Williams v. Emp'rs Mut. Cas. Co.

• Decision Date: 12 January 2017
• Docket Number: No. 15-3573,15-3573
• Citation: 845 F.3d 891
• Parties: 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
• Court: U.S. Court of Appeals — Eighth Circuit

845 F.3d 891

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.

Submitted: September 20, 2016

Filed: January 12, 2017

Counsel who presented argument on behalf of the appellant was Robert P. Berry, of Saint Louis, MO. The following attorney(s) appeared on the appellant brief; Timothy A. Engelmeyer, of Chesterfield, MO., Robert P. Berry, of Saint Louis, MO., Kevin C. Roberts, of Hillsboro, MO., Anthony M. Pezzani, of Chesterfield, MO.

Counsel who presented argument on behalf of the appellee Owners Insurance Company was John J. Bursch, of Caledonia, MI. The following attorney(s) appeared on the appellee brief; Russell F. Watters, of Saint Louis, MO., Thomas Michael Ward, of Saint Louis, MO., John J. Bursch, of Caledonia, MI., Robert L. Carter, of Saint Louis, MO., David McCourt, of Saint Louis, MO. and Matthew T. Nelson, of Grand Rapids, MI.

Counsel who presented argument and appeared on the brief on behalf of the appellee Capitol Indemnity Insurance Company was Patrick Florian Hofer, of Washington, D.C. The following attorney(s) appeared on the appellee brief; Alan K. Goldstein and Giles B. Howard, of St. Louis, MO., John R. Gerstein, of Washington, D.C., Wm. Clayton Crawford and Abbigale A. Gentle of Kansas City, MO.

Before WOLLMAN, ARNOLD, and KELLY, Circuit Judges.

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 year-long 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 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 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, "The only remaining defendant in this equitable garnishment action is Collier. Collier is a nominal but necessary party under Missouri's equitable garnishment statute. Mo. Rev. Stat. § 379.200. Based on its prior ruling, the Court finds no relief can be obtained against Collier under Mo. Rev. Stat. § 379.200 and the Court must enter judgment in favor of Collier." Counsel for Collier and Williams both signed the judgment. Williams filed a notice of appeal on November 2, 2015.

II. Discussion

Williams appeals the district court's denials of her two motions to remand, as well as the district court's grant of judgment on the pleadings in favor of the Insurers, and grant of consent judgment in favor of Collier. Before we reach Williams' arguments, we must consider the Insurers' contention that we lack jurisdiction over this appeal.

A. Jurisdiction over appeal

As an initial matter, the Insurers contend that we lack jurisdiction to consider this appeal. They argue that a consent judgment is not appealable, that the March 2, 2015, judgment on the pleadings was a final judgment, and that the district court erred in granting Williams an extension of time to file a notice of appeal to the judgment on the pleadings. The Insurers previously moved to dismiss this appeal on the same grounds. An...