Canopius US Insurance, Inc. v. Johnson et al
Filing
86
ORDER denying 72 Motion for Summary Judgment; ***Civil Case Terminated. Signed by Honorable Susan O. Hickey on March 23, 2016. (mll)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
TEXARKANA DIVISION
CANOPIUS US INSURANCE, INC.
f/k/a OMEGA US INSURANCE, INC.
VS.
PLAINTIFF
CASE NO. 4:13-CV-4079
STEVE JOHNSON and
DONN WOLF
DEFENDANT-INSUREDS
and
DESIREE KOLBEK, AMY EDDY,
JEANETTE ORLANDO, NICOLE FARR,
SUMMER HAGAN, JAMIE RODRIGUEZ,
PEBBLES RODRIGUEZ a/k/a
YVONNE RODRIGUEZ, SPENCER ONDIRSEK,
SETH CALAGNA
DEFENDANT-CLAIMANTS
ORDER
Before the Court is an Amended Motion for Summary Judgment (ECF No. 72) filed on
behalf of Plaintiff Canopius US Insurance, Inc. (“Canopius”). Separate Defendant-Claimants
Amy Eddy, Nicole Farr, Summer Hagan, Desiree Kolbek, Jeanette Orlando, Jamie Rodriguez,
Pebbles Rodriguez have filed a response. (ECF No. 75). 1 Canopius has filed a reply. (ECF No.
80). The Court finds this matter ripe for consideration.
BACKGROUND
The First Amended Complaint (ECF No. 70) and the present Motion for Summary
Judgment seek a declaration from the Court regarding Canopius’ contractual obligations to
defend and indemnify Defendant-Insureds Steve Johnson and Donn Wolf in cases before this
Court and Arkansas state courts. The underlying cases referenced in the First Amended
1
Defendant-Insureds Steve Johnson and Donn Wolf have not appeared in this action.
1
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; and Ondrisek, et al. v. Kolbek, Case No, 4:09-cv-4100. 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 2 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 owners of businesses and property 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,
2
Desiree Kolbek, Amy Eddy, Jeannette Orlando, Nicole Farr, Summer Hagan, Jamie Rodriguez, and
Pebbles Rodriguez are Defendant-Claimants in the present case. However, the Court will refer to them
throughout this opinion as “the Kolbek plaintiffs” in order to clarify their role in the underlying litigation.
2
defamation, joint-venture 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.
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). 3
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 Canopius’ First Amended Complaint, the Kolbek state suit has been
voluntarily nonsuited with prejudice. (ECF No. 76, Exh. 1). 4 Despite this dismissal, and despite
the fact that no Defendant-Insured was named in the case or requested defense and/or
indemnification from Canopius with respect to the Kolbek state suit, Canopius continues to seek
3
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).
4
Prior to the dismissal of the suit, default judgment was entered against Tony Alamo and Twenty First
Century Holiness Tabernacle Church. (ECF No. 74, Exh. 15-16). Accordingly, at the time of dismissal,
the only pending claims were against Jeanne Estates Apartments, Inc.
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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.
B. The Ondrisek suits
In November 2008, Defendant-Claimants Spencer Ondrisek and Seth Calagna filed suit
in this Court against Tony Alamo and John Kolbek. 5 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 Donn Wolf and Steve Johnson 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. 74, Exh. 19). Some of these properties are covered
by the policies issued by Canopius to Defendant-Insureds. In a letter dated May 31, 2013,
Defendant-Insured Donn Wolf forwarded the Court’s Writ of Execution to Canopius and
5
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.
4
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. 74, Exh. 20).
Canopius 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.
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.
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
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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 Canopius has no duty to defend
under the policies, then it also has 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 Canopius’ duty to defend in
the Kolbek and Ondrisek suits.
A. The Kolbek Suit
Before discussing the substance of the policies and whether Canopius 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.
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
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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 Canopius’ First Amended Complaint being filed in this
case, the Kolbek plaintiffs voluntarily nonsuited with prejudice their remaining claims against
Jeanne Estates Apartments, Inc. (ECF No. 76, Exh. 1). 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. 6 Because there is no justiciable controversy at to
the claims in the Kolbek state suit, Canopius’ request for summary judgment on this issue is
denied.
B. The Ondrisek Suit
Like the Kolbek state suit, the Court must first determine whether a justiciable
controversy still exists as to the Ondrisek suit before discussing the substance of the policies and
whether Canopius has a duty to defend or indemnify.
6
After the entry of the default judgments in the Kolbek state case, a “Direct Action Lawsuit” was filed
against various insurance carriers, including Canopius, 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 Canopius 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 Canopius and Defendant-Insureds as to coverage disputes in the Direct Action
Lawsuit. However, the Direct Action Lawsuit and Canopius’ 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. 69).
7
As noted above, Defendant-Insureds Donn Wolf and Steve Johnson were not named as
defendants in the Ondrisek suit, but Donn Wolf has made a request to Canopius for defense
and/or indemnification. The request for defense and/or indemnification is based on the Court’s
Writ of Execution that authorized the seizure of certain property to satisfy the judgment against
Tony Alamo.
While Donn Wolf has made this demand and Canopius is seeking a declaration,
Defendant-Claimants maintain that there is no justiciable controversy as to the Ondrisek suit.
Defendant-Claimants state that “the only proceedings remaining [in Ondrisek] concern the
enforcement of the judgments, which have now been final for years. The last Writ of Execution
was issued on April 18, 2013.” (ECF No. 76, p. 5). Importantly, the Ondrisek plaintiffs—
Defendant-Claimants Spencer Ondrisek and Seth Calagna—state that they “have not sought and
do not seek Canopius US Insurance proceeds in the collection of their judgment, and stipulate as
such.” Id.
Given this stipulation by Ondrisek and Calagna, the Court finds that they are not pursuing
claims against Canopius for any insurance proceeds arising from the Ondrisek suit and the
execution of the judgment in that suit. In light of this stipulation, the Court finds that there is no
actual controversy of sufficient immediacy and reality to warrant the issuance of a declaratory
judgment as to coverage issues in the Ondrisek suit. Because there is no longer a justiciable
controversy as to the claims in the Ondrisek suit, Canopius’ request for summary judgment on
this issue is denied
CONCLUSION
For the reasons stated above, the Court finds that Canopius’ Motion for Summary
Judgment (ECF No. 72) should be and hereby is DENIED. Because there is currently no
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justiciable controversy, the Court finds that this case should be and hereby is DISMISSED
WITHOUT PREJUDICE.
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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