State Farm Fire and Casualty Co. v. Pike

          ORDER AND MEMORANDUM ON PLAINTIFF'S MOETION FOR SUMMARY JUDGMENT (DOCKET NO. 31)

          TIMOTHY S. HILLMAN DISTRICT JUDGE.

         John Pike (“Pike”) sexually abused his granddaughter, Jane Doe. Subsequently, Jane Doe brought a claim against her grandmother and Pike's wife, Barbara Pike (“Barbara”) for negligently allowing Pike to abuse her. Barbara sought defense and indemnity from her insurer, State Farm Fire and Casualty Company (“State Farm”).

         State Farm now seeks declaratory judgment that the policies do not provide coverage for abuse that occurred while the policies were not in effect and regardless of the number of incidents of abuse that occurred while the policies were in effect, only one “occurrence” or “loss” occurred under the meaning of the policies. Further, State Farm moves for summary judgment on Jane Doe's counterclaim that State Farm breached its duty to make a settlement offer where liability is reasonably clear.

         For the reasons stated below, State Farm's motion (Docket No. 31) is denied.

         Background

         1. Abuse

         This Court's review of the record is in the light most favorable to the party opposing summary judgment. Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 50 (1st Cir. 2000).

         Jane Doe is a minor female resident of Massachusetts who was sexually abused by her grandfather, Pike. Jane Doe previously sued Pike and judgment was entered against him in the amount of $5, 000, 000. See Doe v. Pike, 15-CV-40057-TSH. Barbara, Pike's wife and Jane Doe's maternal grandmother, occasionally cared for Jane Doe while her mother, Kim Pike (“Kim”), was at work. Although Kim requested that Barbara supervise Doe, Pike would accompany Barbara to Jane Doe's home.

         Pike sexually abused Jane Doe at her home. Jane Doe further alleges that abuse occurred at her homes in Upton and Centerville, Massachusetts, and Pike and Barbara's condo in Laconia, New Hampshire. Pike made Jane Doe do headstands and, while Jane Doe was upside down, put his mouth on her vulva. Pike admits that he performed oral sex on Doe up to six times. On one occasion in 2010, Pike kissed Doe and inserted his tongue into her mouth. Pike also made Jane Doe play the “penny game” where Pike would hide a penny in the foreskin of his penis and make Jane Doe find it. Jane Doe suffered significant and enduring emotional distress as a result of the abuse. She lost her motivation to attend school and her desire to socialize. The emotional distress also had physical manifestations and symptoms such as stomach pain, headaches, and nightmares.

         Much of the abuse occurred while Barbara was supposed to be supervising Jane Doe but was instead napping, reading outside, or otherwise occupied. According to Jane Doe, Barbara was also present during some of the abuse. For instance, Doe described one incident when she was being molested by Pike under a blanket and Barbara walked in and made eye contact with her. Barbara, however, alleges that she first learned about the abuse when her son Scott called her in 2014. Barbara also observed Pike playing the “turn on the radio” game with his grandchildren, where Pike would twist their nipples. Jane Doe alleges Barbara watched Pike play this game with her. Barbara testified, however, that she did not specifically recall Pike playing the game with Jane Doe and that she thought the game was simply innocent horseplay. Barbara was also aware of the 1998 allegations against Pike of sexual abuse of another grandchild.

         After the abuse began, Jane Doe attempted to avoid Barbara and Pike when they were at her home. She locked herself in her room and put duck-tape on the door. Jane Doe befriended neighbors so she could leave the home while Barbara and Pike were there. According to Jane Doe, Barbara became angry that Jane Doe avoided her and Pike and pressured Jane Doe to spend more time with them. Barbara never told Kim that she had left Jane Doe alone with Pike or informed Kim about the risk that Pike posed.

         2. State Farm Policies

         State Farm issued three insurance policies that are the subject of this litigation: A Condominium Unitowners Policy with an effective date of October 1, 2009, a Homeowners Policy with an effective date of September 23, 2009, and a Personal Liability Umbrella Policy with an effective date of October 1, 2009. See Docket No. 32-10, at 3-102.

         On January 4, 2017, Jane Doe, as a third-party beneficiary under the Policies, sent a demand to State Farm pursuant to Mass. Gen. Laws ch. 93A and ch. 176D, demanding that State Farm make a fair and reasonable settlement offer. On February 28, 2017, State Farm refused to grant relief following receipt of Jane Doe's demand letter because ...