St. Paul Mercury Insurance Company v. Order of St. Benedict, Inc.

Filing 64

ORDER denying 27 Motion to Dismiss; granting 31 Motion for Summary Judgment (Written Opinion) Signed by Senior Judge David S. Doty on 2/28/2017. (DLO)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 15-2617(DSD/KMM)
St. Paul Mercury Insurance Company,
Plaintiff,
v.

ORDER

Order of St. Benedict, Inc.,
Defendant.

Frederick P. Marczyk, Esq. and Drinker Biddle & Reath, LLP,
One Logan Square, Suite 2000, Philadelphia, PA 19103 and Lance
D. Meyer, Esq. and O’Meara Leer Wagner & Kohl, PA, 7401 Metro
Blvd. Suite 600, Minneapolis, MN 55439, counsel for plaintiff.
Mollie Nolan Werwas, Esq. and Kopon Airdo, LLC, 233 South
Wacker Drive, #4450, Chicago, IL 60606 and Robert T. Stich,
Esq. and Stacey L. Sever, Esq, and Stich Angell Kreidler Dodge
& Unke, P.A., 250 2nd Avenue South, Suite 120, Minneapolis, MN
55401, counsel for defendant.

This matter is before the court upon the motion to dismiss or
join necessary parties by defendant The Order of St. Benedict, Inc.
(Order) and the motion for summary judgment by plaintiff St. Paul
Mercury Insurance Company (St. Paul).
file,

record,

and

proceedings

herein,

Based on a review of the
and

for

the

following

reasons, the court denies the Order’s motion and grants St. Paul’s
motion.

BACKGROUND
This insurance coverage dispute arises out of an underlying
claim by Doe 27 that Father Francis Hoefgen, a member of the Order,
sexually abused him between 1989 and 1992.

Doe 27 filed suit in

Dakota County, alleging that the Order is liable for Hoefgen’s
conduct

under

supervision,

theories

and

of

negligent

nuisance,
retention.1

negligence,
Thereafter,

negligent
another

claimant, Doe 188, filed a similar lawsuit against Father Timothy
Backous and the Order.2

The Doe 27 lawsuit is stayed pending

bankruptcy proceedings involving the Archdiocese.

The status of

the Doe 188 lawsuit is unclear.
St. Paul insured the Order under Policy No. CK06304393 from
July 1, 1990, to July 1, 1991, and under Policy No. CK06305315 from
July 1, 1991, to July 1, 1992.

The policies provide commercial

general liability (CGL) coverage and umbrella liability coverage.
The CGL policies cover “any amounts any protected person is legally
required to pay as damages for covered bodily injury ... that:
happens while this agreement is in effect; and is caused by an
event.”

Conklin Decl. Ex. B, at 3; id. Ex. C, at 3.

The CGL

policies exclude coverage for “bodily injury ... that’s expected or

1

Doe 27 also sued the Archdiocese of St. Paul and
Minneapolis, Hoefgen, and St. Luke’s Institute. St. Luke’s has
since been dismissed from the suit. ECF No. 61-1.
2

The Doe 188 suit was filed after this suit commenced. The
court will nevertheless consider that suit in the context of the
instant motions. ECF No. 61-2.
2

intended by any protected person.”
8.

Id. Ex. B, at 8; id. Ex. C, at

The parties added the “Members of the Order of St. Benedict” as

protected persons through an endorsement.
Ex. C, at 16.

Id. Ex. B, at 16; id.

A separate endorsement provides that “Church

Members” are protected persons “[b]ut only for covered injury or
damage that results from your activities or activities they perform
for [the Order].”

Leuthner Decl. Exs. A and B.

The same

endorsement further states that the Order’s “officers, trustees,
clergy or members of the board of governors are protected persons
... [b]ut only for covered injury or damage that happens or is
committed while they’re acting within the scope of their duties.”
Id.
The umbrella policies are similarly worded except they do not
include the endorsements noted above.

They were intended to cover

amounts in excess of the CGL policies’ limits and certain claims
not covered by the CGL policies.
Ex. C, at 22.

Conklin Decl. Ex. B, at 21; id.

An endorsement to the 1990-1991 umbrella policy

excludes coverage for “any claim resulting from the sexual or
physical abuse or molestation of any person by you, your employees
or volunteer workers.”

Id. Ex. B, at 34.

An endorsement to the

1991-1992 umbrella policy similarly excludes coverage for “any
claim resulting from physical, mental, moral harassment or assault
of a sexual nature against any person, by [the Order], your
employees, or volunteers.”

Id. Ex. C, at 35.

3

On June 2, 2015, St. Paul filed this action asking the court
to declare that it has no obligation to defend or indemnify the
Order for the conduct alleged in the underlying lawsuits.

The

Order promptly filed a motion to dismiss for failure to include
necessary parties or in the alternative to join all necessary
parties.

St. Paul, in turn, moved for summary judgment.

The

motion hearing was rescheduled several times at the request of the
parties due to the underlying bankruptcy and criminal proceedings.
On January 27, 2017, the court proceeded with the hearing following
supplemental briefing by the parties.3

DISCUSSION
I.

Motion for Joinder
The Order argues that the claimants and its co-defendants in

the underlying lawsuits are required parties pursuant to Federal
Rule of Civil Procedure 19(a)(1). Joinder of any person subject to
service of process whose presence will not destroy a court’s
subject matter jurisdiction is required if:
(A) in that person’s absence, the court cannot
accord complete relief among existing parties; or
(B) that person claims an interest relating to
the subject of the action and is so situated
that disposing of the action in the person’s
3

The Order’s motion to dismiss - premised on the argument
that St. Luke’s was a required party that would divest the court of
diversity jurisdiction - is now moot given St. Luke’s dismissal
from Doe 27’s underlying suit.
4

absence may:
(i) as a practical matter impair or
impede the person’s ability to protect
the interest; or
(ii) leave an existing party subject to a
substantial risk of incurring double,
multiple,
or
otherwise
inconsistent
obligations because of the interest.
Fed. R. Civ. P. 19(a)(1).4

The court finds that the underlying

claimants and co-defendants are not required parties.
As an initial matter, Rule 19(a)(1)(B) requires that the
absent party not only have an interest related to the subject of
the action, but must also affirmatively “claim[] an interest.” The
absent parties have failed to do so here and thus do not qualify as
required parties.5

Am. Ins. Co. v. St. Jude Med., Inc., 597 F.

Supp. 2d 973, 978 (D. Minn. 2009).

Even if they had claimed such

an interest, however, the Order’s motion would still fail.
First, the Order argues that the absent parties have an
interest in the case because the policy proceeds would serve as a
“potential funding source to satisfy any underlying judgment.” ECF

4

The court will not address Rule 19(a)(1)(A) or (B)(ii),
because defendant does not argue that complete relief cannot be
accorded without the underlying claimants or that proceeding
without them could result in double, multiple, or otherwise
inconsistent obligations.
5

Even if the absent parties were not required to formally
claim an interest in this matter, the court would be disinclined to
force them - particularly the Doe plaintiffs who wish to remain
anonymous - to participate in additional litigation involving such
sensitive matters.
5

No. 60, at 6.

Not only is that interest purely speculative given

that neither of the underlying cases has proceeded to judgment, an
“economic interest in the outcome of the litigation is not itself
sufficient to warrant mandatory [joinder].”

Med. Liab. Mut. Ins.

Co. v. Alan Curtis LLC, 485 F.3d 1006, 1008 (8th Cir. 2007).
Second, the court is not persuaded that the absent parties’
interests will be jeopardized if they are not joined.

The Order

fails to establish that its interests and those of the absent
parties diverge or that it will fail to adequately protect those
interests.

Indeed, the Order’s interests and those of the absent

parties are fully aligned given that they would all benefit from a
determination that the policies cover the underlying conduct.

The

Order seeks insurance coverage in order to avoid having to satisfy
a potential judgment in the underlying cases.

And the absent

parties would undoubtedly prefer to have insurance proceeds readily
available

should

the

Order

be

found

liable.

Under

these

circumstances, there is no indication that the Order cannot or will
not zealously advocate for coverage.

It has in fact done so in its

opposition to St. Paul’s motion for summary judgment. Accordingly,
the absent parties’ interests will not be impaired or impeded if
they are not joined in this case.
II.

The joinder motion is denied.

Motion for Summary Judgment
A.

Standard of Review

“The court shall grant summary judgment if the movant shows
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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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A fact is material only when its resolution affects the outcome of
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

the case.
(1986).

A dispute is genuine if the evidence is such that it could

cause a reasonable jury to return a verdict for either party.

See

id. at 252.
On a motion for summary judgment, the court views all evidence
and inferences in a light most favorable to the nonmoving party.
Id. at 255.

The nonmoving party, however, may not rest upon mere

denials or allegations in the pleadings but must set forth specific
facts sufficient to raise a genuine issue for trial.
U.S. at 324.

Celotex, 477

A party asserting that a genuine dispute exists - or

cannot exist - about a material fact must cite “particular parts of
materials in the record.”

Fed. R. Civ. P. 56(c)(1)(A).

If a

plaintiff cannot support each essential element of a claim, the
court must grant summary judgment because a complete failure of
proof regarding an essential element necessarily renders all other
facts immaterial.
B.

Celotex, 477 U.S. at 322-23.

Coverage

In Minnesota the interpretation of an insurance policy is a
question of law.
609 (Minn. 2001).

Am. Family Ins. Co. v. Walser, 628 N.W.2d 605,
The court interprets an insurance policy in

7

accordance with general principles of contract construction, giving
effect to the intent of the parties.

Thommes v. Milwaukee Ins.

Co., 641 N.W.2d 877, 879 (Minn. 2002). The court gives unambiguous
language its plain and ordinary meaning and construes ambiguous
Id. at

language against the drafter and in favor of the insured.

880; Nathe Bros., Inc. v. Am. Nat’l Fire Ins. Co., 615 N.W.2d 341,
344 (Minn. 2000).

Language is ambiguous if it is “reasonably

subject to more than one interpretation.” Columbia Heights Motors,
Inc.

v.

Allstate

Ins.

Co.,

275

N.W.2d

32,

34

(Minn.

1979).

However, the court “guard[s] against invitations to find ambiguity
where none exists.”

Metro. Prop. & Cas. Ins. Co. v. Jablonske, 722

N.W.2d 319, 324 (Minn. Ct. App. 2006) (citation and internal
quotation marks omitted).
The insured must first establish a prima facie case of
coverage.

SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 311

(Minn. 1995), overruled on other grounds by Bahr v. Boise Cascade
Corp.,

766

N.W.2d

910,

919

(Minn.

2009).

If

coverage

is

established, the burden shifts to the insurer to prove that a
policy

exclusion

applies.

Id.

at

313.

The

court

strictly

construes exclusions against the insurer, in light of the insured’s
expectations.

Thommes,

641

N.W.2d

at

880.

If

the

insurer

demonstrates that an exclusion applies, the insured bears the
burden of proving an exception to the exclusion.
N.W.2d at 314.

8

SCSC Corp., 536

1.

CGL Policies

The parties do not address whether the Order has established
a prima facie case of coverage and instead move directly to whether
a policy exclusion applies.

The parties’ central disagreement is

whether the “intentional bodily injury” exclusion applies. The CGL
policies expressly exclude coverage for “bodily injury ... that’s
expected or intended by any protected person.”

Conklin Decl. Ex.

B, at 8; id. Ex. C, at 8.

According to St. Paul, the intended-

injury

because

exclusion

applies

Hoefgen

and

Backous

were

“protected persons” and their conduct resulted in expected or
intended bodily injury to Does 27 and 188.
Hoefgen

and

Backous

cannot

be

The Order argues that

considered

“protected

persons”

because St. Paul has not established that they were acting within
the scope of their duties at the time of the alleged abuse.
According to the Order, if Hoefgen and Backous were not “protected
persons” during the alleged abuse, the exclusion does not apply and
their conduct is covered under the policies.

Resolution of this

issue turns on interpretation of the two “additional protected
person” endorsements.
The first endorsement adds “Members of the Order of St.
Benedict” as protected persons without limitation.
at 16; id. Ex. C, at 16.

See id. Ex. B,

The second endorsement adds “Church

Members, Officers and Volunteer Workers” as protected persons only
insofar as they are performing within the scope of their duties.

9

Leuthner Decl. Exs. A and B.

The Order argues that because the

second

term

endorsement

uses

the

“member”

without

expressly

excluding “Members of the Order of St. Benedict,” it must apply to
those members, including Hoefgen and Backous. The court disagrees.
The only reasonable interpretation of the two endorsements is
that they apply to different categories of people.

The first

endorsement applies to “Members of the Order of St. Benedict.” The
second

endorsement

applies

Volunteer Workers.”

to

“Church

Members,

Officers

and

Although one could broadly define “church

members” to include members of the Order, doing so here would be
unreasonable

because

it

would

effectively

nullify

the

first

endorsement. See Carlson Mktg. Grp., Inc. v. Royal Indem. Co., 517
F. Supp. 2d 1089, 1097 (D. Minn. 2007) (“Policy language is
ambiguous if it can reasonably be interpreted more than one way.”)
(emphasis added).

Had the parties wished to strike the first

endorsement in favor of the second, they could have done so. Their
decision to maintain both endorsements is telling and dispositive.
As a result, Hoefgen and Backous are “protected persons” under the
policies.
The court further notes that even if the Order were correct
that Hoefgen and Backous are not “protected persons” for purposes
of the intended-injury exclusion, there likely would be no coverage
anyway.

The policies apply to “each protected person named in the

introduction ... and to each other protected person.”

10

See Conklin

Decl. Exs. B, at 6; id. Ex. C, at 6.

If Hoefgen and Backous are

not “protected persons,” and thus not insureds, then the policies
simply do not apply to them.
The Order next argues that the exclusion does not apply
because there are insufficient facts to establish that the priests
acted with intent to cause bodily injury.

The Order acknowledges

that intent to injure is inferred when a person sexually abuses a
minor, but notes that such an inference may be rebutted by evidence
that the abuse was “unintentional because of mental illness.”
B.M.B v. State Farm Fire & Cas. Co., 664 N.W.2d 817, 826 (Minn.
2003).

The Order has failed to submit any evidence to rebut the

inference that Hoefgen or Backous acted with intent to injure. The
Order suggests that the lack of progress in the underlying cases
has impeded its ability to uncover necessary facts relating to
Hoefgen’s and Backous’s mental health.

But the Order likely

already possesses all of the information needed to address the
issue.
priests

See Marczyk Decl. Exs. A-C (cataloguing information about
maintained

by

the

Order,

including

medical

records).

Further, if the Order needed to engage in third-party discovery to
gather such information, it has had ample time and ability to do
so.

For example, the Order could have subpoenaed witnesses and

documents notwithstanding the stay in the Doe 27 case.

To the

extent the Order suggests that summary judgment is premature, it
should have requested relief under Rule 56(d).

11

See Nolan v.

Thompson, 521 F.3d 983, 986 (8th Cir. 2008) (“In the absence of a
Rule 56[d] motion for a continuance accompanied by an affidavit
showing what specific facts further discovery might uncover, a
district court generally does not abuse its discretion in granting
summary judgment on the basis of the record before it.”).
The Order also contends that the intended-injury exclusion
cannot be read to apply to the underlying conduct because, as
evidenced in the umbrella policies, St. Paul could have, but chose
not to, expressly exclude coverage for sexual abuse.
Conklin Decl. Ex. B, at 34; id. Ex. C, at 35.

See See

The fact that the

CGL policies’ exclusion is more broadly worded than the umbrella
policies’ exclusion does not mean, however, that St. Paul intended
to cover sexual abuse under the CGL policies.

A plain reading of

the CGL policies’ exclusion reveals that it includes such conduct,
even though it is not expressly enumerated.
Finally, the Order argues that the CGL policies’ severability
provision and intended-injury exclusion are at odds and, at a
minimum, create a fact issue.

The severability provision states

that the policies apply to “each protected person named in the
introduction as if that protected person was the only one named
there; and separately to each other protected person.” See id. Ex.
B, at 6; id. Ex. C, at 6.

The exclusion bars coverage for the

intentional conduct of “any” insured.
C, at 8.

See id. Ex. B, at 8; id. Ex.

The court is not persuaded that there is any ambiguity to

12

resolve or that the two provisions are in any way inconsistent.
See Secura Supreme Ins. Co. v. M.S.M, 755 N.W.2d 320, 328 (Minn.
Ct. App. 2008) (“[A]n exclusion prohibiting coverage for all
insureds, including innocent insureds, based on the wrongful or
intentional acts of ‘any insured’ is not ambiguous” even when the
policy contains a severability clause).

As a result, the Order is

not entitled to coverage under the CGL policies.
2.

Umbrella Policies

The umbrella policies exclude coverage for sexual abuse by the
Order, its employees, or its volunteers.
at 34; id. Ex. C, at 35.

See Conklin Decl. Ex. B,

The Order does not argue that the

exclusion is inapplicable here.

As a result, the Order is not

entitled to coverage under the umbrella policies.

CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that
1.

The motion for joinder [ECF No. 27] is denied;

2.

The motion for summary judgment [ECF No. 31] is granted;

3.

St. Paul Mercury Insurance Company has no duty to defend

or indemnify The Order of St. Benedict, Inc. with regard to the
action styled Doe 27 v. The Order of St. Benedict a/k/a and d/b/a
St. John’s Abbey, et al., Case No. 19HA-CV-4599, pending in
Minnesota

District

Court,

County

District; and
13

of

Dakota,

First

Judicial

4.

St. Paul Mercury Insurance Company has no duty to defend

or indemnify The Order of St. Benedict, Inc. with regard to the
action styled Doe 188 v. The Order of St. Benedict a/k/a and d/b/a
St. John’s Abbey, and Father Timothy Backous, pending in Minnesota
District Court, County of Stearns, Seventh Judicial District.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: February 28, 2017
s/David S. Doty
David S. Doty, Judge
United States District Court

14