D.W.J. v. Wausau Bus. Ins. Co.

192 F.Supp.3d 1014

D.W.J., Plaintiff,

v.WAUSAU BUSINESS INSURANCE COMPANY, Defendant.

Case No. 5:15-cv-00003-SLG

United States District Court, D. Alaska.

Signed June 28, 2016

Jeffrey J. Barber, Barber & Associates, LLC, Anchorage, AK, for Plaintiff.

Marc Gerhard Wilhelm, Richmond & Quinn, Anchorage, AK, for Defendant.

ORDER RE MOTION TO DISMISS

Sharon L. Gleason, UNITED STATES DISTRICT JUDGE

Before the Court is Defendant Wausau Business Insurance Company's Motion to Dismiss at Docket 7. Plaintiff D.W.J. opposed at Docket 12, and Defendant replied at Docket 18. Oral argument was not requested and was not necessary to the Court's determination of the motion. For the reasons set forth below, the motion will be granted.

FACTS & PROCEEDINGS

This is an insurance coverage dispute arising out of a sexual assault that occurred at the Super 8 Motel in Ketchikan in May 2011. The victim of the assault, D.W.J., brings this action as the assignee of the hotel employee who committed the assault, Robert Callanan. The defendant, Wausau Business Insurance Company, provides specified liability insurance to the hotel and, by extension, its employees. Plaintiff D.W.J. alleges that Wausau should have defended and indemnified Mr. Callanan for his sexual assault. The parties do not dispute the majority of the facts.¹

On May 26, 2011, D.W.J. checked into the Super 8 Motel in Ketchikan. Robert Callanan was the only employee on the premises that day, and registered D.W.J. into the hotel. Mr. Callanan assigned D.W.J. to a room on the first floor, near the hotel's front desk. Within ten to fifteen minutes after D.W.J. had checked into her room, Mr. Callanan used his key to open D.W.J.'s door. He told her that he was there to fix the television, but instead of fixing the television, he "pushed [her] down on her own hotel bed, stripped her nearly naked, groped her breasts and performed cunnilingus on her, all against her will and after she told him to stop."² D.W.J. told Mr. Callanan that she needed to use the restroom, and from there called her husband and the police. When D.W.J.'s husband arrived, "Mr. Callanan had D.W.J. gripped by the arm, and was seen attempting to leave [the room] with [her]."³

On May 14, 2012, Mr. Callanan was convicted by a jury of First Degree Sexual Assault as a result of this incident.⁴ He was sentenced to 24 years in prison with 10 years suspended.⁵ Mr. Callanan appealed his conviction.

The day following his conviction, May 15, 2012, D.W.J. filed a civil action against Mr. Callanan and the Peninsula Group—the entity that owned the Super 8 Motel.⁶ In that complaint, D.W.J. noted that Mr. Callanan had been convicted of sexual assault in the first degree.⁷ D.W.J. alleged (1) assault and sexual battery, and assault and battery related to kidnapping; (2) negligent failure to supervise, hire, train, or screen Mr. Callanan, and negligent infliction of emotional distress; (3) breach of contract; and (4) claims under the Alaska Unfair Trade Practices and Consumer Protection Act.⁸ D.W.J.'s First Amended Complaint identified the sexual assault as an "intentional tort[ ]"; it did not assert that the assault was an accident, negligent, or unintentional.⁹ The only references to negligence in that complaint were as follows: D.W.J. alleged that Mr. Callanan was liable for negligence because he assigned her a room on the first floor, and she asserted that Mr. Callanan had a duty to "keep [her] safe," and he breached this duty "by assaulting [her] and engaging in negligent, or reckless and outrageous conduct against her."¹⁰

In the prior case, D.W.J. settled her claims against the Peninsula Group before trial. Mr. Callanan did not enter an appearance, nor did he tender the civil complaint to Wausau; however, Wausau still sent Mr. Callanan a letter dated October 11, 2012 denying coverage. Wausau explained that it would not provide a defense to Mr. Callanan because "[a] sexual assault obviously is not part of your duties and was not within the scope of your employment by Peninsula."¹¹ Wausau added that even if Mr. Callanan was an "insured," his sexual assault of D.W.J. was not an "occurrence" such that it was covered under the policy.¹²

Mr. Callanan died in July 2013, while his criminal case was still on appeal.¹³ Because he had not appeared in the civil case, that court entered a default judgment against Mr. Callanan's estate in the amount of $641,264.86.¹⁴ In her memorandum in support of the entry of the default judgment, D.W.J. asserted that all of her damages should be allocated to Mr. Callanan and none to the Peninsula Group, because "[w]ith [Mr.] Callanan's assault being intentional, there is no fault to allocate and, thus, no offset."¹⁵ The court evidently agreed and entered a default judgment against Mr. Callanan for 100% of the claimed damages; the parties here agree there was no allocation of fault to the Peninsula Group.¹⁶ Mr. Callanan's estate then assigned any claim it might have against Wausau to D.W.J., and D.W.J. filed the instant case against Wausau in Alaska Superior Court. The case was timely removed to this Court.¹⁷ D.W.J. asserts claims of negligent adjustment, breach of contract, and breach of the covenant of good faith and fair dealing; she seeks damages in excess of $100,000, including punitive damages.¹⁸

At issue in this case is whether the Wausau policy provides coverage to Mr. Callanan for his conduct towards D.W.J. Wausau asserts that the Court should dismiss the action because: (1) Mr. Callanan was not acting within the scope of his employment when he assaulted D.W.J., and, therefore, the Wausau policy provides him no coverage; and (2) Mr. Callanan's intentional sexual assault of D.W.J. does not qualify as an "occurrence" under the policy.

DISCUSSION

I. Jurisdiction

The Court has subject-matter jurisdiction over this action pursuant to 28 U.S.C. § 1332(a). Because the Court is sitting in diversity, it applies the substantive law of the forum state, Alaska, including the collateral estoppel rules of that state.¹⁹

II. Conversion to Summary Judgment

Defendant Wausau styles its briefing as a motion to dismiss D.W.J.'s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). In ruling on a motion to dismiss, a court "consider[s] only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice."²⁰ However, Wausau has presented as attachments materials beyond the scope of the challenged pleading, and D.W.J. does not assert that the attached additional materials should be excluded.²¹

"If, on a motion under Rule 12(b)(6)..., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56."²² Either party may bring the conversion provision into operation by submitting materials other than the challenged pleading.²³ A district court has discretion to accept or reject this additional material based on "whether or not the proffered material, and the resulting conversion from the Rule 12(b)(6) to the Rule 56 procedure, is likely to facilitate the disposition of the action."²⁴

The Court finds that consideration of the additional materials submitted without objection in this case will facilitate the disposition of the action, because the materials provide a comprehensive view of the dispute and the legal issues before the Court. Therefore, the Court will not exclude the additional materials and will convert Wausau's motion to dismiss into a motion for summary judgment under Rule 56.

Rule 56(a) directs a court to "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." When considering a motion for summary judgment, a court must draw "all justifiable inferences" in the non-moving party's favor.²⁵ The burden of showing the absence of a genuine dispute of material fact initially lies with the moving party.²⁶ If the moving party meets this burden, the non-moving party must present specific evidence demonstrating the existence of a genuine issue of fact.²⁷ The non-moving party may not rely on mere allegations or denials. To reach the level of a genuine dispute, the evidence must be such "that a reasonable jury could return a verdict for the non-moving party."²⁸ If the evidence provided by the non-moving party is "merely colorable" or "not significantly probative," summary judgment to the moving party is appropriate.²⁹

III. Scope of Employment

The Wausau insurance policy provides coverage for employees, "but only for acts within the scope of their employment by [Peninsula Group] or while performing duties related to the conduct of [Peninsula Group's] business."³⁰

Wausau asserts that under no set of facts can sexual activity, whether consensual or nonconsensual, be within Mr. Callanan's scope of employment as a front desk clerk. Wausau argues that under Alaska law an act must be motivated at least in part by a desire to serve the employer, and a sexual assault cannot have such a motivation. Wausau also asserts that no insured could have a reasonable expectation of being insured for sexual assault.³¹

D.W.J. responds that she has also asserted a "negligent billeting" theory, under which Mr. Callanan's action of assigning her a room on the first floor of the hotel made her less safe. Because checking a guest into the hotel is motivated at least in part by a desire to serve the employer, she asserts coverage would apply. And D.W.J. relies heavily on a case where the Alaska Supreme Court held that a counselor's sexual relations with a patient were related to his employment.³² Finally, D.W.J. asserts that the assault was close enough in time and space to Mr. Callanan's performance of hotel-related duties that it was within his scope of employment or while performing duties related to Peninsula Group's business.³³

In determining whether an employee has acted within his scope of employment, ...