Howard v. Russell Stover Candies, Inc.

Citation649 F.2d 620
Decision Date29 May 1981
Docket NumberNo. 80-1700,80-1700
PartiesLawrence W. HOWARD, v. RUSSELL STOVER CANDIES, INC., Appellee, United States Fidelity and Guaranty Co., Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Clyde G. Meise and Jerald S. Enslein, Meise, Cope & Coen, Kansas City, Mo., for appellant.

Edward Stratemeir, Russell Stover Candies, Inc., Kansas City, Mo., Jeffrey D. Fridkin, Albert W. Thomson, Linde Thomson Fairchild Langworthy & Kohn, Kansas City, Mo., for appellee.

Before BRIGHT and ROSS, Circuit Judges, and HARRIS, Senior District Judge. *

ROSS, Circuit Judge.

Lawrence Howard brought suit against his employer, Russell Stover Candies, Inc., for damages arising from the termination of his employment. Only Count II of the complaint, alleging that Russell Stover failed to issue a service letter in compliance with R.S.Mo. § 290.140, 1 is relevant to this appeal.

In Count II of the complaint, Howard alleged, inter alia,

22. As a result of defendant's failure to issue a service letter complying with R.S.Mo. § 290.140, plaintiff has been impaired in his ability to secure other employment, and has suffered damages thereby in the amount of Twenty-Five Thousand Dollars ($25,000.00).

23. Defendant's failure to issue a service letter complying with R.S.Mo. § 290.140 was intentional, willful, wanton and malicious. Plaintiff is therefore entitled to punitive damages in the amount of One Hundred Thousand Dollars ($100,000.00).

Howard does not attack the veracity of the statements contained in the service letter but instead contends that the letter does not contain the true reason for his discharge. Howard's underlying theory is that Russell Stover has engaged in the systematic discriminatory discharge of employees over the age of forty years.

At all times relevant to this matter, Russell Stover was insured by United States Fidelity and Guaranty (USF&G) under a comprehensive general liability policy. Under the liability provisions of the supplement to the policy, USF&G had the

right and duty to defend any suit against the Insured seeking damages on account of such injury even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the Company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the Company's liability has been exhausted by payment of judgments or settlements.

Pursuant to this provision, Russell Stover asked USF&G to defend it against Count II 2 of Howard's complaint. When USF&G refused to undertake the defense of the suit, Russell Stover impleaded USF&G by third party complaint, alleging that USF&G had a contractual duty to defend under the terms of the policy.

USF&G filed a complaint asking for a declaratory judgment, claiming its policy and endorsement did not cover the alleged personal injury to Howard. Russell Stover then moved for summary judgment against USF&G on the ground that the endorsement to the policy expressly covered all personal injury resulting from service letters. Russell Stover asserted that the question before the court was solely a matter of interpretation of the endorsement to the policy and that there was no genuine issue of material fact.

The district court 3 granted Russell Stover's motion for summary judgment. The court found that Count II of Howard's complaint was potentially within the policy's coverage and that USF&G therefore had an affirmative duty to defend its insured.

The issue presented on appeal is whether Count II of Howard's complaint is potentially within the coverage of the policy, thereby creating an affirmative duty on the part of the insurer, USF&G, to defend its insured, Russell Stover.

The relevant terms of the comprehensive general liability insurance policy and its endorsement are set forth below. A supplement to the policy specifically covers:

1. PERSONAL INJURY AND ADVERTISING INJURY LIABILITY

A. The Company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of injury sustained by any person or organization and arising out of one or more of the following offenses committed in the conduct of the Named Insured's business designated in the declarations:

Group A false arrest, detention or imprisonment, or malicious prosecution;

Group B the publication or utterance of a libel or slander or of other defamatory or disparaging material, or a publication or utterance in violation of an individual's right of privacy; except publications or utterances in the course of or related to advertising, broadcasting or telecasting activities conducted by or on behalf of the Named Insured;

Group C wrongful entry or eviction, or other invasion of the right of private occupancy; herein called "personal injury"; or

Group D libel, slander, defamation, invasion of the right of privacy, piracy, unfair competition or idea misappropriation under an implied contract, or infringement of copyright, title or slogan, arising out of the Named Insured's advertising activities; herein called "advertising injury" The policy contains two exclusions pertinent to our discussion:

The insurance does not apply:

2. to personal injury sustained by any person as a result of an offense directly or indirectly related to the employment of such person by the Named Insured but this exclusion shall be inapplicable if so indicated in the schedule of this endorsement;

6. to personal injury or advertising injury arising out of the willful violation of a penal statute or ordinance committed by or with the knowledge or consent of any Insured;

An endorsement to the policy "modifies such insurance as is afforded by the provisions of the policy" and provides:

IT IS UNDERSTOOD AND AGREED THAT THE COVERAGE FOR PERSONAL INJURY AS PROVIDED BY CASUALTY 204 (the policy in question) COVERS PERSONAL INJURY RESULTING FROM SERVICE LETTERS, BUT ONLY AS RESPECTS THE EXISTING TERMS AND CONDITIONS OF SUCH COVERAGE ON CASUALTY 204.

This court has recognized the appropriateness of summary judgment in resolving disputes involving the interpretation of unambiguous contracts. Champale, Inc. v. Joseph S. Pickett & Sons, Inc., 599 F.2d 857, 859 (8th Cir. 1979); Parish v. Howard, 459 F.2d 616, 618 (8th Cir. 1972). In reviewing a decision of a district court to grant a motion for summary judgment, we apply the same standard as the trial court. Butler v. MFA Life Ins. Co., 591 F.2d 448, 451 (8th Cir. 1979).

Summary judgment should be granted only where there is "no genuine issue as to any material fact and * * * the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Moreover, the court must view the facts in the light most favorable to the party opposing the motion, giving that party the benefit of all reasonable inferences to be drawn from the facts. Butler v. MFA Life Ins. Co., supra, 591 F.2d at 451.

The general principles of Missouri law to be applied in construing insurance policies are well established. Plain and unambiguous language must be given its plain meaning. The contract should be construed as a whole; but, insofar as open to different constructions, that most favorable to the insured must be adopted. Kyte v. Fireman's Fund Am. Ins. Companies, 549 S.W.2d 366, 367-68 (Mo.App.1977).

Plain language in an insurance policy cannot be used to create an ambiguity where none exists; but if the policy is reasonably susceptible of more than one meaning, the ambiguity will be resolved in favor of the insured. Although parties to an insurance contract may, by plain language, limit the liability of the insurer to the insured, ambiguities in restrictive or exclusionary clauses are to be construed in favor of the insured.

Kay v. Metropolitan Life Ins. Co., 548 S.W.2d 629, 631 (Mo.App.1977) (citations omitted).

Finally, we note that

(t)he policy of insurance and an endorsement must be read together where there is a dispute as to its meaning, and they should be construed together unless they are in such conflict they cannot be reconciled. If the language of the endorsement and the general provisions of the policy conflict, the endorsement will prevail, and the policy remains in effect as altered by the endorsement.

Abco Tank & Mfg. Co. v. Fed. Ins. Co., 550 S.W.2d 193, 198 (Mo.1977) (citations omitted).

The district court reconciled the endorsement with the policy by construing the endorsement to at least cover all personal injuries arising from a nonwillful violation of the service letter statute, in addition to those injuries enumerated in the policy.

On appeal, USF&G contends that the language "but only as respects the existing terms and conditions of such coverage on (the policy)" should be construed to limit coverage for service letters to the four enumerated types of injuries. Thus, USF&G argues that failure to send a proper service letter is not covered by the endorsement unless the service letter is also libelous or slanderous.

The district court concluded that such an interpretation of the endorsement provision would render it "meaningless and unnecessary," finding instead that "the provision was meant to extend the 'personal injury' coverage to include injuries from service letters in addition to the other injuries enumerated, subject of course to the same terms and conditions under the policy as were other...

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