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12/15/81 Sherman, v. Ambassador Insurance

December 15, 1981

SHERMAN, APPELLANT

v.

AMBASSADOR INSURANCE COMPANY 1981.CDC.318 DATE DECIDED: DECEMBER 15, 1981



Before WRIGHT, TAMM and EDWARDS, Circuit Judges.

UNITED STATES COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT

Appeal from the United States District Court for the District of Columbia.

APPELLATE PANEL:

Opinion for the Court filed by Circuit Judge, HARRY T. EDWARDS.

Separate opinion, concurring in part and dissenting in part, filed by Circuit Judge TAMM.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE EDWARDS

From August 1972 until approximately June of 1975, appellant, Robert J. Sherman, M.D., a practicing gynecologist, owned and operated an abortion clinic (named "Columbia Family Planning Clinic, P.C." (hereinafter "Clinic") ) in Washington, D.C. In March of 1975, one of the patients at the Clinic, a Rita McDowell, died as a result of an abortion performed by Dr. Sherman. In June of 1975, a wrongful death action was filed in the District of Columbia Superior Court by the mother of Ms. McDowell against

(1) Robert J. Sherman, individually and trading as Columbia Family Planning Clinic and Counseling Service, P.C.,

(2) Columbia Family Planning Clinic and Counseling Service, P.C., a corporation, and

(3) Dr. Robert J. Sherman, P.C., a corporation.

See Complaint in McDowell v. Sherman, Civil Action No. 5783-75 (D.C.Super.Ct.).1 In September or October of 1976, following a jury trial in Superior Court, the plaintiff's claim in McDowell was settled for $525,000.00.

Subsequently, in March of 1979, Dr. Sherman initiated a diversity action in the United States District Court for the District of Columbia against appellee, Ambassador Insurance Company (hereafter "Ambassador"). In his diversity action, Dr. Sherman alleged that, at the time of Ms. McDowell's death, his abortion Clinic had been covered by a medical malpractice insurance policy issued by Ambassador, and that appellee had "deliberately and wrongfully withheld the monies which it was required to contribute under the terms of the malpractice policy." A. 7-8.2

During the course of proceedings before the District Court, Dr. Sherman filed a Motion for Summary Judgment, claiming that Ambassador had breached its duties to defend and indemnify him under the applicable insurance policy. A. 282-88. In response, Ambassador filed a Cross-Motion for Summary Judgment, claiming that it owed no duty to Dr. Sherman because he was not a named insured on the policy. A. 344-46. In a Memorandum opinion dated July 21, 1980, Sherman v. Ambassador Insurance Co., No. 79-1039 (D.D.C. July 22, 1980), the District Court found that "Ambassador's duty was to the named insured, Columbia Family Planning Clinic, P.C., and not to a non-insured party, Sherman." A. 494. The trial court also found that "Ambassador had no duty to Sherman individually in the McDowell suit, and it satisfied its obligation to the named insured" by successfully moving to quash service of process on the "Columbia Family Planning Clinic and Counseling Service, P.C." Id. Accordingly, the District Court granted Ambassador's Cross-Motion for Summary Judgment. A. 495. It is from this judgment that Dr. Sherman appeals.

After careful review of the record in this case, we reverse in part and remand for further proceedings before the District Court. The bases for our reversal are threefold. First, we reject as a matter of law the District Court's finding that Dr. Sherman was not covered under the insurance contract with Ambassador. The insurance policy in force at the time of Ms. McDowell's death covered "Columbia Family Planning Clinic, P.C.," including "any partner, executive officer, director or stockholder thereof while acting within the scope of his duties as such." A. 414-15. It is undisputed that Dr. Sherman was an executive officer and director of the Clinic. See, e.g., A. 278-79 and A. 431.

Second, we reject as a matter of law the District Court's finding that Ambassador had no duty to defend Dr. Sherman in the McDowell action. Under the terms of the insurance policy, Dr. Sherman was owed a defense for actions taken in his administrative capacities as executive officer and director of the Clinic.

Finally, we reject the finding of the District Court that Ambassador was entitled to summary judgment. We cannot find, as did the trial court, that there were no genuine issues of material facts. In particular, we note that, on remand, the District Court must determine whether the Complaint in McDowell raised any claims of administrative negligence, and, if so, whether any portion of the $525,000.00 award paid to plaintiff in McDowell was attributable to acts of administrative negligence by Dr. Sherman.

We affirm the decision of the District Court only insofar as it holds that Ambassador had no duty to indemnify Dr. Sherman for his professional (i.e., non-administrative) acts as a practicing physician at the Clinic. I. Background

Dr. Sherman practiced medicine in Washington, D.C. as a gynecologist and obstetrician from 1957 to 1977. He headed the Columbia Family Planning Clinic, located at 1835 Eye Street, N.W., which was operated for the performance of out-patient abortions.3 In addition to Dr. Sherman, the Clinic included two physicians, who worked occasionally as "independent contractors," and three assistants.

In March 1975, Dr. Sherman unsuccessfully performed an abortion on Rita C. McDowell at his Clinic. Five days later, Ms. McDowell died at D.C. General Hospital. As a result of her death, Rita McDowell's mother, Lupe M. McDowell, filed the aforecited wrongful death action in McDowell v. Sherman. The complaint in McDowell charged Dr. Sherman with the following acts of negligence:

a. failure to obtain informed consent;

b. failure to obtain adequate history;

c. failure to perform adequate examination and determine risk potential;

d. use of unsterile equipment;

e. failure to provide and maintain adequately trained staff, or adequate laboratory equipment and surgical equipment;

f. abandonment;

g. inadequate and improper aspiration suction procedure;

h. abortion procedure requiring hospitalization performed in out-patient clinic without requiring hospital admission;

i. performance of aspiration suction subsequent to time allowed by rules and regulations of the District of Columbia;

j. failure to order hospitalization;

k. improper and inadequate post-operative ...


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