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Nautilus Insurance Co. v. Alamo

United States District Court, W.D. Arkansas, Texarkana Division

March 31, 2015

NAUTILUS INSURANCE COMPANY, Plaintiff,
v.
SHARON ALAMO, SALLY DEMOULIN, THOMAS SCARCELLO, STEVE LOVELETTE, DONN WOLFE, JENNIFER KOLBEK, JEANNE ESTATES APARTMENTS, INC., ADVANTAGE FOODS GROUP, ACTION DISTRIBUTORS, INC., TONY ALAMO a/k/a BERNARD HOFFMAN, Defendant-Insureds and CHRISTHIAON COIE, Defendant-Claimants.

MEMORANDUM OPINION

SUSAN O. HICKEY, District Judge.

Before the Court is a Motion for Summary Judgment (ECF No. 104) filed on behalf of Plaintiff Nautilus Insurance Company ("Nautilus"). Defendants[1] have filed a response. (ECF No. 109). Nautilus has filed a reply. (ECF No. 113). The Court finds this matter ripe for consideration.

BACKGROUND

The Fourth Amended Complaint (ECF No. 49) and the present Motion for Summary Judgment seek a declaration from the Court regarding Nautilus's contractual obligations to defend and indemnify their respective Defendant-Insureds in cases before this Court and Arkansas state courts. The underlying cases referenced in the Fourth Amended Complaint are: Kolbek, et al. v. Twenty First Century Holiness Tabernacle Church, et al., Case No. 4:10-cv-4124; Ondrisek, et al. v. Hoffman, Case No. 4:08-cv-4113; Ondrisek, et al. v. Kolbek, Case No, 4:09-cv-4100; Ondrisek et al. v. Kolbek, et al., No. CV-2011-004-1, Circuit Court of Miller County, Arkansas; Coie v. Alamo, et al., No. CV-2009-1854(V), Circuit Court of Sebastian County, Arkansas.[2] The Court will summarize the underlying cases in turn.

A. The Kolbek suits

In August 2010, Desiree Kolbek, Amy Eddy, Jeannette Orlando, Nicole Farr, Summer Hagan, Jamie Rodriguez, and Pebbles Rodriguez filed suit in this Court against a number of defendants, including several Defendant-Insureds in the present case. The Kolbek plaintiffs were former members of Tony Alamo Christian Ministries ("TACM"). TACM is an organization of churches and businesses that are operated by individual members of TACM and Tony Alamo. Defendants in the Kolbek suit and the present declaratory judgment action are current or former members of TACM or businesses that have close ties with TACM. The Kolbek plaintiffs alleged that, when they were members of TACM, they were forced to become "spiritual wives" of Tony Alamo; they were moved into his home when they were minors; and they were subjected to frequent sexual, physical, and psychological abuse. This abuse allegedly took place on TACM property and was facilitated by TACM members and TACM businesses. Specifically, the Kolbek plaintiffs allege that the TACM businesses allowed Tony Alamo access to the young girls; endorsed or facilitated the "spiritual weddings" with the girls; failed to protect the girls from sexual abuse and beatings; and failed to keep the locations they managed in a reasonably safe condition. The Kolbek Complaint asserted claims of negligence, negligent entrustment, negligent hiring, supervision and retention, false imprisonment, invasion of privacy, defamation, joint-venture liability, outrage, transporter liability under 18 U.S.C. § 2255, and trafficking liability under 18 U.S.C. § 1595.

In 2013, through mediation, Nautilus entered into a Confidential Settlement Agreement with the Kolbek plaintiffs on behalf of several Kolbek defendants who are also Defendant-Insureds in the present case. The settlement resulted in the voluntary dismissal of claims against many of the defendants in the Kolbek suit. Thereafter, the Court dismissed with prejudice all federal law claims against the remaining defendants in the Kolbek suit (Case No. 4:10-cv-4124, ECF No. 716) and dismissed without prejudice all state law claims asserted by the Kolbek plaintiffs. ( Id., ECF No. 722).[3] After the dismissal of their federal suit, the Kolbek plaintiffs re-filed their claims in the Miller County Circuit Court on January 14, 2014, Kolbek v. Twenty First Century Holiness Tabernacle Church, Inc., Case No. 46CV-14-8-2. (ECF No. 107, Exh. E). When the case was re-filed, the defendants were limited to Tony Alamo, Jeanne Estates Apartments, Inc., and Twenty First Century Holiness Tabernacle Church. The allegations in the state suit mirror the allegations made in the dismissed federal suit, and the Kolbek plaintiffs make the same claims for negligence, negligent entrustment, negligent hiring, supervision and retention, false imprisonment, invasion of privacy, defamation, joint-venture liability, and outrage.

In light of the Kolbek settlement, the dismissal of the remaining claims in the federal Kolbek case, and the exclusion of many Defendant-Insureds in the newly filed Kolbek state suit, Nautilus has voluntarily dismissed its Kolbek -related claims against all Defendants except Jeanne Estates Apartments, Inc. and Tony Alamo. (ECF Nos. 98 & 119). Nautilus seeks a declaration from the Court that they owe no coverage to Tony Alamo or Jeanne Estates Apartments, Inc. for any of the alleged misconduct that forms the basis of the claims in the Kolbek federal case and state case and that they have no duty to provide a defense to either Defendant.

B. The Ondrisek suits

1. The Ondrisek Battery Suit

In November 2008, Spencer Ondrisek and Seth Calagna filed suit in this Court against Tony Alamo and John Kolbek.[4] Ondrisek and Calagna alleged that they were repeatedly beaten by and/or at the direction of Tony Alamo and John Kolbek over a period of several years. Ondrisek and Calagna sought damages for battery, false imprisonment, tort of outrage, and conspiracy as a result of those beatings. In October 2009, Ondrisek and Calagna obtained a default judgment against John Kolbek for $1 million in compensatory damages and $2 million in punitive damages. In June 2011, Ondrisek and Calagna obtained a judgment against Tony Alamo for battery, outrage, and conspiracy and were awarded $6 million in compensatory damages and $60 million in punitive damages. In October 2012, the EighthCircuit reversed the award of $60 million in punitive damages and remanded the case to the district court for entry of a verdict imposing $24 million in punitive damages. The Eighth Circuit otherwise upheld the June 2011 judgment.

2. The Ondrisek Fraudulent Transfer Suit

In January 2011, Ondrisek and Calagna filed suit in the Circuit Court of Miller County against various defendants, including Defendant-Insureds Jennifer Kolbek and Jeanne Estates Apartments, Inc. Ondrisek et al. v. Kolbek, et al., No. CV-2011-004-1. The complaint alleges that Jennifer Kolbek and John Kolbek fraudulently transferred their title to certain real property in Miller County and Sebastian County to other defendants named in the fraudulent transfer suit. The Kolbeks allegedly made the transfers with actual intent to hinder, delay or defraud Ondrisek and Calagna with respect to their rights to John Kolbek's interests in the properties pursuant to Ark. Code Ann. § 45-59-204(a)(1) and (2). Ondrisek and Calagna allege that they are entitled to avoidance of the purported transfers and to an order levying execution on the properties in satisfaction of the judgment entered against John Kolbek in the Ondrisek battery suit.

Defendants Jeanne Estates Apartments, Inc., Jennifer Kolbek, and Thomas Scarcello have requested that Nautilus defend them with respect to the Ondrisek battery suit. Nautilus seeks a declaration from the Court that they owe no coverage to these Defendants for any of the alleged misconduct that forms the basis of the claims in the Ondrisek battery suit or fraudulent transfer suit and that they have no duty to provide a defense to any of the Defendants in this case.

C. The Coie suit

The Coie Suit is a lawsuit filed in Circuit Court of Sebastian County, Arkansas, Fort Smith District, Civil Division, on November 12, 2009, Coie v. Alamo, et al., Case No. CV 2009-1854(V). Christhiaon Coie is the sole plaintiff in the suit. Coie seeksdeclaratory judgment to establish her rights to execute a $100, 000 judgment against Tony Alamo by forcing the sale of certain real estate allegedly held by Defendant Jeanne Estates Apartments, Inc., Defendant Jennifer Kolbek, and others who are not Nautilus insureds and/or not parties to the present declaratory judgment action. The judgment that Coie seeks to execute was entered against Tony Alamo on September 14, 1995 after a trial in which Alamo was found liable to Coie for the tort of outrage. Specifically, the trial judge ruled that Coie was entitled to damages because Alamo removed her mother's remains and refused to tell her the subsequent location of her mother's remains. Defendants Jeanne Estates Apartments, Inc. and Jennifer Kolbek have requested that Nautilus defend them with respect to the Coie suit. ...


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