You Won’t Believe This Case -- I Did Not Make This Up. Really!

Imagine this scenario for a second. A man is having marital problems. So he takes the not unreasonable step of visiting his priest to seek guidance. Unbeknownst to the man, however, the priest has been having an intimate relationship with the man’s wife. The priest fails to mention this detail. Instead, the priest tells him that he should make no further efforts to save his marriage and accept his wife’s decision to seek a divorce.

Now, as a member of the Jewish faith, I have very little experience with priests. It’s pretty much been limited to seeing the priest on the way out of a wedding or funeral and giving him a wave and a nice job Father. But despite my lack of first-hand knowledge with priests I’m pretty sure I know this much--most priests would probably react differently when confronted with a parishioner that is having marital problems. I imagine that the conversation would be more along the lines of the priest telling the parishioner that marriage can be difficult, it takes hard work, there are going to be bumps in the road, ups and downs are inevitable and he should do whatever he can to solve the problem. But not this priest. Nope. He hears that his lover’s husband thinks that his marriage is in trouble and his reaction is swift – Oh this sounds bad my son. It’s time to throw in the towel. (And, by the way, I know what your towels look like.)

While I’ve been known to make up a decision now and then, this one is the real deal -- courtesy of a recent New Jersey federal court. By it’s not just any decision. It’s one in a coverage case! Baby when it rains it pours. Now to the coverage part of the story – which has its own share of hard-to-believe facts.

In Drew v. Church Mutual Insurance Company, No. 13-1906 (D.N.J. May 29, 2014), [enhanced version available to lexis.com subscribers], Henry Drew was the priest and Michael Doerr was the parishioner. In May 2009, Doerr found out about the affair and informed Drew of his discovery via text message. Drew notified his supervisors of the affair, and Doerr’s knowledge of it, and Drew then fled the country under his supervisors’ direction. It just gets better and better.

Drew secretly returned to the U.S. in the Summer of 2009. In February 2011, Doerr brought an action against Drew in New Jersey state court for breach of fiduciary duty and negligent infliction of emotional distress. Doerr alleged that Drew, because of the affair, had an irreconcilable conflict of interest in providing marriage counseling to him.

Drew sought defense and indemnification under a Church Mutual policy for the claims being made against him. Church Mutual declined. Drew filed a complaint against Church Mutual seeking a declaratory judgment that coverage was owed. Drew and Doerr reached a settlement and Drew assigned any policy rights to Doerr.

At issue was coverage, for a “counseling incident,” under a policy for Counseling Professional Liability. The policy defined “counseling incident,” in relevant part, as follows: “any act or omission in the furnishing of counseling services.”

The more specific issue before the court was the applicability of an endorsement for Prior Acts Coverage. The endorsement only provided coverage for a “counseling incident” that an insured did not have knowledge of before the Prior Acts Date of July 1, 2010. So the issue before the court, and the crux of its analysis, was whether Drew had knowledge of the “counseling incident” before July 1, 2010.

The court did not break a sweat to conclude that no coverage was owed, as there was “no question” that Drew had knowledge of the counseling incident before July 1, 2010: “[I]n May 2009, Plaintiff received a second text message from Doerr. Plaintiff subsequently informed his superiors of Doerr’s text message regarding discovery of the affair. Plaintiff’s superiors then told him to flee to Canada to avoid service of process in Doerr’s pending lawsuit. Based on these facts, Plaintiff’s claim that he was only aware of the ‘counseling incident’ upon being served with Doerr’s complaint in October 2010 is unpersuasive.” Wow.

Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit www.coverageopinions.info.

The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

    Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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