Plaintiffs CACI International, Inc., CACI Inc.–Federal, CACI Premier Technology, Inc., and CACI N.V. (collectively “CACI”) filed a declaratory judgment action against defendant St. Paul Fire and Marine Insurance Company (“St. Paul”), seeking a declaration that, under its general commercial insurance policy, St. Paul was obligated to defend CACI in two pending lawsuits brought by Iraqi nationals claiming that they were abused and tortured by CACI employees. St. Paul denied any duty to defend or indemnify CACI, arguing that the insurance policy expressly denied coverage for the conduct alleged in those lawsuits. The parties filed cross motions for summary judgment on St. Paul’s duty to defend. The Court ultimately denied CACI’s motion and granted St. Paul’s motion, relieving St. Paul from the duty to defend/indemnify CACI. CACI International v. St. Paul Fire and Marine Insurance Company, 2008 WL 2890881 (E.D. Va. July 14, 2008).
CACI, a Delaware company with its principal place of business in Virginia, provides logistical, engineering, technological, and professional support to the United States government. In May 2003, CACI acquired Premier Technology Group, Inc., a company specializing in the provision of intelligence support and information technology to the United States government. Premier was reorganized and renamed under CACI as CACI Premier Technology, Inc. (“CACI Premier”). Under a series of contracts issued in August 2003 and December 2003, CACI Premier agreed to provide interrogators and screeners to the United States government to assist with military intelligence operations in Iraq. These interrogators and screeners were deployed throughout Iraq, including the Abu Ghraib prison. On March 31, 2003, St. Paul issued a twelve month “Commercial General Liability Protection” policy to CACI. On March 31, 2004, this policy was renewed for an additional twelve months.
In late April 2004, reports began to circulate of detainee abuse at the Abu Ghraib prison. Shortly thereafter, CACI notified its insurance broker of its potential involvement in the detainee abuse. On May 13, 2004, this information was relayed to St. Paul.
CACI was ultimately sued by a number of plaintiffs alleging various forms of detainee abuse, some of which were alleged to have occurred at the Abu Ghraib prison. St. Paul was notified of these lawsuits and shortly thereafter issued a reservation of rights letter declining to pay for CACI’s defense to the litigation. CACI ultimately filed a declaratory judgment action, asserting that St. Paul had a duty to defend or indemnify CACI and its subsidiaries in the pending litigation. St. Paul filed a counterclaim asserting that St. Paul had no duty to defend or indemnify CACI under the terms of the insurance policy. In ruling on the cross motions for summary judgment, the Court applied the Eight Corners Rule in which the Court was required “‘to compare the four corners of the insurance policy against the four corners of the underlying complaint; [and] if any allegations may potentially be covered by the policy, the insurer has a duty to defend.’” 2008 WL 2890881, at *3 (E.D. Va. July 14, 2008) (quoting Capital Envtl. Servs., Inc. v. North River Ins. Co., 536 F. Supp.2d 633, 640 (E.D. Va. 2008)).
St. Paul’s motion relied, in part, on the fact that the allegations of abuse consisted of intentional acts, which were not covered under the insurance policy. CACI argued that while some of the acts were intentional, some of the abuse was also caused by negligent conduct which was expressly covered by the policy. St. Paul also argued that CACI Premier was not a covered subsidiary and that CACI failed to provide timely notice of the potential liability for its operations in Iraq. Finally, St. Paul argued that because all of the alleged abuse and misconduct occurred in Iraq, the alleged misconduct fell outside of the express coverage territory (i.e., geographic scope) of the insurance policy. The insurance policy limited coverage to activities within the United States and Canada. While CACI attempted to argue that claims of negligent hiring satisfied the coverage territory requirement, the Court did not find this argument persuasive.
Ultimately, the Court agreed with St. Paul as to the geographic scope issue and granted St. Paul’s motion for summary judgment. The Court’s ruling relieved St. Paul from defending CACI for the alleged detainee abuse raised against CACI.
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