Nationwide Mutual Insurance Company v. Puyallup Basketball Academy et al, No. 3:2015cv05123 - Document 24 (W.D. Wash. 2015)
Court Description: ORDER denying 12 Motion for Declaratory Judgment by Judge Benjamin H. Settle.(TG)
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Nationwide Mutual Insurance Company v. Puyallup Basketball Academy et al Doc. 24 1 2 3 4 5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 6 7 8 NATIONWIDE MUTUAL INSURANCE COMPANY, 9 Plaintiff, 10 v. 11 PUYALLUP BASKETBALL 12 ACADEMY, et al., 13 CASE NO. C15-5123 BHS ORDER DENYING PLAINTIFF’S MOTION FOR DECLARATORY JUDGMENT Defendants. 14 15 This matter comes before the Court on Plaintiff Nationwide Mutual Insurance 16 Company’s (“Nationwide”) motion for declaratory judgment (Dkt. 12). The Court has 17 considered the pleadings filed in support of and in opposition to the motion and the 18 remainder of the file and hereby denies the motion for the reasons stated herein. 19 I. PROCEDURAL HISTORY 20 On March 2, 2015, Nationwide filed a declaratory judgment action under 28 21 U.S.C. § 2201 against Defendants Jonnie Barr (“Mr. Barr”), Sue Barr (“Ms. Barr”), 22 Puyallup Basketball Academy (“PBA”), and Shari Furnstahl (“Furnstahl”). Dkt. 1 ORDER - 1 Dockets.Justia.com 1 (“Comp.”). Nationwide seeks a declaratory judgment that Nationwide does not have a 2 duty to defend or indemnify Mr. Barr, Ms. Barr, and PBA in the underlying lawsuit. Id. 3 ¶ 31. 4 On April 23, 2015, Nationwide filed a motion for a declaratory judgment. Dkt. 5 12. On May 15, 2015, Furnstahl responded. Dkt. 16. On May 18, 2015, Mr. Barr, Ms. 6 Barr, and PBA responded. Dkt. 18. On May 22, 2015, Nationwide replied. Dkt. 21. 7 II. FACTUAL BACKGROUND 8 A. Underlying Suit 9 Mr. Barr and Ms. Barr own PBA. Comp. ¶ 2. C.F., a minor child, attended PBA 10 from September 2010 to September 2011. Dkt. 13, Declaration of D. Jeffrey Burnham 11 (“Burnham Dec.”), Ex. 1 ¶¶ 3.2, 3.4. 12 On May 15, 2012, Mr. Barr was charged with fourth degree assault for unlawfully 13 and intentionally assaulting C.F. with sexual motivation. Burnham Dec., Ex. 3. On 14 November 4, 2013, Mr. Barr pled guilty to fourth degree assault. Burnham Dec., Ex. 4. 15 In his guilty plea, Mr. Barr states that “[o]n 2/1/11–12/8/11 . . . [he] assaulted another 16 person ([C.F.] DOB 9/13) intentionally by having unpermitted and/or offensive contact 17 with that person.” Id. 18 On April 18, 2014, Furnstahl, as guardian ad litem for C.F., filed suit against Mr. 19 Barr, Ms. Barr, and PBA in Pierce County Superior Court (“underlying suit”). Burnham 20 Dec., Ex. 1. Furnstahl alleges that C.F. was assaulted, unlawfully detained, and had her 21 privacy invaded while she was attending PBA from September 2010 to September 2011. 22 Id. ¶¶ 3.3–3.6. Furnstahl also alleges that the defendants negligently breached their duty ORDER - 2 1 to prevent reasonably foreseeable bodily injury and assault. Id. ¶ 3.3. Furnstahl asserts 2 causes of action for “negligence, invasion of privacy, battery, assault, intentional 3 infliction of emotional distress, [and] false imprisonment.” Id. ¶ 4.2. Furnstahl seeks 4 damages for emotional distress, physical pain and suffering, mental pain and suffering, 5 medical expenses, potential lost wages, diminution of future earning capacity, and 6 decrease in ability to enjoy life. Id. ¶ 5.1. 7 On May 4, 2015, Furnstahl filed an amended complaint in the underlying suit. 8 Dkt. 17, Declaration of James Beck (“Beck Dec.”), Ex. J. The amended complaint 9 changes the applicable time period to September 2010 through 2011. See id. ¶¶ 3.4–3.5. 10 The amended complaint also alleges that the Defendants placed C.F. in a false light by 11 recklessly disregarding the falsity of statements. Id. ¶ 3.6. Furnstahl asserts the same 12 causes of action. Id. ¶ 4.2. 13 B. Nationwide Policies 14 In 2009 and 2010, Nationwide issued two insurance policies to PBA. The first 15 policy had a term of March 1, 2009 to March 1, 2011. Burnham Dec., Ex. 5 at 3, 13. 1 16 The second policy had a term of March 1, 2010 to March 1, 2013. Burnham Dec., Ex. 6 17 at 3, 15. 18 The Nationwide policies provide general liability coverage for “sums that the 19 insured becomes legally obligated to pay as damages because of ‘bodily injury’ . . . to 20 21 1 In its motion, Nationwide states that the policies ran from December 30, 2009 through December 30, 2011. Dkt. 12 at 3. However, the policies’ declarations pages list the dates 22 provided above. See Burnham Dec., Ex. 5 at 5, 13; Ex. 6 at 3, 15. ORDER - 3 1 which this insurance applies.” Burnham Dec., Ex. 5 at 19; Ex. 6 at 20. The policies 2 define “bodily injury” as “bodily injury, sickness or disease sustained by a person, 3 including death resulting from any of these at any time.” Burnham Dec., Ex. 5 at 30; Ex. 4 6 at 31. 5 The policies also provide general liability coverage for “sums the insured is legally 6 obligated to pay as damages because of ‘personal and advertising injury’ to which this 7 insurance applies.” Burnham Dec., Ex. 5 at 23; Ex. 6 at 24. The policies define 8 “personal and advertising injury” as “injury, including consequential ‘bodily injury’ 9 arising out of one or more of the following offenses: (a) False arrest, detention or 10 imprisonment; . . . (d) Oral or written publication, in any manner, of material that 11 slanders or libels a person . . . ; [or] (e) Oral or written publication, in any manner, of 12 material that violates a person’s right of privacy.” Burnham Dec., Ex. 5 at 32; Ex. 6 at 13 33. 14 The Nationwide policies contain several exclusions that are relevant to the instant 15 motion. First, the policies contain an “expected or intended injury” exclusion to general 16 liability coverage. Burnham Dec., Ex. 5 at 20; Ex. 6 at 21. This exclusion precludes 17 coverage for “bodily injury . . . expected or intended from the standpoint of the insured.” 18 Burnham Dec., Ex. 5 at 20; Ex. 6 at 21. 19 The policies also include a “criminal acts” exclusion to professional liability 20 coverage. Burnham Dec., Ex. 5 at 50; Ex. 6 at 53. This exclusion precludes coverage for 21 “[a]ny liability arising out of any dishonest, fraudulent or criminal act committed by any 22 insured.” Burnham Dec., Ex. 5 at 50; Ex. 6 at 53. ORDER - 4 1 Finally, the policies include an “abuse, molestation, harassment or sexual conduct” 2 exclusion to general liability coverage. This exclusion precludes coverage for “[t]he 3 actual, threatened, or alleged abuse, molestation, harassment or sexual conduct of any 4 person in your care, custody and control.” Burnham Dec., Ex. 5 at 37; Ex. 6 at 41. The 5 exclusion also precludes coverage for “[t]he negligent: (i) Employment; (ii) Investigation; 6 (iii) Supervision, hiring or training; (iv) Reporting to the proper authorities, or failure to 7 so report; (v) Retention; or (vii) Referral of any person for whom any insured is or ever 8 was legally responsible and whose conduct would be excluded by [the section] above.” 9 Burnham Dec., Ex. 5 at 37; Ex. 6 at 41. 10 Under both policies, Nationwide has “the right and duty to defend the insured 11 against any ‘suit’ seeking” damages for bodily injury or personal and advertising injury. 12 Burnham Dec., Ex. 5 at 19, 23; Ex. 6 at 20, 24. Nationwide does not have a “duty to 13 defend the insured against any ‘suit’ seeking damages” for bodily injury or personal and 14 advertising injury “to which this insurance does not apply.” Burnham Dec., Ex. 5 at 19, 15 23; Ex. 6 at 20, 24. 16 C. Reservation of Rights 17 Mr. Barr, Ms. Barr, and PBA sought insurance coverage and defense counsel from 18 Nationwide in the underlying suit. Comp. ¶ 14. On May 30, 2014, Nationwide agreed to 19 defend Mr. Barr, Ms. Barr, and PBA subject to a reservation of rights. Burnham Dec., 20 Ex. 7. Nationwide subsequently filed this declaratory judgment action. 21 22 ORDER - 5 1 III. DISCUSSION 2 Nationwide moves for a declaratory judgment on its duty to defend and duty to 3 indemnify. Dkt. 12. However, “a party may not make a motion for declaratory relief[;] 4 rather, the party must bring an action for a declaratory judgment.” Kam-Ko Bio-Pharm 5 Trading Co., Ltd-Australasia v. Mayne Pharma (USA) Inc., 560 F.3d 935, 943 (9th Cir. 6 2009) (quoting Int’l Bhd. of Teamsters v. E. Conference of Teamsters, 160 F.R.D. 452, 7 456 (S.D.N.Y. 1995)). The Court therefore construes Nationwide’s motion as a motion 8 for summary judgment. See id. (“The only way plaintiffs’ motion [for a declaratory 9 judgment] can be construed as being consistent with the Federal Rules is to construe it as 10 a motion for summary judgment on an action for a declaratory judgment.”). 11 A. Summary Judgment Standard 12 Summary judgment is proper only if the pleadings, the discovery and disclosure 13 materials on file, and any affidavits show that there is no genuine issue as to any material 14 fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). 15 The moving party is entitled to judgment as a matter of law when the nonmoving party 16 fails to make a sufficient showing on an essential element of a claim in the case on which 17 the nonmoving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 18 323 (1986). There is no genuine issue of fact for trial where the record, taken as a whole, 19 could not lead a rational trier of fact to find for the nonmoving party. Matsushita Elec. 20 Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (nonmoving party must 21 present specific, significant probative evidence, not simply “some metaphysical doubt”). 22 See also Fed. R. Civ. P. 56(e). Conversely, a genuine dispute over a material fact exists ORDER - 6 1 if there is sufficient evidence supporting the claimed factual dispute, requiring a judge or 2 jury to resolve the differing versions of the truth. Anderson v. Liberty Lobby, Inc., 477 3 U.S. 242, 253 (1986); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 4 626, 630 (9th Cir. 1987). 5 The determination of the existence of a material fact is often a close question. The 6 Court must consider the substantive evidentiary burden that the nonmoving party must 7 meet at trial—e.g., a preponderance of the evidence in most civil cases. Anderson, 477 8 U.S. at 254; T.W. Elec. Serv., Inc., 809 F.2d at 630. The Court must resolve any factual 9 issues of controversy in favor of the nonmoving party only when the facts specifically 10 attested by that party contradict facts specifically attested by the moving party. The 11 nonmoving party may not merely state that it will discredit the moving party’s evidence 12 at trial, in the hopes that evidence can be developed at trial to support the claim. T.W. 13 Elec. Serv., Inc., 809 F.2d at 630 (relying on Anderson, 477 U.S. at 255). Conclusory, 14 nonspecific statements in affidavits are not sufficient, and missing facts will not be 15 presumed. Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888–89 (1990). 16 B. Insurance Policy Interpretation 17 In Washington, the interpretation of insurance policies is a question of law. Am. 18 Star Ins. Co. v. Grice, 121 Wn.2d 869, 874 (1993), opinion supplemented by 123 Wn.2d 19 131 (1994). Washington courts construe insurance policies as a whole, giving force and 20 effect to each clause in the policy. Id. If the policy language is clear and unambiguous, 21 the Court will not modify the policy or create an ambiguity. Id. If the policy language is 22 fairly susceptible to two different reasonable interpretations, it is ambiguous, and the ORDER - 7 1 Court may attempt to discern the parties’ intent by examining extrinsic evidence. Id. If 2 the policy remains ambiguous after resort to extrinsic evidence, the Court construes the 3 ambiguities against the insurer. Id. at 874–75. 4 C. Nationwide’s Motion 5 Nationwide argues that it does not have a duty to defend or indemnify Mr. Barr, 6 Ms. Barr, and PBA in the underlying suit because Furnstahl’s claims are not covered by 7 the Nationwide policies. Dkt. 12. 8 In Washington, the duty to defend is broader than the duty to indemnify. Woo v. 9 Fireman’s Fund Ins. Co., 161 Wn.2d 43, 52 (2007). The duty to defend arises when the 10 “complaint contains any factual allegations which could render the insurer liable to the 11 insured under the policy.” Hayden v. Mut. of Enumclaw Ins. Co., 141 Wn.2d 55, 64 12 (2000). “The key consideration in determining whether the duty to defend has been 13 invoked is whether the allegation, if proven true, would render [the insurer] liable to pay 14 out on the policy.” Kirk v. Mt. Airy Ins. Co., 134 Wn.2d 558, 561 (1998). If an insurer is 15 uncertain of its duty to defend, it may defend under a reservation of rights while seeking 16 a declaratory judgment that coverage does not exist. Nat’l Sur. Corp. v. Immunex Corp., 17 176 Wn.2d 872, 879 (2013). An insurer defending a suit under a reservation of rights 18 “must defend until it is clear that the claim is not covered.” Am. Best Food, Inc. v. Alea 19 London, Ltd., 168 Wn.2d 398, 405 (2010). Meanwhile, the duty to indemnify depends on 20 “the insured’s actual liability to the claimant and actual coverage under the policy.” 21 Hayden, 141 Wn.2d at 64. 22 ORDER - 8 1 To determine whether the duty to defend exists, the Court first “examines the 2 policy’s insuring provisions to see if the complaint’s allegations are conceivably 3 covered.” Id. If the complaint’s allegations are conceivably covered, the Court “must 4 then determine whether an exclusion clearly and unambiguously applies to bar coverage.” 5 Id. Exclusionary clauses are strictly construed against the insurer. Expedia, Inc. v. 6 Steadfast Ins. Co., 180 Wn.2d 793, 803 (2014). The insurer bears the burden of proving 7 that an exclusionary clause applies. Am. Star Ins. Co. v. Grice, 121 Wn.2d 869, 875 8 (1993). 9 In the underlying suit, Furnstahl alleges that C.F. was assaulted and falsely 10 imprisoned while she was in the defendants’ care from September 2010 through 2011. 11 Beck Dec., Ex. J ¶¶ 3.3–3.6. Furnstahl asserts that the defendants negligently breached 12 their duty to prevent reasonably foreseeable bodily injury and assault. Id. ¶ 3.3. She also 13 asserts that the defendants placed C.F. in a false light by recklessly disregarding the 14 falsity of statements. Id. ¶ 3.6. Furnstahl brings the following causes of action: (1) 15 negligence; (2) invasion of privacy; (3) battery; (4) assault; (5) intentional infliction of 16 emotional distress; and (6) false imprisonment. Id. ¶ 4.2. 17 Nationwide does not dispute that Furnstahl’s complaint contains claims that 18 conceivably fall within the general liability coverage provisions of the Nationwide 19 policies. The policies provide general liability coverage for bodily injury. Burnham 20 Dec., Ex. 5 at 19; Ex. 6 at 20. The policies also provide general liability coverage for 21 personal and advertising injury, which includes injury arising from false imprisonment, 22 slander and libel, and invasion of privacy. Burnham Dec., Ex. 5 at 32; Ex. 6 at 33. ORDER - 9 1 Instead, Nationwide argues that three exclusionary clauses preclude coverage: (1) the 2 expected or intended injury exclusion; (2) the criminal acts exclusion; and (3) the abuse 3 exclusion. Dkt. 12. 4 The overarching problem with Nationwide’s arguments is the brevity of 5 Furnstahl’s complaint. Furnstahl’s complaint contains minimal factual allegations. 6 Moreover, Furnstahl’s claims are not limited to a specific defendant, act, or occasion. 7 Although Nationwide contends that Furnstahl’s claims all flow from Mr. Barr’s 8 intentional and criminal assault of C.F., this connection is not clear from Furnstahl’s 9 complaint. For example, Furnstahl alleges that C.F. was assaulted, but Furnstahl’s 10 complaint does not reference Mr. Barr’s criminal assault. Indeed, the Court is unable to 11 determine which factual allegations, if any there are, support the assault claim. To the 12 extent that Nationwide argues Furnstahl has not pled sufficient facts to support her 13 claims, see Dkt. 21 at 8, this argument should be raised in the underlying state court suit 14 because the Court is without jurisdiction to dismiss the underlying claims for failure to 15 provide sufficient factual allegations. 16 With this overarching problem in mind, the Court will address each exclusionary 17 clause in turn. 18 1. 19 Nationwide first argues that the expected or intended injury exclusion precludes Expected or Intended Injury Exclusion 20 coverage. Dkt. 12 at 9. This exclusion precludes coverage for “‘bodily 21 injury’ . . . expected or intended from the standpoint of the insured.” Burnham Dec., Ex. 22 5 at 20; Ex. 6 at 21. Nationwide contends that all of Furnstahl’s claims stem from Mr. ORDER - 10 1 Barr’s intentional acts, and thus Nationwide may decline coverage for Mr. Barr, Ms. 2 Barr, and PBA. Dkt. 12 at 9–11, 14–15 (citing Farmers Ins. Co. of Wash. v. Hembree, 54 3 Wn. App. 195 (1989)). 4 As a preliminary matter, Nationwide’s reliance on Hembree is misplaced. In 5 Hembree, the Washington Court of Appeals examined an intentional acts exclusion that 6 precluded coverage for bodily injury arising from the intentional acts of “an insured.” 54 7 Wn. App. at 198. The court determined that the exclusion “broadly excludes coverage 8 for all intentionally caused injury or damage by an insured, which includes anyone 9 insured under the policy.” Id. at 200. In this case, however, the expected or intended 10 injury exclusion precludes coverage for bodily injury that is expected or intended from 11 the standpoint of “the insured.” Burnham Dec., Ex. 5 at 20; Ex. 6 at 21. “When an 12 insurance policy contains an exclusion for ‘the insured,’ each insured is entitled to read 13 the policy as if applying only to that insured.” Truck Ins. Exch. v. BRE Props., Inc., 119 14 Wn. App. 582, 591 (2003)). The expected or intended injury exclusion must therefore be 15 applied separately to each insured. 16 With regard to whether this exclusion applies, the Court cannot conclude that it 17 clearly and unambiguously bars coverage at this time. First, Furnstahl alleges that the 18 defendants acted negligently. Beck Dec., Ex. J ¶¶ 3.3, 4.2. Furnstahl’s negligence claim 19 is not limited to a single defendant or occasion. Thus, liability in the underlying suit 20 could be premised on any of the defendants’ negligent acts. Nationwide recognized that 21 negligent acts are covered under the policies in its reservation of rights letter. Burnham 22 Dec., Ex. 7 at 5. ORDER - 11 1 Additionally, Furnstahl alleges that the defendants falsely imprisoned C.F. and 2 invaded her privacy. Beck Dec., Ex. J ¶¶ 3.5–3.6, 4.2. The Nationwide policies 3 expressly provide coverage for personal and advertising injury arising from false 4 imprisonment and invasion of privacy. Burnham Dec., Ex. 5 at 32; Ex. 6 at 33. By its 5 plain terms, the expected or intended injury exclusion applies to bodily injury rather than 6 personal and advertising injury. 2 See Burnham Dec., Ex. 5 at 20; Ex. 6 at 21. 7 Even if the exclusion does apply to personal and advertising injury, intentional 8 conduct is not necessary to establish liability for invasion of privacy by false light. Under 9 Washington law, invasion of privacy by false light can occur if the defendant recklessly 10 disregarded a communication’s falsity. Eastwood v. Cascade Broad. Co., 106 Wn.2d 11 466, 470–71 (1986). In her complaint, Furnstahl alleges that the defendants placed C.F. 12 in a false light by recklessly disregarding the falsity of statements. Beck Dec., Ex. J 13 ¶ 3.6. Thus, liability in the underlying suit could also be premised on the defendants’ 14 reckless disregard of a communication’s falsity. 15 16 17 18 19 20 21 22 2 The policies include a “knowing violation” exclusion for “‘personal and advertising injury’ caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict ‘personal and advertising injury.’” Burnham Dec., Ex. 5 at 24; Ex. 6 at 25. Nationwide relies on this specific exclusion for the first time in its reply brief. Dkt. 21 at 6–7. “As a general rule, a movant may not raise new facts or arguments in his reply brief.” Karpenski v. Am. Gen. Life Co., LLC, 999 F. Supp. 2d 1218, 1226 (W.D. Wash. 2014) (internal quotation marks omitted). Even if the Court were to consider Nationwide’s new argument, Furnstahl’s complaint alleges that the defendants acted negligently and with reckless disregard. Beck Dec., Ex. J ¶¶ 3.3, 3.6, 4.2. Thus, the Court cannot conclude that this exclusion clearly and unambiguously bars coverage. ORDER - 12 1 Because Furnstahl’s complaint includes claims that do not clearly and 2 unambiguously fall within the expected or intended injury exclusion, the exclusion does 3 not provide a basis for Nationwide to deny a defense in the underlying suit. 4 2. 5 Next, Nationwide contends that the criminal acts exclusion precludes coverage. Criminal Acts Exclusion 6 Dkt. 12 at 11–12. The exclusion states that the Nationwide policies do not apply to 7 “[a]ny liability arising out of any dishonest, fraudulent or criminal act committed by any 8 insured.” Burnham Dec., Ex. 5 at 50; Ex. 6 at 53. According to Nationwide, Furnstahl’s 9 claims arise from Mr. Barr’s criminal acts, and thus Nationwide may decline coverage. 10 Dkt. 12 at 11–13, 14–15 (citing Allstate Ins. Co. v. Raynor, 143 Wn.2d 469 (2001)). 11 To begin with, this exclusion applies to professional liability coverage rather than 3 12 general liability coverage. Burnham Dec., Ex. 5 at 50; Ex. 6 at 53. Additionally, 13 Furnstahl’s claims do not necessarily rely on criminal acts. As discussed above, 14 Furnstahl’s complaint alleges conduct that is not limited to a specific defendant, act, or 15 occasion. Indeed, Furnstahl’s complaint does not specifically reference Mr. Barr’s 16 criminal assault. Furnstahl’s complaint also alleges conduct occurring prior to the time of 17 Mr. Barr’s criminal assault. Compare Beck Dec., Ex. J ¶¶ 3.4–3.5, with Burnham Dec., 18 Ex. 4 at 6. While some of Furnstahl’s claims could be construed to include Mr. Barr’s 19 3 The policies include a “criminal acts” exclusion to general liability coverage for “‘personal and advertising injury’ arising out of a criminal act committed by or at the direction of 20 the insured.” Burnham Dec., Ex. 5 at 24; Ex. 6 at 25. Nationwide references this specific 21 exclusion for the first time in its reply brief. Dkt 21 at 6. As previously noted, “a movant may not raise new facts or arguments in his reply brief.” Karpenski, 999 F. Supp. 2d at 1226. For the reasons discussed above, the Court cannot conclude that this exclusion clearly and 22 unambiguously bars coverage. ORDER - 13 1 criminal assault, other claims do not invoke assault, let alone any criminal act. Because 2 Furnstahl’s complaint alleges a variety of conduct, potential liability cannot be attributed 3 to a single act. This case is therefore distinguishable from Raynor, which involved a 4 wrongful death action arising from a single, discrete criminal act. 143 Wn.2d at 474, 5 476–77. 6 Moreover, under Washington law, “a criminal act exclusion does not apply to all 7 acts technically classified as crimes, but only to serious criminal conduct ‘done with 8 malicious intent, from evil nature, or with a wrongful disposition to harm or injure other 9 persons.’” Id. at 478 (quoting Van Riper v. Constitutional Gov’t League, 1 Wn.2d 635, 10 642 (1939)). It has not been established that any of the underlying actions involved 11 malicious intent. For these reasons, the Court cannot conclude that the criminal acts 12 exclusion clearly and unambiguously bars coverage in this case. 13 3. 14 Finally, Nationwide references the abuse exclusion in its motion, but does not Abuse Exclusion 15 discuss this exclusion in detail. Dkt. 12 at 4. The abuse exclusion precludes general 16 liability coverage for “[t]he actual, threatened, or alleged abuse, molestation, harassment 17 or sexual conduct of any person in your care, custody and control.” Burnham Dec., Ex. 5 18 at 37; Ex. 6 at 41. The exclusion also precludes coverage for “[t]he negligent: (i) 19 Employment; (ii) Investigation; (iii) Supervision, hiring or training; (iv) Reporting to the 20 proper authorities, or failure to so report; (v) Retention; or (vii) Referral of any person for 21 whom any insured is or ever was legally responsible and whose conduct would be 22 excluded by [the section] above.” Burnham Dec., Ex. 5 at 37; Ex. 6 at 41. ORDER - 14 1 By its plain terms, the abuse exclusion is limited to abuse, molestation, 2 harassment, and sexual conduct. Furnstahl’s complaint, however, does not allege abuse, 3 molestation, harassment, or sexual conduct. While Furnstahl’s battery claim may be 4 construed to include allegations of abuse, molestation, harassment, or sexual conduct, her 5 other claims do not necessarily imply these actions. The Court cannot conclude that 6 Furnstahl’s claims are clearly and unambiguously barred by the abuse exception. 7 4. 8 Nationwide has not established that these exclusionary clauses preclude coverage Conclusion 9 in this case. Nationwide has a duty to defend until it is clear that the underlying claims 10 are not covered. In regards to Nationwide’s duty to indemnify, Mr. Barr, Ms. Barr, and 11 PBA’s actual liability in the underlying suit has not yet been determined. Accordingly, it 12 is premature for the Court to decide whether Nationwide has a duty to indemnify. See 13 Hayden, 141 Wn.2d at 64 (“The duty to indemnify hinges on the insured’s actual liability 14 to the claimant and actual coverage under the policy.”). For these reasons, the Court 15 denies Nationwide’s motion. 16 IV. ORDER 17 Therefore, it is hereby ORDERED that Nationwide’s motion for declaratory 18 judgment (Dkt. 12) is DENIED without prejudice. 19 Dated this 10th day of July, 2015. 20 A BENJAMIN H. SETTLE United States District Judge 21 22 ORDER - 15
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