Genesis Ins. Co. v. City of Council Bluffs, s. 11–1277

Decision Date19 June 2012
Docket Number11–1741.,Nos. 11–1277,s. 11–1277
Citation677 F.3d 806
PartiesGENESIS INSURANCE COMPANY, Plaintiff–Appellee, v. CITY OF COUNCIL BLUFFS; Daniel C. Larsen; Lyle Brown, Defendants–Appellants,Curtis W. McGhee, Jr., Movant,Iowa Leagues of Cities, Amicus on Behalf of Appellant.Gulf Underwriters Insurance Company; Travelers Indemnity Company, Plaintiffs,Genesis Insurance Company, Plaintiff–Appellee, v. City of Council Bluffs, IA; Daniel C. Larsen; Lyle Brown, Defendants–Appellants,Terry Harrington, Defendant in member case 1:07–cv–24; Curtis W. McGhee, Jr., Defendant in member case 1:07–cv–24, Defendants,Iowa Leagues of Cities, Amicus on Behalf of Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

OPINION TEXT STARTS HERE

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

Fritz K. Huszagh, argued, Christine Olson McTigue and Kent J. Cummings, on the brief, Chicago, IL, for appellee.

Bruce Bergman, Des Moines, IA, on the amicus brief on behalf of appellants.

Before BYE, SMITH, and COLLOTON, Circuit Judges.

SMITH, Circuit Judge.

This appeal arises from an insurance coverage dispute. The City of Council Bluffs, Iowa, and its police officers, Daniel Larsen and Lyle Brown, (collectively, the City) sought coverage from Genesis Insurance Company (Genesis) for § 1983 claims in the nature of malicious prosecution. Genesis filed suit against the City, seeking a declaratory judgment that its policies provided no coverage for the underlying actions. The district court 1 granted summary judgment to Genesis. The City appeals, arguing that the district court erred in ruling as a matter of law that the policies do not provide the City insurance coverage for the claims. We affirm.

I. Background

Terry Harrington and Curtis McGhee filed two underlying civil actions against the City based on the City's conduct in their criminal prosecutions.

A. Underlying Criminal Actions

In 1977, Harrington and McGhee were arrested for the murder of retired police officer John Schweer. “Harrington, who was seventeen at the time, was charged with Schweer's murder and was ultimately convicted [on August 4, 1978], primarily on the testimony of a juvenile accomplice, Kevin Hughes.” Harrington v. State, 659 N.W.2d 509, 514 (Iowa 2003) (footnote omitted). According to Hughes,

Hughes, Harrington, and ... McGhee ... went to [a car] dealership with the intent to steal a beige Toronado. Hughes waited in Harrington's car while Harrington and McGhee walked around a building to find the desired automobile. Harrington had a shotgun. Shortly after Harrington and McGhee left, Hughes heard a gun shot. Then Harrington and McGhee came running back. Harrington said he had just shot a cop.

Id.

Like Harrington, McGhee was convicted of Schweer's murder on May 11, 1978, and sentenced on June 13, 1978. Both Harrington and McGhee received life sentences.

Following his conviction, Harrington's direct appeal failed, “as did a subsequent postconviction relief action in which he claimed that Hughes'[s] testimony was perjured.” Id. at 515. “Harrington also unsuccessfully sought habeas corpus relief in federal court.” Id.

In 2000, Harrington filed his second state postconviction relief action. Id. Harrington requested that his conviction be vacated “based on an alleged due process violation arising from the prosecution's failure to turn over eight police reports to the defense during the criminal trial.” Id. at 516. He ... asserted a Brady violation occurred in 1978 because these reports contained potentially exculpatory evidence of an alternative suspect and they had been withheld by the prosecution.” Id. at 518. The Iowa Supreme Court held “that Harrington's due process right to a fair trial was violated by the State's failure to produce the police reports documenting their investigation of an alternative suspect in Schweer's murder.” Id. at 525. Therefore, the court ordered that the state trial court vacate Harrington's conviction and grant him a new trial. Id.

On April 17, 2003, Harrington was released from prison. On September 2, 2003, McGhee was released from prison after entering an Alford plea. 2

B. Underlying Civil Actions

In 2005, Harrington and McGhee filed suit against, inter alia, the City of Council Bluffs and Officers Daniel Larsen and Lyle Brown of the City of Council Bluffs Police Department. Both Harrington and McGhee brought claims under 42 U.S.C. §§ 1983 and 1985(3). According to the district court, Harrington's and McGhee's § 1983 claims seeking damages for constitutional injuries resulting from their arrests, convictions, and incarcerations are in the nature of malicious prosecution because [they] essentially allege that their constitutional rights were violated as a result of the wrongful institution of legal process against them.” Gulf Underwriters Ins. Co. v. City of Council Bluffs, 755 F.Supp.2d 988, 992 (S.D.Iowa 2010) (quotation and citation omitted).3

C. Declaratory Judgment Action

The City provided Genesis notice of the underlying civil actions. Thereafter, Genesis filed suit against the City seeking, inter alia, a declaratory judgment that its policies did not provide coverage for the underlying civil actions. Genesis alleged that it owed no duty to indemnify the City in the underlying civil actions because the claims that Harrington and McGhee asserted related to bodily injury or personal injury that occurred prior to the Genesis policies.

“Genesis [had] issued two separate, consecutive indemnity insurance policies to the City. The first policy was effective from January 1, 2002[,] to January 1, 2003[,] and the second was effective from January 1, 2003[,] to January 1, 2004....” Id. at 992 (internal citation omitted). The City “concede[s] that Genesis has no duty to defend.” Id. at 1003. But the policies “do clearly implicate a duty to indemnify for covered losses.” Id.

SECTION I of the policies, entitled “COVERAGE,” provides, in relevant part:

A. Insuring Agreement

1. Subject to the applicable Limit(s) of Insurance of this Coverage Part, we agree to indemnify the Insured for the ultimate net loss in excess of the retained limit for which the Insured becomes legally obligated to pay because of bodily injury,4 personal injury, advertising injury, or property damage which occurs during this policy period and to which this insurance applies....

2. This insurance applies to bodily injury, personal injury, advertising injury, or property damage which occurs during this policy period, provided that prior to this policy period, no Insured ... knew that the bodily injury, personal injury, advertising injury, or property damage had occurred, in whole or part. If such listed Insured ... knew, prior to this policy period, that the bodily injury, personal injury, advertising injury, or property damage occurred, then any continuation, change or resumption of such bodily injury, personal injury, advertising injury, or property damage during or after this policy period will be deemed to have been known prior to this policy period and will not be covered hereunder.

3. Bodily injury, personal injury, advertising injury, or property damage which occurs during this policy period and was not, prior to this policy period, known to have occurred by an Insured ... includes any continuation, change or resumption of that bodily injury, personal injury, advertising injury, or property damage after the end of this policy period.

* * *

In any event, the bodily injury, personal injury, advertising injury, or property damage must be caused by an occurrence and the occurrence must take place in the coverage territory.

(Emphases added.)

The policies define “personal injury” as

injury, other than bodily injury, arising out of one or more of the following offenses from the conduct of your operations:

1. False arrest, detention or imprisonment;

2. Malicious prosecution;

3. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor[;]

4. Electronic or other publication, transmission, dissemination or storage of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or

5. Electronic or other publication, transmission or dissemination or storage of material that violates a person's right of privacy.

Personal injury also includes the following offenses, but only with respect to your law enforcement activities or your departmentally approved law enforcement activities for others:

6. Assault and battery;

7. Violation of civil rights;

8. Violation of property rights;

9. Erroneous service of process; or

10. Failure of your law enforcement department and its employees to follow departmentally approved policy(ies) or procedure(s).

(Emphases added.)

The policies define “occurrence,” [w]ith respect to personal injury ..., [as] an offense or series of related offenses.” And, “offense” is defined as “any of the offenses included in the definitions of advertising injury or personal injury.” “The Gulf Policies do not define ‘false arrest, detention or imprisonment’ or ‘malicious prosecution.’ Id. at 1004.

Genesis moved for summary judgment on its declaratory-judgment claim. The district court granted Genesis's motion, concluding that the City “failed to demonstrate that there is any genuine issue of material fact as to whether a covered injury occurred during the Genesis policy periods.” Id. at 1009. In its analysis, the court addressed whether Harrington and McGhee alleged personal injuries and found that “the only ‘offenses' potentially relevant to [Harrington's and McGhee's] remaining claims are ‘malicious prosecution and ‘violation of civil rights.’ Id. at 1005 (footnote omitted). As a result, the district court...

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