United States District Court, D. Alaska
ORDER RE MOTION TO DISMISS
SHARON
L. GLEASON, District Judge.
Before
the Court is Defendant Wausau Business Insurance
Company's Motion to Dismiss at Docket 7. Plaintiff D.W.J.
opposed at Docket 12, and Defendant replied at Docket 18.
Oral argument was not requested and was not necessary to the
Court's determination of the motion. For the reasons set
forth below, the motion will be granted.
FACTS &
PROCEEDINGS
This is
an insurance coverage dispute arising out of a sexual assault
that occurred at the Super 8 Motel in Ketchikan in May 2011.
The victim of the assault, D.W.J., brings this action as the
assignee of the hotel employee who committed the assault,
Robert Callanan. The defendant, Wausau Business Insurance
Company, provides specified liability insurance to the hotel
and, by extension, its employees. Plaintiff D.W.J. alleges
that Wausau should have defended and indemnified Mr. Callanan
for his sexual assault. The parties do not dispute the
majority of the facts.[1]
On May
26, 2011, D.W.J. checked into the Super 8 Motel in Ketchikan.
Robert Callanan was the only employee on the premises that
day, and registered D.W.J. into the hotel. Mr. Callanan
assigned D.W.J. to a room on the first floor, near the
hotel's front desk. Within ten to fifteen minutes after
D.W.J. had checked into her room, Mr. Callanan used his key
to open D.W.J.'s door. He told her that he was there to
fix the television, but instead of fixing the television, he
"pushed [her] down on her own hotel bed, stripped her
nearly naked, groped her breasts and performed cunnilingus on
her, all against her will and after she told him to
stop."[2] D.W.J. told Mr. Callanan that she
needed to use the restroom, and from there called her husband
and the police. When D.W.J.'s husband arrived, "Mr.
Callanan had D.W.J. gripped by the arm, and was seen
attempting to leave [the room] with
[her]."[3]
On May
14, 2012, Mr. Callanan was convicted by a jury of First
Degree Sexual Assault as a result of this
incident.[4] He was sentenced to 24 years in prison
with 10 years suspended.[5] Mr. Callanan appealed his
conviction.
The day
following his conviction, May 15, 2012, D.W.J. filed a civil
action against Mr. Callanan and the Peninsula Group-the
entity that owned the Super 8 Motel.[6] In that complaint,
D.W.J. noted that Mr. Callanan had been convicted of sexual
assault in the first degree.[7] D.W.J. alleged (1)
assault and sexual battery, and assault and battery related
to kidnapping; (2) negligent failure to supervise, hire,
train, or screen Mr. Callanan, and negligent infliction of
emotional distress; (3) breach of contract; and (4) claims
under the Alaska Unfair Trade Practices and Consumer
Protection Act.[8] D.W.J.'s First Amended Complaint
identified the sexual assault as an "intentional
tort[]"; it did not assert that the assault was an
accident, negligent, or unintentional.[9] The only references
to negligence in that complaint were as follows: D.W.J.
alleged that Mr. Callanan was liable for negligence because
he assigned her a room on the first floor, and she asserted
that Mr. Callanan had a duty to "keep [her] safe, "
and he breached this duty "by assaulting [her] and
engaging in negligent, or reckless and outrageous conduct
against her."[10]
In the
prior case, D.W.J. settled her claims against the Peninsula
Group before trial. Mr. Callanan did not enter an appearance,
nor did he tender the civil complaint to Wausau; however,
Wausau still sent Mr. Callanan a letter dated October 11,
2012 denying coverage. Wausau explained that it would not
provide a defense to Mr. Callanan because "[a] sexual
assault obviously is not part of your duties and was not
within the scope of your employment by
Peninsula."[11] Wausau added that even if Mr.
Callanan was an "insured, " his sexual assault of
D.W.J. was not an "occurrence" such that it was
covered under the policy.[12]
Mr.
Callanan died in July 2013, while his criminal case was still
on appeal.[13] Because he had not appeared in the
civil case, that court entered a default judgment against Mr.
Callanan's estate in the amount of $641,
264.86.[14] In her memorandum in support of the
entry of the default judgment, D.W.J. asserted that all of
her damages should be allocated to Mr. Callanan and none to
the Peninsula Group, because "[w]ith [Mr.]
Callanan's assault being intentional, there is no fault
to allocate and, thus, no offset."[15] The court
evidently agreed and entered a default judgment against Mr.
Callanan for 100% of the claimed damages; the parties here
agree there was no allocation of fault to the Peninsula
Group.[16] Mr. Callanan's estate then
assigned any claim it might have against Wausau to D.W.J.,
and D.W.J. filed the instant case against Wausau in Alaska
Superior Court. The case was timely removed to this
Court.[17] D.W.J. asserts claims of negligent
adjustment, breach of contract, and breach of the covenant of
good faith and fair dealing; she seeks damages in excess of
$100, 000, including punitive damages.[18]
At
issue in this case is whether the Wausau policy provides
coverage to Mr. Callanan for his conduct towards D.W.J.
Wausau asserts that the Court should dismiss the action
because: (1) Mr. Callanan was not acting within the scope of
his employment when he assaulted D.W.J., and, therefore, the
Wausau policy provides him no coverage; and (2) Mr.
Callanan's intentional sexual assault of D.W.J. does not
qualify as an "occurrence" under the policy.
DISCUSSION
I.
Jurisdiction
The
Court has subject-matter jurisdiction over this action
pursuant to 28 U.S.C. § 1332(a). Because the Court is sitting
in diversity, it applies the substantive law of the forum
state, Alaska, including the collateral estoppel rules of
that state.[19]
II.
Conversion to Summary Judgment
Defendant
Wausau styles its briefing as a motion to dismiss
D.W.J.'s Complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6). In ruling on a motion to dismiss, a court
"consider[s] only allegations contained in the
pleadings, exhibits attached to the complaint, and matters
properly subject to judicial notice."[20] However,
Wausau has presented as attachments materials beyond the
scope of the challenged pleading, and D.W.J. does not assert
that the attached additional materials should be
excluded.[21]
"If,
on a motion under Rule 12(b)(6)..., matters outside the
pleadings are presented to and not excluded by the court, the
motion must be treated as one for summary judgment under Rule
56."[22] Either party may bring the
conversion provision into operation by submitting materials
other than the challenged pleading.[23] A district court
has discretion to accept or reject this additional material
based on "whether or not the proffered material, and the
resulting conversion from the Rule 12(b)(6) to the Rule 56
procedure, is likely to facilitate the disposition of the
action."[24]
The
Court finds that consideration of the additional materials
submitted without objection in this case will facilitate the
disposition of the action, because the materials provide a
comprehensive view of the dispute and the legal issues before
the Court. Therefore, the Court will not exclude the
additional materials and will convert Wausau's motion to
dismiss into a motion for summary judgment under Rule 56.
Rule
56(a) directs a court to "grant summary judgment if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law." When considering a motion for summary
judgment, a court must draw "all justifiable
inferences" in the non-moving party's
favor.[25] The burden of showing the absence of
a genuine dispute of material fact initially lies with the
moving party.[26] If the moving party meets this
burden, the non-moving party must present specific evidence
demonstrating the existence of a genuine issue of
fact.[27] The non-moving party may not rely on
mere allegations or denials. To reach the level of a genuine
dispute, the evidence must be such "that a reasonable
jury could return a verdict for the non-moving
party."[28] If the evidence provided by the
non-moving party is "merely colorable" or "not
significantly probative, " summary judgment to the
moving party is appropriate.[29]
III.
Scope of Employment
The
Wausau insurance policy provides coverage for employees,
"but only for acts within the scope of their employment
by [Peninsula Group] or while performing duties related to
the conduct of [Peninsula Group's]
business."[30]
Wausau
asserts that under no set of facts can sexual activity,
whether consensual or nonconsensual, be within Mr.
Callanan's scope of employment as a front desk clerk.
Wausau argues that under Alaska law an act must be motivated
at least in part by a desire to serve the employer, and a
sexual assault cannot have such a motivation. Wausau also
asserts that no insured could have a reasonable expectation
of being insured for sexual assault.[31]
D.W.J.
responds that she has also asserted a "negligent
billeting" theory, under which Mr. Callanan's action
of assigning her a room on the first floor of the hotel made
her less safe. Because checking a guest into the hotel is
motivated at least in part by a desire to serve the employer,
she asserts coverage would apply. And D.W.J. relies heavily
on a case where the Alaska Supreme Court held that a
counselor's sexual relations with a patient were related
to his employment.[32] Finally, D.W.J. asserts that the
assault was close enough in time and space to Mr.
Callanan's performance of hotel-related duties that it
was within his scope of employment or while performing duties
related to Peninsula Group's business.[33]
In
determining whether an employee has acted within his scope of
employment, Alaska courts apply a flexible multi-factored
test.[34] The test adopts the factors set
forth in the Restatement (Second) of Agency:
(1) Conduct of a servant is within the scope of employment
if, but only if:
(a) it is of the kind he is employed to perform;
(b) it occurs substantially within the authorized time and
space limits;
(c) it is actuated, at least in part, by a purpose to serve
the master; and
(d) if force is intentionally used by the servant against
another, the use of force is not unexpected by the master.
(2) Conduct of a servant is not within the scope of
employment if it is different in kind from that authorized,
far beyond the authorized time or space limits, or too little
actuated by a purpose to serve the master.[35]
Not all
four of the Restatement factors are required-rather, together
they are relevant considerations.[36] However, the Alaska
Supreme Court has held that that some purpose to serve the
master, factor (c) of the test, must be
present.[37]
The
case that D.W.J. relies on most heavily is Doe v.
Samaritan Counseling Center. [38] In that case, a
therapist engaged in kissing and fondling with his patient
during sessions, and after the patient terminated the
sessions the two engaged in sexual intercourse. The patient
filed suit against the counseling center for the
counselor's actions, in part based on a theory of
respondeat superior liability. The trial court granted
summary judgment to the counseling center on the respondeat
superior claim, but the Alaska Supreme Court reversed. It
framed the question as whether an employee could be acting in
the scope of employment even if the employee's tortious
conduct was not motivated by a desire to serve the
employer.[39] It opined that "where tortious
conduct arises out of and is reasonably incidental to the
employee's legitimate work activities, the motivation to
serve' test will have been satisfied."[40] Because
of a therapy phenomenon called transference in which a
patient becomes dependent on the therapist, the court
reasoned that the sexual encounter was incidental to the
therapy.[41] Thus, the court appeared to hold
that "motivation to serve" could be deemed
satisfied so long as the employee's acts were
"reasonably incidental" to those tasks the employee
was hired to perform; no actual desire to serve the employer
need be present.
Nine
years later, in VECO, Inc. v. Rosebrock ,
the Alaska Supreme Court retreated from its holding in
Doe .[42] There, an employee sued VECO,
alleging a hostile work environment and retaliation. While
the scope of employment test was not the focus of the case,
the court cited with approval the Restatement of Agency, that
an "employee is not acting within the scope of
employment unless his actions are actuated, at least in part,
by a purpose to serve the master.'"[43] The court
cited Doe's language regarding the tortious
conduct being "reasonably incidental to the
employee's legitimate work activities" and held that
"to the extent that this language suggests that the
employee's acts need not be motivated in fact at least to
some degree to serve the master's business we disapprove
of it."[44] The court noted that the aided in
agency theory from another section of the Restatement would
have been more applicable to the facts of Doe, as it
does not require that the conduct be within the scope of
employment.[45] The Alaska Supreme Court concluded
that "imposing vicarious liability under a scope of
employment theory absent at least a partial purpose on the
part of the employee to serve the employer seems
unjustified."[46]
Thus,
after Rosebrock, although Alaska has not strictly
required that each of the four factors of the Restatement of
Agency be present, the Alaska Supreme Court has stated that
an "employee is not acting within the scope of
employment unless his actions are actuated, at least in part,
by a purpose to serve the master.'"[47] Here,
D.W.J. does not allege, nor could she rationally allege, that
Mr. Callanan's criminal actions were at all carried out
for the purpose of serving Peninsula Group. Under
Rosebrock, an employee must be acting at least in
part with a purpose to serve the master, and an employee
perpetrating a sexual assault cannot do such. Moreover, even
if this factor was not required, Mr. Callanan's conduct
cannot meet two of the remaining three Restatement factors.
The Restatement also asks whether the conduct is "of the
kind [the employee] is employed to
perform."[48] Under no circumstances is a front
desk clerk employed to perform sexual assaults, and D.W.J.
does not allege such. D.W.J. also cannot meet the final
factor, that "if force is intentionally used by the
servant against another, the use of force is not unexpected
by the master."[49] Here, force was intentionally used
by Mr. Callanan against D.W.J., and that force would not have
been expected by the Peninsula Group. Unlike a person
employed in an occupation where a use of force could be
expected, such as a security guard, Mr. Callanan was employed
as a front desk clerk, a position that should not require any
force. Finally, D.W.J. has alleged that Mr. Callanan's
criminal act occurred "substantially within the
authorized time and space limits" of his employment
because the assault happened on the premises of the hotel
during his shift.[50] But the ability to meet one out of
four Restatement factors is insufficient: a sexual assault is
"different in kind from that authorized... [and] too
little actuated by a purpose to serve the
master."[51]
D.W.J.
also asserts that Mr. Callanan should be an insured because
he was performing business-related tasks under the second
portion of the policy language: "while performing duties
related to the conduct of [Peninsula Group's]
business."[52] But the Court finds that in sexually
assaulting D.W.J., Mr. Callanan was not performing a
business-related task.[53] The fact that the assault
happened on work premises and during Mr. Callanan's work
shift is insufficient to bring Mr. Callanan's intentional
sexual assault under the second portion of the policy
language.[54] And, as discussed later in this
order, Mr. Callanan is estopped by his criminal conviction of
asserting that the sexual encounter was
consensual.[55]
Finally,
D.W.J. asserts a "negligent billeting" theory based
on Mr. Callanan's action of placing D.W.J. on the ground
floor of the hotel. The First Amended Complaint in the prior
action did not specifically state a "negligent
billeting" theory; rather, it expressly stated that Mr.
Callanan engaged in "deception, fraud, and false
pretenses" by assigning D.W.J. to a ground-floor
room.[56] Regarding negligence, the prior
complaint simply stated that Mr. Callanan negligently
"fail[ed] to keep D.W.J. safe, " but did not
elaborate.[57] But in any event, the act of
assigning D.W.J. a room on the first floor, itself, was not
the basis for D.W.J.'s claims; the basis for her claims
arose when Mr. Callanan intentionally sexually assaulted
her.[58] In United Services Automobile
Association v. Neary, the Alaska Supreme Court held that
"it is the unforeseen event, not every act of negligence
preceding it, that constitutes the accident or occurrence for
purposes of insurance coverage."[59] Thus, even if
D.W.J. had expressly pled her "negligent billeting"
claim in the prior complaint, the claim against Mr. Callanan
would have still been a tort claim for intentional sexual
assault, based on the facts alleged by D.W.J.[60]
Because
Mr. Callanan's sexual assault was not performed within
the scope of his employment or while performing
business-related tasks, he is not an insured under the
Peninsula Group's insurance policy with respect to
D.W.J.'s particular injury.
IV.
Occurrence as Defined by the Policy
Because
the Court has held that Mr. Callanan was not an additional
insured for his sexual assault, it need not consider whether
the assault could have been an "occurrence" covered
under the policy. Nonetheless, the Court will also address
this issue.
The
Wausau policy covers only "bodily injury" that is
caused by an "occurrence."[61]
"[O]ccurrence" is defined in the policy as "an
accident, including continuous or repeated exposure to
substantially the same general harmful
conditions."[62] The policy does not define
"accident, " but the Alaska Supreme Court has
defined it as "anything that begins to be, that happens,
or that is a result which is not anticipated and is
unforeseen and unexpected."[63] The event must be
unexpected and unintentional from the standpoint of the
insured, [64] because "Alaska recognizes a
general ...