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Specialty National Insurance Co. v. English Brothers Funeral Home

March 30, 2009

SPECIALTY NATIONAL INSURANCE COMPANY, PLAINTIFF,
v.
ENGLISH BROTHERS FUNERAL HOME, DEFENDANT.



The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge

OPINION

Plaintiff Specialty National Insurance Company ("Specialty") brings this action seeking a declaratory judgment that, despite having issued insurance policies to defendant English Brothers Funeral Home, it has no duty to defend or indemnify its insured in a series of lawsuits filed against English Brothers relating to the alleged unlawful harvesting of human body parts from corpses entrusted to defendant for burial. English Brothers, for its part, contends that each of the suits filed against it raises at least some claims-and therefore provides some factual and legal basis-by which Specialty might ultimately be obligated to indemnify it, and accordingly, that a declaratory judgment should be granted in its favor compelling Specialty to defend it in each underlying case. Each side contends the record as developed thus far is sufficiently clear for the Court to grant summary judgment in its favor with respect to Specialty's duty to defend. Specialty additionally seeks summary judgment with respect to its duty to indemnify, while English Brothers seeks dismissal of the action insofar as it seeks to resolve any duty to indemnify as premature. Finally, English Brothers requests the reasonable attorneys' fees and costs it has incurred in defending itself in this action should it prevail on these motions.

Because the Court finds that each of the underlying complaints does in fact provide some basis by which Specialty might ultimately be obligated to indemnify English Brothers, Specialty does have a duty to defend English Brothers in the underlying suits. Therefore, Specialty's motion should be denied to the extent it seeks a declaration that it has no duty to defend English Brothers, and defendant's motion for summary judgment with regard to the same should be granted. In addition, the Court finds Specialty's request for a declaratory judgment that it has no duty to indemnify English Brothers to be premature, and accordingly, that portion of plaintiff's motion for summary judgment should be denied and that portion of the action should be dismissed without prejudice. Finally, because defendant prevails on the merits in this litigation, English Brothers' request for reasonable attorneys' fees and costs should be granted.

I. BACKGROUND

Plaintiff, a national insurance company, issued a policy to English Brothers in August 2002 that provided separate coverage for (1) Business Owners Liability and (2) Death Care Services Professional Liability. (Pl.'s Local Rule 56.1 Statement of Undisputed Material Facts ("Pl.'s 56.1") ¶ 55). The Business Owners Liability coverage extends to any "'bodily injury' . . . caused by an 'occurrence'" with "occurrence" being defined as "an accident." (Business Owners Liability Coverage at A(1)(b)(1)(a), F(12), Ex. T to Pl.'s Mem. of Law in Supp. of Summ. J. "Pl.'s Summ J. Mem.") The Death Care Services Professional Liability coverage extends to any "professional malpractice, error, or mistake, which causes bodily injury, sickness, disease, death or mental anguish." (Death Care Svcs. Professional Liability Coverage at I(1)(a), V(6)(a)(1)(a), Ex. T to Pl.'s Summ J. Mem.)

Beginning in the fall of 2005, English Brothers was named as a defendant in a series of lawsuits stemming from allegations that it, in conjunction with several other individuals and entities also named as defendants in those actions, illegally harvested body parts, organs, and tissue from corpses without the consent of the deceased or their families, and then caused those body parts, organs, and tissues to be implanted in individuals awaiting donations without their knowledge of where the implanted body parts, organs, or tissues had come from. (Pl.'s 56.1 ¶¶ 3-54; Def.'s Local 56.1 Counter-Statement of Material Facts ("Def.'s 56.1") ¶¶ 3-54.)

At least seventeen such suits were filed falling into two general categories. First, "donor cases" have been brought by living family members of decedents whose bodies were allegedly harvested without the consent of the decedents or their families; these donor cases seek relief for the resulting emotional, physical, and mental anguish suffered by surviving family members as a result. (E.g., Enright v. English Bros. Funeral Home, Inc., et al. ("Enright Compl."), Ex. C to Pl.'s Summ. J. Mem.; Bruno v. English Bros. Funeral Home, et al. ("Bruno Compl."), Ex. D to Pl.'s Summ J. Mem.)

Second, "implant cases" have been brought by persons who received tissue or other body parts from the harvested corpses; the implant cases seek relief for physical injuries suffered or likely to be incurred by the recipients as a result of defendants' conduct, as well as for the emotional and mental anguish suffered by the organ or tissue recipients and their families. (E.g. Collins v. Biomedical Tissue Svcs., Ltd. ("Collins Compl."), Ex. I to Pl.'s Summ. J. Mem.; Ricklefs v. Biomedical Tissue Svcs. Ltd. ("Ricklefs Compl."), Ex. J to Pl.'s Summ. J. Mem.)

While the claims raised vary slightly from suit to suit,*fn1 each of the seventeen complaints alleges both intentional wrongful conduct as well as negligent conduct- including a failure to supervise or manage employees or to properly handle corpses-by English Brothers. (Exs. C-S to Pl.'s Summ. J. Mem.) Donor cases stem from the contractual relationship between English Brothers and the families of corpses entrusted to it for burial, and accordingly include claims for breach of contract, false or fraudulent representations, and unjust enrichment, (E.g., Enright Compl. ¶¶ 50, 63, 72, 76-77.) Donor cases, all of which name not only English Brothers but also their employees and other defendants, also bring claims for "conduct that was negligent" and allege that "this negligence caused plaintiff" various harms. (Id. ¶ 58.)

By contrast, implant cases are brought by plaintiffs who have no direct contractual relationship with English Brothers but instead allege they received organs, body parts, or tissue from third parties also named as defendants after those organs or tissues were harvested from corpses in English Brothers' care. Accordingly, those suits are brought primarily against other defendants and raise claims such as products liability, intentional misrepresentation, and breach of express warranty. (E.g., Ricklefs Compl. ¶¶ 37-54; 67-78; 79-88.) However, implant cases also set forth claims against English Brothers for negligence, negligent infliction of emotional distress, and respondeat superior liability for the negligent acts or omissions of its employees. (E.g., Ricklefs Compl. ¶¶ 55-60, 97-100, 101-05.)

In August 2007, Specialty commenced this action, seeking a declaration that it had neither a duty to indemnify nor to defend English Brothers in any of the underlying suits because each involved intentional wrongful conduct and accordingly alleged claims not covered by the policies issued. Both parties subsequently moved for summary judgment in their respective favor.

II. ANALYSIS

A. The Summary Judgment Standard

Summary judgment is appropriate if the evidence shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine issue of material fact exists where the record taken as a whole could lead a reasonable trier of fact to find for the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In determining whether a genuine issue of material fact exists, a court "is to resolve all ambiguities and draw all ...


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