Argonaut Great Cent. Ins. Co. v. Lincoln Cnty.

• Decision Date: 08 August 2018
• Docket Number: No. 4:17-CV-00762 JAR,4:17-CV-00762 JAR
• Parties: ARGONAUT GREAT CENTRAL INSURANCE COMPANY, Plaintiff, v. LINCOLN COUNTY, MISSOURI, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

ARGONAUT GREAT CENTRAL INSURANCE COMPANY, Plaintiff, v. LINCOLN COUNTY, MISSOURI, et al., Defendants.

No. 4:17-CV-00762 JAR

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

August 8, 2018

MEMORANDUM AND ORDER

This matter is before the Court on the following motions: Plaintiff's Motion for Summary Judgment (Doc. No. 75); Lincoln County Defendants' Motion for Judgment on the Pleadings (Doc. No. 74); and Defendant Michael Merkel's Motion for Summary Judgment (Doc. No. 78) or alternatively, Motion for Judgment on the Pleadings (Doc. No. 80)¹. The motions are fully briefed and ready for disposition.²

I. Factual and procedural background

This case arises out of a civil rights action filed by Russell Scott Faria against Lincoln County, Missouri, Sergeant Ryan J. McCarrick, Detective Patrick Harney, and Prosecuting Attorney Leah Askey (the "Lincoln County Defendants"), and Detective Michael Merkel ("Merkel"), styled Russell Scott Faria v. Sergeant Ryan J. McCarrick, et al., Case No. 4:16-CV-01175 JAR ("the Underlying Action"), now pending before this Court. Each individual was sued in his or her individual capacity only. Plaintiff Argonaut Great Central Insurance Company("Argonaut") seeks a declaratory judgment that it has no duty to defend or indemnify the Lincoln County Defendants and Merkel in the Underlying Action. Because the dispute between the parties involves the interpretation of an insurance policy and pleadings in the Faria action, the material facts are not disputed.

A. Underlying action

Faria was detained in furtherance of an investigation in December 2011 and formally arrested in January 2012 for the murder of his wife Betsy Faria. In November 2013, Faria was convicted of his wife's murder and sentenced to life imprisonment. He appealed, and on retrial in November 2015, was acquitted. On July 19, 2016, Faria filed the Underlying Action, alleging that Defendants violated his Fourth and Fourteenth Amendment rights by arresting and prosecuting him for his wife's murder. Specifically, Faria alleges that investigators from the Lincoln County Sheriff's Department and the Lincoln County Prosecuting Attorney fabricated evidence, ignored exonerating evidence, and failed to investigate the obvious suspect - Pamela Hupp. On September 15, 2016, Faria was granted leave to file his First Amended Complaint adding Lincoln County as a defendant and adding a Monell claim³ against Lincoln County through Prosecuting Attorney Askey in her official capacity.

The following claims are currently pending in the Underlying Action: Count I (against Sergeant McCarrick) Fourth Amendment initial seizure of Faria for more than 24 hours without probable cause; Count II (against Sergeant McCarrick) Fourth Amendment second seizure and incarceration of Faria without probable cause; Count III (against Prosecuting Attorney Askey) Fourth Amendment second seizure and incarceration of Faria without probable cause; Count IV(against all underlying Defendants) Fourth and Fourteenth Amendment conspiracy to seize the person and deny substantive due process; and Count VI (against Lincoln County through Askey in her official capacity as policymaker) Monell liability.⁴ Argonaut moves for summary judgment on both its duty to defend and duty to indemnify Defendants for the claims asserted in the Underlying Action. The Lincoln County Defendants and Merkel seek judgment in their favor declaring that Argonaut has a duty to defend them and dismissing Argonaut's claim that it has no duty to indemnify.

B. Insurance policies

Argonaut issued a liability insurance policy, AGCIC Policy No. 4627390-00, to Lincoln County, including its officers and employees, effective January 1, 2012 to January 1, 2013. That policy was renewed by Argonaut and Lincoln County for the period January 1, 2013 to January 1, 2014, AGCIC Policy No. 4627390-01. The Policies contain multiple coverage parts including Law Enforcement Liability, Public Officials' Liability, Commercial General Liability, and Commercial Excess Liability.⁵

Section I, Part A of the Law Enforcement Liability Coverage Part states in relevant part that:

We will pay those sums that the insured becomes legally obligated to pay as "damages" resulting from a "wrongful act" to which this insurance applies that is committed during the course and scope of "law enforcement activities", or which arise out of yourownership, maintenance or use of premises for the purpose of conducting "law enforcement activities".

We will have the right and duty to defend the insured against any "suit" seeking those "damages". However, we will have no duty to defend the insured against any "suit" seeking "damages" for a "wrongful act" to which this insurance does not apply. We may, at our discretion, investigate any "wrongful act" and settle any claim or "suit" that may result.

"Wrongful act" is defined as:

any act, error or omission flowing from or originating out of a "law enforcement activity". All acts, errors or omissions, committed by one or more insureds that are substantially the same or are in any way directly or indirectly related - either logically, causally, or temporally - shall be deemed to constitute one "wrongful act", regardless of the number of claims or claimants.

"Law enforcement activity" is defined as:

administration of the criminal justice system and/or any act, error or omission of your law enforcement agency, its officials, officers, "employees" or volunteers. "Law Enforcement Activity" also includes the use, operation or maintenance of any premises by your law enforcement agency.

The Policies further provide that "[t]his insurance applies to "damages" arising out of a "wrongful act" only if the "wrongful act" was first committed:

a. By an insured in the course of his or her "law enforcement activities" and

b. During the policy period.

The "Exclusions" section of the Policies' Law Enforcement Liability Coverage Part states in relevant part that "this insurance does not apply to:"

Any claim arising out of:

a dishonest, malicious, fraudulent or criminal act, error or omission by any person including actual or threatened acts of sexual abuse or molestation, or

b. a knowing violation of any law, statute or governmental regulation.

The "Conditions" section of the Policies' Law Enforcement Liability Coverage Part, titled "Conditions," states in part:

The insurance provided by this Coverage Part is excess over any other collectible insurance. We will have no duty to defend the insured against any "suit" or claim for "damages" if any other insurer has a duty to defend the insured against that "suit".

The Policies' Common Policy Conditions form, which is applicable to "all coverage parts," states in Paragraph H:

Because you are a public institution, you may be entitled to a governmental immunity. This policy does not constitutive a waiver of any governmental immunity to which you are entitled.

The Policies also include a Sovereign Immunity Non-Waiver Endorsement which modifies the Policies' coverage parts including the Commercial General Liability, Law Enforcement Liability, and Public Officials' Liability Coverage parts. The Endorsement states in part:

In consideration of the premium charged, it is hereby agreed and understood that the policy(ies), coverage part(s) or coverage form(s) issued by us provide(s) no coverage for any "occurrence", "offense", "accident", "wrongful act", claim or suit for which any insured would otherwise have an exemption or no liability because of sovereign immunity, any governmental tort claims act or laws, or any other state or federal law. Nothing in this policy, coverage part or coverage form waives sovereign immunity for any insured.

In 2011, the Missouri Public Entity Risk Management Fund ("MOPERM")⁶ provided liability insurance coverage to Lincoln County and its officers, officials, and employees. The 2011 MOPERM policy provided coverage during the policy period from January 1, 2011 toJanuary 1, 2012 for multiple types of liability including Public Officials Errors and Omissions Liability and Personal Injury Liability.

The MOPERM Policy defines "occurrence" in part:

As applied to COVERAGES C and D. Occurrence means an accident during the coverage period, or an event that first occurs during the coverage period, or continuous, intermittent or repeated exposure to conditions that commence during the coverage period, any of which accidents, events or exposures causes Bodily Injury, Personal Injury or Property Damage neither expected nor intended by the Covered Party.

As applied to COVERAGES A, B, C and D All injuries or damages arising out of continuous or repeated exposure to substantially the same general condition shall be considered as arising out of one Occurrence. Bodily Injury, Personal Injury, or Property Damage that results from an act that is intended by the Covered Party to cause Bodily Injury, Personal Injury, or Property Damage is not an injury or damage that is neither expected nor intended.

Section VI ("Conditions") of the Memorandum of Coverage of the MOPERM Policy states the following:

F. Multiple Coverage Periods. An occurrence with a duration of more than one coverage period shall be treated as a single occurrence arising during the coverage period when the occurrence begins.

II. Legal standards

The standards applicable to summary judgment motions are well settled. Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Lynn v. Deaconess Medical Center, 160 F.3d 484, 486 (8th Cir. 1998) (citing Fed. R. Civ. P. 56(c)). The party seeking summary judgment bears the initial responsibility of informing the court of the basis of its motion and identifying those portions of the affidavits, pleadings, discovery and disclosure materials on file which it believes demonstrates the absence...