845 F.3d 891 (8th Cir. 2017), 15-3573, Williams v. Employers Mutual Casualty Co.

Docket Nº:15-3573
Citation:845 F.3d 891
Opinion Judge:KELLY, Circuit Judge.
Party Name:Barbara Williams, Plaintiff - Appellant v. Employers Mutual Casualty Company; Capitol Indemnity Insurance Co.; Owners Insurance Company; the Collier Organization, Inc.; Employers Mutual Casualty Company, Defendants - Appellees
Attorney:For Barbara Williams, Plaintiff - Appellant: Robert P. Berry, Andrew Douglas Lamb, BERRY & SILBERBERG, Saint Louis, MO; Timothy A. Engelmeyer, Anthony M. Pezzani, ENGELMEYER & PEZZANI, Chesterfield, MO; Kevin C. Roberts, ROBERTS & WOOTEN, Hillsboro, MO. For Employers Mutual Casualty Company, Defe...
Judge Panel:Before WOLLMAN, ARNOLD, and KELLY, Circuit Judges.
Case Date:January 12, 2017
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
SUMMARY

In the Original Action, Michelle Pratt filed a class action on behalf of residents of Autumn Hills against Collier and two other entities, alleging that two wells supplied by Autumn Hills contained contaminated water. Barbara Williams was later substituted as a class representative. The state court awarded plaintiffs $70,085,000 for medical monitoring, and $11,952,000 for the loss in value to... (see full summary)

 
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845 F.3d 891 (8th Cir. 2017)

Barbara Williams, Plaintiff - Appellant

v.

Employers Mutual Casualty Company; Capitol Indemnity Insurance Co.; Owners Insurance Company; the Collier Organization, Inc.; Employers Mutual Casualty Company, Defendants - Appellees

No. 15-3573

United States Court of Appeals, Eighth Circuit

January 12, 2017

Submitted September 20, 2016.

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[Copyrighted Material Omitted]

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Appeal from United States District Court for the Eastern District of Missouri - St. Louis.

For Barbara Williams, Plaintiff - Appellant: Robert P. Berry, Andrew Douglas Lamb, BERRY & SILBERBERG, Saint Louis, MO; Timothy A. Engelmeyer, Anthony M. Pezzani, ENGELMEYER & PEZZANI, Chesterfield, MO; Kevin C. Roberts, ROBERTS & WOOTEN, Hillsboro, MO.

For Employers Mutual Casualty Company, Defendant - Appellee: Michael L. Belancio, William Clayton Crawford, Abbigale Alyce Northcraft Gentle, FOLAND & WICKENS, Kansas City, MO.

For Capitol Indemnity Insurance Co., Defendant - Appellee: John R. Gerstein Patrick Florian Hofer, TROUTMAN & SANDERS, Washington, DC; Alan K. Goldstein, Giles Benjamin Howard, GOLDSTEIN & PRICE, Saint Louis, MO.

For Owners Insurance Company, Defendant - Appellee: John J. Bursch, BURSCH LAW PLLC, Caledonia, MI; Kenneth Raymond Goleaner, David McCourt, Thomas Michael Ward, Russell F. Watters, BROWN & JAMES, Saint Louis, MO; Matthew T. Nelson, WARNER & NORCROSS, Grand Rapids, MI.

For The Collier Organization, Inc., Defendant - Appellee: Timothy R. Huff, NIEDNER & BODEUX, Saint Charles, MO.

Before WOLLMAN, ARNOLD, and KELLY, Circuit Judges.

OPINION

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KELLY, Circuit Judge.

Plaintiff-appellant Barbara Williams appeals the district court's denials of two motions to remand; grant of judgment on the pleadings in favor of the defendant-appellees Employers Mutual Casualty Company, Capitol Indemnity Insurance Co., and Owners Insurance Company; and grant of consent judgment in favor of the defendant-appellee The Collier Organization, Inc. We affirm.

I. Background

The Collier Organization, Inc. (Collier) was the owner of Autumn Hills Mobile Home Park (Autumn Hills) in Old Monroe, Missouri. From 1998 to 2009, Collier purchased commercial general liability insurance policies from three different insurance companies: Employers Mutual Casualty Company (Employers), Capitol Indemnity Insurance Company (Capitol), and Owners Insurance Company (Owners) (collectively, the Insurers). Employers issued three year-long policies, covering the period from March 13, 1999, to March 13, 2002. Capitol issued two yearlong policies, covering the period from April 1, 2003, to April 1, 2005. Owners issued four year-long policies, covering the period from April 1, 2005, to April 1, 2009. Each policy provided that the relevant insurance company had a duty to defend and indemnify Collier for " bodily injury and property damage" resulting from " occurrences."

On March 5, 2008, Michelle Pratt brought a class-action lawsuit (Original Action) in Lincoln County, Missouri Circuit Court on behalf of the residents of Autumn Hills against Collier and two other entities that are not parties in this case. Williams was later substituted as class representative. The state court certified a class of Autumn Hills residents.

The complaint alleged that from 1999 to 2008, the two wells that supplied Autumn

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Hills with drinking water contained illegal levels of Radium 226, combined Radium 226 and Radium 228, gross alpha particle activity, and coliform bacteria. According to the complaint, Collier was aware the water supply was contaminated, and failed to correct the issue. Further, the complaint alleged that Collier failed to inform Autumn Hills residents of the contamination, as required by Missouri law. As a result, the complaint stated, class members " suffered injury and damages including, but not limited to, the payment of monies to the Defendants for rent, water and sewer systems; the diminution in value of . . . property; costs of relocation; purchasing alternative sources of water; mental anguish and other damages." The complaint additionally alleged that Collier promised to build a picnic area, basketball court, and other amenities at Autumn Hills, and never did. The complaint asserted claims for fraud, violation of the Missouri Merchandising Practice Act, breach of the implied warranty of habitability, negligence, negligence per se, and breach of contract.

Collier informed each of the Insurers of the complaint, and demanded indemnity and defense. Each of the Insurers declined. Thereafter, Williams entered into an agreement with Collier, which provided that Collier would assign the rights to its insurance proceeds to Williams, as class representative. In exchange, Williams agreed that if the class obtained judgment against Collier, the class' recovery would be limited to those insurance proceeds. This type of agreement is specifically authorized by Missouri law. See Mo. Rev. Stat. § 537.065.

The state court held an evidentiary hearing to determine liability. At the hearing, Williams dismissed all claims except for the negligence claim, and orally amended the pleadings to add a claim for trespass. Shortly after the hearing, the state court entered findings of fact, conclusions of law, and a judgment in favor of the class. Specifically, the state court concluded that Collier " pump[ed] water with levels of combined Radium 226 and Radium 228 and Gross Alpha Particle Activity levels that exceeded the established maximums." The state court also concluded that the class suffered bodily injury and property damage as a result of the Radium and alpha particle activity in the water. On August 28, 2013, after a separate hearing on damages, the state court awarded the plaintiffs $70,085,000 for medical monitoring, and $11,952,000 for the loss in value to their homes.

On October 18, 2013, Williams filed an equitable garnishment action in state court against the Insurers and Collier pursuant to Missouri Revised Statute § 379.200, which provides that if a plaintiff's judgment against a defendant is not satisfied within thirty days, " the judgment creditor may proceed in equity against the defendant and the insurance company to reach and apply the insurance money to the satisfaction of the judgment." The complaint stated that Williams was bringing the equitable garnishment action " as class representative, by and through class counsel."

The Insurers removed the case to the United States District Court for the Eastern District of Missouri, asserting jurisdiction under the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d). Williams moved to remand, arguing that the equitable garnishment action was not a " class action" as defined by § 1332(d)(1)(B). The district court1 denied the motion on April

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8, 2014, concluding that although the garnishment action was not brought under a statute specifically authorizing class action suits, it was a class action under CAFA because Williams filed it on behalf of a class. Later, after the case was reassigned to a different district court judge,2 Williams filed a renewed motion to remand, which the district court denied on July 28, 2015.

The Insurers each moved for judgment on the pleadings. Each argued that it was not obligated to defend or indemnify Collier, because none of the claims asserted in the Original Action were covered by the policies issued to Collier. The district court granted judgment on the pleadings in favor of the Insurers on March 2, 2015. First, it concluded as a matter of law that the allegations that Autumn Hills' drinking water supply contained illegal levels of Radium, alpha particle activity, and coliform bacteria fell within a pollution exclusion contained in each policy. Second, it concluded as a matter of law that the allegations that Collier failed to build promised amenities at Autumn Hills were not covered by the policies because the policies did not provide coverage for breach of contract.

At that point, Collier still had not been served with process. On March 3, 2015, the district court ordered Williams to show cause as to why Collier should not be dismissed without prejudice pursuant to Rule 4(m) of the Federal Rules of Civil Procedure. Williams responded, explaining that if she filed an appeal before obtaining service on Collier, the Eighth Circuit might deem the appeal premature, and remand it to the district court. Williams then served Collier. Collier failed to appear, and Williams moved for a default judgment, which was granted on August 25, 2015. On October 8, 2015, the court set aside the default judgment against Collier and allowed Collier to file a motion to dismiss, which it then denied.

On October 21, 2015, the district court entered a " Consent Judgment" in favor of Collier. The order stated...

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