American Western Home Insurance Company v. Johnson et al

Filing 66

MEMORANDUM OPINION. Signed by Honorable Susan O. Hickey on March 23, 2016. (mll)

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

VS.

PLAINTIFF

CASE NO. 4:11-CV-4071

STEVE JOHNSON; STEVE JOHNSON d/b/a
CHERRY HILL PRINTING, INC.; DON WOLF a/k/a
DONN WOLFE; and CHERRY HILL PRINTING, INC.

DEFENDANTS

MEMORANDUM OPINION
Before the Court is an Amended Motion for Summary Judgment (ECF No. 57) filed on
behalf of Plaintiff American Western Home Insurance Company (“American Western”).
Separate Defendants Cherry Hill Printing, Inc. and Don Wolf have filed a response. (ECF No.
60). American Western has filed a reply. (ECF No. 62). The Court finds this matter ripe for
consideration.
BACKGROUND
The Third Amended Complaint (ECF No. 51) and the present Motion for Summary
Judgment seek a declaration from the Court regarding American Western’ contractual
obligations to defend and indemnify their respective Defendant-Insureds in cases before this
Court and Arkansas state courts. The underlying cases referenced in the Third Amended
Complaint are: Kolbek, et al. v. Twenty First Century Holiness Tabernacle Church, et al., Case
No. 4:10-cv-4124; Kolbek, et al. v. Twenty First Century Holiness Tabernacle Church Inc., et
al., No. 46CV-14-8-2, Circuit Court of Miller County, Arkansas; Ondrisek, et al. v. Hoffman,
Case No. 4:08-cv-4113; Ondrisek, et al. v. Kolbek, Case No, 4:09-cv-4100; Coie v. Alamo, et al.,

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No. CV-2009-1854(V), Circuit Court of Sebastian County, Arkansas. The Court will summarize
the underlying cases in turn.
A. The Kolbek suits
In August 2010, Desiree Kolbek, Amy Eddy, Jeannette Orlando, Nicole Farr, Summer
Hagan, Jamie Rodriguez, and Pebbles Rodriguez filed suit in this Court against a number of
defendants, including Defendant-Insureds in the present case. The Kolbek plaintiffs were former
members of Tony Alamo Christian Ministries (“TACM”). TACM is an organization of churches
and businesses that are operated by individual members of TACM and Tony Alamo. Defendants
in the Kolbek suit and the present declaratory judgment action are current or former members of
TACM or businesses that have close ties with TACM. The Kolbek plaintiffs alleged that, when
they were members of TACM, they were forced to become “spiritual wives” of Tony Alamo;
they were moved into his home when they were minors; and they were subjected to frequent
sexual, physical, and psychological abuse. This abuse allegedly took place on TACM property
and was facilitated by TACM members and TACM businesses.

Specifically, the Kolbek

plaintiffs allege that the TACM businesses allowed Tony Alamo access to the young girls;
endorsed or facilitated the “spiritual weddings” with the girls; failed to protect the girls from
sexual abuse and beatings; and failed to keep the locations they managed in a reasonably safe
condition. The Kolbek Complaint asserted claims of negligence, negligent entrustment, negligent
hiring, supervision and retention, false imprisonment, invasion of privacy, defamation, jointventure liability, outrage, transporter liability under 18 U.S.C. § 2255, and trafficking liability
under 18 U.S.C. § 1595.
In 2013, through mediation, several insurance companies entered into a Confidential
Settlement Agreement with the Kolbek plaintiffs on behalf of several Kolbek defendants.

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The

settlement resulted in the voluntary dismissal of claims against many of the defendants in the
Kolbek suit. Thereafter, the Court dismissed with prejudice all federal law claims against the
remaining defendants in the Kolbek suit (Case No. 4:10-cv-4124, ECF No. 716) and dismissed
without prejudice all state law claims asserted by the Kolbek plaintiffs. (Id., ECF No. 722). 1
After the dismissal of their federal suit, the Kolbek plaintiffs re-filed 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. 145, Exh. 22). When the case was re-filed, the
defendants were limited to Jeanne Estates Apartments, Inc., Tony Alamo, and Twenty First
Century Holiness Tabernacle Church. The allegations in the state suit mirrored the allegations
made in the dismissed federal suit, and the Kolbek plaintiffs made the same claims for
negligence, negligent entrustment, negligent hiring, supervision and retention, false
imprisonment, invasion of privacy, defamation, joint-venture liability, and outrage.
Since the filing of American Western’ Third Amended Complaint, the Kolbek state suit
has been voluntarily nonsuited with prejudice. (ECF No. 62, fn. 3; see also Canopius Capital
Two Limited, et al. v. Jeanne Estates Apartments, Inc. et al., Case No. 4:11-cv-4070, ECF No.
150, Exh. 1). 2 Despite this dismissal, and despite the fact that no Defendant-Insured ever
requested defense and/or indemnification from American Western with respect to the Kolbek
state suit, American Western continues to seek a declaration from the Court that they owe no
coverage for any of the alleged misconduct that forms the basis of the claims in the Kolbek state
case.

1

The Court’s order dismissing the state claims was appealed by certain defendants and later affirmed by
the Eighth Circuit. (Case No. 4:10-cv-4124, ECF No. 737).

2

Prior to the dismissal of the Kolbek state suit, default judgment was entered against Tony Alamo and
Twenty First Century Holiness Tabernacle Church. Accordingly, at the time of dismissal, the only
pending claims were against Jeanne Estates Apartments, Inc.

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B. The Ondrisek suits
In November 2008, Spencer Ondrisek and Seth Calagna filed suit in this Court against
Tony Alamo and John Kolbek. 3 Ondrisek and Calagna alleged that they were repeatedly beaten
by and/or at the direction of Tony Alamo and John Kolbek over a period of several years.
Ondrisek and Calagna sought damages for battery, false imprisonment, tort of outrage, and
conspiracy as a result of those beatings. In October 2009, Ondrisek and Calagna obtained a
default judgment against John Kolbek for $1 million in compensatory damages and $2 million in
punitive damages. In June 2011, Ondrisek and Calagna obtained a judgment against Tony Alamo
for battery, outrage, and conspiracy and were awarded $6 million in compensatory damages and
$60 million in punitive damages. In October 2012, the Eighth Circuit reversed the award of $60
million in punitive damages and remanded the case to the district court for entry of a verdict
imposing $24 million in punitive damages. The Eighth Circuit otherwise upheld the June 2011
judgment.
Defendant-Insureds were not named as defendants in the Ondrisek suit. However, in
connection with the judgment against Tony Alamo in the Ondrisek suit, the Court granted a Writ
of Execution authorizing seizure of property owned by certain Defendant-Insureds in this case.
(ECF No. 59, Exh. 20). Some of these properties are listed in the policies issued by American
Western to Defendant-Insureds. In a letter dated May 31, 2013, Defendant-Insured Don Wolf
forwarded the Court’s Writ of Execution to Canopius and demanded “a defense and full
indemnity for Steven Johnson, [himself], and the property as well as any interest in any other
property to which the insurance may apply.” (ECF No. 59, Exh. 21). While Separate-Defendant

3

The case in its original iteration was against both Tony Alamo and John Kolbek, Case No. 4:08-cv4113. John Kolbek was later severed from the case, and the claims against him proceeded under a new
case number, 4:09-cv-4100.

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Cherry Hill Printing, Inc. does not appear to have made a direct request to American Western for
defense and indemnification for the clams in the Ondrisek suits, 4 they have argued in their
response to the present motion that American Western owes them a duty to defend and
indemnify. American Western seeks a declaration from the Court that they owe no coverage to
any Defendant for the alleged misconduct that forms the basis of the claims in the Ondrisek suits
and that they have no duty to provide a defense to any of the Defendants in this case.
C. The Coie suit
The Coie Suit is a lawsuit filed in Circuit Court of Sebastian County, Arkansas, Fort
Smith District, Civil Division, on November 12, 2009, Coie v. Alamo, et al., Case No. CV 20091854(V). Christhiaon Coie is the sole plaintiff in the suit. Coie seeks declaratory judgment to
establish her rights to execute a $100,000 judgment against Tony Alamo by forcing the sale of
certain real estate allegedly held by Separate Defendant-Insureds Cherry Hill Printing, Inc. and
Steve Johnson and others who are not American Western’s insureds and/or not parties to the
present declaratory judgment action. The judgment that Coie seeks to execute was entered
against Tony Alamo on September 14, 1995, after a trial in which Alamo was found liable to
Coie for the tort of outrage. Specifically, the trial judge ruled that Coie was entitled to damages
because Alamo removed her mother's remains and refused to tell her the subsequent location of
her mother's remains.

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American Western claims that Cherry Hill Printing sought a defense and indemnification in the
Ondrisek suit via correspondence dated March 22, 2011. (ECF No. 59, Exh. 7). However, upon review
of this correspondence, it appears that the only litigation mentioned is the Kolbek federal suit.

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It does not appear that any Defendant-Insureds have made a direct request to American
Western for defense and/or indemnification for the claims made in the Coie suit. 5 However,
Defendant-Insureds Cherry Hill Printing, Inc. and Don Wolf have argued in their response to the
present motion that American Western owes them a duty to defend and indemnify. 6 American
Western seeks a declaration from the Court that they owe no coverage to any Defendant-Insured
for the alleged misconduct that forms the basis of the claims in the Coie suit and that they have
no duty to provide a defense to any Defendant.
DISCUSSION
The standard of review for summary judgment is well established. When a party moves
for summary judgment, “[t]he court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact, and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a); Krenik v. County of LeSueur, 47 F.3d 953 (8th Cir. 1995).
This is a “threshold inquiry of…whether there is a need for trial—whether, in other words, there
are genuine factual issues that properly can be resolved only by a finder of fact because they may
reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
250 (1986); see also Agristor Leasing v. Farrow, 826 F.2d 732 (8th Cir. 1987). A fact is material
only when its resolution affects the outcome of the case. Anderson, 477 U.S. at 248. A dispute is
genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either
party. Id. at 252.

5

American Western’s claim that Cherry Hill Printing sought a defense and indemnification in the Coie
suit via correspondence dated March 22, 2011. (ECF No. 59, Exh. 7). However, upon review of this
correspondence, it appears that the only litigation mentioned is the Kolbek federal suit.

6

Defendant-Insured Steve Johnson is pro se and has not filed a response to the Motion for Summary
Judgment.

6

The Court must view the evidence and the inferences reasonably drawn from the
evidence in the light most favorable to the nonmoving party. Enterprise Bank v. Magna Bank, 92
F.3d 743, 747 (8th Cir. 1996). The moving party bears the burden of showing that there is no
genuine issue of material fact and that it is entitled to judgment as a matter of law. Id. The
nonmoving party must then demonstrate the existence of specific facts in the record that create a
genuine issue for trial. Krenik, 47 F.3d at 957. A party opposing a properly supported motion for
summary judgment may not rest upon mere allegations or denials, but must set forth specific
facts showing that there is a genuine issue for trial. Anderson, 477 U.S. at 256.
As an initial matter, the Arkansas Supreme Court has recognized that the duty to defend
is broader than the duty to indemnify. Murphy Oil USA, Inc. v. Unigard Security Ins. Co., 61
S.W.3d 807, 812 (Ark. 2001). In other words, where there is no duty to defend, there is generally
no duty to indemnify. See id. Therefore, if the Court finds that American Western has no duty to
defend under the policies, then they also have no duty to indemnify.
As a general rule, an insurer’s duty to defend is determined by the allegations in the
pleadings against the insured. Id. “[T]he duty to defend arises when there is a possibility that the
injury or damage may fall within the policy coverage.” Id. at 813. However, “where there is no
possibility that the damage alleged in the complaint may fall within the policy coverage, there
would be no duty to defend.” Id. The Court will separately address American Western’s duty to
defend in the Kolbek, Ondrisek, and Coie suits.
A. The Kolbek Suit
Before discussing the substance of the policies and whether American Western has a duty
to defend or indemnify in the Kolbek state suit, the Court must first determine whether a
justiciable controversy still exists in light of the suit’s dismissal.

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For a declaratory judgment action to be justiciable, there must be a disputed coverage
issue of sufficient imminency to constitute an actual controversy.

Aetna Life Ins. Co. v.

Haworth, 300 U.S. 227 (1937). See also 28 U.S.C. § 2201(a). An actual controversy exists when
“the facts alleged, under all the circumstances show that there is a substantial controversy,
between parties having adverse legal interests, of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.” Ringo v. Lombardi, 677 F.3d 793, 796 (8th Cir. 2012)
(quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)).
In February and March 2014, default judgments were entered against Twenty First
Century Holiness Tabernacle Church and Tony Alamo in the Kolbek state suit. Subsequent to
the default judgments being entered and American Western’s Third Amended Complaint being
filed in this case, the Kolbek plaintiffs voluntarily nonsuited with prejudice their remaining
claims against Jeanne Estates Apartments, Inc. With this dismissal, the Kolbek plaintiffs have no
claims pending against any party affiliated with TACM and no Defendant-Insured in this case.
Moreover, none of the Defendant-Insureds in this case made a demand for coverage for the
claims in the Kolbek state case. The Court cannot justify making coverage declarations in an
underlying case where there have been no demands for coverage and there are no longer any
claims to defend or defendants to indemnify. 7 Because there is no justiciable controversy at to

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After the entry of the default judgments in the Kolbek state case, a “Direct Action Lawsuit” was filed
against various insurance carriers, including American Western, in the Circuit Court of Miller County.
See Kolbek, et al v. American Western Home Ins. Co., et al, Case No. 46cv14-304-2. This Direct Action
Lawsuit seeks to hold American Western liable for the $525,000,000.00 default judgment entered against
Twenty First Century Holiness Tabernacle Church in the Kolbek state suit. Accordingly, there may be a
justiciable controversy between American Western and Defendant-Insureds as to coverage disputes in the
Direct Action Lawsuit. However, the Direct Action Lawsuit and American Western’s potential liability
for the default judgments are not at issue here. In a previous order, the Court expressly declined to allow
Plaintiffs to amend their complaint to include claims related to the Direct Action Lawsuit. (ECF No. 50).

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the claims in the Kolbek state suit, American Western’s request for summary judgment on this
issue is denied.
B. The Ondrisek Suit
While no Defendant-Insureds were named as defendants in the Ondrisek suit, DefendantInsureds Don Wolf and Cherry Hill Printing Inc. argue that they are entitled to a defense and
indemnification in that suit.
American Western argues that, because the Ondrisek defendants—Tony Alamo and John
Kolbek—are not insureds as defined by the American Western policies, the policies provide no
coverage for any judgment stemming from Alamo and Kolbek’s alleged actions.
The policies issued to Defendant-Insureds provide as follows:
No person or organization is an insured with respect to the conduct of any
current or past partnership, joint venture or limited liability company that is
not shown as a Named Insured in the Declarations.
(ECF No. 59, Exh 1-4). The policies’ declarations do not identify any Named Insured other than
Steve Johnson, Don Wolf, and Cherry Hill Printing, Inc.
Because Defendant-Insureds were not named as defendants in the Ondrisek suit, and
because Tony Alamo and John Kolbek are not listed as Named Insureds under the policies, there
can be no coverage for the claims and injuries at issue in the Ondrisek suit. 8 See Kolbek v. Truck
Ins. Exch., 2014 Ark. 108, 7, 431 S.W.3d 900, 906 (Ark. 2014).

Moreover, coverage is

precluded because the Ondrisek complaint does not contain any specific allegation that any of
the actions that caused harm to the Ondrisek plaintiffs were carried out on any of the designated
premises specified on the policies’ respective declarations. Id.

8

Defendant-Insureds Don Wolf and Cherry Hill Printing, Inc. do not argue in their response that Alamo
or Kolbek should be classified as insureds under the policies because they were employees of DefendantInsureds acting within the scope of their employment. Rather, Don Wolf and Cherry Hill Printing, Inc.
seem to concede that Alamo and Kolbek are not insureds under the policies. (ECF No. 60, p. 2).

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The Court finds that no genuine issue of material fact exists as to coverage for the claims
in the Ondrisek suit.

Accordingly, summary judgment in favor of American Western is

warranted
C. The Coie Suit
As the Court has previously noted, it does not appear that any Defendant-Insureds have
made a direct request to American Western for defense and/or indemnification for the claims
made in the Coie suit. However, Don Wolf and Cherry Hill Printing, Inc. have argued in their
response to American Western’s summary judgment motion that American Western owes them a
duty to defend and indemnify. Accordingly, the Court will address whether American Western
is under any duty to defend or indemnify in the Coie suit.
Beginning in 2006, American Western issued a number of liability insurance policies to
Defendant-Insureds. The judgment that Christhiaon Coie seeks to execute was entered against
Tony Alamo on September 14, 1995. Accordingly, American Western’s polices were issued
after Coie’s judgment, and the allegations against the Defendant-Insureds occurred prior to the
inception of coverage. Because the policies were not in effect at the time of the judgment, no
genuine issue of material fact exists as to coverage for the Coie claims, and summary judgment
is appropriate. See Kolbek v. Truck Ins. Exch., 2014 Ark. 108, 6, 431 S.W.3d 900, 906 (Ark.
2014). 9

9

In their response to the summary judgment motion, Defendant-Insureds Cherry Hill Printing, Inc. and
Don Wolf acknowledged that this ruling would be consistent with the Court’s prior summary judgment
rulings in related declaratory judgment actions addressing the Coie suit. See Nautilus Insurance
Company v. Sharon Alamo, et al., Case No. 4:11-cv-4054 (ECF No. 120); Catalina London Limited v.
Jeanne Estates Apartments, Inc., et al., Case No. 4:11-cv-4091 (ECF No. 112).

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CONCLUSION
For the reasons stated above, the Court finds that American Western’s Motion for
Summary Judgment (ECF No. 57) should be and hereby is GRANTED in part and DENIED in
part. American Western’s motion is granted as to the coverage issues in the Coie and Ondrisek
suits. Because there is no justiciable controversy as to American Western’s claims regarding the
Kolbek suit, the motion is denied as to these claims and they are hereby DISMISSED
WITHOUT PREJUDICE. A judgment of even date consistent with this opinion shall issue.
IT IS SO ORDERED, this 23rd day of March, 2016.

/s/ Susan O. Hickey
Susan O. Hickey
United States District Judge

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