Chi. Ins. Co. v. City of Council Bluffs

• Decision Date: 02 July 2013
• Docket Number: Nos. 12–1918,12–1922.,s. 12–1918
• Parties: CHICAGO INSURANCE COMPANY, an Illinois corporation, Plaintiff v. CITY OF COUNCIL BLUFFS; Daniel C. Larsen, in his individual and official capacities; Lyle Brown, in his individual and official capacities, Defendants. Columbia Casualty Company, Plaintiff–Appellee v. City of Council Bluffs; Daniel C. Larsen; Lyle Brown; David Dawson; Terry J. Harrington, Defendants Curtis W. McGhee, Jr., Defendant–Appellant. Chicago Insurance Company, an Illinois corporation, Plaintiff–Appellee v. City of Council Bluffs; Daniel C. Larsen, in his individual and official capacities; Lyle Brown, in his individual and official capacities, Defendants–Appellants. Columbia Casualty Company, Plaintiff–Appellee v. City of Council Bluffs; Daniel C. Larsen; Lyle Brown; David Dawson, Defendants–Appellants Terry J. Harrington; Curtis W. McGhee, Jr., Defendants.
• Court: U.S. Court of Appeals — Eighth Circuit

713 F.3d 963

CHICAGO INSURANCE COMPANY, an Illinois corporation, Plaintiff

v.CITY OF COUNCIL BLUFFS; Daniel C. Larsen, in his individual and official capacities; Lyle Brown, in his individual and official capacities, Defendants.

Columbia Casualty Company, Plaintiff–Appellee

v.City of Council Bluffs; Daniel C. Larsen; Lyle Brown; David Dawson; Terry J. Harrington, Defendants

Curtis W. McGhee, Jr., Defendant–Appellant.

Chicago Insurance Company, an Illinois corporation, Plaintiff–Appellee

v.City of Council Bluffs; Daniel C. Larsen, in his individual and official capacities; Lyle Brown, in his individual and official capacities, Defendants–Appellants.

Columbia Casualty Company, Plaintiff–Appellee

v.City of Council Bluffs; Daniel C. Larsen; Lyle Brown; David Dawson, Defendants–Appellants

Terry J. Harrington; Curtis W. McGhee, Jr., Defendants.

Nos. 12–1918, 12–1922.

United States Court of Appeals, Eighth Circuit.

Submitted: Dec. 12, 2012.

Filed: April 30, 2013.

Rehearing and Rehearing En Banc Denied July 2, 2013.^*

Lorraine J. May, argued, Des Moines, IA, Robert M. Livingston and Michael A. Sciortino, on the brief, Council Bluffs, IA, for appellants.

Bethany K. Culp, argued, Minneapolis, MN, Duana J. Grage, Minneapolis, MN, Debra Lynn Hulett, Des Moines, IA, on the brief, for appellee Chicago Insurance Company.

Roderick Timothy Dunne, argued, Chicago, IL, Debra Lynne Hulett, Des Moines, IA, Linda J. Carwile, Chicago, IL, on the brief, for appellee Columbia Casualty Company.

Before WOLLMAN, BYE, and BENTON, Circuit Judges.

WOLLMAN, Circuit Judge.

The City of Council Bluffs, police officers Daniel Larsen, Lyle Brown, and David Dawson (collectively the City), and Curtis McGhee appeal from the district court's order granting summary judgment to Chicago Insurance Company (CIC) and Columbia Casualty Company (Columbia), on CIC's and Columbia's declaratory judgment claims concerning coverage under various insurance policies. We affirm as to those policies in effect after 1977, but reverse as to Columbia's 1977–78 policy.

I. Background

Many of the background facts are set forth in Genesis Insurance Co. v. City of Council Bluffs, 677 F.3d 806 (8th Cir.2012). We summarize them only briefly here. In 1977, McGhee and Terry Harrington were arrested for the murder of retired police officer John Schweer and were convicted on May 11, 1978, and August 4, 1978, respectively. McGhee and Harrington both received life sentences. In 2003, the Iowa Supreme Court concluded that “Harrington's due process right to a fair trial was violated by the State's failure to produce ... police reports documenting the[ ] investigation of an alternative suspect in Schweer's murder.” Harrington v. State, 659 N.W.2d 509, 525 (Iowa 2003). McGhee and Harrington were released from prison later that year.

In 2005, McGhee and Harrington brought claims under 42 U.S.C. §§ 1983 and 1985(3) against, among others, the City, alleging violations of civil rights sounding in malicious prosecution. See Genesis, 677 F.3d at 808. The City sought coverage under the following insurance policies issued by CIC and Columbia: (1) two excess liability policies issued by CIC; (2) five special excess liability policies issued by Columbia; and (3) one commercial umbrella liability policy issued by Columbia.

A. CIC Excess Liability Policies

CIC issued the City two excess liability policies, one in effect from July 1, 1983, to July 1, 1984; and the other in effect from July 1, 1984, to July 1, 1985. The policies contain Endorsement 6, which reads:

POLICE PROFESSIONAL LIABILITY—FOLLOWING FORM

It is agreed that, except insofar as coverage is available to the Insured in the underlying insurance, this policy shall not apply to Personal Injury or Property Damage caused by Negligent Acts, Errors and/or Omissions of Police Officers including but not limited to[:] false arrest, erroneous service of civil papers, false imprisonment, malicious prosecution, assault and battery, libel, slander, defamation of character, violation of property rights, or deprivation of any rights, privileges or immunities secured by the Constitution and the laws of the United States.

Appellants' App. 579.¹ The “underlying insurance” was issued by Admiral Insurance Company.² The relevant portions of the policies read:

INSURING AGREEMENT

In consideration of the payment of premium in reliance upon the statements herein or attached hereto, and subject to all of the terms of this policy, the Company(s) agrees with the Named Insured and will indemnify the Insured for ultimate net loss in excess of the retained limit hereinafter stated which the Insured shall become legally obligated to pay by reason of liability imposed by law, or liability assumed by contract, insofar as the Named Insured may legally do so, for damages because of:

....

COVERAGE D—PERSONAL INJURY LIABILITY

....

to which this policy applies, caused by an occurrence, during the policy period.Appellants' App. 620. For purposes of Coverage D, the Admiral policies define an “occurrence” as “any injury or damage sustained during the policy term, by any person or organization and arising out of the personal injury as defined herein” and define “personal injury” as including “malicious prosecution[.]” Appellants' App. 625.

B. Columbia Special Excess Liability Policies

Columbia issued the City five special excess liability policies: one in effect from August 8, 1977, to August 8, 1978; one in effect from August 8, 1978, to August 8, 1979; one in effect from August 8, 1979, to August 8, 1980; one in effect from August 8, 1980, to August 8, 1981; and one in effect from July 1, 1981, to July 1, 1982. These policies provide that Columbia “will indemnify the Insured for ultimate net loss in excess of the retained limit hereinafter stated which the Insured shall become legally obligated to pay as damages because of ... personal injury ... to which this policy applies, caused by an occurrence.” Appellants' App. 762. These policies define “personal injury” as including “malicious prosecution” and define an “occurrence” as “an accident, including injurious exposure to conditions, which results, during the policy period, in personal injury or property damage neither expected nor intended from the standpoint of the Insured[.]” Appellants' App. 765.

C. Columbia Commercial Umbrella Liability Policy

Columbia also issued the City a commercial umbrella liability policy, in effect from July 1, 1982, to July 1, 1983, which reads:

1. COVERAGE A—EXCESS LIABILITY INDEMNITY

The company will indemnify the insured for loss in excess of the total applicable limits of liability of underlying insurance stated in the schedule. The provisions of the [i]mmediate underlying policy are, with respect to Coverage A, incorporated as a part of this policy, except for any obligation to investigate and defend and pay for costs and expenses incident to any of the same, the amounts of the limits of liability, an “other insurance” provision and any other provisions therein which are inconsistent with this policy.

....

2. COVERAGE B—EXCESS LIABILITY INDEMNITY OVER RETAINED LIMIT

The company will indemnify the insured, with respect to any occurrence not covered by underlying insurance, or with respect to damages not covered by underlying insurance but which result from an occurrence covered by underlying insurance, for loss in excess of the insured's retained limit which the insured shall become obligated to pay as damages by reason of liability imposed upon the insured by law or assumed by the insured under any contract because of

personal injury,

property damage, or

advertising injury

to which this coverage applies, caused by an occurrence.

Appellants' App. 828 (emphasis omitted). The policy defines “personal injury” as:

(1) bodily injury, shock, mental injury or mental anguish,

(2) false arrest, detention or imprisonment, wrongful entry or eviction or other invasion of private occupancy, malicious prosecution or humiliation; except that maliciously inflicted by, at the direction of, or with the consent of the insured[.]

....Appellants' App. 844 (emphasis omitted). The policy defines an “occurrence” as:

(1) with respect to subsection (1) of the definition of personal injury and with respect to property damage, an accident, including continuous or repeated exposure to conditions, which results, during this policy period, in such personal injury or property damage neither expected nor intended from the standpoint of the insured. All loss arising out of continuous or repeated exposure to substantially the same conditions shall be considered as arising out of one occurrence,

(2) with respect to subsection[ ](2) ... of the definition of personal injury, an act or series of acts of the same or similar nature, committed during this policy period which causes such personal injury. All loss arising out of such act or series of acts, regardless of the frequency thereof or the number of claimants, shall be deemed to arise out of one occurrence[.]

....

Appellants' App. 844 (emphasis omitted).

D. Declaratory Judgment Actions

CIC and Columbia filed declaratory judgment actions on the issue of coverage. On summary judgment, the district court rejected the “multiple triggers” coverage theory; denied the use of extrinsic evidence for contract interpretation or contract construction purposes; and determined that only the 1977–78 Columbia special excess liability policy potentially provided coverage. As to that policy, the district court concluded that because the alleged malicious prosecution was not caused by an accident and did not result in unexpected or unintended personal injuries, that policy was inapplicable. The district court accordingly granted CIC and Columbia summary judgment on each of the policies.

II. Discussion

We review de novo the district court's grant of summary judgment, “applying the same standards as the district court and viewing the evidence in the light most favorable to the nonmoving party.”...