Sommer v. New Amsterdam Casualty Company

• Decision Date: 20 February 1959
• Docket Number: No. 58C91(3).,58C91(3).
• Parties: Conrad SOMMER, Plaintiff, v. NEW AMSTERDAM CASUALTY COMPANY, a Corporation, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

171 F. Supp. 84

Conrad SOMMER, Plaintiff, v. NEW AMSTERDAM CASUALTY COMPANY, a Corporation, Defendant.

No. 58C91(3).

United States District Court E. D. Missouri, E. D.

February 20, 1959.

Kenneth Teasdale, Cobbs, Armstrong, Teasdale & Roos, St. Louis, Mo., for plaintiff.

J. C. Jaeckel, Moser, Marsalek, Carpenter, Cleary, Jaeckel & Hamilton, St. Louis, Mo., for defendant.

WEBER, District Judge.

This cause is before the Court upon cross Motions for Summary Judgment filed by both parties under Rule 56. A brief review of the factual situation and the pleadings is necessary for the purposes of this Opinion.

Plaintiff here is a psychiatrist-psychoanalyst. Defendant issued its policy of professional insurance on August 14, 1954, for a term of one year and received advance premium therefor.

The policy in question provided:

"I. Professional Liability Coverage A * * * To pay on behalf of insured all sums which insured shall become legally obligated to pay as damages because of injuries arising out of malpractice, error or mistake in rendering or failing to render professional services in the practice of the insured's profession described in the declarations * * *."

"II. Defense, Settlement, Supplementary Payments. As respects the insurance afforded by other terms of this policy the company shall: (a) defend any suit against the insured alleging such injury and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; * * *."

"Exclusions. This policy does not apply: (a) to injury arising out of the performance of a criminal act or caused by a person while under influence of intoxicants or narcotics."

It can be seen from the above pertinent provisions of the policy that this coverage falls in the general classification of malpractice-type of policy for professional people.

After the issuance of the policy the plaintiff herein was sued in the Circuit Court of the City of St. Louis by one Littleton. Another doctor, an ambulance service operator and a sanatorium were joined as defendants in that suit. Generally speaking, the Petition filed charged the defendants with making an assault upon the plaintiff by placing him in a sanatorium for the mentally ill. The Petition alleged the professional capacities of the defendants and there was sufficient allegation to infer that the alleged assault was committed in the performance of their several professional capacities.

Without going into all details disclosed by exhibits filed on this hearing, suffice it to say that plaintiff herein called upon the defendant insurance company at various intervals for a defense in that lawsuit. Defendant refused to defend and subsequently the plaintiff herein settled the case with Littleton and the present suit has been filed to recover attorney's fees and expenses incidental to the settlement of the litigation.

Upon the cross Motions for Summary Judgment plaintiff is contending that his Complaint, with the policy attached, entitles him to a judgment on the pleadings, and defendant is contending that the pleadings entitle it to a summary judgment thereon.

At the outset, it can be said that plaintiff's Complaint requires proof on all issues, including the measure of damages. Under the state of this record there can be no question but that plaintiff's Motion for Summary Judgment is not well founded.

Defendant's contention for summary judgment is bottomed upon the exclusion feature of the policy above quoted, to wit, that the policy does not apply to injury arising out of the performance of a criminal act. Certainly an insurance company has a right to interpret its policy and determine whether it will or will not defend or whether it will or will not pay. Such decision, however, is an action by the company and constitutes its interpretation of its own policy. But just as certainly, if the company makes the decision to neither defend nor pay, such decision is not binding upon courts. For, when the policy comes into question upon a suit by the insured against the company, then the legal issue arises whether the facts, regardless of how the insurance company interpreted those facts, do or do not require defense, payment or both.

The provisions of the policy above quoted show a two-fold duty on the part of the company: under Coverage I, to pay on behalf of the insured all sums which the insured becomes legally obligated to pay, and under Coverage II, to defend any suit against the insured alleging such injury and seeking damages, "even if such suit is groundless, false or fraudulent;".

The whole theory and philosophy of malpractice insurance liability embraces the theory of defending the physician charged by a patient. The insurance company knows when it writes its policy that a suit for malpractice might be groundless and, therefore, it tells the doctor in his policy "we will defend you even though such charges may be false, groundless or fraudulent". See Employers' Liability Assur. Corp. v. Youghiogheny & Ohio Coal Co., 8 Cir., 1954, 214 F.2d 418, loc. cit. 422.

The defendant is saying, "because Littleton alleged an assault, and...