Ricchio v. Bijal, Inc.

Decision Date22 November 2019
Docket NumberCivil Action No. 15-13519-FDS
Citation424 F.Supp.3d 182
Parties Lisa RICCHIO, Plaintiff, v. BIJAL, INC. d/b/a Shangri-La Motel; Ashvinkumar Patel; Sima Patel; and Clark McLean, Defendants, and Peerless Indemnity Insurance Company, Intervenor-Plaintiff, v. Lisa Ricchio; Bijal, Inc. d/b/a Shangri-La Motel; Ashvinkumar Patel; Sima Patel; and Clark McLean, Intervenor-Defendants.
CourtU.S. District Court — District of Massachusetts

Kevin Truland, Morrison Mahoney LLP, Boston, MA, for Intervenor-Plaintiff.

Cynthia D. Vreeland, Arjun K. Jaikumar, Eric L. Hawkins, Felicia H. Ellsworth, Jason H. Liss, Jillian Schlotter, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, for Plaintiff.

Clark McLean, Middleboro, MA, pro se.

David A. Sullivan, Law Office of David A. Sullivan PC, Fall River, MA, John B. Reilly, John Reilly & Associates, Attleboro, MA, Geoffrey M. Aptt, DarrowEverett LLP, Providence, RI, for Defendants.



This is a dispute concerning the existence of insurance coverage. Intervenor-plaintiff Peerless Indemnity Insurance Company seeks a declaration that it has no duty to defend or indemnify defendants Bijal, Inc., d/b/a the Shangri-La Motel; Ashvinkumar (Ashvin) Patel; and Sima Patel as to claims brought by Lisa Ricchio under the Victims of Trafficking and Violence Protection Act of 2000 ("TVPA") and the Trafficking Victims Protection Reauthorization Act of 2003 ("TVPRA"). Jurisdiction as to the claims of Ricchio is based on federal-question jurisdiction under 28 U.S.C. § 1331, and, as to the insurance-coverage dispute, on supplemental jurisdiction under 28 U.S.C. § 1367.

Peerless has moved for summary judgment. For the following reasons, the motion will be denied.

I. Background
A. Ricchio's Allegations

Plaintiff Lisa Ricchio alleges that she was kidnapped by defendant Clark McLean on June 1, 2011. She alleges that McLean brought her to the Shangri-La Motel in Seekonk, Massachusetts, and held her captive there for a period of several days.

The Shangri-La Motel is owned by defendant Bijal, Inc. Defendants Ashvin and Sima Patel worked and lived at the motel during Ricchio's alleged captivity.

Ricchio contends that she was repeatedly raped and abused by McLean during her captivity, and that McLean made clear to her that he intended to force her to work as a prostitute under his control. She further contends that Bijal and the Patels were aware of the abuse and profited from it.

Ricchio asserts seven claims under the TVPA and TVPRA against McLean, Bijal, and the Patels. Essentially, the complaint alleges that McLean performed various trafficking-related acts prohibited by the TVPA, including, among other things, knowingly harboring, transporting, and obtaining Ricchio for labor or services by means of force and abuse. Ricchio also contends that the Patels and Bijal violated the TVPRA by benefitting financially from the acts of McLean performed at the motel in violation of the TVPA—specifically, by receiving rental income for the room.

B. Procedural Background

Peerless Indemnity Insurance Company is a Massachusetts-based insurer. It issued two insurance policies to Bijal, Inc. covering the relevant time period. On December 16, 2015, it filed a motion to intervene in Ricchio's civil case. The court found that the interests of Peerless would be adequately protected by filing a separate declaratory judgment action and rejected its motion to intervene.

On January 11, 2016, Peerless filed a separate action seeking a declaratory judgment that it was not obligated to defend or indemnify Ashvin Patel, Sima Patel, Bijal, Inc., or Clark McLean in connection with the lawsuit brought by Ricchio. (See Civil Action No. 16-10032). The complaint in that case alleged that this court had subject-matter jurisdiction under 28 U.S.C. § 1367 because the claims in the declaratory judgment action were "so related" to the claims brought by Ricchio "that they form part of the same case or controversy." (Peerless Compl. ¶ 8).

On March 29. 2016, Judge Stearns (to whom the case was then assigned) stayed the insurance proceeding pending the outcome of the underlying case. At the request of Peerless, the stay was lifted on May 2, 2017.

On December 10, 2018, the case was reassigned to the undersigned judge.

On September 13, 2019, the Court, concerned that 28 U.S.C. § 1367 did not provide subject matter jurisdiction in an independent case, entered an order to show cause as to jurisdiction. Peerless, seconding the Court's jurisdictional concerns, asked that its declaratory judgment action be considered an intervention in the underlying case and that its 2015 motion to intervene be reconsidered.

On October 3, 2019, the Court granted the motion for reconsideration and consolidated the declaratory judgment action brought by Peerless with the civil action brought by Ricchio.

Prior to reassignment, Peerless had filed a motion for summary judgment. Both the Bijal defendants and Ricchio have filed oppositions to the motion for summary judgment. All filings in the earlier declaratory judgment action are deemed to have been filed in this action.

C. The Standing of Ricchio

The policies in dispute were issued by Peerless to Bijal, Inc. As noted, both the Bijal defendants and Ricchio have opposed the motion of Peerless. Ricchio, however, is neither a named insured nor an employee or agent of an insured. There is therefore a threshold question whether she has standing to contest the issue of the coverage of the policy.

Ordinarily, the standing of a third party to litigate a contract action is limited. See, e.g. , 13 § 37:7 (4th ed. 2019) (highlighting limitations on third parties to contest contracts under traditional intended and incidental beneficiary doctrines). However, such standing is often found to exist in insurance coverage disputes. See Westchester Fire Ins. Co. v. Mendez , 585 F.3d 1183, 1189 (9th Cir. 2009) ("[P]ermitting another party to proceed is especially powerful in the context of third-party liability insurance, where the insured may lose interest and the injured party has the primary motivation to pursue the claim."). The issue arises primarily in two contexts: when the insured has defaulted in the insurance company's declaratory judgment action and when, as here, the insurance company has named an uninsured third party in its suit. In the former case, courts have repeatedly held that the third party has standing. See Hawkeye-Security Ins. Co. v. Schulte , 302 F.2d 174, 177 (7th Cir. 1962) ("[I]n a declaratory judgment action an actual controversy exists between an injured third party—not a party to the contract of insurance—and the plaintiff insurer.") (citing Maryland Casualty Co. v. Pacific Coal & Oil Co. , 312 U.S. 270, 61 S.Ct. 510, 85 L.Ed. 826 (1941) ); Fed. Kemper Ins. Co. v. Rauscher , 807 F.2d 345, 353 (3d Cir. 1986) ("It would be anomalous to hold that the [uninsured third party] should not be given an opportunity to establish their case against [the insurance company] because of a default which they could not prevent."); Metropolitan Property and Cas. Ins. Co. v. Devlin , 104 F.Supp.3d 126, 127 (D. Mass. 2015) (same). Where an insurance company has named a third party as a defendant in its declaratory judgment action, third-party standing to oppose the case is similarly recognized. See Penn America Ins. Co. v. Valade , 28 Fed. Appx. 253, 257 (4th Cir. 2002) ("[W]e recognize[ ] that the third party's interest in defining the scope of insurance coverage is independent of the interest of the insured. When an insurer initiates a declaratory judgment action against both an injured third party and its insured, the injured third party acquires standing—independent of that of the insured—to defend itself in the declaratory judgment proceeding.") (citing Fed. Kemper Ins. , 807 F.2d at 353 ).

Under the circumstances, the Court finds that Ricchio has standing to oppose the summary judgment motion filed by Peerless, and will therefore consider her arguments.

D. The Insurance Policies

Peerless issued two insurance policies to Bijal, Inc. for the policy period of June 26, 2010, through June 26, 2011: a general liability policy and an umbrella policy. (Peerless SUF ¶ 31, 32).1

The general liability policy provided two types of coverage. Under "Coverage A," entitled "Bodily Injury and Property Damage Liability," Peerless agreed to "pay those sums the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies." (Peerless SUF Ex. 2 at 156). Coverage A also provided that "[t]his insurance applies to ‘bodily injury’ and ‘property damage’ only if: (1) the ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’ that takes place in the ‘coverage territory’ ...." (Id. ). The policy further provided that " [o]ccurrence’ means an accident including continuous or repeated exposure to substantially the same general conditions." (Id. at 169).

Various categories of injuries were excluded from the insurance provided by Coverage A. Exclusion (o), entitled "Personal and Advertising Injury," provided that coverage did not apply to " ‘bodily injury’ arising out of ‘personal and advertising injury.’ " (Id. at 160). "Personal and advertising injury" was defined as "injury, including consequential ‘bodily injury,’ arising out of one or more" of a variety of "offenses," including "false ... imprisonment." (Id. at 169).

Under "Coverage B," entitled "Personal and Advertising Injury Liability," Peerless agreed to "pay those sums that the insured become legally obligated to pay as damages because of ‘personal and advertising injury’ to which this insurance applies." (Id. at 160). Coverage B further provided that "[t]his insurance applies to ‘personal and advertising injury’ caused by an offense arising out of [the insured's] business but only if the offense was committed in the ...

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