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Brotherhood Mutual Insurance Company v. Lancaster Conference of the

May 31, 2011

BROTHERHOOD MUTUAL INSURANCE COMPANY,
PLAINTIFF,
v.
LANCASTER CONFERENCE OF THE MENNONITE CHURCH, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Jones, II, J.

MEMORANDUM

This declaratory judgment action arises out of an insurance coverage dispute, specifically: whether Plaintiff Brotherhood Mutual Insurance Company ("Brotherhood" or "Plaintiff") is obligated to defend or indemnify Defendants Lancaster Conference of the Mennonite Church ("LMC"), Bishop Freeman Miller ("Bishop Miller") or Philadelphia Ministry Partnership ("PMP") (collectively, "Defendants") in the underlying action captioned Kapatiran Christian Church, Inc. v. Freeman Miller, et al., Pennsylvania Court of Common Pleas, Delaware County, No. 07-6216 (the "Kapatiran Action").*fn1

The parties have fully briefed cross-motions for summary judgment. Before the Court are

(1) Plaintiff's Motion for Summary Judgment, which incorporates Brotherhood's Statement of Undisputed Facts ("Pl. SOF"), and brief in support of said Motion ("Pl. Mem.") (collectively, Dkt. No. 22); (2) Defendants' Answer to Plaintiff's statement of facts (Dkt. No. 26), as well as Defendants' brief in opposition to Plaintiff's summary judgment motion (Dkt. No. 27) ("Defs. Opp. to Pl. MSJ"); (3) Plaintiff's Reply to Defendants' Answer (Dkt. No. 28); (4) Defendants' Motion for Summary Judgment (Dkt. No. 23) ("Defs. MSJ"), which includes Defendants' Statement of Material Facts (Ex. 9 to Dkt. No. 23) and Defendants' brief in support of their summary judgment motion (Dkt. No. 24) ("Defs. Mem."); (5) Plaintiff's Answer to Defendants' summary judgment motion and statement of facts (Dkt. No. 25); and (6) Defendants' Reply in support of their summary judgment motion (Dkt. No. 29). In addition to the parties' cross-motions for summary judgment, Defendants assert a Counterclaim to recover the attorneys' fees incurred by LMC in defending against this declaratory judgment action (Dkt. No. 20 ("Counterclaim")). For the reasons set forth below, Plaintiff's summary judgment motion will be GRANTED, Defendants' summary judgment motion will be DENIED, and Defendants' Counterclaim for reimbursement of attorneys' fees will be DENIED.

I. FACTUAL BACKGROUND

A. The Kapatiran Action

In May 2007, Kapatiran filed a complaint against Bishop Miller, LMC, PMP and others in the Kapatiran Action (Compl., Ex. A ("Kapatiran Compl.")). The Kapatiran Complaint alleges as follows:

* Kapatiran purchased property located at 825 Beechwood Road, Havertown, Pennsylvania, where its members worshipped ("the Property") (Kapatiran Compl.¶¶ 2, 15);

* LMC was an "umbrella organization" affiliated with Kapatiran, but had no right or power to interfere with Kapatiran's religious or business affairs (id. ¶ 13);

* Bishop Miller holds or held the position of Bishop of LMC (id. ¶ 4);

* In November 2003, a majority of Kapatiran's membership wrote a resolution to Bishop Miller requesting that ownership of the Property be turned over to the majority membership (id. ¶¶ 19, 23);

* Bishop Miller never responded to the resolution (id. ¶ 24);

* Bishop Miller suspended the church's services on March 6, 2005, although Kapatiran was never dissolved (id. ¶¶ 27-28);

* The Chairman of Kapatiran's Church Council and its Treasurer sold the Property to LMC in May 2005 for one dollar (id. ¶ 29);

* LMC then sold the Property to the Chinese Assembly of God for $295,000 in October 2005 (id. ¶ 30);

* The proceeds of the sale were given to PMP, which is controlled by Bishop Miller (id. ¶

31);

* Defendants sold the Property without the right to do so, conferred a benefit on themselves by keeping the proceeds, intentionally misrepresented that the proceeds would be paid to Kapatiran and conspired to do so with an intent to defraud (id. ¶¶ 35-39, 47-48, 55).

The Kapatiran Complaint asserts claims against all Defendants for unjust enrichment,

fraud and deceit (sale of the property), civil conspiracy, breach of fiduciary duty and punitive damages. Id. ΒΆΒΆ 33-59, 78-86. The plaintiff in the Kapatiran Action seeks to recover the proceeds from the sale of the Property, ...


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