Tig Ins. Co. v. Smart School
| Decision Date | 06 October 2005 |
| Docket Number | No. 04-22178-CIV.,04-22178-CIV. |
| Parties | TIG INSURANCE COMPANY, Plaintiff, v. SMART SCHOOL, Curtis Gordon, and J. J., a minor by her parent, Defendants. |
| Court | U.S. District Court — Southern District of Florida |
Joshua D. Lerner, Michael Roland Holt, Rumberger Kirk & Caldwell, Miami, George J. Manos, Vincent P. Tomkiewicz, Bollinger Ruberry & Garvey, Chicago, IL, for TIG Insurance Company, Plaintiff.
Darlene M. Lidondici, Jeremy Michael Zubkoff, Fertig & Gramling, Fort Lauderdale, Curtis Gordon, Pro Se, c/o Florida Department of Corrections, Mark Hicks, Ellen Novoseletsky, Hicks Anderson & Kneale, Miami, Jorge Emilio Silva, Silva & Silva, Coral Gables, Jean Anne Kneale, Hicks & Kneale, Hollywood, for Smart School, Curtis Gordon, J.J., a minor by her parent, Defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND ORDER DENYING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT
THIS CAUSE is before the Court upon the following motions:
(1) Defendant Smart School's Motion for Summary Judgment, filed April 4, 2005 ("Smart School's Motion") [DE 43];
(2) Plaintiff TIG Insurance Co's. ("TIG") Motion for Summary Judgment ("TIG's Motion"), filed April 4, 2005 [DE 45]; and
(3) Defendant P.J.'s Cross Motion for Summary Judgment, filed May 12, 2005 ("P.J.'s Cross Motion")1 [DE 91].
THE COURT has considered the motions, the pertinent portions of the record, and is otherwise fully advised in the premises. The matter is ripe for disposition.
The instant case arises initially from a disagreement regarding the interpretation of certain terms contained in identical comprehensive general liability policies that TIG issued to Smart School for the periods of August 6, 2001 to August 6, 2002 and August 6, 2002 to August 6, 2003. TIG, a Californian insurance company, seeks a declaratory judgment pursuant to 28 U.S.C. § 2201 et seq. that its coverage with respect to sexual abuses perpetrated by Curtis Gordon, a Smart School teacher, is limited to the $1 million per occurrence limit specified in the first policy, despite the fact that Gordon molested two children separately on multiple occasions and the abuse of one of the children extended into the second policy period. TIG contends that the definition of "sexual abuse occurrence" contained in the policies collapses all of Gordon's acts of sexual abuse or molestation into a single incident during the initial policy period for the purpose of ascertaining the coverage limit. Smart School and P.J., the parent of one of the two children molested by Gordon, have asserted affirmative defenses and Smart School has asserted a counterclaim for declaratory relief in which they contend, inter alia, that the definition of "sexual abuse occurrence" is ambiguous and the policies should be construed to afford coverage of at least $1 million for Gordon's victimization of each child.
The dispute is before the Court because TIG has already settled with D.N., the parent of the other minor, for a sum which has largely depleted the $1 million per occurrence limit, and little coverage remains to compensate J.J. if TIG's interpretation is correct. As explained above, Smart School and P.J.'s disagree with TIG's interpretation. The Smart School alternatively contends in Count II of its Counterclaim that, if TIG's construction is correct, TIG violated its duty of good faith when it settled with the A.N. lawsuit without taking into consideration the impact on J.J.'s claim.
TIG, Smart School and P.J. have cross motioned for summary judgment respecting the proper interpretation of the TIG policies. Additionally, TIG has moved for summary judgment on Smart School's bad faith claim.
Summary judgment is appropriate "in declaratory judgment actions seeking a declaration of coverage when the insurer's duty, if any, rests solely on the applicability of the insurance policy, the construction and effect of which is a matter of law." Northland Cas. Co. v. HBE Corp., 160 F.Supp.2d 1348, 1358 (M.D.Fla.2001). In a declaratory judgment action, "if the allegations in the complaint alleging a claim against the insured either are acts not covered by the policy or are excluded from the policy's coverage, the insurer is not obligated to defend or indemnify." Id. at 1357-58.
As to the Smart School's bad faith claim, a party is entitled to judgment as a matter of law when the party can show that there is no genuine issue of material fact. Fed.R.Civ.P. 56(c). The substantive law applicable to the case determines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that 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, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party bears the burden of proving that no genuine issue of material fact exists. Id. at 323, 106 S.Ct. 2548. In determining whether the moving party has satisfied its burden, the court considers all inferences drawn from the underlying facts in a light most favorable to the party opposing the motion, and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. If the record presents factual issues, the court must not decide them, but rather, must deny the motion and proceed to trial. Environmental Def. Fund v. Marsh, 651 F.2d 983, 991 (5th Cir.1981).2
Gordon sexually abused two Smart School students.3 As a consequence, two lawsuits were filed in the Southern District of Florida.
First, on August 18, 2003, a lawsuit was filed styled D.N., individually and as parent of A.N. v. Curtis Ramley Gordon, Jr. et al., Case No. 03-61249-CIV (S.D.Fla.2003) (hereinafter the "A.N. lawsuit"). In the amended complaint in that action, D.N. alleged that the Smart School and certain of its administrators failed to respond properly to complaints that Gordon was inappropriately touching A.N., a twelve-year old female student in the Smart School's summer program. (A.N.lawsuit, Compl. ¶¶ 8-12.) The complaint alleged that beginning in July 2002 Gordon engaged in escalating acts of sexual misconduct with A.N. culminating in her rape on August 30, 2002. TIG defended Smart School and its employees against the allegations in the A.N. lawsuit pursuant to its 2001-2002 policy. On June 4, 2004, the Hon. Adalberto Jordan entered an order approving a confidential settlement of the A.N. lawsuit.
Second, on September 20, 2004, a lawsuit was filed styled P.J., on behalf of J.J., et al. v. Curtis Gordon et al., Case No. 04-61230-CIV (S.D.Fla.2004) (hereinafter the "J.J. lawsuit"). In the J.J. lawsuit, P.J. alleged that the Smart School and certain of its administrators failed to respond properly to P.J.'s complaints that Gordon was having sexual intercourse with J.J., her thirteen year old daughter and an eighth grader at the Smart School. The first alleged incident of sexual abuse occurred in November 2001 and the last in May 2002. The J.J. lawsuit is still pending. See J.J. lawsuit.
Jorge Silva, Esq. represented the plaintiffs with respect to both claims. On April 2, 2004, when only the A.N. lawsuit was pending, he sent a demand letter to defense counsel, Pete L. DeMahy, Esq. of DeMahy, Labrador & Drake and Barry A. Postman, Esq. of Cole Scott & Kissane, in which he discussed the merits of both claims and requested to know "what the insurer's position is regarding the available limits of insurance for both the A.N. and the J.J. claim, who is also our client." (Smart School's Resp. Ex. 3 [DE 66].) At that time, Cole Scott and Kissane had been retained by TIG to defend the Smart School's interests with respect to A.N.'s claim. Also, no later than May 19, 2004, TIG retained Cole Scott & Kissane to represent Smart School with respect to J.J.'s claim.
According to Rebekah Ratliff, a TIG claims specialist, TIG first received notice of a claim against the Smart School on behalf of J.J. some time in May 2004 and TIG also reached an agreement with Silva for the settlement of A.N.'s lawsuit some time in May 2004. TIG never advised the Smart School prior to settling with D.N. that its position was that the per occurrence limit of $1 million contained in the first policy would apply to both claims.
TIG issued two identical commercial liability policies to Smart School. The first policy covered the period from August 6, 2001 to August 6, 2002, and the second covered from August 6, 2002, to August 6, 2003.4 The policies excluded coverage for intentional acts.5 However, TIG issued endorsement Form LB25787 to the insurance policies providing limited coverage for claims arising from sexual abuse as follows:
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