Livonia Public Schools et al v. Selective Insurance Company of the Southeast

Filing 93

OPINION AND ORDER denying 84 Motion to Amend/Correct. Signed by District Judge Paul D. Borman. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
LIVONIA PUBLIC SCHOOLS, &
METROPOLITAN ASSOCIATION FOR
IMPROVED SCHOOL LEGISLATION,

Case No. 16-cv-10324
Paul D. Borman
United States District Judge

Plaintiffs,
v.
SELECTIVE INSURANCE COMPANY
OF THE SOUTHEAST
Defendant.
______________________________/

OPINION AND ORDER DENYING PLAINTIFF’S MOTION TO MODIFY THE
COURT’S AUGUST 24, 2018 OPINION AND ORDER
INTRODUCTION
By Motion, Plaintiffs Livonia Public Schools (LPS) and Metropolitan
Association for Improved School Legislation (MAISL) ask the Court to revisit its
August 24, 2018 Opinion and Order (ECF No. 76), which granted in part and denied
in part the parties’ cross-motions for summary judgment in this insurance coverage
dispute. (ECF No. 84, Motion to Modify.) Specifically, Plaintiffs ask the Court to
reevaluate its holding that “[Defendant] Selective [Insurance Company of the
Southeast (Selective)]’s duty to defend the underlying lawsuits under the 2010-2011
and 2011-2012 Primary Policies is based on three occurrences in the Doe lawsuit
under the 2010-2011 Primary Policy [and] three occurrences in the Doe lawsuit

under the 2011-2012 Primary Policy.” (ECF No. 76, O&O, PgID 101.) Plaintiffs
base their Motion to Modify on the district court’s “inherent power to reconsider
interlocutory orders and reopen any part of a case before entry of a final judgment”
rather than any Federal Rule of Civil Procedure or Local Rule. (ECF No. 88, Reply
in Support of Motion to Modify, PgID 3874–75 (quoting Mallory v. Eyrich, 922 F.2d
1273, 1282 (6th Cir. 1991)).)
The Motion to Modify, ostensibly based on new developments in the
underlying cases, raises a new legal theory under Mead Reinsurance v. Granite State
Ins. Co., 873 F.2d 1185 (9th Cir. 1988), attempts to relitigate theories considered
and rejected by the Court in the Opinion and Order, and brings up an issue that was
not addressed in the Opinion and Order.1 The Court finds that, even with the
additional information created by the resolution of the underlying lawsuits, the
August 24, 2018 Opinion and Order was neither clearly erroneous nor manifestly
unjust, and therefore the Court denies Plaintiffs’ Motion to Modify.

1

The fourth alternative modification requested by Plaintiffs in their Motion
to Modify is a finding that “all losses and defense expenses incurred for the 2103
Doe Complaint should be allocated to the 2011-2012 policy year.” (ECF No. 84,
Motion to Modify, PgID 3466.) Although Defendant Selective discussed the proper
allocation of defense costs between the policies in its Motion for Summary Judgment
(ECF No. 59, Selective MSJ, PgID 2803–04 (citing Alticor, Inc. v. Nat’l Union Fire
Ins. Co. of Pa., 916 F. Supp. 2d 813, 833 (W.D. Mich. 2013))), as well as in its
Response to Plaintiffs’ Motion for Partial Summary Judgment (ECF No. 65,
Selective Response to MSJ, PgID 2929 (citing Alticor, 916 F. Supp. 2d at 833)), the
Court did not address the proper method of allocation in the Opinion and Order so
the Court does not resolve this question here, in the context of a motion to modify.
2

BACKGROUND
In this case, Plaintiffs LPS and MAISL and Defendant Selective dispute the
extent to which Selective owes LPS, under certain insurance policies, the duty to
defend and the duty to indemnify in connection with several lawsuits filed on behalf
of physically and/or mentally disabled children against LPS, LPS employees, and
members of the LPS school board. (ECF No. 76, O&O, PgID 3367.) Each lawsuit
was based on allegations that Sharon Turbiak, a special-needs teacher at Webster
Elementary School, and Nancy Respondek, a classroom aide in Turbiak’s classroom,
physically, verbally, and emotionally abused the plaintiff children, and allegations
that school administrators knew about this behavior and failed to act. (See id. at PgID
3367–71.) By now, all of the underlying lawsuits have been dismissed or settled.
Only one of these underlying lawsuits, Doe, et al. v. Livonia Public Schools,
et al., No. 13-cv-11687 (E.D. Mich. 2013) (Levy, J.), is relevant to the motion now
before the Court. In Doe, the parents of three children brought 85 federal and state
claims on behalf of their children against 17 individuals and LPS—alleging that
Turbiak and Respondek committed acts of physical and emotional abuse “on
multiple occasions in the 2010-2011 and/or 2011-2012 school year(s).” (ECF No. 110, Doe Federal Complaint, PgID 464–580.) On October 12, 2018, Judge Levy
granted summary judgment to the defendants on all 51 federal claims and dismissed
the state law claims without prejudice. Doe, No. 13-cv-11687, 2018 WL 4953086
3

(E.D. Mich. Oct. 12, 2018). The Doe plaintiffs then filed suit in state court to pursue
their remaining claims, this time alleging abuse only in the 2011-2012 school year.
(ECF No. 84-5, Doe State Complaint, PgID 3747–80.) The state case was settled and
dismissed on October 23, 2019.
The insurance policies relevant to the Motion to Modify are the 2010-2011
and the 2011-2012 “Primary Policies,” in which Selective agreed to pay damages
and expenses “in excess of the self insured retention” for “bodily injuries or personal
injuries, suffered or alleged to have been suffered” that were “caused by an
occurrence during the term of this insurance.” (ECF No. 1-3, 2011-2012 Policy,
PgID 109.) The policies define “occurrence” as “an accident; . . . a happening; . . .
an event; or . . . continuous or repeated exposure to conditions,” that “unexpectedly
or unintentionally lead to bodily injury or property damage during the term of this
insurance.” (Id. at PgID 116.) According to the definition, “[a]ll exposure to the
same general conditions of one location is one occurrence.” (Id.) The self insured
retention (SIR), is the amount that the insured, LPS/MAISL, must pay in its own
defense before the insurer, Selective, becomes obligated to pay. (Id. at PgID 84.)
The SIR for the relevant policies is $500,000 per occurrence. (Id.) The parties
dispute the number of occurrences alleged in the federal Doe lawsuit and whether
any of the alleged occurrences fall under the 2010-2011 policy.

4

On August 18, 2017, Plaintiffs filed an Amended Joint Motion for Partial
Summary Judgment seeking rulings that (1) the policies covered the underlying
lawsuits and “Selective owed a duty to defend and pay past and ongoing defense
costs incurred in the three2 lawsuits,” (2) Selective was estopped from changing its
original coverage position that all of the underlying lawsuits constituted only “two
claims with two $500,000 [SIRs],” and (3) other declarations not relevant to the
motion now before the court. (ECF No. 60, Plaintiffs’ MSJ, PgID 2894–96.)
Plaintiffs, in their brief, made clear their position that the underlying lawsuits
triggered the duty to defend under only one policy year, 2011-2012, but did not
discuss their position on whether, based on a correct interpretation of the policy, the
underlying lawsuits constituted one “occurrence” per policy year triggered, three
“occurrences” per year (one for each lawsuit), or five “occurrences” per year (one
for each plaintiff). (ECF No. 57, Plaintiffs’ MSJ, PgID 2563–65.) Plaintiffs’ initial
position on this question, as stated in their Amended Complaint, was “[t]he claim of
each of the five plaintiffs in the Underlying Lawsuits constitutes a separate
occurrence.” (ECF No. 8, Amended Complaint, PgID 792, ¶ 78; see also, id. at PgID,
793, 795, ¶¶ 79–80, 85(a-b).) Regardless of the correct interpretation of the policy
language, Plaintiffs maintained that Selective was estopped from changing its

2

At that time, there were three relevant federal court cases—since that time,
all federal cases were dismissed (two at summary judgment and one was settled) and
two state lawsuits based on the same conduct were filed, litigated, and settled.
5

original position that the lawsuits constituted two total occurrences (so two total
$500,000 SIRS), one under the 2010-2011 policy and one under the 2011-2012
policy. (Id. at PgID 840, ¶¶ 248–49; ECF No. 57, Plaintiffs’ MSJ, PgID 2569.)
Selective responded to Plaintiffs’ Joint Motion for Partial Summary Judgment
by arguing that the 2010-2011 primary policy duty to defend was triggered by the
allegations in the Doe case because the Doe plaintiffs alleged that the abuse occurred
“on multiple occasions in the 2010-2011 and/or 2011-2012 school year(s).” (ECF
No. 65, Selective Response to MSJ, PgID 2928–29.) These allegations, according to
Selective, arguably fall within the coverage of the 2010-2011 policy and therefore
constitute one occurrence and one SIR for each of the three Doe plaintiffs for each
policy year, resulting in a total of six occurrences and SIRs. (Id.) Selective also
disputed Plaintiffs’ estoppel theory. (Id. at PgID 2929–37.) Plaintiffs devoted their
Reply to the estoppel issue. (ECF No. 69, Plaintiff Reply on MSJ, PgID 3148–53.)
Selective filed its own Motion for Summary Judgment on August 18, 2017.
(ECF No. 59, Selective MSJ.) In it, it asked the Court to rule that “there is one
occurrence per claimant per policy period” and to find against Plaintiffs’ estoppel,
waiver, and reformation theories. (Id. at PgID 2787.) Selective based its argument
for one occurrence per claimant per policy period on the language of the policies,
the “cause test” described in Dow Chem. Co. v. Associated Indem. Corp., 727 F.
Supp. 1524 (E.D. Mich. 1989), and cases holding that related acts of sexual abuse
6

constituted one occurrence per victim per policy period. (ECF No. 59, Selective
MSJ, PgID 2799–2802.) Regarding the question of whether the Doe complaint
triggered the 2010-2011 primary policy, Selective argued that proof of injury to the
plaintiffs during the 2010-2011 policy period was unnecessary because the duty to
defend “is not limited to meritorious suits.” (Id. at PgID 2802–03 (quoting Auto Club
Group Ins. Co. v. Burchell, 249 Mich. App. 468, 480–81 (2002).)
In response to Selective’s Motion for Summary Judgment, Plaintiffs did not
dispute Selective’s interpretation of the policy language to find that there was one
occurrence (so one $500,000 SIR) per victim per policy period. (See ECF No. 66,
Plaintiffs Response to MSJ, PgID 3106.) Instead, they reiterated their estoppel
arguments and argued, in the alternative, that there were no occurrences in the 20102011 policy period. (Id. at PgID 3107.) To support their argument on the 2010-2011
policy, Plaintiffs pointed to the response brief filed by the Doe plaintiffs at the
summary judgment stage in the federal Doe case, in which the plaintiffs stated that
the plaintiffs were afternoon students in Turbiak’s classroom during only the 20112012 school year and identified specific incidents in only January and March 2012.
(Id. at PgID 3106–07 (referring to ECF No. 57, Plaintiffs’ MSJ, PgID 2549–52).)
They also argued that the phrase in the Doe complaint, “on multiple occasions in the
2010-2011 and/or 2011-2012 school year(s),” is inherently ambiguous and the
ambiguity should be resolved in their favor. (Id. at PgID 3107.) Selective did not
7

address either of these issues in its Reply. (ECF No. 70, Selective Reply on MSJ,
PgID 3214–20.)
The Court held a hearing on the motions on December 14, 2017, and issued
an Opinion and Order that partially granted and partially denied both motions on
August 24, 2018. (ECF No. 76.) Regarding the question of the number of
occurrences, the Court found that the claims in the underlying lawsuits constituted
one occurrence per plaintiff. (Id. at PgID 3405, 3449.) In reaching this conclusion,
the Court found that there was “no dispute” because Plaintiffs had asserted, in their
Amended Complaint, that “[t]he claim of each of the five plaintiffs in the Underlying
Lawsuits constitutes a separate occurrence,” (ECF No. 8, Amended Complaint, PgID
792, ¶ 78) and because Plaintiffs had not made any arguments regarding the correct
interpretation of the policy definition of occurrence. (ECF No. 76, O&O, PgID
3405.) The Court also rejected Plaintiffs’ estoppel argument regarding the number
of occurrences. (Id. at PgID 3435–38.)
On the issue of whether there were any occurrences under the 2010-2011
primary policy, the Court held that “[t]he allegations in the Doe lawsuit, even if
unspecific, are sufficient to impose a duty to defend on Selective, which in turn
justifies Selective’s position that there were occurrences in the 2010-2011 policy
period.” (Id. at PgID 3406.) In a footnote in this section of the Opinion and Order,
the Court wrote:
8

At the December 14, 2017 hearing on the instant Motions, Plaintiffs’
counsel argued that just as Selective concluded that the 2010-2011
policies were not triggered by the Telerico lawsuit—i.e., after
determining that the Telerico plaintiff did not actually attend Webster
during that academic year—the same reasoning should compel a
conclusion that the 2010-2011 policies were not triggered by the Doe
lawsuit, because the filings in the Doe litigation suggest that the three
Doe plaintiffs were all in the same classroom only during the 20112012 policy year, and because no specific incidents during the 20102011 policy year have been pled or proven. (See ECF No. 74, Transcript
of December 14, 2017 Hearing at 57:6-20.)
When it comes to the duty to defend, “[t]he insurer has the duty to look
behind the third party’s allegations to analyze whether coverage is
possible.” American Bumper & Mfg. Co. v. Hartford Fire Ins. Co., 452
Mich. 440, 450–51 (1996). Under this principle, there is a distinction
between the discovery of evidence that definitively precludes coverage
of a particular claim (such as the fact that the Telerico plaintiff did not
attend Webster during the 2010-2011 year) and the simple fact that the
claim has not been proven (as is the case with the Doe plaintiffs’ claims
regarding the 2010-2011 school year). At this time, this distinction
justifies Selective’s position that the Doe lawsuit implicates the 20102011 policy year. The Court notes, however, that if and when it is no
longer the case that “coverage is possible” as to the Doe lawsuit’s 20102011 allegations, Selective will be obligated to adjust its position
accordingly.
(Id. at PgID 3407 n. 12.) The other holdings in the Opinion and Order are not relevant
to the Motion before the Court.
The parties appeared before the Court for a Status Conference on November
2, 2018 (See ECF No. 77.) At the status conference the parties discussed the October
12, 2018 grant of summary judgment in the underlying federal Doe case, and
Plaintiffs indicated their belief that Judge Levy’s opinion was relevant to the
question of whether coverage was possible under the 2010-2011 case. (See ECF No.
9

79, Communication to Parties as they Proceed to Facilitation (Corrected), PgID
3453.) The Court directed the parties to go back to facilitation to try to resolve the
case, and, on November 19, 2018, issued a communication to the parties saying that
Judge Levy’s opinion is “certainly relevant to the instant case.” (Id.)
Facilitation was fruitless,3 and Plaintiffs filed their Motion to Modify the
Court’s August 24, 2018 Opinion and Order on October 4, 2019. (ECF No. 84.) In
it, the Plaintiffs argue that Judge Levy’s opinion in the federal Doe case and the state
court complaint filed by the Doe plaintiffs on December 14, 2018 compel the Court
to modify the August 24, 2018 Opinion and Order to find no occurrences under the
2010-2011 policy year. (Id. at PgID 3465.) In the Motion, Plaintiffs also ask the
Court to modify the Opinion and Order to find a single occurrence applicable to the
Doe case, to modify the Opinion and Order to find two occurrences for the 20102011 policy year because no specific injury to C.W. Doe was alleged in the Doe
complaint, or to modify the Opinion and Order to find that all of the losses and
defense expenses incurred for the federal Doe case should be allocated to the 20112012 policy year. (Id. at PgID 3465–66.) The Motion was fully briefed. (See ECF
No. 86, Selective Response; ECF No. 88, Reply in Support of Motion to Modify.)

3

Plaintiffs indicate that they engaged in facilitation until mid-July 2019. (ECF
No. 84, Motion to Modify, PgID 3464.)
10

STANDARD OF REVIEW
“District Courts have inherent power to reconsider interlocutory orders and
reopen any part of a case before entry of a final judgment.” Mallory, 922 F.2d at
1282. This power is recognized by Federal Rule of Civil Procedure 54(b):
[A]ny order or other decision, however designated, that adjudicates
fewer than all the claims or the rights and liabilities of fewer than all
the parties does not end the action as to any of the claims or parties and
may be revised at any time before the entry of a judgment adjudicating
all the claims and all the parties’ rights and liabilities.
Fed. R. Civ. P. 54(b). If a party seeks reconsideration of an interlocutory order, “the
district court has authority to reexamine the question . . . hold whatever hearings it
deems advisable, and redetermine the issue in light of its findings and conclusions.”
Mallory, 922 F.2d at 1282. This “inherent procedural power” allows district courts
to “reconsider, rescind, or modify an interlocutory order for cause seen by it to be
sufficient.” Leelanau Wine Cellars, Ltd. v.. Black & Red, Inc., 118 F. App’x 942,
946 (6th Cir. Dec. 29, 2004). A District Court may exercise this power sua sponte,
as did the court in Leelanau, or it may do so on motion of the parties. Id. at 945–46;
see also In re Saffady, 524 F.3d 799, 802–03 (6th Cir. 2008) (finding a district court’s
sua sponte decision to vacate an order to be proper exercise of inherent power).
Typically, when a party asks a district court to exercise its power to
reconsider, rescind, or modify an interlocutory order, it does so through a motion for
reconsideration. In the Eastern District of Michigan, motions for reconsideration are
11

governed by Local Rule 7.1(h), which requires parties to file the motion “within 14
days after entry of the judgment or order” and show “a palpable defect by which the
Court and the parties and other persons entitled to be heard on the motion have been
misled,” which, if corrected, “will result in a different disposition of the case.” “A
‘palpable defect’ is a defect which is obvious, clear, unmistakable, manifest, or
plain.” Michigan Dep’t of Envtl. Quality v. City of Flint, 296 F. Supp. 3d 842, 847
(E.D. Mich. 2017). No Local or Federal Rule establishes a standard for a “motion to
modify” an interlocutory order, so the Court must look for guidance in the rules and
case law establishing standards of review for similar motions.
Because a motion to modify is materially indistinguishable from a motion for
reconsideration—both ask the court to reevaluate a previous decision—the Court
should first look to the standard of review for motions for reconsideration. In
addition to the palpable defect standard for both final and interlocutory orders set
out in Local Rule 7.1(h), “courts will find justification for reconsidering
interlocutory orders whe[re] there is (1) an intervening change of controlling law;
(2) new evidence available; or (3) a need to correct a clear error or prevent manifest
injustice.” Louisville/Jefferson Cty. Metro Gov’t v. Hotels.com, L.P., 590 F.3d 381,
389 (6th Cir. 2009) (quoting Rodriguez v. Tenn. Laborers Health & Welfare, 89 F.
App’x 949, 959 (6th Cir. Feb. 6, 2004)). Generally, motions for reconsideration
“may not be used to raise issues that could have been raised in the previous motion.”
12

Evanston Ins. Co. v. Cogswell Props., LLC, 683 F.3d 684, 692 (6th Cir. 2012). If the
district court’s resolution of the motion for reconsideration is appealed, arguments
that were raised for the first time in the motion for reconsideration are forfeited and
will not be considered unless the result would be a plain miscarriage of justice. Id.
The only way to distinguish Plaintiffs’ Motion to Modify from a typical
motion for reconsideration is the fact that it purports to rely on new evidence—Judge
Levy’s opinion in the federal Doe case and the Doe complaint in state court. (See
ECF No. 84, Motion to Modify, PgID 3480–86.) In this regard, the Motion to Modify
is analogous to a motion for relief from judgment under Federal Rule of Civil
Procedure 60(b)(2), which permits courts to grant relief from a final judgment, order,
or proceeding on the basis of “newly discovered evidence that, with reasonable
diligence could not have been discovered in time to move for a new trial under Rule
59(b).” A motion under Rule 60(b) “must be made within a reasonable time—and
for reasons (1), (2), and (3) no more than a year after the entry of the judgment or
order or the date of the proceeding.” Fed. R. Civ. P. 60(c)(1). The newly discovered
evidence must have been previously unavailable and be likely to produce a different
result. Michigan Dep’t of Envtl. Quality, 296 F. Supp. 3d at 846 (internal quotations
and citations omitted). Rule 60(b) may not be used to relitigate the case. Id.
Based on this analysis, the Court finds the following standard appropriate: if
failure to consider the new arguments presented in the Motion to Modify would lead
13

to manifest injustice, or if the new evidence renders the conclusions reached in the
prior opinion clearly erroneous or manifestly unjust, the Court may consider the
new arguments and evidence and grant the Motion to Modify. This standard
acknowledges the Court’s inherent power to reconsider interlocutory orders but also
reflects the “common denominator” among the rules governing motions to
reconsider, modify, or vacate prior decisions of the court: “a party that has had a fair
chance to present its arguments ought not have a second bite at the apple.” Michigan
Dep’t of Envtl. Quality, 296 F. Supp. 3d at 847.
ANALYSIS
Plaintiffs, in their Motion to Modify, urge the Court to modify its conclusion
that Selective’s duty to defend the federal Doe lawsuit is based on three occurrences
under the 2010-2011 policy and three occurrences under the 2011-2012 policy, a
conclusion that requires Plaintiffs to pay six SIRs before Selective is obligated to
pay anything. (ECF No. 84.) Plaintiffs ask the Court to limit the duty to defend the
federal Doe lawsuit to only one occurrence under the 2011-2012 policy, to three
occurrences under the 2011-2012 policy, or to five occurrences—two under the
2010-2011 policy and three under the 2011-2012 policy. (Id. at PgID 3465–66.) If
the Court does not find modification of the number of occurrences appropriate,
Plaintiffs ask the Court to add a finding that all losses and defense expenses incurred
for the Doe complaint should be allocated to the 2011-2012 policy year. (Id. at PgID
14

3466.) In support of this motion, they offer several different arguments, which boil
down to create two main issues for the Court: (1) how to apply the “cause test” to
determine the number of occurrences in the context of allegations of physical and/or
emotional abuse of children; and (2) whether, considering Judge Levy’s opinion
granting summary judgment in the federal Doe case and the Doe state court
complaint, Selective owed a duty to defend under the 2010-2011 policy.
There is one threshold issue. Selective argues that the Motion to Modify is
itself improper—saying that no rule permits it and that it is actually “an untimely
motion for reconsideration or a late second attempt at summary judgment.” (ECF
No. 86, Selective Response, PgID 3827.) Selective is right. The Motion to Modify
was not timely under any applicable or analogous procedural rule. Plaintiffs filed it
404 days after the entry of the Opinion and Order it seeks to modify, 355 days after
the entry of the summary judgment in the federal Doe case, 292 days after the
complaint was filed in the state Doe case, and more than 60 days after facilitation
ended. See E.D. Mich LR 7.1(h) (14 days after entry of judgment or order); Fed. R.
Civ. P. 56(b) (30 days after the close of all discovery); Fed. R. Civ. P. 60(b)(2)
(within a reasonable time up to one year after entry of final judgment). Plaintiffs also
did not seek leave of Court to file their motion—Local Rule 7.1(b)(2) requires leave
of Court to file a second motion for summary judgment and parties should seek leave

15

of Court whenever they wish to file a motion that is not affirmatively permitted by
the applicable procedural rules.
However, the Court has discretion to consider the motion because its inherent
power to reconsider and amend its interlocutory orders is not limited by the
previously mentioned procedural rules. See generally, In re Saffady, 524 F.3d at 803.
The Court will consider this motion, despite its procedural impropriety, because
Plaintiffs are somewhat justified in filing it. Plaintiffs construed the Court’s footnote
saying, “[t]he Court notes, however, that if and when it is no longer the case that
“coverage is possible” as to the Doe lawsuit’s 2010-2011 allegations, Selective will
be obligated to adjust its position accordingly,” as an invitation to ask the Court to
reconsider the question of occurrences under the 2010-2011 policy after additional
factual development in the federal Doe case. (ECF No. 76, O&O, PgID 3407 n. 12.)
Although the developments relied on by Plaintiffs do not change the analysis of
whether coverage was possible and the footnote does not invite the Motion to
Modify’s full-scale attempt to relitigate summary judgment, the Court acknowledges
that Plaintiffs’ reading of the footnote is reasonable and therefore considers the
Motion to Modify, subject to the standard of review set out above.
A.

The Cause Test

Plaintiffs base their first argument, that the Opinion and Order should be
modified to reflect a single occurrence for all three Doe plaintiffs, on a 1988 Ninth
16

Circuit case which affirmed a district court’s holding that eleven civil rights lawsuits
alleging excessive force by police constituted a single occurrence under a general
liability policy similar to the one at issue here. Mead Reinsurance v. Granite State
Ins. Co., 873 F.2d 1185, 1187–88 (9th Cir. 1988). A twelfth lawsuit that alleged
police harassment instead of excessive force was considered a second occurrence.
Id. The basis for the Mead court’s ruling was the fact that municipal liability under
28 U.S.C. § 1983 is “necessarily premised on a single policy or custom” of
condoning a series of similar police acts, so the cause of the city’s liability was not
each individual act of excessive force but the policy itself. Id. Plaintiffs argue that
the claims against the LPS defendants also had a single cause, the “alleged
knowledge of and deliberate indifference to Turbiak’s alleged abusive conduct” by
school administrators, which means, under Mead, that there was a single occurrence.
(ECF No. 84, Motion to Modify, PgID 3486–88.)
This argument is a blatant attempt to use a new, but previously available,
theory to relitigate the number of occurrences after the failure of Plaintiffs’ estoppel
theory. Selective addressed the question of whether the underlying lawsuits
constituted one occurrence total or one occurrence per claimant per policy period in
its Motion for Summary Judgment. (See ECF No. 59, Selective MSJ, PgID 2799–
2800 (“To determine whether multiple instances of injury constitute one or more
occurrences, Michigan applies the “cause test.”).) Selective cited Dow Chem. Co. v.
17

Associated Indem. Corp., 727 F. Supp. 1524 (E.D. Mich. 1989) and Michigan Chem.
Corp. v. Am. Home Assurance Co., 728 F.2d 374 (6th Cir. 1984), which establish
the cause test for interpreting the term “occurrence” in similarly worded general
liability insurance policies. (Id.) The cause test is the proposition that multiple
injuries with the same “proximate, uninterrupted, and continuous cause” are one
occurrence. Dow Chem. Co., 727 F. Supp. at 1529. Selective argued that the causes
of the alleged injuries to each child were separate acts of abuse and therefore each
child’s allegations were a separate occurrence. (ECF No. 59, Selective MSJ, PgID
2800–02.) Selective bolstered this argument with a discussion of cases involving
coverage of allegations of multiple acts of sexual abuse of children—the majority of
which have concluded that there is one occurrence per alleged victim per policy
period. (Id. (citing H.E. Butt Grocery Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh,
Pa., 150 F.3d 526, 532 (5th Cir. 1998) (collecting cases)).)
Plaintiffs chose not to address Selective’s argument regarding the cause test
in their Response, choosing instead to rely on their estoppel claims to limit the
number of occurrences. The Court relied on this lack of dispute, as well as Plaintiffs’
statement in their Amended Complaint that “[t]he claim of each of the five plaintiffs
in the Underlying Lawsuits constitutes a separate occurrence” (ECF No. 8, Amended
Complaint, PgID 792, ¶ 78) and found that there was one occurrence per plaintiff
per policy period. (ECF No. 76, O&O, PgID 3405.)
18

The Court does not consider Plaintiffs’ Mead argument on the merits.
Plaintiffs had ample opportunity to make this argument in their Response to
Selective’s Motion for Summary Judgment, or even in their own Motion for Partial
Summary Judgment, but failed to do so. A motion to modify, which is, in essence a
motion for reconsideration “may not be used to raise issues that could have been
raised in the previous motion.” Evanston Ins. Co., 683 F.3d at 692. Failure to address
the Mead argument will also not result in a plain miscarriage of justice. The
reasoning of courts that have found that multiple related acts of abuse against
multiple victims constitute one occurrence per victim is persuasive. See, e.g., H.E.
Butt, 150 F.3d at 534 (“Here, it is clear that each child’s injuries are independent and
caused by separate acts of sexual abuse.) The allegations of sexual abuse and related
allegations of negligent supervision in those cases are more analogous to the
allegations of physical abuse and related allegations of deliberate indifference,
failure to report, and failure to adequately investigate in the underlying lawsuits than
are the allegations of a policy of condoning excessive force by the police in Mead.
Accordingly, the Court denies the Motion to Modify’s invitation to find one
occurrence total for the federal Doe lawsuit.
B.

Duty to Defend under the 2010-2011 Policy

The remainder of Plaintiffs arguments focus on the question of whether there
were any occurrences under the 2010-2011 policy. (See ECF No. 84, Motion to
19

Modify, PgID 3488–99.) Specifically, they insist that Judge Levy’s opinion in the
federal Doe case made “key findings of fact” that were “confirmed” by the state Doe
complaint and these findings of fact make it clear that Selective never owed a duty
to defend the Doe lawsuit under the 2010-2011 policy. (See ECF No. 88, Reply in
Support of Motion to Modify, PgID 3878–80.) Judge Levy’s opinion and the state
court complaint, however, are not strong enough pieces of evidence to compel the
Court to change its opinion—in fact, neither piece of evidence is significantly
probative on the question of whether the federal Doe lawsuit contained allegations
of occurrences under the 2010-2011 policy.
It is well settled that an insurer’s duty to defend is broader than its duty to
indemnify. American Bumper, 452 Mich. at 450–51. It “encompasses even frivolous
and unfounded allegations,” Shepard Marine Constr. Co. v. Maryland Cas. Co., 73
Mich. App. 62, 65 (1976), and extends “to actions which are groundless, false, or
fraudulent, so long as the allegations against the insured even arguably come within
the policy coverage.” Detroit Edison Co. v. Michigan Mut. Ins. Co., 102 Mich. App.
136, 142 (1981). Insurers owe a duty to defend “despite theories of liability asserted
against any insured which are not covered under the policy, if there are any theories
of recovery that fall within the policy.” Id. The duty to defend exists when “coverage
is possible.” Id.

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Coverage is possible whenever the allegations against the insured arguably
state a covered claim. See id. For instance, in Detroit Edison the defendant insurance
company owed Detroit Edison, the insured, a duty to defend an employee’s
workplace injury suit when the coverage exclusion for employee negligence had an
exception for supervisory liability and the allegations in the complaint led to a
reasonable inference of an unstated allegation that Detroit Edison failed to properly
supervise the employee’s work. Id. at 139–42. As these facts make clear, the duty to
defend is not dependent “upon the skill in pleading of a third party.” Shepard
Marine, 73 Mich. App. at 65. The insurer must look behind the allegations in the
third-party complaint to determine whether coverage is possible. Id. “Uncertainty
regarding whether an allegation comes within the scope of the policy must be
resolved in the policyholder’s favor.” American Bumper, 452 Mich. at 455.
Insurers must determine whether coverage is possible at the time the thirdparty files a complaint against the insured. See American Bumper, 452 Mich. at 455
(finding that insurer owed duty to defend lawsuit that proved to be groundless
because an occurrence under the policy was possible based on the allegations). To
hold otherwise would be to deprive insureds of their bargained-for right to a defense
against meritless claims. See id. at 458. This is also what distinguishes the duty to
defend from the duty to indemnify—the duty to defend exists whenever a thirdparty’s allegations arguably qualify for coverage, the duty indemnify exists only
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when the third-party’s allegations have been proven true or when, after factual
development, the insurer and insured decide settle the claims rather than test their
veracity in court. See, e.g., Citizens Ins. Co. v. Secura Ins., 279 Mich. App. 69 (2008)
(finding that insurer owed duty to defend but that duty to indemnify turned on factfinder’s determination of the issue upon which coverage depended).
There are some situations, as this Court acknowledged in the Opinion and
Order, where, after some factual development, overwhelming evidence proves that
coverage was never possible. This was the case with the Telerico plaintiff, who did
not attend Webster during the 2010-2011 school year and therefore could not have
been subjected to physical and verbal abuse that year. (See ECF No. 76, O&O, PgID
3407 n. 12.) This type of evidence is distinguishable from a mere lack of evidence
in support of a claim that is later proved groundless—once a defense has run its
course, the duty to defend cannot be determined “[w]ith the benefit of hindsight”
because that would eviscerate the duty. American Bumper, 452 Mich. at 455; see
also Alticor, Inc. v. Nat’l Union Fire Ins. Co. of Pa., 916 F. Supp. 2d 813, 828 n. 14
(W.D. Mich. 2013) (“Coverage is triggered by the claims and allegations, even when
ultimately groundless or frivolous, and not whether the plaintiff later proves, or fails
to prove, the allegations to be true.”).
This Court, in determining whether the federal Doe Complaint alleged
occurrences in the 2010-2011 policy year, and thus determining whether Selective
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had a duty to defend under the 2010-2011 policy, held, “[t]he allegations in the Doe
lawsuit, even if unspecific, are sufficient to impose a duty to defend on Selective”
for that policy year. (ECF No. 76, O&O, PgID 3406.) It further stated, “[t]he record
contains no indication that there has been any legal determination, in the Doe lawsuit
itself or otherwise, establishing that no “occurrences” took place as to any of the
plaintiffs in that action during the 2010-2011 policy year.” (Id.) This holding was
not clear legal error. The federal Doe Complaint alleged that Turbiak and Respondek
physically and/or emotionally abused the plaintiffs “on multiple occasions in the
2010-2011 and/or 2011-2012 school year(s)” and listed specific incidents in 2012
with the caveat “[b]y way of example.” (ECF No. 1-10, Doe Federal Complaint,
PgID 470–72, ¶¶ 50–59.) The complaint also describes a “pattern of conduct” of
abuse. (Id. at PgID 472, ¶ 60.) These allegations lead to the reasonable inference that
the Doe plaintiffs expected to find evidence of additional instances of abuse in the
2010-2011 school year and intended to include those instances of abuse in their
lawsuit. Therefore, the Doe plaintiffs alleged possible occurrences in 2010-2011 and
coverage under that policy was possible.
Now, Plaintiffs argue that Judge Levy’s opinion in the federal Doe case and
the complaint in the state Doe case, which contains allegations of abuse in only the
2011-2012 school year, prove that coverage was never possible under the 2010-2011
school year. (See ECF No. 84, Motion to Modify, PgID 3494–99.) There are two
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problems with this argument—(1) neither piece of evidence is particularly probative
on the question of whether coverage was possible under the allegations of the federal
Doe complaint, and (2) the premise of the argument, that proof of bodily injury to
each Doe plaintiff in 2010-2011 is required for the duty to defend, is incorrect.
First, an opinion granting summary judgment, by rule, is a legal conclusion
reached on the basis of undisputed material facts—a court ruling on a motion for
summary judgment does not weigh the evidence or make contested factual findings
and it need not discuss allegations that did not generate factual support. See Fed. R.
Civ. P. 56(a) (“The 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.”) A court may discuss which facts are in dispute, which
facts are material, and which are undisputed, but the court does not conclusively
establish all of what was alleged in the first place nor does it conclusively establish
what actually happened. The state court complaint is even less probative—it is a
second attempt by the Doe plaintiffs to redress their perceived harms. Though it may
reflect a reassessment of which allegations they can support and prove, it does
nothing to limit the scope of allegations they presented in their previous case. Neither
Judge Levy’s opinion nor the subsequent state court filing definitively prove that
coverage was never possible under the 2010-2011 policy.

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Second, Plaintiffs insist, throughout their various arguments on whether the
federal Doe complaint triggered the duty to defend under the 2010-2011 policy, that
proof that each of the Doe plaintiffs “actually sustained “bodily injury” during the
2010-2011 school year” is required to trigger the duty to defend under that policy.
(See, e.g., ECF No. 84, Motion to Modify, PgID 3491.) All of their arguments
regarding 2010-2011 occurrences depend on this premise—for instance, Plaintiffs’
alternative argument that there should be only one occurrence for plaintiff C.W. Doe
is based on the fact that “the 2013 Doe Complaint never alleged any specific
“occurrence” involving C.W. Doe.” (Id. at PgID 3498.) Similarly, Plaintiffs’ attempt
to recharacterize the broad allegation that Turbiak and Respondek physically and/or
emotionally abused the plaintiffs “on multiple occasions in the 2010-2011 and/or
2011-2012 school year(s)” (ECF No. 1-10, Doe Federal Complaint, PgID 464) into
an allegation that “the LPS Defendants knew of this hostile teaching environment in
the 2010-2011 school year, and were deliberately indifferent to the situation in the
2011-2012 school year” only makes sense if proof of bodily injury is required to
establish an occurrence for the duty to defend.4 (ECF No. 84, Motion to Modify,

4

Although the Court does not address Plaintiffs’ fourth alternative argument
regarding the proper allocation of losses between the policy, this argument also relies
on the premise discussed in this section. (See ECF No. 84, Motion to Modify, PgID
3499–3500.)
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PgID 3490.) This premise misunderstands the distinction between the proof needed
to trigger the duty to defend and the proof needed to trigger the duty to indemnify.
When a policy defines “occurrence” as an event that “unexpectedly or
unintentionally lead[s] to bodily injury or property damage during the term of this
insurance,” as the policies here at issue do, an injury during the term of policy is
required to trigger the duty to indemnify under that policy. (ECF No. 1-3, 2011-2012
Policy, PgID 116 (emphasis added)); see Gelman Sci., Inc. v. Fidelity and Cas. Co.,
456 Mich. 305, 321 (1998) (“[A]n actual injury must occur during the time the policy
is in effect in order to be indemnifiable or compensable.”) The duty to defend is
therefore triggered whenever a third-party’s allegations arguably allege that an
injury occurred during the time the policy was in effect. See, Citizens Ins. Co, 279
Mich. App. 69 (distinguishing proof required for duty to indemnify from simple
allegations required for duty to defend). The difference in the amount of proof
required to trigger the duties is necessary because “the duty to defend includes
groundless and frivolous claims.” American Bumper, 452 Mich. at 458.
Here, as discussed in the Opinion and Order and above, the federal Doe
Complaint arguably alleged bodily injury during the 2010-2011 policy year. It
alleged multiple acts of abuse in either or both of the 2010-2011 and 2011-2012
school years and alleged specific incidents “[b]y way of example,” implying that
more incidents had occurred. (ECF No. 1-10, Doe Federal Complaint, PgID 470–72,
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¶¶ 50–59.) Evidence of specific incidents in the 2010-2011 school year did not
emerge during discovery. In fact, the Doe plaintiffs were not able to produce enough
evidence to avoid summary judgment on all of their federal claims. But that dearth
of evidence does not entitle Selective to disclaim its duty to defend under the
policies—once the defense has run its course, “it [is] too late for the insurer[] to
complain that [it does] not owe a duty to defend.” American Bumper, 452 Mich. at
455.
Finally, in their Motion to Modify, Plaintiffs revive an argument they made in
their response to Selective’s Motion for Summary Judgment, that the Doe Plaintiffs’
use of the phrase “on multiple occasions in the 2010-2011 and/or 2011-2012 school
year(s)” was inherently ambiguous and the ambiguity should be resolved in their
favor. (ECF No. 84. Motion to Modify, PgID 3491–94; see also ECF No. 66,
Plaintiffs Response to MSJ, PgID 3106.) This argument is easily disposed of. In
addition to already having been considered and rejected by the Court, it stretches the
ambiguities-resolved-in-favor-of-the-insured rule too far.
In H.E. Butt, facing an argument that the definition of “occurrence” should be
considered ambiguous and resolved in the insured’s favor, the Fifth Circuit noted
that, in cases where the insured serves as its own primary insurer through SIR limits,
“the interpretation of ‘occurrence’ favorable to the insured in this case will not
necessarily be the interpretation favorable to the insured in the next case,” and
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refused to find that “occurrence” was ambiguous. 150 F.3d at 534 (“The Seventh
Circuit noted, however, that “[w]inners and losers will change with the
circumstances, the roles. . . . [I]f tomorrow the victim’s loss exceeds the maximum
coverage for a single occurrence, the roles will be reversed.”) (citation omitted). The
intent of the rule is to protect the reasonable expectations of the policyholder, not to
allow a sophisticated self-insuring entity to change the terms of the contract
depending on the extent of liability it faces in a particular case. See Gelman Sci., 456
Mich. at 318. Plaintiffs argument that the ambiguity in the federal Doe complaint
regarding the 2010-2011 policy year should be resolved in their favor was properly
rejected in the Opinion and Order and the Court now rejects it again.
V.

CONCLUSION

For the reasons stated above, the Court denies Plaintiffs’ Motion to Modify
the Court’s August 24, 2018 Opinion and Order (ECF No. 84).
IT IS SO ORDERED.

Dated: February 13, 2020

s/Paul D. Borman
Paul D. Borman
United States District Judge

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