City of Ypsilanti v. Appalachian Ins. Co.
| Decision Date | 28 September 1982 |
| Docket Number | Civ. A. No. 81-60021. |
| Citation | 547 F. Supp. 823 |
| Parties | CITY OF YPSILANTI, Plaintiff, v. APPALACHIAN INSURANCE COMPANY, a foreign corporation and Law Enforcement Insurance Company, Limited, a foreign corporation, Defendants. |
| Court | U.S. District Court — Western District of Michigan |
Walter K. Hamilton, Egnor, Hamilton & Muth, Ypsilanti, Mich., for plaintiff.
Lynn L. Lower, Southfield, Mich., for defendants.
This case is before the court on cross motions for summary judgment by the plaintiff, City of Ypsilanti, and the defendant, Appalachian Insurance Company (Appalachian). For the reasons given below, the motion of the plaintiff is granted and the motion of the defendant is denied.
The facts are not in dispute. On or about July 8, 1976, the plaintiff contracted with the defendant Appalachian for liability insurance coverage. The written policy was entitled, "Law Enforcement Officers Comprehensive Professional Liability Insurance," and was effective for the period July 8, 1976 to November 1, 1977.1 It appears that this insurance contract was a renewal of a group insurance policy purchased by the plaintiff from the defendant in several prior years.
On November 1, 1977, plaintiff renewed the policy, but contracted with a new carrier, the defendant Law Enforcement Insurance Company, Ltd. (LEICL). The contract entered into with the defendant LEICL was identical to the policy provided by the defendant Appalachian, and was effective for the period November 1, 1977 to July 30, 1978.
The pertinent language of the contract is as follows:
On November 21, 1977, the City of Ypsilanti, its City Manager, its Mayor, and the individual members of its City Council were sued in U. S. District Court by a class of persons residing in state-licensed Adult Foster Care Homes in Ypsilanti. Doe v. Shutt, No. 77-72755, (E.D.Mich.) The complaint alleged, inter alia, that the City and its officers had, on October 10, 1977, formally resolved to enforce certain housing and zoning ordinances for the purpose of closing down the Adult Foster Care Homes in which the plaintiff class resided. The complaint charged the municipal defendants with selective and discriminatory enforcement of City ordinances in violation of various Constitutional protections, and requested injunctive relief, monetary damages and attorney's fees.
On November 29, 1977, the plaintiff notified its insurers, Appalachian and LEICL, of the lawsuit and attempted to turn the defense of the suit over to them. Both defendants refused to appear for and defend the City and its officers.3
Doe v. Shutt was settled in August, 1979. The consent judgment included an injunction against the City and dismissal of the claim for monetary damages. In its final judgment, the district court awarded the plaintiffs $13,427.55 for costs and attorney fees. The defendants, Appalachian and LEICL, refused to pay the award of attorney fees under the terms of the insurance policy. Ultimately, the City paid $12,181.00 to the Doe v. Shutt plaintiffs in satisfaction of the district court's attorney fees award. In its second amended complaint, the City alleges that it paid an additional $9,660.59 to its own attorneys to defend the suit.
The City commenced this suit in January, 1981, to recover from the defendant Appalachian the sums the City expended in defense of Doe v. Shutt and the sums it ultimately paid in satisfaction of the attorney fees award. Appalachian removed to this court and the defendant LEICL was later added to the suit. Default judgment has been entered against the defendant LEICL in the amount of $21,849.59 ($12,281.00 plus $9,660.59), plus interests and costs.
The first issue is whether the contract between plaintiff and Appalachian, which expired November 1, 1977, is applicable to the Doe v. Shutt lawsuit, which was filed on November 21, 1977. The court concludes that it is.
The contract says the defendant will be liable for "claims against the Insured growing out of the performance of the duties of law enforcement officers or their employees, during the currency period of this policy." (emphasis added) This language, at the least, implies that the defendant is to be liable for claims which accrue during the effective period of the policy.
Furthermore, the purpose underlying this type of liability insurance coverage dictates that liability not depend on when a complaint is made against the Insured. Liability insurance protects the Insured against its own negligence or misdeeds. This type of policy is purchased with the expectation that acts within the scope of coverage will be protected against if committed within the period of coverage. This type of liability insurance would be illusory indeed if coverage were made to turn on the date a claim or complaint is filed against the Insured, a circumstance utterly beyond the control of the Insured. See Stine v. Continental Casualty Co., 112 Mich. App. 174, 315 N.W.2d 887 (1982). In construing the language of a contract, the court must avoid that which is unnatural or unreasonable if the language will also bear a construction which is fair and reasonable. B. Siegel Co. v. Wayne Circuit Judge, 183 Mich. 145, 149 N.W. 1015 (1914).
Here, it is plain that plaintiff's claim, if any, accrued against Appalachian during the period the policy was in force. The actions of the City and its officers complained of in Doe v. Shutt occurred on, or prior to, October 10, 1977. It was at the City Council meeting on October 10, that the plaintiff and its officers formally resolved to take action against the Adult Foster Care Homes in Ypsilanti by selectively and discriminatorily enforcing certain zoning and housing ordinances, according to the Doe v. Shutt complaint. Moreover, it was the October 10 action of the City and its officers that the Doe v. Shutt plaintiffs sought to enjoin.
Therefore, the court holds that the insurance contract between plaintiff and Appalachian applies to plaintiff's claims, if any, growing out of the Doe v. Shutt lawsuit.
The second issue is whether the claims asserted against the plaintiff and its officers in Doe v. Shutt were covered by the insurance contract. This issue has two sub-issues. First, were the Doe v. Shutt defendants covered by the policy. Second, did the policy cover claims for equitable relief. The court concludes that both of these questions must be answered in the affirmative.
The policy is entitled, "Law Enforcement Officers Comprehensive Professional Liability Insurance." The policy is formally issued to "City of Ypsilanti Police Department, Government Officials and Unit of Goovernment (sic)." Coverage C states that the defendant will be liable to the "Insured" for claims "growing out of the performance of the duties of law enforcement officers or their employees."
The words "Insured" and "Law Enforcement Officers" are not defined in the policy. However, it is clear that "Insured" refers to those to whom the policy was issued, i.e., the "City of Ypsilanti Police Department, Government Officials and Unit of Goovernment (sic)."
As for the words "Law Enforcement Officers", the court concludes that they were intended to cover all those named as defendants in the Doe v. Shutt lawsuit. The words "Law Enforcement Officers" connote more than the words "Police Officers." They suggest that all those responsible for enforcing the laws are covered by the insurance policy. Where the policy intended to refer only to the "police," it did so.
Plainly, the City Manager, the City of Ypsilanti, the Mayor of Ypsilanti, and the members of the Ypsilanti City Council are responsible for enforcing the laws. Therefore, claims "growing out of the performance of their duties" must be covered by the policy. The Doe v. Shutt lawsuit was indisputably a claim against the City and its officers growing out of the performance of the duties of these "law enforcement officers."
The second sub-issue is whether the policy covers claims for equitable relief. This is a valiant, but futile, effort by the defendant to cleave nonexistent hairs. The...
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