Pine Bluff Sch. Dist. v. Ace Am. Ins. Co., Case No. 5:18-cv-00185-KGB

• Decision Date: 12 July 2019
• Docket Number: Case No. 5:18-cv-00185-KGB
• Citation: 402 F.Supp.3d 548
• Parties: PINE BLUFF SCHOOL DISTRICT, Plaintiff v. ACE AMERICAN INSURANCE COMPANY, Defendant
• Court: U.S. District Court — Eastern District of Arkansas

402 F.Supp.3d 548

PINE BLUFF SCHOOL DISTRICT, Plaintiff

v.ACE AMERICAN INSURANCE COMPANY, Defendant

Case No. 5:18-cv-00185-KGB

United States District Court, E.D. Arkansas, Pine Bluff Division.

Signed July 12, 2019

David A. Hodges, David Hodges Law Office, Little Rock, AR, for Plaintiff.

David B. Vandergriff, Quattlebaum, Grooms & Tull PLLC, Little Rock, AR, Jennifer Wall, Pro Hac Vice, Stephen Errol Whitehead, Lloyd, Gray, Whitehead & Monroe, P.C., Birmingham, AL, for Defendant.

OPINION AND ORDER

Kristine G. Baker, United States District Judge

Before the Court is a motion for summary judgment filed by defendant ACE American Insurance Company ("ACE") (Dkt. No. 13). Plaintiff Pine Bluff School District ("PBSD") responded in opposition (Dkt. No. 23), and ACE replied (Dkt. No. 26). PBSD then filed a supplement to response to motion for summary judgment (Dkt. No. 38). For the following reasons, the Court grants the motion for summary judgment (Dkt. No. 13).

I. Factual Background

Unless otherwise noted, the following facts are taken from ACE’s statement of undisputed material facts in support of ACE's motion for summary judgment and from PBSD's response to statement of undisputed facts (Dkt. Nos. 14, 25). The Court notes that Local Rule 56.1 of the Local Rules of the United States District Court for the Eastern and Western Districts of Arkansas provides that all material facts set forth in the statement filed by the moving party shall be deemed admitted unless controverted by the statement filed by the non-moving party. Local Rule 56.1(c). As such, the Court deems admitted each parties' statement of material facts to the extent statements are not controverted by the opposing party.

A. The 2015 Policy

ACE issued ACE Scholastic Advantage Educators Legal Liability Policy No. EON G23670471 003 to PBSD for the period April 2, 2015, to February 1, 2016 ("the 2015 Policy") (Dkt. No. 25, at 1). The Declarations for the 2015 Policy contain a statement in bold and capital letters stating that "THIS POLICY IS A CLAIMS MADE AND REPORTED POLICY. EXCEPT AS OTHERWISE PROVIDED HEREIN, THIS POLICY COVERS ONLY CLAIMS FIRST MADE AGAINST THE INSUREDS AND REPORTED TO THE INSURER DURING THE POLICY PERIOD ..." (Id. ) (emphasis in original). The Insuring Agreement for the Employment Practices Liability coverage section in the 2015 Policy provides that "[t]he Insurer will pay on behalf of the Insureds all Damages and Claims Expenses for which the Insured becomes [sic] legally obligated to pay by reason of a Claim first made against an Insured and reported to the Insurer during the Policy Period ..." (Id. , at 1-2).

The 2015 Policy defines "Claim" to include "a civil, administrative or regulatory proceeding against any Insured commenced by ... the issuance of a notice of charge or formal investigative order, including without limitation any such proceeding by or in association with ... the Equal Employment Opportunity Commission" (Id. , at 2). The 2015 Policy also defines "Claim" to include "a civil proceeding against any Insured seeking monetary Damages or non-monetary or injunctive relief, commenced by the service of a complaint or similar pleading" (Id. ). Although PBSD admits this language appears in the 2015 Policy, PBSD submits that there are several other subparagraphs setting forth instances which fall within the definition of "Claim" (Id. ). The Limit of Liability Section for the 2015 Policy provides, in part, "[a]ll Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts of the Insureds shall be deemed to be one Claim. Such Claim shall be deemed to be first made on the date the earliest of such Claim is first made, regardless of whether such date is before or during the Policy Period" (Id. , at 2-3).

"Wrongful Acts" are defined in the 2015 Policy to include "Wrongful Employment Practices committed or attempted by the Educational Institution or by any Insured Educator acting solely in their capacity as such and on behalf of the Educational Institution ..." (Id. , at 3). "Wrongful Employment Practices" include "1. [W]rongful dismissal, discharge or termination, whether actual or constructive; ... 3. Discrimination; ... 4. Sexual Harassment or unlawful workplace harassment; ... 8. [W]rongful discipline; [and] 9. Retaliation ... of any past, present[,] or prospective full-time, part-time, seasonal and temporary Employee ... of the Educational Institution" (Id. ). Although PBSD admits this language appears in the 2015 Policy, PBSD contends that these are only portions of the defined terms (Id. ). "Interrelated Wrongful Acts" are defined in the 2015 Policy as "[a]ll Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause of series of related facts, circumstances, situations, events, transactions[,] or causes" (Id. ).

The Notice Section for the 2015 Policy states that "[t]he Insured shall, as a condition precedent to their rights under this Policy, give to the Insurer written notice of any Claim as soon as practicable, but in no event later than 30 days after: 1. The end of the Policy Period ..." (Id. , at 3-4). Although PBSD admits this language appears in the 2015 Policy, PBSD submits that this is only a portion of the "Notice" section (Id. , at 4). Endorsement 4 to the 2015 Policy amends the Notice provision "by deleting the phrase ‘30 days’ and inserting the phrase ‘60 days’ " (Id. ).

ACE contends that the 2015 Policy includes the following definition for "Policy Period": "The period of time specified in Item 2 of the Declarations, subject to prior termination pursuant to Section VIX, Termination of the Policy" (Dkt. No 14, ¶ 9). PBSD denies that the definition of "Policy Period" refers to Section VIX and submits that it actually refers to Section XIV (Dkt. No. 25, at 4). Item 2 of the Declarations identifies the Policy Period for the 2015 Policy as spanning "From 12:01 a.m. 04/02/2015 To 12:01 a.m. 02/01/2016" (Id. , at 4-5).

B. The 2016 Policy

ACE issued Ace Scholastic Advantage Educators Legal Liability Policy No. EON G23670471 004 to PBSD for the period February 1, 2016, to February 1, 2017 ("the 2016 Policy") (Id. , at 5). The Declarations for the 2016 Policy contain a statement in bold and capital letters stating that "THIS POLICY IS A CLAIMS MADE AND REPORTED POLICY. EXCEPT AS OTHERWISE PROVIDED HEREIN, THIS POLICY COVERS ONLY CLAIMS FIRST MADE AGAINST THE INSUREDS AND REPORTED TO THE INSURER DURING THE POLICY PERIOD ..." (Id. ) (emphasis in original). The Insuring Agreement for the Employment Practices Liability coverage section in the 2016 Policy provides that "[t]he Insurer will pay on behalf of the Insureds all Damages and Claims Expenses for which the Insured becomes [sic] legally obligated to pay by reason of a Claim first made against an Insured and reported to the Insurer during the Policy Period ..." (Id. ).

The 2016 Policy defines "Claim" to include "a civil, administrative or regulatory proceeding against any Insured commenced by ... the issuance of a notice of charge or formal investigative order, including without limitation any such proceeding by or in association with ... the Equal Employment Opportunity Commission" (Id. , at 5-6). The 2016 Policy also defines "Claim" to include "a civil proceeding against any Insured seeking monetary Damages or non-monetary or injunctive relief, commenced by the service of a complaint or similar pleading" (Id. , at 6). Although PBSD admits this language appears in the 2016 Policy, PBSD submits that there are several other subparagraphs setting forth instances which fall within the definition of "Claim" (Id. ). The Limit of Liability Section for the 2016 Policy provides, in part, "[a]ll Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts of the Insureds shall be deemed to be one Claim. Such Claim shall be deemed to be first made on the date the earliest of such Claim is first made, regardless of whether such date is before or during the Policy Period" (Id. , at 6).

"Wrongful Acts" are defined in the 2016 Policy to include "Wrongful Employment Practices committed or attempted by the Educational Institution or by any Insured Educator acting solely in their capacity as such and on behalf of the Educational Institution ..." (Id. , at 6). "Wrongful Employment Practices" include "1. [W]rongful dismissal, discharge or termination, whether actual or constructive; ... 3. Discrimination; ... 4. Sexual Harassment or unlawful workplace harassment; ... 8. [W]rongful discipline; [and] 9. Retaliation ... of any past, present[,] or prospective full-time, part-time, seasonal and temporary Employee ... of the Educational Institution" (Id. , at 7). Although PBSD admits this language appears in the 2016 Policy, PBSD contends that these are only portions of the defined terms (Id. ). "Interrelated Wrongful Acts" are defined in the 2016 Policy as "[a]ll Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause of series of related facts, circumstances, situations, events, transactions[,] or causes" (Id. ).

ACE contends that the 2016 Policy includes the following definition for "Policy Period": "The period of time specified in Item 2 of the Declarations, subject to prior termination pursuant to Section VIX, Termination of the Policy" (Dkt. No 14, ¶ 17). PBSD denies that the definition of "Policy Period" refers to Section VIX and submits that it actually refers to Section XIV (Dkt. No. 25, at 7). Item 2 of the Declarations identifies the Policy Period for the 2016 Policy as spanning "From 12:01 a.m. 02/01/2016 To 12:01 a.m. 02/01/2017" (Id. , at 8).

C. Celeste Alexander's Sexual Harassment Claim

Celeste Alexander was a math teacher at Pine Bluff High School during the 2014-2015 school year (Id. ). Michael Nellums was the principal of Pine Bluff High School and was Ms. Alexander's supervisor (Id. ). Ms. Alexander alleged in a lawsuit she filed against PBSD on September 22, 2016...