LINCOLN CTY. AMBUL. v. PACIFIC EMP. INS., ED 72333.

• Decision Date: 22 April 1998
• Docket Number: No. ED 72333.,ED 72333.
• Citation: 15 S.W.3d 739
• Parties: LINCOLN COUNTY AMBULANCE DISTRICT, Plaintiff/Respondent, v. PACIFIC EMPLOYERS INSURANCE COMPANY, Defendant/Appellant.
• Court: Missouri Court of Appeals

15 S.W.3d 739

LINCOLN COUNTY AMBULANCE DISTRICT, Plaintiff/Respondent, v. PACIFIC EMPLOYERS INSURANCE COMPANY, Defendant/Appellant.

No. ED 72333.

Missouri Court of Appeals, Eastern District, Division Four.

January 20, 1998.

Motion for Rehearing and/or Transfer Denied March 18, 1998.

Application for Transfer Denied April 22, 1998.

James W. Childress, Jerry R. Wilding, Holtkamp, Liese, Beckemeier & Childress, P.C., St. Louis, for appellant.

Brian E. McGovern, Elaine M. Moss, McCarthy, Leonard, Kaemmerer, Owen, Lamkin & McGovern, L.C., Chesterfield, for respondent.

Motion for Rehearing and/or Transfer to Supreme Court Denied March 18, 1998.

SIMON, Judge.

Pacific Employers Insurance Company (Pacific) appeals from an order and judgment entered by the Honorable Patrick J. Clifford on March 28, 1997, granting Lincoln County Ambulance District's (Lincoln) motion for summary judgment and denying Pacific's motion for summary judgment.

On appeal, Pacific contends that the trial court erred in granting Lincoln's motion for summary judgment and denying Pacific's motion for summary judgment in that: (1) the claims made by Lincoln are not covered under the policy issued by Pacific; (2) requiring payment of Lincoln's claims constitutes unjust enrichment and is against public policy; (3) waiver and estoppel will not bring coverage to a risk that is not covered by an insurance policy; and (4) the prior adjudication of the case and the coverage issue required the trial court to grant Pacific's motion for summary judgment. We affirm the judgment and note that the denial of Pacific's motion for summary judgment is not appealable. D.L. Erickson v. Pulitzer Publishing Co., 797 S.W.2d 853, 857 (Mo.App. E.D.1990).

The facts are not in dispute. Our review is essentially de novo. ITT Commercial Finance v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 3764. The criteria on appeal for testing the propriety of summary judgment are no different from those used by the trial court. Id. at 3765. The burden on a summary judgment movant is to show a right to judgment flowing from facts about which there is no genuine dispute. Id. at 3789. The non-movant must show—by affidavit, depositions, answers to interrogatories, or admissions on file—that one or more material facts shown by movant to be above any genuine dispute is, in fact, genuinely disputed. Id. at 38117.

The record indicates that Pacific issued Errors and Omissions (E & O) insurance policies to Lincoln from 1987 through 1995 through its managing agent Volunteer Firemen's Insurance Services (VFIS). In addition to the E & O policies, comprehensive general liability (CGL) policies were issued to Lincoln, providing coverage for the treatment and transport of patients and included coverage for errors and omissions which occurred during treatment.

The E & O policy provided in pertinent part:

THE COVERAGE

1. INSURANCE AGREEMENT AND CLAIMS MADE CLAUSE

TO PAY ON BEHALF OF THE INSURED ALL SUMS WHICH THE INSURED BECOMES LEGALLY OBLIGATED

TO PAY AS "DAMAGES" AS A RESULT OF CLAIMS FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD BY REASON OF ANY ACT, ERROR OR OMISSION IN PROFESSIONAL SERVICES RENDERED IN THE DISCHARGE OF DUTIES IN THE CONDUCT OF THE INSURED'S CAPACITY AS INDICATED IN ITEM 3 OF THE DECLARATIONS.

Item 3 of the Declarations defines the insured's capacity in the following manner:

NAMED INSURED'S CAPACITY: AMBULANCE & AMBULANCE

The policy also includes a section entitled "Definitions" which does not define "professional services," but provides the following definitions:

1. The term "Insured"

(a) the Named Insured:

(b) any officer, director, trustee and/or commissioner of the Named Insured or other person acting in a similar capacity, but only while acting within the scope of the official duties as such

(c) any individual member of the Named Insured, but only while acting in the scope of his official duties as such.

2. The word "damages" means any amount which any insured is legally obligated to pay for any claim to which the insurance applies and shall include judgments, settlements and claim expenses; provided always that damages shall not include fines or penalties imposed by law or other matters which may be deemed uninsurable under the law pursuant to which the policy shall be construed.

* * *

Further, the E & O policy contains twelve specific exclusions, disclaiming in pertinent part:

1. the rendering or failure to render medical or paramedical services, first aid or other such medical assistance;

2. the use or operation of equipment or supplies used in any diagnostic or testing procedures or for treatment or support;

3. the furnishing, dispensing, or application of drugs, oxygen or other medical dental or surgical supplies or appliances;

* * *

5. the violation or alleged violation of any municipal, state or federal civil rights law, regulation or ordinance;

6. any strike or other labor disturbance;

7. the Employee Retirement Income Security Act of 1974, Public Law 93-406, commonly referred to as the Pension Reform Act of 1974, and amendments thereto, or similar provisions of any Federal, State or Local Statutory or Common Law;

* * *

In July 1991, Sherry Masterson and others (employees) filed a complaint in the United States District Court for the Eastern District of Missouri, Case No. 91-0533-C-4 (the Masterson Litigation) against Lincoln pursuant to 29 USC Section 207, Fair Labor Standards Act (FLSA). Employees alleged that Lincoln violated the FLSA by classifying sleep and meal time as non-compensable time for purposes of calculating overtime. Lincoln tendered the defense of the Masterson litigation to Pacific.

On July 30, 1991, a claims representative for Pacific informed Lincoln that it would begin an investigation of the case and assign defense counsel of its choice in St. Louis, but was generally reserving its rights under the policy. On September 26, 1991, Pacific sent a second reservation of rights letter to Lincoln. Pacific continued to defend Lincoln in the Masterson litigation until September, 1994.

On September 9, 1994, Pacific sent a third letter to Lincoln, stating:

We have reviewed the allegations and discovery completed to date in light of the development of the law ... After conducting this review, we must advise you there is no coverage for the allegations contained within the complaint.

Under the DEFINITION section:

2. The word "damages" means any amount which an Insured is legally obligated to pay for any claim to which this insurance applies and shall include judgments, settlements, and claim expenses; provided always that damages shall not include fines or penalties imposed by law or other matters which may be deemed uninsurable under the law pursuant to which the Policy shall be construed.

The relief or damages prayed for by Lincoln do not meet the definitional requirements of "damages" as cited above. The damages as prayed for would be uninsurable as against public policy.

As there is no coverage under the terms of your policy, we will be withdrawing from the defense and indemnification of this litigation.....

Pacific Employers Insurance Company does not intend to waive any of its rights or contractual defenses under the insurance policy because a provision of the policy was not addressed specifically in this letter. The company relies on each and every reason mentioned in this letter for the denial of coverage and on all of its rights (whether or not mentioned in this letter), as well as on all of the terms, provisions, conditions, and limitations of policy number VAPG1393455-1.

The Masterson litigation was set for trial on October 25, 1994. Lincoln requested a continuance as a result of the withdrawal of its defense counsel. The trial commenced on February 21, 1995, and concluded February 24, 1995. The district court found that Lincoln had not acted wilfully and refused to submit the issue of wilfulness to the jury. The jury returned a special verdict that, although Lincoln's employees had impliedly agreed to the exclusion of sleep and mealtime for their compensation, such time was "bona fide" and was hence compensable under the FLSA. The district court entered a judgment accordingly.

Subsequently, Lincoln filed a petition in the circuit court seeking a declaration that the contract language and the specific exclusions delineated within the contract were intended to cover claims resulting from errors or omissions of Lincoln's officers or directors. Cross-motions for summary judgment were filed requesting a declaration as to whether the claims asserted in the Masterson litigation were covered under the E & O policy of insurance issued by Pacific.

On June 30, 1995, the trial court granted Pacific's motion for summary judgment and denied Lincoln's motion. Lincoln filed an appeal and, during the appeal process, the parties learned that their underlying motions for summary judgment were premised on the wrong policy of insurance in that the policy supplied by Pacific contained form UW-191a, but the declarations page stated that the policy included form UW-191, not UW-191a. Lincoln filed a motion to vacate judgment and remand to the trial court because the policy relied on by the trial court was not the policy applicable to the Masterson litigation. Pacific did not object and Lincoln's motion was granted, vacating the judgment and remanding the case for further proceedings.

On remand, the parties filed cross motions for summary judgment. In support of its motion for summary judgment, Lincoln produced the affidavit of John Lenk, the chief operating officer of Lincoln. In support of its motion for summary judgment, Pacific did not submit any affidavits, but submitted copies of the following documents: the insurance policy; the complaint filed by the employees in the Masterson litigation; its September 9, 1994 letter to Lincoln denying coverage; the June 30, 1995 order granting Pacific's motion for summary judgment and...