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Brotherhood Mutual Insurance Co. v. M.M.

United States District Court, D. Kansas

November 13, 2017

BROTHERHOOD MUTUAL INSURANCE COMPANY, Plaintiff,
v.
M.M., a minor by and through his natural mother, T.C.; J.J., a minor by and through his natural mother, A.K.; A.K.; COMMUNITY CHRISTIAN CHURCH; STEVEN BUTLER; RAY BARNHART; ALAN CONRADY; MIKE EDDINGTON; WILLIARD BRIGHT; BENNY DARBRO; JIM AIKEN; BRIAN LESTER; LARRY MCHUGH; and DALE MEADOWS, Defendants.

          MEMORANDUM AND ORDER

          J. THOMAS MARTEN, JUDGE.

         Brotherhood Mutual Insurance Company (“Brotherhood”) seeks a determination of its liability under insurance policies it issued to Community Christian Church of Independence, Kansas (hereinafter “Community Christian” or “the church”). In two related lawsuits filed in state court, minors M.M. and J.J. claimed they were sexually abused by Steven Butler, a pastor at Community Christian, and they sought damages from Butler, the church, and, in J.J.'s case, from a group of individuals identified as church elders. Brotherhood contends its coverage for these claims is capped by a $300, 000 limit in a Sexual Acts Endorsement, and that its duty to defend the church and the elders terminated upon Brotherhood's payment of $300, 000. The defendants, on the other hand, contend Brotherhood's coverage is subject to a $1, 000, 000 limit, and that Brotherhood's duty to defend is ongoing.

         The matter is now before the court on cross-motions for summary judgment. The court also has before it Brotherhood's motion for default judgment against Steven Butler.

         Although oral argument was requested in this case, the issues presented are questions of law concerning construction of an insurance contract and the court concludes that oral argument would not assist in deciding the issues presented.

         I. Uncontroverted Facts

         Community Christian Church hired Steven Butler as a pastor in 2004. In 2012, defendant M.M., a minor, alleged in a state-court lawsuit that Butler sexually abused him from 2006 to 2010 while Butler was a pastor at Community Christian. M.M. asserted claims against Butler and against Community Christian, including: Count I - battery against Butler; Count II - intentional infliction of emotional distress against Butler; Count III - negligent infliction of emotional distress against Community Christian (including allegations that the church, through its elders, authorized or ratified Butler's conduct and knew or should have known he was engaging in inappropriate conduct with minors); Count IV - negligent supervision against the church; and Count V - negligent hiring and retention against the church.

         Defendant J.J., a minor, and his mother A.K., filed a similar suit in state court in 2016 against Butler, Community Christian, and a group of individuals identified as church elders. J.J. alleged sexual abuse by Butler from approximately 2006 to 2010. The claims in that suit included: Count I - battery/sexual abuse against Butler; Count II - defamation against Butler, the church, and the elders, based on allegations that after J.J.'s mother reported the abuse to the church, Butler spoke from the pulpit to the congregation and claimed that J.J. and his mother were “liars” and were trying to obtain financial gain; Count III - negligent supervision against the church and the elders for failing to supervise Butler; Count IV - negligent supervision against the church and elders for failing to supervise minor parishioners; Count V - negligent infliction of emotional distress; Count VI - negligent false detention or imprisonment, based upon allegations that during one incident Butler locked a door and would not allow J.J. to leave or J.J.'s mother to enter. The last incidents of sexual abuse alleged by J.J. and M.M. occurred in 2009 or early 2010.

         Butler was criminally charged with sexually molesting M.M. and J.J. in State v. Butler, Case No. 12-CR-1961, in Montgomery County, Kansas. A jury convicted Butler of aggravated criminal sodomy of J.J., but acquitted him of criminal charges with respect to M.M. Butler received a life sentence without the possibility of parole until after 25 years. The Kansas Court of Appeals affirmed Butler's conviction. State v. Butler, No. 112, 723, 2016 WL 1614167, 369 P.3d 341 (Table) (Kan. App. 2016).

         Brotherhood is defending Butler, Community Christian, and the elders in the underlying civil lawsuits.

         The Interpleader Action

         Brotherhood filed an interpleader action in the District Court of Crawford County, Kansas, No. 2016-CV-000101-P, through which it paid $300, 000 under the Sexual Acts Endorsement in the 2007-2010 policy. The $300, 000 has been distributed to M.M., J.J., and A.K., pursuant to an order of the Crawford County District Court.

         The Policies

         Brotherhood issued two policies to Community Christian. The first policy was effective from December 24, 2004, to December 24, 2007. The second policy was effective from December 24, 2007, to December 24, 2010. Both policies were numbered 15M5A0289744.

         Each policy provides commercial liability coverage under form GL-100, for a General Occurrence Limit of $1, 000, 000, and a General Aggregate Limit of $6, 000, 000. The policies also provide additional coverage under BGL-63, BGL-81, and BGL-65 for Counseling Acts, Directors & Officers coverage, and Religious Communication, in the same amounts as the commercial liability. The policies also provide additional coverage through a Sexual Acts Endorsement under form BGL-61, which is subject to a $300, 000 coverage limit, and a $300, 000 coverage aggregate limit.

         The declarations page states that the coverages listed are subject to the terms of the designated coverage forms. It states that only one liability coverage and one medical coverage will apply to an occurrence and any related loss. It states that any limit which is specifically stated within a coverage form or endorsement is the most that Brotherhood will pay for the coverage to which such limits applies, and it refers to BGL-11 for application of limits.

         Form GL-100 Commercial Liability Coverage Form

         The policies include form GL-100, which sets forth terms and conditions for general liability coverage. Under “Principal Coverage L - Bodily Injury/Property Damage, ” Brotherhood promised to pay all sums which the insured becomes legally obligated to pay as damages due to bodily injury to which the insurance applies. The bodily injury must have resulted from an occurrence, which according to the policy means an accident and includes repeated exposure to similar conditions. The policy defined bodily injury to mean bodily harm, sickness or disease sustained by a person, but not mental or emotional injury, suffering, or distress that does not result from a physical injury.

         The policy defined insured (in part) to mean “you and all of your executive officers and directors, but only while acting within the scope of their duties….” The term also included “your employees, for acts within the scope of their employment by you ….”

         Form GL-100 provides, under a Section titled “How Much We Pay, ” that the “limits, shown on the declarations … are the most we pay regardless of the number of: a. Insureds under the Commercial Liability Coverage; b. persons … who sustain injury or damage; or c. claims made or suits brought.” It provides that the “Each Occurrence Limit” is the most Brotherhood will pay for the total of damages under Coverages L, N, and O, and medical expenses under Coverage M, due to bodily injury arising out of a single occurrence.

         Form GL-100 contains a condition entitled “Separate Insureds, ” which states that coverage under Commercial Liability Coverage applies separately to each insured against whom a claim is made, and that this does not affect the limits stated in the policy.

         Form GL-100 includes the following concerning Brotherhood's duty to provide a defense:

         DEFENSE COVERAGE

         Payments under this coverage are in addition to the limits for the Commercial Liability Coverage.

1. We have the right and duty to defend a suit seeking damages which may be covered under the Commercial Liability Coverage. We may make investigations and settle claims or suits we decide are appropriate.
* * *
2. We do not have to provide defense after we have paid an amount equal to the limit as the result of:
a. a judgment; or
b. a written settlement agreed to by us.

         Liability and Medical Coverage Form (BGL-11)

         The policies include form BGL-11, which is captioned “Liability and Medical Coverage Form, ” and which provides additional definitions, terms, and exclusions. It further provides that all provisions of the GL-100 and any “Liability Coverage Endorsements … (BGL Forms)” are subject to the terms of the BGL-11 form, and that in the case of any conflicting terms, the BGL-11 form will control.

         BGL-11 includes the following[1] definitions:

         Emotional injury means mental or emotional injury, suffering or distress sustained by a person other than as a result of physical injury. It does not include bodily injury or personal injury.

         Loss means specified bodily injury, emotional ...


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