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Diocese of St. Cloud v. Arrowood Indemnity Co.

United States District Court, D. Minnesota

January 4, 2018

DIOCESE OF ST. CLOUD; CHURCH OF SAINT JOSEPH, ST. JOSEPH; CHURCH OF THE SACRED HEART OF JESUS, DENT; CHURCH OF SAINT ANTHONY OF PADUA, ST. CLOUD; CHURCH OF OUR LADY OF VICTORY, FERGUS FALLS; CHURCH OF SAINT ANNE, KIMBALL; CHURCH OF SAINT JAMES, RANDALL; CHURCH OF SAINT LOUIS BERTRAND, FORESTON; CHURCH OF SAINT BONIFACE, COLD SPRING; CHURCH OF THE ASSUMPTION, EDEN VALLEY; CHURCH OF SEVEN DOLORS, ALBANY; CHURCH OF SAINT MARY OF THE PRESENTATION, BRECKENRIDGE; CHURCH OF THE HOLY CROSS, ONAMIA; CHURCH OF SAINT GALL, TINTAH; CHURCH OF SAINT OLAF, ELBOW LAKE; CHURCH OF THE IMMACULATE CONCEPTION, OSAKIS; CHURCH OF SAINT PETER, DUMONT; CHURCH OF AVE MARIA, WHEATON; CHURCH OF THE HOLY SPIRIT, ST. CLOUD; CHURCH OF THE HOLY ANGELS OF ST. CLOUD, ST. CLOUD f/k/a Holy Angels Congregation of St. Cloud, St. Cloud; CHURCH OF SAINT HEDWIG, HOLDINGFORD f/k/a Church of All Saints, Holdingford; CHURCH OF IMMACULATE CONCEPTION, NEW MUNICH; CHURCH OF SAINT PAUL, SAUK CENTRE; CHURCH OF SAINT JOSEPH, CLARISSA; CHURCH OF THE SACRED HEART, STAPLES; CHURCH OF SAINT STANISLAUS, SOBIESKI; CHURCH OF SAINT PETER, ST. CLOUD; CHURCH OF SAINT ANDREW, ELK RIVER; CHURCH OF SAINT EDWARD, BOWLUS; CHURCH OF SAINT PAUL, ST. CLOUD; and CHURCH OF ST. MARY'S CATHEDRAL OF ST. CLOUD, ST. CLOUD f/k/a Church of the Immaculate Conception, St. Cloud, Plaintiffs,
v.
ARROWOOD INDEMNITY COMPANY, individually and as successor to Royal Indemnity Company, Connecticut Indemnity Company, The Fire & Casualty Insurance Company, Security Insurance Company of Hartford, Connecticut Specialty Insurance Company, New Amsterdam Casualty Company, and Orion Capital Companies; THE ORDER OF ST. BENEDICT, d/b/a St. John's Abbey; THE CONTINENTAL INSURANCE COMPANY; ST. PAUL FIRE AND MARINE INSURANCE COMPANY; TRAVELERS INDEMNITY COMPANY; CHURCH MUTUAL INSURANCE COMPANY; and HARTFORD ACCIDENT AND INDEMNITY COMPANY, Defendants.
v.
CHURCH MUTUAL INSURANCE COMPANY, Counterclaim Plaintiff,
v.
CHURCH OF THE SACRED HEART OF JESUS, DENT, Counterclaim Defendant.

          John H. Faricy, Jr., and Vadim Trifel, for plaintiffs.

          James S. Carter, Jr., for defendant The Order of St. Benedict.

          Scott E. Turner, and Troy A. Poetz, for defendant The Continental Insurance Company.

          Lance D. Meyer, for defendant Travelers Indemnity Corporation.

          MEMORANDUM OPINION AND ORDER

          JOHN R. TUNHEIM CHIEF JUDGE UNITED STATES DISTRICT COURT

         Plaintiffs the Diocese of St. Cloud (“the Diocese”) and various Catholic parishes located in central Minnesota (collectively, “Plaintiffs”) bring this insurance coverage action in order to determine which parties will pay compensation to victims of clerical abuse that have filed claims in state court. Plaintiffs have brought this action against their own alleged insurers, Arrowood Indemnity Company (“Arrowood”), Church Mutual Insurance Company (“Church Mutual”), St. Paul Fire and Marine Insurance Company (“St. Paul”), and Hartford Accident and Indemnity Company (“Hartford”). They have also brought this action against a fellow Catholic religious organization, The Order of St. Benedict, doing business as St. John's Abbey (“the Abbey”), and its alleged insurers, The Continental Insurance Company (“Continental”) and Travelers Indemnity Company (“Travelers”).

         Against their own insurers, Plaintiffs seek declaratory relief regarding duty to defend, duty to pay investigation and defense costs, and duty to indemnify. Against Arrowood, Plaintiffs seek damages for breach of contract, promissory estoppel, bad faith/breach of fiduciary duty, fraudulent misrepresentation, and tortious interference with contractual relations. Against the Abbey and its insurers, Plaintiffs seek only declaratory relief with regard to the pending state court liability claims.

         There are four motions currently before the Court: (1) Continental's Motion to Dismiss; (2) Travelers' Motion for Joinder of Continental's Motion to Dismiss; (3) the Abbey's Motion to Dismiss; and (4) Plaintiffs' Motion to Remand to State Court. Because the Court will find that Plaintiffs' claims against the Abbey and its insurers are not ripe, the Court will grant Continental's Motion to Dismiss, Travelers's Motion for Joinder, and the Abbey's Motion to Dismiss. Upon dismissal of these parties, complete diversity will exist between the remaining parties. Thus, the Court will deny Plaintiffs' Motion to Remand to State Court.

         BACKGROUND

         I. FACTUAL BACKGROUND

         A. The Plaintiffs

         The Diocese is a Catholic Diocese corporation in St. Cloud, Minnesota. (Notice of Removal ¶ 1, Ex. 1 (“Compl.”) ¶ 4, June 12, 2017, Docket No. 1.) The remaining Plaintiffs are “separate and independent Catholic parish corporations” located in Minnesota. (Compl. ¶¶ 5-7.) The Diocese is organized and operates under Minn. Stat. § 315.16; the remaining Plaintiffs are organized and operate under Minn. Stat. § 315.15. (Id. ¶¶ 4, 7.)

         In May 2013, the Minnesota Legislature enacted the Minnesota Child Victims Act, Minn. Stat. § 541.073, which allowed individuals to file sexual abuse claims that had been previously time-barred. (Id. ¶ 2.) More than 75 actions have been filed naming the Diocese as a Defendant, and the other Plaintiffs in this case have each been named in one or more actions. (Id. ¶ 3.) The actions involve some combination of public nuisance, private nuisance, negligence, negligent supervision, and negligent retention. (Id.) Plaintiffs refer to these actions generally as “the Claims.” (Id.)

         B. The Defendants

         With regard to Plaintiffs' own insurers, Arrowood is a Delaware corporation with its principal place of business in North Carolina. (Id. ¶ 9.) According to Plaintiffs, Arrowood is the successor to numerous insurance companies. (See id.) Plaintiffs allege that Arrowood or its predecessors issued numerous insurance policies to various Plaintiff parishes between 1955 and 1967 and insured the Diocese at least from April 1964 to December 1, 1971. (Id. ¶¶ 18-19, 21-28.) Church Mutual is incorporated and has its principal place of business in Wisconsin. (Id. ¶ 12.) It allegedly insured Plaintiff Church of the Sacred Heart from January 1967 to January 1970. (Id. ¶ 30.) St. Paul is incorporated and has its principal place of business in Connecticut. (Id. ¶ 10.) It allegedly insured Plaintiff Church of St. Andrew around 1960. (Id. ¶ 31.) Hartford is incorporated and has its principal place of business in Connecticut. (Id. ¶ 11.) It allegedly insured Plaintiff Church of Saint Olaf from around 1964 to 1966 and Plaintiff Church of Saint Paul from around 1960 to 1963. (Id. ¶¶ 32-33.)

         The Abbey is a Catholic religious organization in Collegeville, Minnesota, organized as a Minnesota church corporation under Minn. Stat. § 315.16. (Id. ¶ 8.) Plaintiff alleges that, by papal decree, several parishes in the Diocese “were staffed by priests and other staff chosen by and interacting with [the Diocese] and [the Abbey].” (Id. ¶ 37.) The priests' and staff's interaction with both organizations “has resulted in actions claiming responsibility for clerical abuse by both [the Diocese] and [the Abbey].” (Id.) The Diocese and the Abbey “maintained separate insurance programs to protect both themselves and the public.” (Id. ¶ 38.) Plaintiffs allege the following with regard to the Abbey:

an actual controversy exists between and among [the Abbey] and the Plaintiffs concerning their respective rights and obligations of themselves and certain of their insurers as to the payment of liabilities jointly or separately incurred or to be incurred by the Plaintiffs ...

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