Heacker v. Safeco Ins. Co. of America

• Citation: 676 F.3d 724
• Decision Date: 22 May 2012
• Docket Number: No. 11–1489.,11–1489.
• Parties: Lewis A. HEACKER, Appellant, v. SAFECO INSURANCE COMPANY OF AMERICA; Nationwide Mutual Insurance Company; Jane Doe, JW; Jessica Wright; Beth C. Boggs; Nationwide Insurance Company of America, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

676 F.3d 724

Lewis A. HEACKER, Appellant,

v.SAFECO INSURANCE COMPANY OF AMERICA; Nationwide Mutual Insurance Company; Jane Doe, JW; Jessica Wright; Beth C. Boggs; Nationwide Insurance Company of America, Appellees.

No. 11–1489.

United States Court of Appeals, Eighth Circuit.

Submitted: Dec. 15, 2011.Filed: April 17, 2012.Rehearing and Rehearing En Banc Denied May 22, 2012.

Daniel Graham Curry, argued, Sarah A. Brown, on the brief, Kansas City, MO, for appellant.

Earl Wayne Taff, argued, Kansas City, MO, for appellee.

Before WOLLMAN, COLLOTON, and BENTON, Circuit Judges.

BENTON, Circuit Judge.

Lewis A. Heacker sued Jessica J. Wright and her insurers (including Nationwide Insurance Company of America) for equitable garnishment to collect a state court judgment. The district court ¹ granted summary judgment to the insurers. Heacker appeals as to Nationwide. Jurisdiction being proper under 28 U.S.C. § 1291, this court affirms.

I.

Lewis Heacker sued Jessica Wright in the Circuit Court of Jackson County, Missouri, for hacking into his voicemail and Facebook services, sending disparaging letters and emails about him, and making anonymous phone calls and texts to harass or defame him, among other things. This conduct began around 2005, continuing for nearly five years. Heacker alleged emotional distress, which manifested itself physically and through post-traumatic stress disorder and alcoholism.

Heacker and one of Wright's insurers settled during trial. Heacker then amended his complaint to include a claim that Wright negligently failed to supervise her children, who may have participated in his harassment or defamation. The settling insurer and Heacker agreed to allow the judge to find damages within the limit set by the settlement agreement. Wright did not participate in the settlement. After trial, Heacker obtained a $7.3 million judgment ($5 million for punitive damages) against Wright for breach of fiduciary duty/confidential relationship, negligent failure to supervise children (Heacker and her own children), premises liability, negligent infliction of emotional distress, general negligence, defamation, invasion of privacy, and tortious interference/injurious falsehood.

To satisfy the judgment, Heacker sued Wright and her remaining insurers in an equitable garnishment action. The case was removed to federal court.

For about six months beginning in May 2006, Jessica Wright was insured by Nationwide Insurance Company under a Homeowner's Policy. For a year beginning at the same time, she was also insured under a Nationwide Umbrella Policy. The district court found that the acts during the periods of the Nationwide policies were text messages, emails about Heacker, and harassing phone calls placed through a phone-number/voice alteration service. These acts correspond to the negligent failure to supervise children, negligent infliction of emotional distress, defamation, and invasion of privacy claims.

II.

This court reviews de novo a grant of summary judgment. Mason v. Corr. Med. Servs., Inc., 559 F.3d 880, 884 (8th Cir.2009). Summary judgment should be granted when—viewing the facts most favorably to the nonmoving party and giving that party the benefit of all reasonable inferences—the record shows that there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a); Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir.2011) (en banc). An issue is “genuine” if the evidence is sufficient to persuade a reasonable jury to return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “As to materiality, the substantive law will identify which facts are material....” Id. This court may affirm the summary judgment decision on any basis supported by the record. Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir.2005).

Missouri law applies to the equitable garnishment issues in this diversity case. To collect a judgment through equitable garnishment, the plaintiff has the burden to show by substantial evidence that the claim is within the coverage provided within the insurance contract. Peck v. Alliance Gen. Ins. Co., 998 S.W.2d 71, 74 (Mo.App.1999). To fall within the coverage provided, the policy must have been in effect when the covered acts occurred and cover the damages awarded in the judgment. Taggart v. Maryland Cas. Co., 242 S.W.3d 755, 758 (Mo.App.2008).

Kansas law applies to the interpretation of the insurance policies here. Sheehan v. Northwestern Mut. Life Ins. Co., 44 S.W.3d 389, 397 (Mo.App.2000) (“In an action between the parties to an insurance contract, the principal location of the insured risk is given greater weight than any other single contact in determining the state of applicable law provided that the risk can be located in a particular state.”). Kansas law dictates that limiting or exclusionary insurance provisions should be construed narrowly. Marquis v. State Farm Fire & Cas. Co., 265 Kan. 317, 961 P.2d 1213, 1220 (1998). In addition, under Kansas law, the liability theory asserted at trial, rather than the actual cause of the accident, generally governs insurance coverage. Id. at 1221.

Heacker argues that because Nationwide did not defend the original action or reserve its rights, it is estopped from asserting defenses now. Coverage, however, cannot be created by estoppel where it does not exist. Aks v. Southgate Trust Co., 844 F.Supp. 650, 660 (D.Kan.1994); Lee Builders, Inc. v. Farm Bureau Mut. Ins. Co., 33 Kan.App.2d 504, 104 P.3d 997, 1005 (2005); Morris v. Travelers Ins. Co., 546 S.W.2d 477, 481 (Mo.App.1976).

A.

The Homeowner's Policy covered “bodily injury” caused by an “occurrence.” ² The district court held that there was no “occurrence.” The Policy defines an occurrence as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The Policy does not define “accident.” The burden is on Heacker to demonstrate that his claim is within the scope of the Policy. Harris v. Richards, 254 Kan. 549, 867 P.2d 325, 328 (1994), citing Clark Equip. Co. v. Hartford Accident & Indem. Co., 227 Kan. 489, 608 P.2d 903, 906 (1980). Heacker argues that an accident includes negligent failure to supervise children and the negligent infliction of emotional distress. The Kansas Supreme Court has defined “accident” in an insurance policy clause—identical to the one here—as an “undesigned, sudden, and unexpected event, usually of an afflictive or unfortunate character, and often accompanied by a manifestation of force.” Lee Builders, Inc. v. Farm Bureau Mut. Ins. Co., 281 Kan. 844, 137 P.3d 486, 492 (2006), citing Harris, 867 P.2d at 328 (internal quotation marks and citation omitted). Heacker argues essentially that an act lacking legal intent is equivalent to an accident. The Kansas Supreme Court does not agree.

According to Kansas law, the theory of liability at trial—not the actual cause of the accident—generally governs insurance coverage. Marquis, 961 P.2d at 1221. Heacker, a Missouri resident, obtained a judgment in Missouri on his tort claims, which are governed by Missouri law. See Stricker v. Union Planters Bank, 436 F.3d 875, 878 (8th Cir.2006) (“When determining choice-of-law issues in tort actions, Missouri courts apply the ‘most significant relationship’ test.” (citation omitted)). A judgment for negligent infliction of emotional distress means that Wright either did expect—or should have expected—Heacker's injuries. See K.G. v. R.T.R., 918 S.W.2d 795, 800 (Mo.banc 1996) (“To plead an action for negligent infliction of emotional harm, a plaintiff must allege the duty exists, that the defendant should have realized that his conduct involved an unreasonable risk of causing emotional distress, and the distress or mental injury must be medically diagnosable and must be of sufficient severity so as to be medically significant.”). The same is true for a judgment for negligent failure to supervise children. See Cook v. Smith, 33 S.W.3d 548, 554–55 (Mo.App.2000). The facts in this case indicate that Wright expected Heacker's injuries. Under Missouri law, neither of the negligence theories involves undesigned, sudden, or unexpected events (or a manifestation of force). ³

The district court also held that the Homeowner's Policy's bodily injury coverage would not apply to Heacker's mental illnesses and alcohol addiction, relying on Rockgate Management Co. v. CGU Insurance, Inc., 32 Kan.App.2d 743, 88 P.3d 798, 804 (2004). The Policy here defines bodily injury as “bodily harm, sickness or disease.” Heacker argues that his physical symptoms of distress, PTSD, and alcoholism are “bodily injury” under this definition. The court in Rockgate pointed out that the interpretation of the contract—not any state law—governs the definition of bodily injury. In that case, the contract—similar to the one here—defined bodily injury as “bodily injury, sickness or disease.” Id. The Rockgate court stated: “Where the policy defines bodily injury as bodily injury, it seems to imply that actual physical injury must occur for policy coverage.” Id. Based on this, the district court here correctly concluded: “Physical manifestations of emotional distress or other related emotional harm may offer insight into the severity or extent of the emotional trauma suffered, but, absent some physical, bodily harm, such physical manifestations arise out of and are directly caused by purely emotional injury, which is clearly excluded from coverage.” Heacker argues that...