Valley Forge Ins. Co. v. Field, s. 11–1316

Citation670 F.3d 93
Decision Date22 February 2012
Docket Number11–1337.,Nos. 11–1316,s. 11–1316
PartiesVALLEY FORGE INSURANCE CO.; American Casualty of Reading, PA, Plaintiffs, Appellees, v. Carol FIELD; The Carson Center for Human Services, Inc., Defendants,David Murphy, as Guardian of the Child's Estate, Defendant, Appellant.Valley Forge Insurance Co.; American Casualty of Reading, PA, Plaintiffs, Appellees, v. David Murphy, as Guardian of the Child's Estate, Defendant,Carol Field; The Carson Center for Human Services, Inc., Defendants, Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

OPINION TEXT STARTS HERE

Robert J. Gilbert, with whom Rickey G. Glover and Gilbert & Renton LLC were on brief, for appellant David Murphy.

James P. Hoban, Thomas J. Conte, Lynette Paczkowski, and Bowditch & Dewey, LLP, on brief for appellants The Carson Center for Human Services, Inc., and Carol Field.

Michael P. Tone, with whom Kimberly E. Rients Blair, Wilson, Elser, Moskowitz, Edelman & Dicker, Amy E. Goganian, and Goganian & Associates, LLC, were on brief for appellees.

Before LYNCH, Chief Judge, HOWARD and THOMPSON, Circuit Judges.

LYNCH, Chief Judge.

An eleven-year-old child (the child) suffered from long-term horrific abuse and on September 11, 2005, was beaten nearly to death by her adoptive mother and stepfather. The child's legal guardian, David Murphy, brought suit in the Superior Court of the Commonwealth of Massachusetts against several defendants including the Carson Center for Human Services, Inc. (Carson Center), and one of its employees, licensed social worker Carol Field, whose patient the child was during this period. The complaint alleged that they failed to detect or report to state authorities signs of ongoing physical abuse of the child. That state court suit led to this insurance coverage litigation in federal court.

The federal plaintiffs are Valley Forge Insurance Company and American Casualty of Reading, PA, the insurers of the Carson Center and, as such, of Field as an employee of the Carson Center. The insurers sought a declaratory judgment that the allegations against the insureds in the underlying suit fall within exclusions to coverage. The district court granted the request for declaratory judgment. Valley Forge Ins. Co. v. Carson Ctr. for Human Servs., No. 09–cv–30038, 2011 WL 864802 (D.Mass. Mar. 10, 2011). The insureds and Murphy appealed.

The issue is one of policy language interpretation. It is whether the policy language of an Abuse or Molestation Exclusion in a Professional Liability Coverage part and an Abuse or Molestation Exclusion in a Commercial Umbrella Coverage part precludes coverage. The language of these Exclusions precludes coverage for abuse that occurs to anyone in the insureds' “care, custody or control.” The question is whether the Exclusions apply where, as here, at the time of the abuse the victim was not in the physical custody of the insureds and had been receiving bi-weekly outpatient therapeutic services from them for fourteen months covered by the policies in question. We conclude, as did the district court, that the word “care” in the Exclusions is unambiguous. We reject the defendants' arguments, including that the term is limited to situations in which there is also “custody” and “control.” As a matter of undisputed fact, the child was in the care of the insureds as a long-term patient, and the plain terms of the Exclusions exclude liability on the part of the insurers. We affirm.

I.

Murphy filed the underlying suit in Superior Court on October 18, 2007. The complaint alleged that the Carson Center, Field, and other providers had a doctor-patient relationship with the child and that in each case the providers knew or should have known that the physical injuries sustained by the child while she was in their care were the result of systematic abuse by her parents. Those injuries included head injuries from a baseball bat, severe burns on her legs from standing in scalding hot water, toenails that had been pulled off, beatings, chipped teeth, and numerous cuts, scrapes, and bruises that required sutures or had become infected.

Murphy's complaint further alleged that the negligent failure to suspect or report such abuse on the part of the Carson Center, Field, and the other providers culminated in the near-fatal brain injury the child sustained as a result of abuse by her parents on September 11, 2005, and that breach of their duties of reasonable care were substantial contributing factors to the child's serious injuries. The child's physical injuries, including paraplegia, are permanently disabling, and she has been left with significant and permanent mental deficits, for all of which she will require lifetime care.

Field was a social worker and therapist at the Carson Center in Westfield, Massachusetts, when she met the child on October 30, 2002. The Carson Center is a non-profit facility that provides psychiatric, mental health, rehabilitation, and family stabilization services to the community. Field provided therapeutic services to the child over the course of the next thirty-five months. In the state suit, Field recalled approximately fifty-one in-person counseling sessions with the child; approximately twenty different meetings or telephone conferences with the child's adoptive mother; at least four meetings with the child's other health care providers; involvement in four of the child's hospitalizations; eleven telephone conferences with the child's medical providers; at least four telephone conversations with the child's school counselors; and four conferences with the Massachusetts Department of Social Services. Field's treatment of the child continued until the child suffered her catastrophic injuries on September 11, 2005.

This action for declaratory judgment is concerned only with Murphy's claims in the underlying Superior Court suit for the years 2002 and 2003. All told, during the period of October 30, 2002, through December 19, 2003, Field saw the child about twenty-five times, which averages to a visit nearly every other week.

The plaintiffs insured the Carson Center from December 19, 1998, through December 19, 2003. At issue is the policy provided by Valley Forge for the period December 19, 2001, through December 19, 2002, and the policy provided by American Casualty for the period December 19, 2002, through December 19, 2003. Each of these policies had five different coverage sections, for which a single premium was paid and which contained a single policy number. The coverage parts at issue are the Professional Liability and Commercial Umbrella coverage parts. These coverage parts each contained an Abuse or Molestation Exclusion. The parties do not dispute that, absent these Exclusions, the policies would provide coverage to the Carson Center and Field for the underlying suit.

Murphy has been named as a defendant in the federal suit along with the insureds and, not surprisingly, has argued that the exclusions do not apply. His arguments overlap with those of the insureds.

II.

We review the district court's grant of summary judgment de novo, assessing the facts and the inferences to be drawn from them in the light most favorable to the non-moving party. Sparks v. Fid. Nat'l Title Ins. Co., 294 F.3d 259, 265 (1st Cir.2002). The interpretation of an insurance policy is a question of law for the court. Bos. Gas Co. v. Century Indem. Co., 454 Mass. 337, 910 N.E.2d 290, 304 (2009). Massachusetts law applies, Lexington Ins. Co. v. Gen. Accident Ins. Co. of Am., 338 F.3d 42, 46 (1st Cir.2003), and requires that we construe an insurance policy de novo under the general rules of contract interpretation.” Brazas Sporting Arms, Inc. v. Am. Empire Surplus Lines Ins. Co., 220 F.3d 1, 4 (1st Cir.2000). We look first to “the actual language of the policies, given its plain and ordinary meaning.” Id. The insurer bears the burden of demonstrating that an exclusion exists that precludes coverage, and “any ambiguities in the exclusion provision are strictly construed against the insurer.” Id. Ambiguity does not exist simply because the parties disagree about the proper interpretation of a policy provision; rather, [a]mbiguity exists when the policy language is susceptible to more than one rational interpretation.” Id. at 4–5.

The pertinent part of the Abuse or Molestation Exclusion to the Professional Liability Coverage reads:

EXCLUSION—ABUSE OR MOLESTATION

This endorsement modifies insurance provided under the following:

PROFESSIONAL LIABILITY COVERAGE FORM

The following exclusion is added to paragraph 2., Exclusions of Section I—Coverage:

This insurance does not apply to damages arising out of:

1. The actual or threatened sexual or physical abuse or molestation by anyone to any person while in the care, custody or control of any insured;....

The parallel exclusion in the Commercial Umbrella Coverage part is essentially identical to the Professional Liability Exclusion and reads:

ABUSE OR MOLESTATION EXCLUSION

The following paragraph is added to 2. Exclusions, SECTION I—Coverages:

This insurance does not apply to “bodily injury”, “property damage”, “advertising injury” or “personal injury” arising out of:

1. The actual, alleged or threatened abuse or molestation by anyone of any person while in the care, custody or control of any insured;....

No one argues that these Exclusions should be interpreted differently from one another, so we will follow the district court and the parties in referring to a single Exclusion.

Exclusions of this type for sexual or physical abuse or molestation are not uncommon for these types of insurance policies for those who have care of others. Such exclusions appear to have been in use since 1987. See Harper v. Gulf Ins. Co., No. 01–CV–201–J, 2002 WL 32290984, *6 (D.Wyo. Dec. 20, 2002) (abuse or molestation exclusion was promulgated by the Insurance Service Office, Inc., in 1987). The court in Harper cites to an insurance reporter series entitled Commercial...

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