State Farm & Cas. Co. v. Haw. Hope Mission Baptist Church

• Decision Date: 14 March 2014
• Docket Number: CIV. NO. 12-00687 JMS-KSC
• Parties: STATE FARM AND CASUALTY COMPANY, an Illinois corporation, Plaintiff, v. HAWAII HOPE MISSION BAPTIST CHURCH, CHANG KYOO PARK, HYON KYONG PARK, JUNG SHIN, and JONG HO SHIN, Defendants.
• Court: U.S. District Court — District of Hawaii

STATE FARM AND CASUALTY COMPANY, an Illinois corporation, Plaintiff, v. HAWAII HOPE MISSION BAPTIST CHURCH, CHANG KYOO PARK,HYON KYONG PARK, JUNG SHIN, and JONG HO SHIN, Defendants.

CIV. NO. 12-00687 JMS-KSC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII

Dated: March 14, 2014

ORDER (1) GRANTING PLAINTIFF

STATE FARM AND CASUALTY

COMPANY'S MOTION FOR

SUMMARY JUDGMENT, DOC. NO.

24; AND (2) DENYING

DEFENDANTS/COUNTER-

CLAIMANTS' COUNTER-MOTION

FOR SUMMARY JUDGMENT, DOC.

NO. 27

ORDER (1) GRANTING PLAINTIFF STATE FARM AND CASUALTY

COMPANY'S MOTION FOR SUMMARY JUDGMENT, DOC. NO. 24;

AND (2) DENYING DEFENDANTS/COUNTER-CLAIMANTS' COUNTER-

MOTION FOR SUMMARY JUDGMENT, DOC. NO. 27

I. INTRODUCTION

In this action, Plaintiff State Farm Fire and Casualty Company ("State Farm") seeks a declaration under 28 U.S.C. § 2201 that it owes no duty to defend or indemnify Hawaii Hope Mission Baptist Church (the "Church"), Chang Kyoo Park, Hyon Kyong Park, Jung Shin, and Jung Ho Shin (collectively, "Defendants") in an action against Defendants pending in the First Circuit Court of the State of Hawaii, Civil No. 12-1-2598-10 (the "Underlying Action") brought by Pak BokSu, Kyong Cha Park, Young Sook Chung, Kyong Ok Um, Jung Hui Bang, Yeon Sil Baeck, Kum Bun Lee, Sarah H. Kim, and Pauline William (collectively "Underlying Plaintiffs").

Currently before the court is State Farm's Motion for Summary Judgment, and Defendants' Counter-Motion for Summary Judgment, both seeking a determination whether State Farm has a duty to defend and/or indemnify Defendants against the Underlying Action. Based on the following, the court concludes that the Underlying Action does not raise the potential for indemnification liability, and thus State Farm has no duty to defend the action. Accordingly, the court GRANTS State Farm's Motion for Summary Judgment, and DENIES Defendants' Counter-Motion for Summary Judgment.

II. BACKGROUND

A. Factual Background

The court begins by setting forth the essential facts and claims alleged against Defendants in the Underlying Action, which are assumed to be true for purposes of this declaratory relief action. See, e.g., Burlington Ins. Co. v. Oceanic Design & Constr., Inc., 383 F.3d 940, 944-45 (9th Cir. 2004) ("The focus is on the alleged claims and facts."). The court then sets forth potentially relevant provisions of State Farm's insurance policy.

1. The Underlying Action

The Underlying Action was filed on October 19, 2012, and its First Amended Complaint (the "Underlying FAC"), filed on January 7, 2014, makes the following allegations:

Chang Kyoo Park ("Mr. Park") is the Church's minister, and Hyon Kyong Park is his wife; Jung Shin is the Church's treasurer, and Jong Ho Shin is his wife; and Chang Kyoo Park, Jung Shin, and Jong Ho Shin are "reportedly" directors of the Church. Doc. No. 25-1, Pl.'s Ex. 1 ¶¶ 6-11. Underlying Plaintiffs are all members of the Church, and have regularly donated money, which is how the Church obtains the bulk of its revenue. Id. ¶¶ 5, 12.

By the end of 2007, the Church reported that it had more than $1 million in its bank accounts, and in February 2008, the Church purchased the leasehold interest and building located at 1640 S. King Street, Honolulu, Hawaii 96826 (the "Church Property") for $500,000. Id. ¶¶ 13-14. The Church subsequently spent several hundred thousand dollars renovating the space for use as a church. Id. ¶ 16.

In 2012, Mr. Park sold the Church's interest in the Church Property for $280,000. Id. ¶ 17. Church members also learned that Mr. and Mrs. Park used Church monies to purchase, among other things, (1) a fee simple condominiumapartment for $500,000, (2) a 2010 Lexus for $58,000 paid in cash; (3) the Church Property; and (4) unspecified property in Korea. Id. ¶¶ 19-21.

In 2012, members of the Church raised questions about the Church's finances, pointing out that financial reports and accountings had not been given to the membership in several years. Id. ¶ 18. In response, Mr. Park refused to answer questions regarding the Church's finances, told dissident members to leave the Church if they disagreed with him, and engineered dissident members' removal. Id. ¶ 24. Due to Defendants' failure to provide an accounting and disclosures regarding the Church's finances, membership in the Church declined from a high of 150 to just 17 members as of August 1, 2012. Id. ¶ 23.

The Underlying FAC further asserts, upon information and belief, that Mr. and Mrs. Park intend to take the Church's funds and relocate outside of Hawaii. Id. ¶¶ 25-26. Finally, the Underlying FAC asserts that Mr. Park assaulted Underlying Plaintiff Sarah Kim ("Ms. Kim") on September 9, 2012. Id. ¶ 42.

Based on these allegations, the Underlying FAC asserts claims for injunctive relief, conversion, removal of officers, breach of fiduciary duty, unlawful distributions, return of misappropriated funds, assault, emotional distress, unfair and deceptive trade practices, punitive damages, civil conspiracy, andracketeering. Beyond the injunctive relief, Plaintiffs also seek special, general, and punitive damages.

2. The Relevant Policy Language

State Farm issued a church policy to the Church, No. 91-BB-J795-2, covering the period from December 14, 2011 through December 14, 2012 (the "Church Policy"). The Church Policy insured the Church Property at 1640 S. King Street in Honolulu. See Doc. No. 28-8, Defs.' Ex. F.

At issue is the Church Policy's coverage for "bodily injury,"¹ which provides as follows:

We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury, property damage, personal injury or advertising injury to which this insurance applies. . . . This insurance applies only:

1. to bodily injury or property damage caused by an occurrence which takes place in the coverage territory during the policy period . . . .

Id. at HHM00042, § II, Comprehensive Business Liability. The Church Policy further provides that "[w]e will have the right and duty to defend any claim or suitseeking damages payable under this policy even though the allegations of the suit may be groundless, false or fraudulent." Id. at "Right and Duty to Defend."

The Church Policy defines "bodily injury" as "bodily injury, sickness or disease sustained by a person, including death resulting from bodily injury, sickness or disease at any time." Id. at HHM00049, at Definitions. An "occurrence" means:

a. an accident, including continuous or repeated exposure to substantially the same general harmful conditions which result in bodily injury or property damage . . . .

For purposes of this definition, bodily injury or property damage resulting from the use of reasonable force to protect persons or property will be considered an accident.

Id. at HHM00050.

The Church Policy further limits liability for 'bodily injury" by the following exclusion:

EXCLUSIONS

Under Coverage L, this insurance does not apply:

1. to bodily injury or property damage:

a. expected or intended from the standpoint of the insured; or

b. to any person or property which is the result of willful and malicious acts of the insured.

This exclusion does not apply to bodily injury or property damage resulting from the use of reasonable force to protect persons or property;

Id. at HM00043, at Business Liability Exclusions.

B. Procedural History

After the Underlying Action was filed on October 19, 2012, Defendants tendered the defense to State Farm, which is providing a defense pursuant to a Reservation of Rights under the Church Policy.

On December 18, 2012, State Farm filed this declaratory relief action seeking "a binding declaration that State Farm has no duty to defend and/or indemnify the Defendants for the claims asserted in the Underlying Lawsuit or for any claims that may arise out of the subject matter of the Underlying Lawsuit." Doc. No. 1, Compl. at 13.

On January 29, 2014, State Farm filed its Motion for Summary Judgment. Doc. No. 24. Defendants filed an Opposition and Counter-Motion on February 24, 2014, Doc. No. 27, State Farm filed a Reply and Opposition to the Counter-Motion on March 3, 2014, Doc. No. 31, and Defendants filed a Reply in support of its Counter-Motion on March 10, 2014. Doc. No. 33. Pursuant to Local Rule 7.2(d), the court determines the Motions without a hearing.

III. STANDARD OF REVIEW

Summary judgment is proper where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R. Civ. P. 56(a). Rule 56(a) mandates summary judgment "against a party who fails to make a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Broussard v. Univ. of Cal. at Berkeley, 192 F.3d 1252, 1258 (9th Cir. 1999).

"A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact." Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007) (citing Celotex, 477 U.S. at 323); see also Jespersen v. Harrah's Operating Co., 392 F.3d 1076, 1079 (9th Cir. 2004). "When the moving party has carried its burden under Rule 56[(a)], its opponent must do more than simply show that there is some metaphysical doubt as to the material facts [and] come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586-87 (1986) (citation and internal quotation signals omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (stating that a party cannot "rest upon the mere allegations or denials of his pleading" in opposing summary judgment).

"An issue is 'genuine' only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party,...