § 2, cl. 1. Two closely related "components of the Article III case or controversy requirement are standing and ripeness." Bova v. City of Medford , 564 F.3d 1093, 1095–96 (9th Cir. 2009). "Sorting out where standing ends and ripeness begins is not an easy task." Thomas v. Anchorage Equal Rights Comm'n , 220 F.3d 1134, 1138 (9th Cir. 2000) ().
Standing is concerned with who may sue, while ripeness addresses when someone may sue. Bova , 564 F.3d at 1096. "The oft-cited Lujan v. Defenders of Wildlife case states the three requirements for Article III standing: (1) an injury in fact that (2) is fairly traceable to the challenged conduct and (3) has some likelihood of redressability." Public Lands for the People, Inc. v. U.S. Dept. of Agric. , 697 F.3d 1192, 1195–96 (9th Cir. 2012). Ripeness generally "coincides squarely with standing's injury in fact prong." Bova , 564 F.3d at 1093. "Whether the question is viewed as one of standing or ripeness, the Constitution mandates that prior to our exercise of jurisdiction there exist a constitutional ‘case or controversy,’ that the issues presented are ‘definite and concrete, not hypothetical or abstract.’ " Thomas , 220 F.3d at 1139.
PIIC focuses its argument on the first standing element, contending that Intervenors have not suffered an injury in fact because they have not "obtained a judgment or even sued Great Falls Rescue Mission," and "have not even attempted to collect a judgment against Great Falls Rescue Mission" or "proven they are unable to do so." (Doc. 17 at 7.) Intervenors have not provided a direct responsive argument, instead maintaining that they were injured as soon as PIIC settled Z.M.’s lawsuit for policy limits. The Court finds Intervenors’ claims ripe for adjudication.
PIIC's argument is sparse on legal authority. Nowhere does PIIC provide the Court with any authority supporting the proposition that a potential claimant against an insured must actually obtain a judgment, or even formally file a lawsuit, before they are able to advance the sort of claim put forward by Intervenors here. The Court finds that the injuries of which Intervenors’ complain are not hypothetical or abstract, but definite and concrete. They allege that they, third-party beneficiaries to the CGL Policy, are injured by PIIC's failure to...
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