Great Lakes Ins. SE v. Doe

497 F.Supp.3d 1003

GREAT LAKES INSURANCE SE, Plaintiff,

v.John DOE, Richard Lucero, and Monastery of Christ in the Desert, Defendants.

Civ. No. 20-344 JAP/JFR

United States District Court, D. New Mexico.

Filed October 22, 2020

Minal P. Unruh, James H. Johansen, Butt Thornton & Baehr, PC, Albuquerque, NM, for Plaintiff.

Carolyn M. Nichols, Paul M. Linnenburger, Rothstein Donatelli LLP, Albuquerque, NM, Caroline Manierre, Rothstein Donatelli, LLP, Santa Fe, NM, for Defendant John Doe.

Robert J. Gorence, Gorence & Oliveros PC, Albuquerque, NM, for Defendant Richard Lucero.

Quinn Scott Simons, Thomas A. Simons, IV, The Simons Firm, LLP, Santa Fe, NM, for Defendant Monastery of Christ in the Desert.

MEMORANDUM OPINION AND ORDER

JAMES A. PARKER, SENIOR UNITED STATES DISTRICT JUDGE

Plaintiff Great Lakes Insurance SE ("Great Lakes") filed a COMPLAINT FOR DECLARATORY JUDGMENT RELIEF ("Complaint") (Doc. 1) in which it seeks a declaration that it has no duty to defend or indemnify Defendant Richard Lucero ("Defendant Lucero") or Defendant Monastery of Christ in the Desert ("Defendant Monastery") in the state court lawsuit ("underlying lawsuit") brought against them by Defendant John Doe ("John Doe"). Doc. 1 at 13–14. Great Lakes and Defendant Monastery have filed cross-motions for summary judgment.¹ Having considered the parties’ respective motions, responses, and replies, as well as the applicable law, the Court finds that GREAT LAKES INSURANCE SE'S MOTION FOR SUMMARY JUDGMENT (Doc. 28) should be GRANTED. The Court further finds that DEFENDANT MONASTERY OF CHRIST IN THE DESERT'S CROSS-MOTION FOR SUMMARY JUDGMENT (Doc. 31) should be DENIED.

BACKGROUND

On October 23, 2019, John Doe filed a COMPLAINT FOR DAMAGES FOR PERSONAL INJURY, NEGLIGENCE, VICARIOUS LIABILITY, AND OTHER TORTIOUS CONDUCT ("John Doe's Complaint") against Defendant Lucero, Defendant Monastery, and others in New Mexico's First Judicial District Court. See Doc. 1-3. John Doe alleged that he was repeatedly raped by Defendant Lucero—his scouting youth group leader and supervisor at his place of employment—in the late 1960s and 1970s.² See id. at ¶¶ 13, 30, 32–48. He further alleged that he "is only now discovering and realizing the nature of Defendant Lucero's abuse, the effect it has had on him, and the fact that he sustained severe psychological injury as a result of Defendant Lucero's childhood sexual abuse." Id. at ¶ 51. In addition to bringing claims against Defendant Lucero for assault and battery and intentional infliction of emotional distress ("IIED"), see id. at ¶¶ 54–61, 88–83, John Doe brought claims against multiple other defendants³ , including Defendant Monastery, for negligence, vicarious liability, and IIED, see id. at 11–15.

As to Defendant Monastery, specifically, John Doe alleged:

26. Defendant Lucero's youth group also engaged in considerable activities under the umbrella of Defendant Monastery. These included fundraising for religious activities conducted directly on behalf of Defendant Monastery and other activities to benefit the monks from Defendant Monastery, under Defendant Lucero's direction.

27. The connection to Defendant Monastery provided significant power and control to Defendant Lucero over the boys in the group and cloaked him with the authority of Defendant Monastery for the same reasons set forth as to other Defendants.

Id. at ¶¶ 26–27. As to all defendants other than Defendant Lucero, John Doe alleged that they were negligent in their screening, hiring, supervision, placement, and retention of Defendant Lucero "as an agent" and that their negligence "proximately caused harm to Plaintiff, as well as the damages and injuries resulting therefrom." Id. at ¶¶ 63, 76. John Doe additionally alleged that the other defendants "had the right and ability to control Defendant Lucero's conduct[,]" thereby making the other defendants "vicariously liable for the harm caused to [John Doe] by Defendant Lucero" or "liable for the conduct of Defendant Lucero under the legal theory of ‘aided-in-agency’." Doc. 1-3 at ¶¶ 80, 85.

Great Lakes, which issued seven commercial insurance policies ("Policies") to Defendant Monastery covering the period spanning April 17, 2013 through April 17, 2020, see Doc. 1 at ¶ 11⁴ , filed the instant lawsuit on April 16, 2020, seeking a declaration that it has no duty under the Policies to defend or indemnify either Defendant Lucero or Defendant Monastery, see id. at 13. On July 10, 2020, Great Lakes filed its motion for summary judgment ("Motion"). See Doc. 28. On August 10, 2020, Defendant Monastery responded in opposition to the Motion, see Doc. 30⁵ , and concurrently filed its cross-motion for summary judgment, see Doc. 31⁶ . Defendant Lucero, who stated in his answer to Great Lakes’ Complaint that he "has not made a claim against Great Lakes" and therefore "takes no position with regard to the Complaint for Declaratory Judgment[,]"⁷ has not responded to the Motion.

STANDARD

"Cross-motions for summary judgment are to be treated separately; the denial of one does not require the grant of another." Buell Cabinet Co. v. Sudduth , 608 F.2d 431, 433 (10th Cir. 1979). On a party's motion for summary judgment, the Court will "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 Court must consider "all evidence in the light most favorable to the non-moving party."⁸ Trask v. Franco , 446 F.3d 1036, 1043 (10th Cir. 2006). Interpretation of an insurance policy, like any contract, presents a pure question of law that is properly decided on summary judgment. See Rummel v. Lexington Ins. Co. , 123 N.M. 752, 945 P.2d 970, 984 (1997) ("The interpretation of an insurance contract is a matter of law about which the court has the final word.").

Because this is a diversity action, New Mexico substantive law applies in determining whether Great Lakes had a duty to defend Defendant Lucero, Defendant Monastery, or both in the underlying lawsuit. See Farmers Alliance Mut. Ins. Co. v. Bakke , 619 F.2d 885, 888 (10th Cir. 1980) ("It is axiomatic that the substantive law of the State of New Mexico applies with respect to the issues involved in [a] federal declaratory relief action predicated upon complete diversity of citizenship, and requisite amount in controversy." (citing Erie R.R. Co. v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) )). In New Mexico, "[t]he obligation of an insurer is a matter of contract law and must be determined by the terms of the insurance policy." Miller v. Triad Adoption & Counseling Servs., Inc. , 133 N.M. 544, 65 P.3d 1099, 1102 (N.M. Ct. App. 2003). "Whether an insurer has a duty to defend is determined by comparing the factual allegations in the complaint with the insurance policy." Lopez v. N.M. Pub. Sch. Ins. Auth. , 117 N.M. 207, 870 P.2d 745, 747 (1994). An "insurance company is obligated to defend when the complaint filed by the claimant alleges facts potentially within the coverage of the policy." Dove v. State Farm Fire & Cas. Co. , 399 P.3d 400, 404 (N.M. Ct. App. 2017) (quotation marks and citation omitted). "[T]he insurer bears the burden of proving that there is no duty to defend, and any doubt about whether the allegations are within the policy coverage is resolved in the insured's favor." W. Am. Ins. Co. v. Atyani , 366 F. Supp. 3d 1270, 1274 (D.N.M. 2019) (quotation marks and citation omitted). But "the insurer has no duty to defend if the allegations in the complaint clearly fall outside the policy's provisions." Guaranty Nat'l Ins. Co. v. C de Baca , 120 N.M. 806, 907 P.2d 210, 214 (N.M. Ct. App. 1995).

"Insurance contracts are construed by the same principles which govern the interpretation of all contracts." Hinkle v. State Farm Fire & Cas. Co. , 308 P.3d 1009, 1014 (N.M. Ct. App. 2013) (alteration, quotation marks, and citation omitted). "An insurance contact should be construed as a complete and harmonious instrument designed to accomplish a reasonable end." Lopez , 870 P.2d at 747 (quotation marks and citation omitted). "If a policy is clear and unambiguous, then the court does not construe terms; it merely gives the terms their usual and ordinary meaning." Dove , 399 P.3d at 407 (quotation marks and citation omitted). In New Mexico, the purpose of an exclusionary provision in an insurance contract is "to restrict the scope of the policy beyond what would otherwise be covered." United Nuclear Corp. v. Allstate Ins. Co. , 285 P.3d 644, 650 (N.M. 2012). Although exclusionary provisions "must be narrowly construed," Knowles v. United Servs. Auto. Ass'n , 113 N.M. 703, 832 P.2d 394, 396 (1992), they must "be enforced so long as their meaning is clear and they do not conflict with statutory law," Chavez v. State Farm. Mut. Auto. Ins. Co. , 87 N.M. 327, 533 P.2d 100, 102 (1975) (alteration, quotation marks, and citation omitted). "In determining the applicability of an exclusion, the focus must be on the origin of the damages, not the legal theory asserted for recovery." Lopez , 870 P.2d at 747 (alterations, quotation marks, and citation omitted). At bottom, "[t]he test to determine a duty to defend is one of reason—whether the defense sought is for coverage which the insured desired to purchase and for which the insured paid premiums." Servants of Paraclete, Inc. v. Great Am. Ins. Co. , 857 F. Supp. 822, 830 (D.N.M. 1994). "The ultimate determination should be one which is fair to all contracting parties." Id.

DISCUSSION

The central question before the Court is whether Great Lakes has a duty to defend Defendant Lucero, Defendant Monastery, or both in the underlying lawsuit. The Court addresses this question with respect to each defendant in turn.

I. Great Lakes has no duty to defend or indemnify Defendant Lucero.

Coverage under the Policies, as well as the commensurate duty to defend against claims made under the Policies, extends to any "insured." S...