DREW v. CHURCH MUTUAL INSURANCE COMPANY

Filing 42

OPINION. Signed by Judge Jose L. Linares on 5/29/14. (DD, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
HENRY DREW AND MICHAEL DOERR,
Civil Action No 13-cv-01906 (JLL)(MAH)
Plaintiffs,
v

OPINION

CHURCH MUTUAL INSURANCE
COMPANY,
Defendant.
LINARES, District Judge.
This matter comes before the Court by way of Plaintiff Henry Drew (“Plaintiff’)’s and
Defendant Church Mutual Insurance Company (“Defendant”)’s cross motions for summary
judgment. The Court has considered the submissions made in support of and in opposition to the
cross motions and decides this matter following oral argument. For the reasons set forth below,
Defendant’s motion is GRANTED.
I.

BACKGROUND

Plaintiff is a former priest who served at Saint Mary’s Abbey in Morristown, New Jersey
and also as a weekend assistant at Our Lady of the Mount Roman Catholic Church in the
Diocese of Metuchen, where Michael Doerr (“Doerr”) and his wife were parishioners. (Def.’s
56.1 Statement ¶f 1, 4, 6). While serving as a priest at Our Lady of the Mount Church, Plaintiff
engaged in an extra-marital affair with Doerr’s wife. (Pl.’s 56.1 Statement
Statement

¶

14).

¶

4; Def.’s 56.1

In early 2009, Doerr’s wife raised thoughts about ending their ten-year

marriage, (P1.’s 56.1 Statement

¶

2; Def.’s 56.1 Statement

¶

15). Thereafter, in March 2009,

Doerr contacted Plaintiff to seek guidance regarding his marriage problems.
Statement

¶ 3; Def.’s 56.1 Statement ¶j

15, 18). At the time Plaintiff met with Doerr, Plaintiff

had already engaged in a physical and intimate relationship with Doerr’s wife.
Statement ¶J 4, 7; Def.’s 56.1 Statement

(P1. ‘s 56.1

¶hlJ

(Pl.’s 56.1

15, 16, 18, 19, 21, 23). During the meeting, Plaintiff

failed to disclose the affair to Doerr. (Pl.’s 56.1 Statement

¶ 8; Def.’s

56.1 Statement

¶ 38).

Plaintiff directed Doerr not to make any further effort to save his marriage and told Doerr that he
should accept his wife’s decision to seek a divorce.
Statement

¶J

(Pl.’s 56.1 Statement

¶

4; Def.’s 56.1

22, 39). Plaintiff did not refer Doerr to others within the church for assistance.

(Pl.’s 56.1 StatementJ 6,8; Def.’s 56.1 Statement 38).
Sometime around May 2009, Doerr discovered the affair. (Pl.’s 56.1 Statement
DeL’s 56.1 Statement

¶

7;

¶ 24). Upon his discovery, Doerr confronted his wife and informed

Plaintiff of his knowledge of the affair via text message. (P1.’s 56.1 Statement

¶ 9; Def.’s 56.1

Statement ¶ 25, 41). Plaintiff informed his supervisors about the affair and Doerr’s discovery of
it. (Pl.’s 56.1 Statement

¶ 10). Plaintiffs supervisors directed him to leave the United States in

order to avoid civil process from Doerr. (Pl.’s 56.1 Statement

¶ 11). In the summer of 2009,

Plaintiff secretly returned to the United States and left the ordained priesthood.

(Pl.’s 56,1

Statement ¶ 14).
On February 23, 2011, Doerr brought an action against Plaintiff in the Superior Court of
New Jersey, Law Division, Essex County (“the underlying action”) for breach of fiduciary duty
and negligent infliction of emotional distress. (Pl.’s 56.1 Statement
Statement

¶J 1, 17, 19; Def.’s 56.1

¶ 33). In the underlying action, Doerr claimed that, because Plaintiff was having a

sexual affair with Doerr’s wife, Plaintiff had an irreconcilable conflict of interest in providing
marriage counseling to Doerr. (P1.’s 56.1 Statement

2

¶ 5; Def.’s 56.1 Statement ¶ 38). Doerr

further alleged that Plaintiff failed to disclose his sexual relations with Doerr’s wife, used the
counseling as a vehicle to “cover up” the affair, and failed to refer Doerr to another priest for
counseling. (Pl.’s 56.1 Statement ¶ 6, 8, 17, 18, 19; Def.’s 56.1 Statement ¶J 39, 42, 43).
Thereafter, on April 27, 2011, the underlying complaint was sent to Defendant with a
request that Defendant provide a defense and indemnification for the claims made against
Plaintiff in the underlying action. (P1.’s 56.1 Statement ¶ 24; Def.’s 56.1 Statement 47). By an
¶
email dated April 29, 2011, and in a subsequent letter dated July 18, 2011, Defendant informed
Plaintiff that it did not insure the Roman Catholic Diocese of Metuchen and declined to
indemnify or defend Plaintiff in the underlying action. (Pl.’s 56.1 Statement

¶ 25;

Def.’s 56.1

Statement ¶ 48).
A. Procedural History
On February 28, 2013, Plaintiff filed a complaint seeking declaratory judgment against
Defendant in the Superior Court of New Jersey, Law Division, Essex County, in which he sought
insurance coverage for the claims asserted in the underlying action. (Def. ‘s 56.1 Statement 60;
¶
Def.’s Ex. 11). On March 26, 2013, Defendant removed this matter to the United States District
Court for the District of New Jersey. (CM/ECF No. 1). Defendant then filed its answer with this
Court on April 3, 2013. (CM/ECF No. 3).
The underlying action was assigned to trial on October 10, 2013 before Justice Francine
A. Schott. At that time, counsel for Doerr stipulated that the only theories he was pursuing were
negligence and breach of fiduciary duty. (Pl.’s 56.1 Statement ¶f 17, 19; Def.’s 56.1 Statement

¶J 42, 43).

The parties agreed to settle and subsequently entered into an assignment whereby

Plaintiff assigned to Doerr his claim for indemnification under the Defendant’s insurance policy.
(CM!ECF No. 20).

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On November 1, 2013, the United States District Court for the District of New Jersey
entered an Amended Pre-Trial Scheduling Order, which required that all dispositive motions be
filed by January 13, 2014. (CM!ECF No. 18). By order dated January 2, 2014, Doerr was
permitted to intervene in this matter to assert the indemnification claim assigned to him by
Plaintiff. (CM/ECF No. 22). Following discovery, Plaintiff and Defendant filed cross motions
for Summary Judgment. (CM/ECF No. 23; 24). This Court held oral argument on April 17,
2014. (CM/ECF No. 41).
At oral argument, the Court determined that the only relevant provision of Defendant’s
policy pertaining to this case is the “Counseling Professional Liability Coverage” provision. (Tr.
at 25-27; Pl.’s Ex. 2 at 78).
B. Relevant Policy Provision
The relevant “Counseling Professional Liability Coverage” provision provides coverage
for injuries caused by a “counseling incident” which occurs during the policy period. (See Tr. at
25-27; P1.’s Ex. 2 at 78).
The insurance policy does not provide coverage for an injury “arising out of any
actual or alleged act of sexual misconduct or sexual molestation.” (Id. at 79 (internal
quotations omitted)). The policy defines “counseling incident” and “sexual misconduct”
as follows:
“Counseling incident,” means any act or omission in the
furnishing of counseling services. Any such act or omission,
together with all related acts or omissions in the furnishing of such
services to any one person, shall be considered one claim subject to
the Each Claim Limit of Insurance in force at the time the first
“counseling incident” covered by this policy occurred.
“Sexual Misconduct or sexual molestation” is any activity by
anyone (whether an adult or child) which is sexual in nature
whether permitted or unpermitted, including but not limited to,
4

sexual assault, sexual battery, sexual relations, sexual acts, sexual
activity, sexual handling, sexual massage, sexual exploitation,
sexual exhibition, photographic, video or other reproduction of
sexual activity, sexual stimulation, fondling, intimacy, exposure of
sexual organs, lewd or lascivious behavior or indecent exposure,
fornication, undue familiarity, or unauthorized touching.
(See P1.’s Ex. 2 at 79, 81-82). The insurance policy was amended to include a “Prior
Acts Coverage Endorsement Counseling Professional Liability” (“endorsement”). (See
Pl.’s Ex. 2 at 83). The additional insurance provided by the endorsement only applies in
the instance where the insured did not have prior knowledge of the “counseling incident”
before the “Prior Acts Date” of July 1, 2010. (See id. at 3, 83). The relevant portion of
the endorsement provides that:
The additional insurance provided by this endorsement applies
only to a “counseling incident” that results in a claim made or
“suit” brought after the Prior Acts Date shown in the Declarations
Page and during the Reporting Period stated in the Declarations
Page.
The additional insurance provided by this endorsement does
not apply to any “counseling incident” that any insured had
knowledge of before the Prior Acts date shown in the
Declarations Page.

(See id.) (emphasis added).
II.

LEGAL STANDARD

A 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). The moving party must first demonstrate that there is no genuine issue of materi
al
fact. Celotex v. Catrett, 477 U.s. 317 (1986). Courts construe facts and inferences in
the light
most favorable to the non-movant in order to determine whether there is a genuin issue
e
for trial.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is “genuine” if the
evidence
5

is such that a reasonable jury could find for the non-moving party. Id. at 248. “[T]here is no
issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return
a verdict for that party. If the evidence is merely colorable, or is not significantly probative,
summary judgment may be granted.” Id. at 249-50 (citations omitted). “Thus, if a reasonable
fact finder could find in the nonmovant’s favor, then summary judgment may not be granted.”
JTo,jblk Southern Ry. Co. v. Basell USA Inc., 512 F.3d 86, 91 (3d Cir. 2008).
III.

DISCUSSION

At oral argument the Court determined that the only issue to be resolved is whether
Plaintiff should be covered under the “Counseling Professional Liability” provision, and thus the
Court limits its analysis to the parties’ arguments pertaining to that provision. (See Tr. at 9:2410:1-2). Plaintiff moves for partial summary judgment on the following basis: the claims made
by Doerr in the underlying action against Plaintiff are covered as a “counseling incident,” and, as
a result, Plaintiff should be indemnified by Defendant. (Pl.’s Br. at 8; CMJECF No. 23).
Defendant moves for summary judgment claiming that any “counseling incident” took place
before the coverage period and is excluded from the “prior acts” coverage because Plaintiff had
knowledge of the incident prior to July 1, 2010. (Def’s Br. 20-21; CMIECF No. 24).
As a preliminary matter, under New Jersey law’, “the interpretation of insurance
contracts requires generous readings of coverage provisions, narrow readings of exclusionary
provisions, resolution of ambiguities in favor of the insured, and construction consistent with
the
insured’s reasonable expectations.” Cobra Products, Inc. v. Federal Ins. Co., 317 N.J. Super.
392, 400 (App. Div. 1998). The insured bears the initial burden of establishing that the claim
is
“within the basic terms of the policy.” S. T. Hudson Eng ‘rs, Inc. v. Pa Nat ‘1 Mut. Cas.
C’o., 388
l

Plaintiff asserts that New Jersey law applies. Defendant does not dispute this nor argue
that Wisconsin law should
apply. Accordingly, the Court applies New Jersey law to this case.

6

N.J. Super. 592, 603 (App. Div. 2006) (citation omitted). The insurer bears the burden of
proving the applicability of a provision excluding coverage. See e.g., Princeton Ins. Co. v.
Chunmuang, 151 N.J. 80, 95 (1997) (“In general, insurance policy exclusions must be narrowly
construed; the burden is on the insurer to bring the case within the exclusion.”). “When
considering an exclusion of coverage, any ambiguity ‘must be strictly construed against the
insurer so that reasonably anticipated coverage is provided.” Am. Wrecking Corp. v. Burlington
Ins. Co., 400 N.J. Super. 276, 282-83 (App. Div. 2008). However, “exclusions are
presumptively valid and will be given effect if specific, plain, clear, prominent, and not contrar
y
to public policy.” Chunmuang, 151 N.J. at 95 (citation omitted).
There is no dispute that the insurance policy provision at issue is an “occurrence made”
provision. (See Tr. at 24:22-24). Under an occurrence policy, “the insured is indemnified for
acts or occurrences which take place within the policy period[;]” and “under a claims made
policy[,] the insured is indemnified for claims made during the policy period regardless of when
the acts giving rise to those claims occurred.” Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676
F.2d 56, 59 (3d Cir. 1982). Furthermore, “the requirement of notice in an occurrence policy is
subsidiary to the event that invokes coverage

..

..“

Zuckerman v. Nat ‘1 Union Fire Ins. Co., 100

N.J. 304, 324 (1985). Because the policy at issue is an occurrence policy (Tr. at 24:2224), the
Court must determine whether the occurrence took place prior to the start date of the policy.
See
Appalachian Ins. Co., 676 F.2d at 59 (holding that where the subject policy was charac
terized as
an occurrence policy, the district court then “had to determine

...

when the occurrence or

occurrences took place”).
Plaintiff argues that he is entitled to coverage on the basis that his acts constituted a
“counseling incident” within the meaning of the policy. (Pl.’s Br. 8). The policy defines
a

7

“counseling incident” as an act or omission in the furnishing of counseling services. (Pl.’s Ex.
2
at 82). At the time of the counseling session between Plaintiff and Doerr, Plaintiff failed to
disclose his relationship with Doerr’s wife. (Pl.’s 56.1 Statement at 5, 8; Def.’s 56.1
¶IJ
Statement at ¶ 38; Tr. at 15:20-22). The failure by Plaintiff to inform Doerr of his ongoin
g
sexual relationship with Doerr’ s wife arguably constitutes exactly the “kind of thing that the
exclusion aims at preventing[.j” (See Tr. 17:13-15).
The counseling liability policy provision, however, only applies if the “counseling
incident” occurred during the policy period. (See Pl.’s Ex. 2 at 78) (emphasis added). The
policy commenced on July 1, 2010 and expired on July 1, 2013. (Pl.’s Ex. 2 at 3). The
“counseling incident” at issue took place in March 2009. (P1’s 56.1 Statement 3; Def.’s 56.1
¶
Statement ¶ 37; Tr. at 4:23-25). Thus, the “counseling incident” will only be covered if it falls
within the “prior acts” coverage amendment. See e.g., S. T. Hudson Eng ‘rs. Inc., 388 N.J.
Super
at 603 (holding that the insured bears the initial burden of establishing that the claim falls “withi
n
the basic terms of the policy”).
As explained above, the policy includes an amendment that provides coverage for “Prior
Acts.” This provision relates to incidents that occurred before the “Prior Acts Date” of July
1,
2010. Specifically, the policy states that:
The additional insurance provided by this endorsement does not
apply to any “counseling incident” that any insured had knowledge
of before the Prior Acts Date shown in the Declarations Page.
(Pl.’s Ex. 2 at 83) (emphasis added). Therefore, in order for coverage to apply to
a counseling
incident that occurred prior to the commencement of the policy, the insured had
to have been
unaware of the incident at the policy’s start date. (Pl.’s Ex. 2 at 83). In light
of the facts that the
policy commenced on July 1, 2010 and that the alleged “counseling incident”
and subsequent
text message from Doerr occurred in 2009, there is no question that Plaintiff had
knowledge of
8

the incident at the time the policy began. (Pl.’s Ex. 2 at 3; Pl.’s 56.1 Statement 3; Def.’s 56.1
¶
Statement ¶ 37; Tr. 23:13-17). Accordingly, the “Prior Acts” provision is not applicable in this
case. See e.g. Chunmuang, 151 N.J. at 95 (internal citations omitted) (“exclusions are
presumptively valid and will be given effect if specific, plain, clear, prominent, and not contrary
to public policy”).
At oral argument before this Court, Plaintiffs attorney admitted to Plaintiff’s knowledge
of the “counseling incident.” (Tr. at 4:23-5:2; 6:6-8). Plaintiffs attorney acknowledged that
Plaintiff received Doerr’s first text message, and proceeded to meet with and provide advice to
Doerr as to his marriage. (id.). Thereafter, in May 2009, Plaintiff received a second text message
from Doerr. (Tr. at 16:22-17:16). Plaintiff subsequently informed his superiors of Doerr’s text
message regarding discovery of the affair. (Tr. at 17:16-23). Plaintiffs superiors then told him
to flee to Canada to avoid service of process in Doerr’s pending lawsuit. (Tr. at 18:10-15).
Based on these facts, Plaintiffs claim that he was only aware of the “counseling incident” upon
being served with Doerr’s complaint in October 2010 is unpersuasive. (See Tr. 17:19-18:15).
Therefore, there is no material question of fact that Plaintiffs “counseling incident” is not
covered under the policy. Accordingly, Defendant’s motion for summary judgment is granted.
V.

CONCLUSION

For the reasons set forth above, Defendant’s motion for summary judgment is granted.
Plaintiff and Plaintiff-Intervenor’s motion for summary judgment is denied.
An appropriate Order accompanies this Opinion.

JOSE L. LINARES
/OS DISTRICT JUDGE

Dated: Mayç 2014

1/

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