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

United States District Court, D. Minnesota

February 28, 2017

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

          Frederick P. Marczyk, Esq. and Drinker Biddle & Reath, LLP, One Logan Square, and Lance D. Meyer, Esq. and O'Meara Leer Wagner & Kohl, counsel for plaintiff.

          Mollie Nolan Werwas, Esq. and Kopon Airdo, LLC, and Robert T. Stich, Esq. and Stacey L. Sever, Esq, and Stich Angell Kreidler Dodge & Unke, P.A., counsel for defendant.

          ORDER

          David S. Doty, Judge

         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). Based on a review of the file, record, and proceedings herein, 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 theories of nuisance, negligence, negligent supervision, and negligent retention.[1] Thereafter, 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 intended by any protected person.” Id. Ex. B, at 8; id. Ex. C, at 8. The parties added the “Members of the Order of St. Benedict” as protected persons through an endorsement. Id. Ex. B, at 16; id. Ex. C, at 16. 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. Conklin Decl. Ex. B, at 21; id. Ex. C, at 22. 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.

         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 ...

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