American Home Assurance Co. v. Stone (61 F.3d 1321, 1995)

COFFEY, Circuit Judge.

In 1990, Sheila and Peter Hall received marriage and family counselling from Steven H. Stone, a psychotherapist, for a period of four months. Sheila and Peter Hall and their children later brought three separate malpractice lawsuits in Illinois state court against Stone, alleging that Stone engaged in a sexual relationship with Sheila while she was receiving professional treatment and therapy. Stone’s insurer, American Home Assurance Company (American Home), brought this diversity action seeking a declaration of policy limit. The insurance company argues that a special provision in the professional insurance policy limiting American Home’s obligation to indemnify Stone to $26,000 for malpractice lawsuits involving allegations of sexual misconduct is applicable to the lawsuits filed by the Halls against Stone. The district court agreed, and granted summary judgment in favor of American Home. The Halls appeal. We affirm.

I. Background

Stone was a social worker licensed by the State of Illinois. He was employed as a psychotherapist and insured by American Home under its Mental Health Counselor’s Professional Liability Policy. In June 1990, Sheila and Peter Hall began seeing Stone for marriage counseling. Their children, Devin and Brandon Hall, also participated in several family counseling sessions with Stone. After several weekly joint sessions, Stone commenced individual therapy sessions with Sheila Hall, the wife and mother, in July 1990. The Halls separated in October 1990, ,