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Church Mutual Insurance Co. v. The Executive Board of the Missouri Baptist Convention

United States District Court, W.D. Missouri, Western Division

March 20, 2017

CHURCH MUTUAL INSURANCE COMPANY, Plaintiff,
v.
THE EXECUTIVE BOARD OF THE MISSOURI BAPTIST CONVENTION, et al., Defendants.

          ORDER

          SCOTT O. WRIGHT Senior United States District Judge

         Before the Court are plaintiff Church Mutual Insurance Company's Motion for Summary Judgment (Doc. #111), plaintiff's Suggestions in Support, defendants The Executive Board of the Missouri Baptist Convention and Representative Churches' Suggestions in Opposition, and plaintiff's Reply. For the reasons stated below, plaintiff's motion is granted in part and denied in part.

         Also before the Court are defendants' Motion for Partial Summary Judgment (Doc. #120), defendants' Suggestions in Support, plaintiff's Suggestions in Opposition, and defendants' Reply. For the reasons stated below, defendants' motion is granted.

         Finally, plaintiff Church Mutual has filed a Motion for Leave to File Second Amended Complaint (Doc. #134). For the reasons stated below, this motion is denied.

         I. Background

         Plaintiff Church Mutual Insurance Company (“Church Mutual”) requests that the Court grant summary judgment in its favor on Counts III and IV of plaintiff's First Amended Complaint for Declaratory Judgment, as well as on each of the Counts of the Counterclaim filed by defendant The Executive Board of the Missouri Baptist Convention. Defendant Missouri Baptist Convention seeks summary judgment on Counts I and II of the Counterclaim it has filed against plaintiff Church Mutual.

         The above-captioned declaratory judgment action was filed after defendants The Executive Board of the Missouri Baptist Convention and the Missouri Baptist Convention, an unincorporated association of churches, as a class, by and through certain representative members (First Baptist Church of Arnold, Missouri; First Baptist Church of Bethany, Missouri; First Baptist Church of Branson, Missouri; Concord Baptist Church of Jefferson City, Missouri; Oakwood Baptist Church of Kansas City, Missouri; and Springhill Baptist Church of Springfield, Missouri), filed a lawsuit for declaratory judgment, breach of contract, and injunctive relief in the Circuit Court of Cole County, Missouri. This underlying action was filed against The Baptist Home, Missouri Baptist College, Missouri Baptist Foundation, Windemere Baptist Conference Center, and Word and Way, as well as Matt Blunt, as the Missouri Secretary of State. The First Amended Petition filed in the Circuit Court of Cole County, Missouri, contains 15 counts which arise from the actions of The Baptist Home, Missouri Baptist College, Missouri Baptist Foundation, Windemere Baptist Conference Center, and Word and Way in amending their respective Articles of Incorporation.

         In the underlying suit in the Circuit Court of Cole County, Missouri, the Missouri Baptist Foundation, Windemere Baptist Conference Center, Word and Way, Baptist Home, and Missouri Baptist College filed Counterclaims against the plaintiffs therein. The Counterclaims ask the Circuit Court of Cole County, Missouri, to declare and adjudge that the counterclaimants actions in amending their respective Articles of Incorporation were proper, and that the court award them attorneys' fees and costs. The Missouri Baptist Foundation, Windemere Baptist Conference Center, and Word and Way are also insured by plaintiff Church Mutual. Neither Baptist Home nor Missouri Baptist College are insured by plaintiff Church Mutual. Plaintiff Church Mutual adds that defendants did not comply with the notice requirements of their respective insurance policies with respect to the counterclaims asserted by Missouri Baptist Home and Missouri Baptist College.

         Specifically, the Counterclaim filed by the Missouri Baptist Foundation seeks the following findings:

1. The Foundation properly followed the provisions of Sections 352.060, 352.070, and 355.020, Mo. Rev. Stat., to accept Chapter 355 governance and said acceptance was lawful, valid, and effective October 9, 2001.
2. The Foundation properly followed the provisions of Sections 355.556 and 355.606, Mo. Rev. Stat., in adopting its Amended and Restated Articles of Incorporation, and said Articles being filed with the Secretary of State on October 10, 2001, and certified by the Secretary of State on the same day, were, and are, lawful, valid, and effective.
3. That neither the Missouri Baptist Convention, the Executive Board of the Missouri Baptist Convention, nor the individually named churches in the underlying lawsuit, are, or ever have been, members of the Foundation at any time relevant to the counterclaim and/or the plaintiffs' cause of action in the underlying lawsuit.
4. That neither the Missouri Baptist Convention, the Executive Board of the Missouri Baptist Convention, nor the individually named churches in the underlying lawsuit, had rights, either express or otherwise, to elect trustees under the Foundation's 1994 Articles of Incorporation, the First Amended Articles of Incorporation, or the Amended and Restated Articles of Incorporation.
5. That the Foundation did not perpetrate a fraud on the Circuit Court of Cole County in that the rights and/or privileges of the plaintiffs were not affected by the filing of any documents with the Court in that those alleged rights and/or privileges, if any, could not have been affected until the Foundation filed the Amended and Restated Articles of Incorporation on October 10, 2001, with the Secretary of State.
6. The actions taken by the Board of Trustees, based on their fiduciary duty to the Foundation, were necessary in order to further the original purpose of the corporation, which has remained consistent throughout the 1994 Articles of Incorporation, the First Amended Articles of Incorporation and the Amended and Restated Articles of Incorporation. In light of the current ideological differences within the Missouri Baptist denomination, self-governance was necessary for the Foundation to operate consistent with its purpose and, therefore, the actions taken by the Foundation were in the best interests of the corporation.
7. That the Foundation's Amended and Restated Articles of Incorporation be declared and adjudged lawful, valid and effective as of October 10, 2001.
8. That the Foundation be granted an award of attorneys' fees and costs herein as permitted by law.

         The Counterclaim filed by Word and Way against all plaintiffs in the underlying lawsuit asked the court to declare and adjudge the following:

1. That at the time the Board of Trustees of Word and Way adopted its 2001 Amended Articles, Word and Way had no members.
2. That plaintiffs in the underlying suit are not and have never been members of Word and Way.
3. That the Amended and Restated Articles of Incorporation adopted by the Board of Trustees on October 19, 2001, were lawfully and properly approved and adopted by the Board of Trustees of Word and Way in accordance with all Missouri laws and statutes and are valid and in effect.
4. That the plaintiffs in the underlying lawsuit do not have the right and/or privilege to elect trustees to the Board of Trustees of Word and Way under the 2001 Amended Articles.
5. That the 2000 Articles did not create any contractual relationship or obligation between Word and Way and/or the Missouri Baptist Convention, the Executive Board of the Missouri Baptist Convention or the Churches.
6. That the 2000 Articles did not confer any rights on the Missouri Baptist Convention, the Executive Board of the Missouri Baptist Convention or the Churches as third-party beneficiaries.
7. That Word and Way may lawfully conduct its business in accord with the provisions of the Amended and Restated Articles of Incorporation adopted by the Board of Trustees on October 19, 2001 and filed with the Secretary of State on the same date.
8. That the property and assets of Word and Way are not, and shall not be construed to be the property and/or assets of the Missouri Baptist Convention, the Executive Board of the Missouri Baptist Convention or the Churches.
9. That Word and Way be granted an award of attorneys' fees and costs as permitted by law.

         Windemere Baptist Conference Center also filed a Counterclaim for Declaratory Judgment against the plaintiffs in the underlying lawsuit. In its prayer for relief, Windemere Baptist Conference Center asks the court to declare:

1. That at the time the Board of Trustees of Windemere adopted its 2001 Amended Articles, Windemere had no members.
2. That the plaintiffs in the underlying lawsuit are not and have never been members of Windemere.
3. That the Amended and Restated Articles of Incorporation adopted by the Board of Trustees on July 30, 2001 and filed by Windemere with the Secretary of State on August 15, 2001 were lawfully and properly approved and adopted by the Board of Trustees of Windemere in accordance with all Missouri laws and statutes and are valid and in effect.
4. That the plaintiffs in the underlying lawsuit do not have the right and/or privilege to elect trustees to the Board of Trustees of Windemere under the 2001 Amended Articles.
5. That the 2000 Articles did not create any contractual relationship or obligation between Windemere and/or the Missouri Baptist Convention, The Executive Board of the Missouri Baptist Convention or the Churches.
6. That the 2000 Articles did not confer any rights on the Missouri Baptist Convention or the Churches as third-party beneficiaries.
7. That Windemere may lawfully conduct its business in accord with the provisions of the Amended and Restated Articles of Incorporation adopted by the Board of Trustees on July 30, 2001 and filed with the Secretary of State on August 15, 2001.
8. That the property and assets of Windemere are not, and shall not be construed to be the property and/or assets of the Missouri Baptist Convention, and the Executive Board of the Missouri Baptist Convention or the Churches.
9. That Windemere be granted an award of attorneys' fees and costs as permitted by law.

         The Missouri Baptist College Counterclaim alleges that the Missouri Baptist Convention and/or its Executive Board appointed members to the Board of Trustees for the College without the right to do so. The Missouri Baptist College seeks certain declaratory relief by way of its Counterclaim in the underlying state court case.[1]

         In the case currently before this Court, plaintiff Church Mutual seeks a declaration that the policies of insurance issued by it to defendants herein, The Executive Board of the Missouri Baptist Convention, the Missouri Baptist Convention, First Baptist Church of Bethany, Missouri, Oakwood Baptist Church of Kansas City, Missouri, and Springhill Baptist Church, do not trigger any duty to defend or indemnify these named defendants against the Counterclaims in the underlying lawsuit.

         Defendant The Executive Board of the Missouri Baptist Convention has filed a three-count Counterclaim against plaintiff Church Mutual. Count I is a claim for breach of contract based upon plaintiff's refusal to defend against the counterclaim in the underlying action. Count II seeks a declaratory judgment that plaintiff is obligated to provide a defense and coverage to the defendants on the counterclaim in the underlying action. Finally, Count III seeks recovery for bad faith refusal to cover the counterclaim in the underlying action.

         The additional undisputed facts relevant to plaintiff's motion for summary judgment are as follows: on March 11, 2004, the Circuit Court for Cole County, Missouri, entered an Order dismissing the underlying lawsuit with prejudice for lack of standing. The Circuit Court then dismissed the counterclaims as being moot. After the Circuit Court denied a Motion to Reconsider its March 11, 2004 Order, defendant The Executive Board of the Missouri Baptist Convention filed a Notice of Appeal in the Missouri Court of Appeals for the Western District.

         Defendants Word and Way, Windemere, and The Missouri Baptist Foundation have subsequently been dismissed from the suit before this Court through a Stipulation for Voluntary Dismissal. The only counts of the Amended Complaint that remain are Counts III and IV in which plaintiff Church Mutual asks this Court to declare that Church Mutual has no coverage for and no contractual duty to defend the Executive Board of the Missouri Baptist Convention, First Baptist Church of Bethany, Missouri, Oakwood Baptist Church of Kansas City, Missouri, and Springhill Baptist Church of Springfield, Missouri against the Counterclaims for Declaratory Judgment filed against them in the underlying lawsuit. Plaintiff Church Mutual also seeks summary judgment on the Counterclaim filed against it by defendant The Executive Board of the Missouri Baptist Convention. A. The Missouri Baptist Convention Church Mutual issued a Commercial Multi-Peril Policy of Insurance (Policy No. 0187572-02-057154) and an Umbrella Liability Policy of Insurance (Policy No. 0187572-81-057157) to defendant Missouri Baptist Convention on December 31, 2001, covering the period of December 31, 2001 through December 31, 2004. The Commercial Multi-Peril Policy of Insurance issued by plaintiff to defendant Missouri Baptist Convention contains six coverage parts, including property coverage, general liability coverage, crime coverage, inland marine coverage, professional liability coverage, and hired and nonowned automobile liability coverage.

         Plaintiff Church Mutual and defendants agree that the provisions relevant to the case before this Court are the Legal Defense Coverage Form and the Directors, Officers, and Trustees Liability Coverage Form contained in the Commercial Multi-Peril Policy. The Legal Defense Coverage Form provides:

         A.LEGAL DEFENSE COVERAGE

         1. ...


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