Eichholz v. Secura Supreme Ins. Co.
| Decision Date | 14 November 2013 |
| Docket Number | Nos. 12–3170,12–4032.,s. 12–3170 |
| Citation | 735 F.3d 822 |
| Parties | Barbara EICHHOLZ; Joshua Alan Eichholz; Dakota Ray Gilpin, Plaintiffs–Appellees v. SECURA SUPREME INSURANCE COMPANY, Defendant–Appellant. Barbara Eichholz; Joshua Alan Eichholz; Dakota Ray Gilpin, Plaintiffs–Appellants v. Secura Supreme Insurance Company, Defendant–Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
OPINION TEXT STARTS HERE
William Clayton Crawford, argued, James Patrick Maloney, on the brief, Kansas City, MO, for appellant/cross-appellee.
Fairfax Jones, argued, St. Louis, MO, Rudy L. Veit, on the brief, Jefferson City, MO, for appellees/cross-appellants.
Before MURPHY, MELLOY, and SHEPHERD, Circuit Judges.
Angela and Rodney Gilpin were murdered inside an apartment building owned and operated by Dennis and Sandra Prenger (collectively, the “Prengers”). Plaintiffs, survivors of the victims, obtained wrongful death judgments against the Prengers in state court. The state court found that the Prengers breached their landlord-tenant duty to provide security to their tenant (Angela) and her guest (Rodney) and awarded Plaintiffs $4 million in total damages.
In this diversity case, Plaintiffs filed an equitable garnishment action in Missouri state court, later removed to federal court, to recover insurance proceeds from one of the Prengers' insurers to satisfy a portion of the wrongful death judgments. The district court ruled that Plaintiffs were entitled to collect $1 million in insurance proceeds from the insurer. We reverse and hold that the insurance policy unambiguously precludes coverage of the wrongful death damages.
On September 28, 2009, Angela and Rodney Gilpin were shot and killed by David Hosier inside the Prengers' apartment building. The Prengers did not live at the apartment building; they operated it as a business endeavor by collecting rents from individual tenants like Angela. Angela was separated at the time from her husband, Rodney, but he was with Angela in the building as her guest when Hosier killed them.
The Prengers had hired Hosier to perform occasional maintenance work at the building and provided him keys. Angela notified the Prengers about one month before her death that she was afraid of Hosier and that she was concerned for her safety because he had keys to her building. She wrote a letter to the Prengers one week before she was killed, again expressing concerns for her safety and notifying the Prengers that she was seeking a restraining order against Hosier.
Plaintiffs filed wrongful death actions against the Prengers in Missouri state court in March 2010, alleging that the Prengers' negligence in failing to provide security to Angela and Rodney contributed to their deaths. The state court entered judgments in favor of Plaintiffs on December 23, 2010. In separate rulings, the court concluded that the Prengers owed a duty to provide security to Angela because of the existence of a landlord-tenant relationship and that they owed a similar duty to Rodney because he was Angela's guest. The court determined that the Prengers negligently failed to conduct a background check of Hosier before giving him the keys to the building.1 The court found that the Prengers were also negligent in failing to change the exterior locks to Angela's apartment building after learning that Hosier was a convicted felon and that Angela feared him. The court ruled that the Prengers' negligence was a contributing cause of the Gilpins' deaths and awarded Plaintiffs $4 million in damages.
On the same day the state court entered the judgments, Plaintiffs and the Prengers entered into an agreement under Mo.Rev.Stat. § 537.065, which allows injured parties and tortfeasors to contract to limit recovery to specific assets such as insurance proceeds. Specifically, Plaintiffs promised to limit satisfaction of the $4 million wrongful death damages to the proceeds of two insurance policies the Prengers held at the time of the killings.
The Prengers possessed a general commercial liability insurance policy from Farm Bureau Town & Country Insurance Company of Missouri (“Farm Bureau”) with a $500,000 limit. Farm Bureau provided a defense to the Prengers in the wrongful death suits and later paid its coverage limit to Plaintiffs. The Prengers also held a personal property and liability insurance policy through Secura Supreme Insurance Company (“Secura”). The policy included “umbrella coverage” with a $1 million limit intended to cover liabilities above the limits of the Prengers' other insurance. In June 2010, Secura wrote a letter to Plaintiffs' attorneys that explained why Secura did not believe it was required to pay any amounts under the umbrella policy.
In February 2011, Plaintiffs filed an equitable garnishment action against Secura in state court. Secura removed the action to federal district court on the basis of diversity jurisdiction. See28 U.S.C. § 1441; 28 U.S.C. § 1332(a)(1). The district court found that Plaintiffs were entitled to recover $1 million in insurance proceeds from Secura. In a separate order, the court denied Plaintiffs' request for postjudgment interest on the underlying wrongful death judgments. Secura appeals the district court's grant of summary judgment in favor of Plaintiffs. Plaintiffs cross appeal, arguing that the district court erred in denying postjudgment interest. Because we hold that the Secura umbrella coverage policy unambiguously precludes coverage in this case, we do not decide the postjudgment interest issue.
We review de novo a district court's interpretation of an insurance policy and its grant of summary judgment. See PETCO Animal Supp. Stores, Inc. v. Ins. Co. of N. Am., 724 F.3d 1025, 1026 (8th Cir.2013). The parties agree that Missouri law applies in this case. When reviewing insurance policy terms, a Missouri court “applies the meaning which would be attached by an ordinary person of average understanding if purchasing insurance, and resolves ambiguities in favor of the insured.” Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo.2007) (en banc) (internal citation and quotation marks omitted). “Whether an insurance policy is ambiguous is a question of law.” Martin v. U.S. Fid. & Guar. Co., 996 S.W.2d 506, 508 (Mo.1999) (en banc). If an insurance policy is not ambiguous, it will be enforced according to its terms. See Rodriguez v. Gen. Accident Ins. Co., 808 S.W.2d 379, 382 (Mo.1991) (en banc).
Plaintiffs maintain that the Prengers' umbrella coverage policy unambiguously allows recovery for the Prengers' tortious actions that contributed to the Gilpins' deaths. In the alternative, Plaintiffs argue that the policy exclusions are ambiguous and should be construed against Secura. Secura argues that its “Personal Umbrella Insurance” policy with the Prengers was intended to cover only personal, noncommercial liabilities and that the policy is subject to two applicable coverage exclusions—either of which bars Plaintiffs' recovery. The two exclusions in the Secura policy read as follows:
EXCLUSIONS
We do not cover:
...
7. Business pursuits of an insured unless covered by Personal Liability primary insurance described in the Declarations. Our coverage is no broader than the primary insurance except for our liability limit.
...
8. Damages resulting from the ownership, maintenance or use of business property of an insured. This exclusion does not apply to:
a. an office, school or studio occupancy located on the insured's residence premises if covered by primary insurance described in the Declarations; or
b. a one- to four- family dwelling rented or held for rental to any personif covered by primary insurance described in the Declarations.
The parties agree that the building at issue had more than four units, that the Prengers owned the apartment building as a “business property,” and that the Prengers operated the apartment building as a “business pursuit.” Accordingly, we must decide whether the business pursuits or business property exclusion contained in the Secura policy bars coverage of the damages Plaintiffs sustained in their wrongful death suits against the Prengers.
We begin our analysis with the “business property” exclusion. The issue is whether the damages suffered by Plaintiffs in the underlying wrongful death suits are “[ d] amages resulting from the ownership, maintenance or use of business property of an insured.” (emphases in original).
Plaintiffs argue that the exclusion applies when damages are caused by dangerous or defective conditions of the business property, but that the exclusion does not bar coverage for the Prengers' personal tortious conduct in failing to conduct a background check on Hosier and in failing to retrieve the master keys from him or change the locks after learning of his felony conviction and of the potential danger he posed to Angela. Plaintiffs rely on Lititz Mutual Insurace Co. v. Branch, 561 S.W.2d 371 (Mo.Ct.App.1977) and MFA Mutual Insurance Co. v. Nye, 612 S.W.2d 2 (Mo.Ct.App.1980) for support.
Contrary to Plaintiffs' assertions, Lititz and Nye fail to support the proposition that the business property exclusion does not apply in this case. First, the policy language at issue in both cases discussed coverage for injuries “arising out of any premises.” Nye, 612 S.W.2d at 3;Lititz, 561 S.W.2d at 372 n. 1. Each case involved personal tortious conduct by an insured: for example, in Lititz, the insured's dog bit and injured a child while the dog was tethered to a leash on the insured's business property. 561 S.W.2d at 372. In Nye, a person was injured when she was struck by a riding lawn mower driven by an insured. 612 S.W.2d at 3. Based on the language of the policies and the fact that each case involved personal tortious conduct, the respective courts interpreted the policy language to exclude coverage only for injuries arising out of the physical conditions of the property itself. See Lit...
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