Sherman v. Ambassador Ins. Co.
| Citation | 670 F.2d 251,216 U.S. App. D.C. 93 |
| Decision Date | 15 December 1981 |
| Docket Number | No. 80-2011,80-2011 |
| Parties | Robert J. SHERMAN, Appellant, v. AMBASSADOR INSURANCE COMPANY. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
John W. Karr, Washington, D.C., for appellant.
Richard W. Galiher, Jr., Washington, D.C., with whom Richard W. Galiher, William H. Clarke, Frank J. Martell and William J. Donnelly, Jr., Washington, D.C., were on the brief for appellee.
Before WRIGHT, TAMM and EDWARDS, Circuit Judges.
Opinion for the Court filed by Circuit Judge, HARRY T. EDWARDS.
(2) Columbia Family Planning Clinic and Counselling Service, P.C., a corporation, and
(3) Dr. Robert J. Sherman, P.C., a corporation.
See Complaint in McDowell v. Sherman, Civil Action No. 5783-75 (D.C.Super.Ct.). 1 In September or October of 1976, following a jury trial in Superior Court, the plaintiff's claim in McDowell was settled for $525,000.00.
Subsequently, in March of 1979, Dr. Sherman initiated a diversity action in the United States District Court for the District of Columbia against appellee, Ambassador Insurance Company (hereafter "Ambassador"). In his diversity action, Dr. Sherman alleged that, at the time of Ms. McDowell's death, his abortion Clinic had been covered by a medical malpractice insurance policy issued by Ambassador, and that appellee had "deliberately and wrongfully withheld the monies which it was required to contribute under the terms of the malpractice policy." A. 7-8. 2
During the course of proceedings before the District Court, Dr. Sherman filed a Motion for Summary Judgment, claiming that Ambassador had breached its duties to defend and indemnify him under the applicable insurance policy. A. 282-88. In response, Ambassador filed a Cross-Motion for Summary Judgment, claiming that it owed no duty to Dr. Sherman because he was not a named insured on the policy. A. 344-46. In a Memorandum opinion dated July 21, 1980, Sherman v. Ambassador Insurance Co., No. 79-1039 (D.D.C. July 22, 1980), the District Court found that "Ambassador's duty was to the named insured, Columbia Family Planning Clinic, P.C., and not to a non-insured party, Sherman." A. 494. The trial court also found that "Ambassador had no duty to Sherman individually in the McDowell suit, and it satisfied its obligation to the named insured" by successfully moving to quash service of process on the "Columbia Family Planning Clinic and Counselling Service, P.C." Id. Accordingly, the District Court granted Ambassador's Cross-Motion for Summary Judgment. A. 495. It is from this judgment that Dr. Sherman appeals.
After careful review of the record in this case, we reverse in part and remand for further proceedings before the District Court. The bases for our reversal are threefold. First, we reject as a matter of law the District Court's finding that Dr. Sherman was not covered under the insurance contract with Ambassador. The insurance policy in force at the time of Ms. McDowell's death covered "Columbia Family Planning Clinic, P.C.," including "any partner, executive officer, director or stockholder thereof while acting within the scope of his duties as such." A. 414-15. It is undisputed that Dr. Sherman was an executive officer and director of the Clinic. See, e.g., A. 278-79 and A. 431.
Second, we reject as a matter of law the District Court's finding that Ambassador had no duty to defend Dr. Sherman in the McDowell action. Under the terms of the insurance policy, Dr. Sherman was owed a defense for actions taken in his administrative capacities as executive officer and director of the Clinic.
Finally, we reject the finding of the District Court that Ambassador was entitled to summary judgment. We cannot find, as did the trial court, that there were no genuine issues of material facts. In particular, we note that, on remand, the District Court must determine whether the Complaint in McDowell raised any claims of administrative negligence, and, if so, whether any portion of the $525,000.00 award paid to plaintiff in McDowell was attributable to acts of administrative negligence by Dr. Sherman.
We affirm the decision of the District Court only insofar as it holds that Ambassador had no duty to indemnify Dr. Sherman for his professional (i.e., nonadministrative) acts as a practicing physician at the Clinic.
Dr. Sherman practiced medicine in Washington, D. C. as a gynecologist and obstetrician from 1957 to 1977. He headed the Columbia Family Planning Clinic, located at 1835 Eye Street, N.W., which was operated for the performance of out-patient abortions. 3 In addition to Dr. Sherman, the Clinic included two physicians, who worked occasionally as "independent contractors," and three assistants.
In March 1975, Dr. Sherman unsuccessfully performed an abortion on Rita C McDowell at his Clinic. Five days later, Ms. McDowell died at D.C. General Hospital. As a result of her death, Rita McDowell's mother, Lupe M. McDowell, filed the aforecited wrongful death action in McDowell v. Sherman. The complaint in McDowell charged Dr. Sherman with the following acts of negligence:
a. failure to obtain informed consent;
b. failure to obtain adequate history;
c. failure to perform adequate examination and determine risk potential;
d. use of unsterile equipment;
e. failure to provide and maintain adequately trained staff, or adequate laboratory equipment and surgical equipment;
f. abandonment;
g. inadequate and improper aspiration suction procedure;
h. abortion procedure requiring hospitalization performed in out-patient clinic without requiring hospital admission;
i. performance of aspiration suction subsequent to time allowed by rules and regulations of the District of Columbia;
j. failure to order hospitalization;
k. improper and inadequate post-operative instruction;
l. improper and inadequate post-operative examination; and
m. failure to consult and refer to other specialists.
A. 320.
Prior to the actual trial of the McDowell suit, Ambassador's Claims Manager, Mr. Doliner, acknowledged, by letter dated July 11, 1975, that the insurer had received a copy of the Summons and Complaint and had retained an attorney, Arthur V. Butler, who would "appear for and defend (the Clinic) in (the McDowell ) action." A. 429-30. 4 In another letter, also dated July 11, 1975, the Claims Manager gave notice that it was Ambassador's position that the insurance policy "coverage as afforded Robert J. Sherman applie(d) only to his acts as administrator of Columbia Family Planning Clinic." A. 431.
On July 22, 1975, Ambassador moved to quash service of process on "Columbia Family Planning Clinic and Counselling Service, P. C." A. 327. This motion was based on an affidavit from Dr. Sherman stating that "Columbia Family Planning Clinic and Counselling Service, P. C." was not a valid existing corporation in the District of Columbia and that he was not an officer, agent, or employee of such corporation. 5 The Motion to Quash was granted by the Superior Court, without objection from plaintiff, and plaintiff never thereafter sought to amend the complaint or to attempt service on the "Columbia Family Planning Clinic." 6 The trial in McDowell did, however, proceed against Dr. Sherman individually and trading as Columbia Family Planning Clinic and Counselling Service, P. C., and against Dr. Sherman, P. C., a corporation.
It is noteworthy that the Motion to Quash was sought by Ambassador's counsel solely because "Columbia Family Planning Clinic and Counselling Service, P. C." "was not an existing corporation within the District of Columbia." Letter from Arthur V. Butler, Esq. to Elliot Doliner, Claims Manager. A. 334. In other words, Ambassador's counsel did not claim that the insured had been misnamed in the complaint; rather, he merely asserted that the insured was not a "corporation" within the District of Columbia. Id. 7 Indeed, Ambassador's counsel assumed that there was an insurance policy in force covering "Columbia Family Planning Clinic and Counselling Service, P. C.," but that the policy did not provide any personal malpractice insurance for Dr. Sherman. A. 335.
Although officials at Ambassador apparently understood that the insurance policy covered the Clinic, including the administrative acts of Dr. Sherman, Ambassador's counsel nevertheless was instructed to withdraw from the McDowell suit after the Motion to Quash had been granted. A. 45. Ambassador's attorney was specifically told to "monitor" the action against Dr. Sherman, but not to defend it. A. 256. 8
Dr. Sherman retained his own counsel to represent him in his defense in the McDowell litigation. Ambassador never offered any defense for Sherman after the Motion to Quash had been granted. At the conclusion of the McDowell trial, the jury returned a verdict of $392,000.00 in compensatory damages. Settlement was later reached in the amount of $525,000.00, in lieu of a further trial on the issue of punitive damages. 9 Dr. Sherman had personal insurance, with insurers other than Ambassador, which covered a large portion of the $525,000.00 settlement. However, he was required to pay between $118,000.00 and $133,000.00 from his personal funds, see note 2 sup...
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