American Western Home Insurance Company v. Johnson et al

Filing 50

ORDER denying as moot 34 Motion for Summary Judgment; denying as moot 37 Motion to Dismiss; denying as moot 39 Motion for Leave to File; granting in part and denying in part 46 Motion for Leave to File. Signed by Honorable Susan O. Hickey on August 14, 2015. (mll)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
TEXARKANA DIVISION
AMERICAN WESTERN HOME INSURANCE
COMPANY

VS.

PLAINTIFF

CASE NO. 11-CV-4071

STEVE JOHNSON,
et al

DEFENDANTS
ORDER

Before the Court are Plaintiff American Western Home Insurance Company’s Motions
for Leave to File Third Amended Complaint. (ECF Nos. 39 & 46). No Defendant has filed a
response to the motions and the time to do so has passed. The Court finds this matter ripe for
consideration.
The Second Amended Complaint (ECF No. 11) seeks a declaration from the Court
regarding Plaintiff’s contractual obligations to defend and indemnify Defendant-Insureds Cherry
Hill Printing Inc., Steve Johnson, Steve Johnson d/b/a Cherry Hill Printing, and Don Wolf in
cases before this Court and Arkansas state courts. The underlying cases referenced in the Second
Amended Complaint are: Kolbek, et al. v. Twenty First Century Holiness Tabernacle Church, et
al., Case No. 4:10-cv-4124; Ondrisek, et al. v. Hoffman, Case No. 4:08-cv-4113; Ondrisek, et al.
v. Kolbek, Case No, 4:09-cv-4100; and Coie v. Alamo, et al., No. CV-2009-1854(V), Circuit
Court of Sebastian County, Arkansas.
Since the filing of Plaintiff’s Second Amended Complaint, the Kolbek case before this
Court has been dismissed. (Case No. 4:10-cv-4124, ECF Nos. 716 & 722). After the dismissal
of the federal suit, the Kolbek plaintiffs re-filed many of their claims in the Miller County Circuit
Court on January 14, 2014, Kolbek v. Twenty First Century Holiness Tabernacle Church, Inc.,

Case No. 46CV-14-8-2. (ECF No. 47, Exh. 6). When the case was re-filed, the defendants were
limited to Tony Alamo, Jeanne Estates Apartments, Inc., and Twenty First Century Holiness
Tabernacle Church. The factual allegations in the state suit mirror the allegations made in the
dismissed federal suit, and the Kolbek plaintiffs make the same claims for negligence, negligent
entrustment, negligent hiring, supervision and retention, false imprisonment, invasion of privacy,
defamation, joint-venture liability, and outrage.
Plaintiff’s first Motion for Leave to File Third Amended Complaint (ECF No. 39) was
filed in October 2014. The motion requested that Plaintiff be permitted to amend its Complaint
to address the dismissal of the Kolbek federal suit and the filing of the Kolbek state suit. Before
the Court ruled on the motion to amend, there was a further development in state court. On
November 25, 2014, the Kolbek plaintiffs filed a lawsuit against Plaintiff American Western
Home Insurance Company, as well as Canopius Capital Two Limited and Canopius US
Insurance, Inc., in Miller County, Arkansas. This new lawsuit was brought under Arkansas’s
direct action statute codified at Ark. Code Ann. § 23-89-101. This “Direct Action Lawsuit” seeks
to hold these carriers liable for the $525,000,000.00 default judgment entered against Twenty
First Century Holiness Tabernacle Church (“TFC”) in the Kolbek state suit. 1 According to
Plaintiff, the Direct Action Lawsuit is the first demand by any party for coverage of TFC under
any of Plaintiff’s insurance policies.
In response to the Direct Action Lawsuit being filed, Plaintiff filed a new motion for
leave to amend. Plaintiff’s second Motion for Leave to File Third Amended Complaint (ECF
No. 46) requests that it be permitted to amend its complaint to address the Kolbek state suit as
well as the newly filed Direct Action Lawsuit. Plaintiff’s second motion further requests the
addition of TFC as a defendant in this matter so that it can seek a determination of whether
1

TFC is an alleged entity of Tony Alamo Christian Ministries. TFC was also a Defendant in the Kolbek federal suit.

2

Plaintiff is obligated to defend or indemnify TFC with respect to the default judgment entered
against TFC in the Kolbek state suit.
Rule 15 of the Federal Rules of Civil Procedure provides that, unless a party seeks to
amend within 21 days of serving a pleading, that party “may amend its pleading only with the
opposing party’s written consent or the court’s leave.” When a party seeks the court’s permission
to amend, leave to amend “shall be freely given when justice so requires.” Doe v. Cassel, 403
F.3d 986, 990 (8th Cir. 2005). The justifications for denying a motion to amend are limited to
“undue delay, bad faith, or dilatory motive, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the non-moving party, or futility of the amendment.” Id.
at 991.
Upon consideration, the Court finds that Plaintiff’s second Motion for Leave to File Third
Amended Complaint (ECF No. 46) should be granted in part and denied in part. The Court
grants Plaintiff’s request to amend its Complaint to address the Kolbek state suit. The dismissed
Kolbek federal suit and the Kolbek state suit are virtually identical in terms of the claims that are
being made and the underlying allegations that allegedly give rise to a duty to defend and
indemnify. 2 No additional issues or parties would be added by the amendment. Accordingly,
there will be no prejudice to any party or any undue delay in the proceedings by allowing
Plaintiff to include this updated case information in an amended complaint.
The Court denies Plaintiff’s request to amend its Complaint to address the newly filed
Direct Action Lawsuit and add TFC as a defendant. The Court recognizes that the Direct Action
Lawsuit implicates some of the same issues present in this case and the Kolbek state suit.
However, this case has been ongoing for over four years in its current iteration, and the Court
2

The Court notes that Certain Defendant-Insureds in this case argue (ECF No. 37) that there is no longer a
justiciable controversy as to Plaintiff’s claims against them because, while they were named as defendants in the
Kolbek federal suit, they were not named in the Kolbek state suit. The present Order takes no stance on this issue.

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finds that the addition of a new, underlying suit and the addition of a new defendant would cause
an undue delay in the disposition of this action. Civil lawsuits involving Tony Alamo Christian
Ministries have been consistently filed in this Court and state courts for the past five years. In
fact, a new case against various individuals and entities involved with the ministry—including
some Defendant-Insureds in this case—was filed in this Court by former church members in
2014. 3 In fairness to the parties and in furtherance of disposing of these cases in a timely
manner, the Court feels it is necessary to draw the line somewhere. While Plaintiff is not being
permitted to amend its Complaint to seek a declaratory judgment on new coverage issues arising
in the Direct Action Lawsuit, Plaintiff is free to file a separate declaratory judgment action to
address these matters. 4
For the reasons stated above, the Court finds that Plaintiff’s second Motion for Leave to
File Third Amended Complaint (ECF No. 46) is hereby GRANTED in part and DENIED in
part. Plaintiff must file a Third Amended Complaint within five (5) days of the entry of the
order granting leave to amend.

Plaintiff’s first Motion for Leave to File Third Amended

Complaint (ECF No. 39) is hereby DENIED AS MOOT.
In light of the forthcoming Third Amended Complaint, the Court finds that the currently
pending Motion to Dismiss and Motion for Summary Judgment (ECF Nos. 34 & 37) should be
DENIED AS MOOT. Updated motions must be refiled on or before September 18, 2015. The
motions should specifically address the allegations as they are set out in the forthcoming Third
Amended Complaint.

Where applicable, the motions should acknowledge and address the

rulings this Court has made in related declaratory judgment actions.
3

Nautilus Insurance

Griffin, et al v. Alamo, et al, Case No. 4:14-cv-4065.

4

While Plaintiff may file a new declaratory judgment action regarding their coverage obligations to TFC, it appears
to the Court that these issues could potentially be resolved by the Direct Action Lawsuit.

4

Company v. Sharon Alamo, et al, Case No. 4:11-cv-4054; Catalina London Limited vs. Jeanne
Estates Apartments, Inc., Case No. 4:11-cv-4091.
The trial of this matter is currently set for December 14, 2015. (ECF No. 49). The Court
finds that a continuance is necessary in order to allow Plaintiff to complete service upon all
Defendants and to allow the parties to refile and brief dispositive motions. The trial of this
matter is hereby continued and will be set at a later date. All deadlines in the Final Scheduling
Order (ECF No. 33) that have not already passed should be adjusted accordingly.
IT IS SO ORDERED, this 14th day of August, 2015.
/s/ Susan O. Hickey
Susan O. Hickey
United States District Judge

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