Essex Insurance Company v. Associates for Renewal in Education, Inc. ( 2009 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
___________________________________
ESSEX INSURANCE COMPANY, )
)
Plaintiffs, )
)
v. ) Case No. 1:04-CV-1460(GK)
)
JOHN DOE, A MINOR, THROUGH HIS )
NEXT FRIEND, BOB DOE )
)
Defendant. )
___________________________________)
MEMORANDUM OPINION
This insurance litigation arose out of events that took place
at a facility operated by Associates for Renewal in Education, Inc.
(“A.R.E.”), who Defendant John Doe (“Doe”) sued for improper
supervision at the facility. A.R.E. settled the claims against it,
and assigned to Doe its rights under a liability policy with
Plaintiff Essex Insurance Company (“Essex”). Essex Ins. Co. v.
Associates for Renewal in Educ., Inc., No. 04-1460, WL 2521231, at
*1-2 (D.D.C. Aug. 30, 2006) (“Essex I”). On August 30, 2006, this
Court entered a judgment in the case, denying Doe’s Motion for
Partial Summary Judgment, and granting in part and denying in part
Essex’s Amended Motion for Summary Judgment. Id. at *9. Doe
challenged that decision, which the Court of Appeals then affirmed
in part and reversed in part. Essex Ins. Co. v. Doe, 511 F.3d 198,
202 (D.C. Cir. 2008) (“Essex II”). On February 29, 2008, parties
both submitted Status Reports pursuant to the Court’s January 4,
2008 Order, addressing the only question remaining in this case:
how the final judgment in favor of Doe should be computed.
In its opinion, the Court of Appeals held that “Doe is
entitled to recover from Essex $300,000 minus the investigation and
defense costs that Essex incurred with respect to Doe's case
against A.R.E.” Essex II, 511 F.3d at 202. For the following
reasons, this Court deems it appropriate to enter final judgment in
Doe’s favor for $197,140.1
The Court of Appeals considered two issues: 1) the number of
claims that Doe brought under the policy when it made one demand
for compensation based on four instances of sexual assault; 2)
whether the policy’s coverage limit must be reduced by the amount
that Essex expended on investigation and defense of the case.
Essex II, 511 F.3d at 199-200. In holding that each occurrence of
sexual abuse did indeed represent a distinct claim under the
policy, the Court of Appeals grounded its decision in case law that
has developed around the term “claim,” as well as analysis of the
term in the contract. Id. at 200. Further, the opinion invoked
“black-letter contract principles” in support of the holding that
“Essex may reduce its coverage by the amount Essex spent on
investigation and defense.” Id. at 202.
1
Parties agree that Essex spent $102,860 on defense costs in
the litigation between Doe and A.R.E. See Plaintiff’s Status
Report at 1; Defendant’s Status Report at 1 (accepting Essex’s
calculation assuming that it can be substantiated). Subtracting
this amount from the $300,000 that the Court of Appeals ordered
Essex to pay to Doe, the Court arrives at the final judgment amount
of $197,140.
-2-
Thus, there is no question that Doe is due payment from Essex
and, as the Court of Appeals clearly held, “Doe is entitled to
recover from Essex $300,000 minus the investigation and defense
costs that Essex incurred with respect to Doe's case against
A.R.E.” Id.
Nevertheless, Essex makes various arguments attempting to
avoid paying further damages to Doe by maintaining that several
issues remain ripe for decision. First, Essex contests the
validity of the settlement and consent judgment entered into by
A.R.E. and Doe for a variety of reasons. See Plaintiff’s Status
Report at 2. Second, Essex argues that this Court should address
the validity of A.R.E.’s assignment of rights to Doe because the
assignment violated the express terms of a “no assignment”
provision in the policy. Id. Lastly, Essex argues that this Court
has yet to address whether or not the necessary number of separate
“claims” have actually been proven so as to satisfy the requisite
burden in this case and thereby trigger payment of the policy’s
coverage limit. Id. at 3.
All of these arguments seem to ignore the straightforward
point that the Court of Appeals directed this Court to calculate
the exact amount of the judgment by determining the investigation
and defense costs, and subtracting them from the $300,000 payment.
The Court of Appeals did not remand for any other purpose, nor did
it give instructions to this Court to do anything other than the
-3-
calculation just described. This Court will do only what the Court
of Appeals has ordered it to do.
Moreover, on the merits of whether Essex’s arguments should
even be addressed at this late point, the insurer is wrong. Essex
could certainly have foreseen the possibility of losing its appeal
in the manner that it did, and therefore should have taken a cross-
appeal. See Northwestern Indiana Tel. Co. v. Federal
Communications Comm’n, 872 F.2d 465, 470 (D.C. Cir. 1989); see also
Blum v. Bacon, 457 U.S. 132, 137 n.5 (1982). Such a procedure is
an appropriate and well-recognized protective measure. Hartman v.
Duffey, 19 F.3d 1459, 1465-66 (D.C. Cir. 1994) (“A party who fully
prevailed in the district court may have an equally obvious
justification for cross-appeal, to protect interests that otherwise
might be adversely affected by disposition of the appeal. Courts
readily understand this principle, and have applied it without
difficulty, permitting the cross-appeals but deciding them only if
disposition of the appeal makes it appropriate.”) (quoting 15A
Charles Alan Wright & Arthur R. Miller, Federal Practice &
Procedure § 3902 p. 78 (2d ed. 1992)).2 Failure to do so precludes
Essex from raising these claims now.
For the foregoing reasons, the Court concludes that Essex
2
While it is true that the Hartman Court eventually permitted
the agency to cross-appeal, it did so because of factors unique to
that case, see 19 F.3d at 1466-67, and did not in any way reject
the principle cited above.
-4-
shall transfer to Doe’s Trust $300,000 minus the $102,860 used in
investigation and defense costs--a total of $197,140 . The
transfer shall be made within thirty (30) days of the Order that
will issue with this Memorandum Opinion.
January 6, 2009 /s/
Gladys Kessler
U.S. District Judge
Copies to: attorneys on record via ECF
-5-