Minden v. Atain Specialty Ins. Co.

Decision Date26 May 2015
Docket Number14–1116.,Nos. 14–1112,s. 14–1112
Citation788 F.3d 750
PartiesNicholas J. MINDEN; L.A.M., a minor, by and through her natural mother and next friend Lisa Minden ; Daniel M. Minden, Jr., individually and as Personal Representative of the Estate of Daniel M. Minden, Sr.; Shannon Minden, Plaintiffs–Appellants v. ATAIN SPECIALTY INSURANCE COMPANY, Defendant–Appellee Nicholas J. Minden; L.A.M., a minor, by and through her natural mother and next friend Lisa Minden ; Daniel M. Minden, Jr., individually and as Personal Representative of the Estate of Daniel M. Minden, Sr.; Shannon Minden, Plaintiffs–Appellees v. Atain Specialty Insurance Company, Defendant–Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

Matthew J. Eddy, argued, Andrew G. Toennies, on the brief, Saint Louis, MO, for PlaintiffsAppellants.

Paul J. Passanante, on the brief, Saint Louis, MO, for Appellant.

Thomas Michael Ward, argued, Samuel John Vincent, III, on the brief, Saint Louis, MO, for DefendantAppellee.

Before COLLOTON, BEAM, and KELLY, Circuit Judges.

Opinion

BEAM, Circuit Judge.

Nicholas Minden (Minden) appeals, and Atain Specialty Insurance Company cross appeals the district court's1 order in this equitable garnishment and vexatious refusal to defend insurance coverage dispute. We affirm.

I. BACKGROUND

In the early morning hours of April 5, 2009, Daniel Minden (Daniel) was struck by a vehicle driven by Curtis Lammert in a parking lot owned by and situated next to The Dry Dock tavern (Gannon's2 ) in St. Louis County, Missouri. A private birthday party for a St. Louis County police officer had been held at Gannon's earlier that evening and Daniel was a friend of the officer and an invited guest. Lammert was there at the invitation of Lammert's sister, who was a friend of another invited guest named Gene Mehrtens. At Gannon's closing, shortly before 1:00 a.m., Mehrtens was going to escort home another female guest named Sherri who appeared to be intoxicated. While in the parking lot, Lammert, who was also acquainted with Sherri, approached Mehrtens and insisted that he should take her home because Lammert was concerned that Mehrtens was going to take advantage of Sherri's intoxicated state. Following a heated discussion at Sherri's car, Mehrtens threw the keys at Lammert and told Lammert to go ahead and take Sherri home. Lammert escorted Sherri to his pickup truck, where Lammert's girlfriend was also waiting. As the three drove out of the parking lot in Lammert's truck, Lammert stopped, got out of his truck, and attempted to lock Sherri's car via the remote key fob. Instead of locking it, however, he caused the car alarm to go off. Lammert began pushing buttons on the key fob, but was not immediately able to stop the noise. Mehrtens, Daniel, and perhaps others, began yelling unflattering remarks about Lammert's intelligence as Lammert struggled to turn off the car alarm. Daniel, who had left the bar from the rear entrance and was in the main parking lot carrying a tray of cupcakes leftover from the party, headed toward the remote parking lot located across the street from Gannon's. Once Lammert was able to silence Sherri's car alarm, Lammert got back in his pickup. Mehrtens testified in a deposition that Lammert looked “right at” Mehrtens, popped his clutch, and drove toward Mehrtens on the way out of the parking lot. Mehrtens was able to get out of the way, but Daniel apparently did not see Lammert coming. Another party guest attempted to pull Daniel out of the way, but was unsuccessful. Upon the initial contact with the right side of the pickup, Daniel was thrown in the air and landed in the street located between the remote parking lot and Gannon's main parking lot. As Lammert's vehicle exited the main parking lot into the street, the right side of the pickup again ran over Daniel's body lying in the street.

Daniel was transported to the hospital, and just over one month later, he died from complications due to the injuries. Lammert left the scene but turned himself into the police later that morning. He contended in his police interview that he saw Daniel in front of him, but that he thought a woman had pulled him out of the way before Lammert proceeded through the parking lot toward the street. He further contended that he did not intend to hit Daniel and that he was afraid to stop once he realized that he had hit someone. Another witness, the police officer in whose honor the birthday party was held, told investigators that Daniel was yelling at Lammert while Lammert attempted to negotiate the key fob, and that in the officer's opinion, Lammert hit Daniel on purpose because of this. Sherri gave a statement to police that after Lammert hit Daniel and drove off, Lammert repeatedly stated that it was an accident and that he did not mean to hit the man.

Lammert was initially charged with assault and leaving the scene of an accident. When Daniel succumbed to his injuries, Lammert's assault charge was changed to involuntary manslaughter. Lammert pleaded guilty to the manslaughter and leaving-the-scene charges, and at his change-of-plea hearing, Lammert again maintained that he did not purposefully hit Daniel, but instead thought Daniel was out of the way. The trial court accepted3 the plea and sentenced Lammert to seven years in prison on the manslaughter charge, and four years on the leaving-the-scene charge.

Minden brought wrongful death claims in state court against Lammert and premises liability and dram shop claims against Gannon's based upon the incident. Gannon's liquor liability insurer defended the dram shop claims, but the general commercial liability insurer, Atain, refused to defend the premises liability and negligence claims. Minden and Gannon's proceeded to mediation, and while Atain was invited to the mediation, it did not appear. All of the claims between Minden and Gannon's4 were settled, and Minden received from Gannon's an assignment of any claim it might have against Atain based upon the failure to defend. Gannon's also agreed not to contest a consent judgment entered against it in state court on the premises liability action, and a $2 million judgment in state court was entered against Gannon's.

Minden brought the present lawsuit against Atain, alleging equitable garnishment and a vexatious failure to defend and indemnify.5 Atain alleges it did not defend or indemnify based upon two policy exclusions—an automobile exclusion precluding coverage for any injuries caused by automobiles, and an assault and battery exclusion. Upon cross motions for summary judgment, the district court ruled that the two exclusions did not apply to the facts of the underlying dispute and therefore entered summary judgment in favor of Minden on the equitable garnishment claim. Nonetheless, the district court granted summary judgment in favor of Atain on the vexatious-refusal-to-defend claim, finding that Atain's refusal was not “vexatious” under the circumstances, because the two exclusions arguably could have applied and coverage was a close call.

Minden appeals the district court's ruling on the vexatious refusal issue, while Atain appeals the district court's conclusions regarding the applicability of the exclusions and the judgment entered on the equitable garnishment claim.

II. DISCUSSION

We review the district court's grant of summary judgment de novo. Porter v. Sturm, 781 F.3d 448, 451 (8th Cir.2015). Missouri substantive law applies to this diversity case, and our task is to predict how the Missouri courts would resolve the issues. Allstate Ins. Co. v. Blount, 491 F.3d 903, 908 (8th Cir.2007).

A. Equitable Garnishment

Minden seeks equitable garnishment, a cause of action governed by statute in Missouri. Missouri statutes provide that when a personal injury plaintiff has recovered a final judgment against a defendant for what should have been an insured loss, he is entitled to have insurance proceeds applied to satisfy the judgment. Mo.Rev.Stat. § 379.200. The action is a suit in equity against the insurance company to seek satisfaction of a judgment under an insurance policy. Id. The party seeking the judgment is in the shoes of the insured, so the insurer may raise the same defenses in an equitable garnishment action that it could have in an action by the insured. Glover v. State Farm Fire and Cas. Co., 984 F.2d 259, 260 (8th Cir.1993) (per curiam). To collect a judgment through equitable garnishment, the plaintiff has the burden to show by substantial evidence that the claim is within the coverage provided within the insurance contract. Heacker v. Safeco Ins. Co. of Am., 676 F.3d 724, 727 (8th Cir.2012) (applying Missouri law). However, if the insurance company relies on a policy exclusion to deny coverage, the insurance company bears the burden of proving that such exclusion is applicable, and we must construe the exclusion clause strictly against the insurer. Jensen v. Allstate Ins. Co., 349 S.W.3d 369, 374–75 (Mo.Ct.App.2011). In addition, if the language of the policy is ambiguous and reasonably open to different constructions, the language will be construed against the insurer and as ordinarily understood by the lay person who bought and paid for the policy. Pruitt v. Farmers Ins. Co., 950 S.W.2d 659, 664 (Mo.Ct.App.1997).

Atain argues that it cannot be liable for equitable garnishment because the automobile exclusion and the assault and battery exclusion in Gannon's policy both exclude coverage for Minded's claims. The auto exclusion provides that the insurance policy does not apply to: bodily injury arising out of any auto “whether or not owned, maintained, used, rented, leased, hired, loaned, borrowed or entrusted to others or provided to another by any insured.” Further, the “exclusion applies even if the claims allege negligence or other wrongdoing in the supervision, hiring, employment, entrustment, permitting, training or monitoring of others by an insured.” The district court found that while it was a “close...

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