Missouri Public Entity Risk v. Investors Ins. Co.

• Decision Date: 28 June 2006
• Docket Number: No. 05-2754.,05-2754.
• Citation: 451 F.3d 925
• Parties: MISSOURI PUBLIC ENTITY RISK MANAGEMENT FUND, Appellee, v. INVESTORS INSURANCE COMPANY OF AMERICA, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

451 F.3d 925

MISSOURI PUBLIC ENTITY RISK MANAGEMENT FUND, Appellee, v. INVESTORS INSURANCE COMPANY OF AMERICA, Appellant.

No. 05-2754.

United States Court of Appeals, Eighth Circuit.

Submitted: January 13, 2006.

Filed: June 28, 2006.

Jonathan T. Barton, argued, St. Louis, MO, for appellant.

Michael G. Berry, argued, Jefferson City, MO, for appellee.

Before SMITH and HANSEN, Circuit Judges, and BOGUE,¹ District Judge.

HANSEN, Circuit Judge.

This diversity-based declaratory judgment case involves a dispute over the interpretation of an excess insurance policy issued by Investors Insurance Company of America ("Investors") to the Missouri Public Entity Risk Management Fund ("MOPERM"). There is no dispute that Missouri law governs the interpretation and application of the insurance contract at issue. The district court² granted summary judgment to MOPERM, concluding that excess insurance coverage exists under the policy, and Investors appeals.

MOPERM is a statutorily-created corporate body that provides liability insurance coverage for Missouri public officials, cities, counties, and various other public entities. MOPERM purchased an excess insurance policy from Investors to cover claims exceeding $900,000 for a single incident or exceeding $6,000,000 for the annual aggregate of all claims. The policy states that Investors "will pay those sums that the Insured becomes legally obligated to pay as damages because of `wrongful acts' to which this coverage applies." (Appellant's App. at 48.) The policy defines an "Insured" as "Member Agencies of MOPERM and any elected or appointed official of the Member Agency ... while acting within the course and scope of duties." (Id. at 51.) As relevant here, the excess policy provides coverage for wrongful acts of a county or an official acting within the scope of the official's duties. The policy defines a "wrongful act" as including "any alleged or actual act, error or omission, or breach of duty, or violation of any federal, state or local civil rights, by a[n] Insured while acting within the scope of his/her duties as a public official." (Id. at 53.) The policy was later modified to add Endorsement No. 19, which expressly provides "coverage for discrimination prohibited by law." (Id. at 85.)

MOPERM filed this declaratory judgment action, seeking a determination of liability under the excess insurance policy with regard to four unrelated employment discrimination claims that it had either settled or lost at trial but for which Investors had denied coverage under the excess insurance policy. MOPERM alleged it was entitled to indemnification for the claims under Endorsement 19 of the policy because the claims all involved "discrimination prohibited by law." While the district court found coverage for all four claims, only one of these claims is at issue in this appeal-that of Darlene Hellerich against Jerome Biggs and Andrew County, Missouri ("the Hellerich claim").

The allegations of the Hellerich claim are these: Darlene Hellerich worked for Jerome Biggs, a lawyer who had a private practice and served as the Andrew County prosecuting attorney. Hellerich worked as an assistant in the private law firm and was also a county employee, serving as clerk for the prosecutor's office. In the office and during work time, Biggs engaged in outrageously offensive and discriminatory conduct toward Hellerich. Also, Hellerich alleged that a custodian for the county, Gary Reed, engaged in inappropriate touching of Hellerich's breasts on more than one occasion and joined in Biggs's harassing and discriminatory banter as well. Hellerich finally felt forced to resign due to their conduct toward her.

Hellerich filed suit against Biggs in state court, alleging intentional and negligent infliction of emotional distress on the basis of Biggs's conduct in the workplace. She also filed charges of discrimination with the Missouri Human Rights Commission and the Equal Employment Opportunity Commission ("EEOC") against Andrew County (her employer) and Biggs (her immediate supervisor), alleging sexual harassment and a hostile environment at work due to the conduct of Biggs and Reed. In the EEOC charge, Hellerich further asserted that during her employment with the county, there was no established procedure for registering discrimination complaints, nor was there an existing antisexual harassment policy in effect governing county employees.

MOPERM settled the Hellerich claim in its entirety. In exchange for the settlement proceeds, Hellerich dismissed the pending state court lawsuit against Biggs, withdrew the EEOC charges of discrimination against Biggs and the county, and relinquished her right to sue on the administrative charges. Andrew County agreed to maintain thereafter an antiharassment policy and to provide appropriate training on harassment issues to all county employees. The Hellerich settlement did not exceed the single claim floor of MOPERM's policy with Investors, but it caused MOPERM's annual aggregate claims to exceed $6,000,000, triggering coverage on the excess insurance policy. Thus, MOPERM sought indemnification from Investors. Investors disputed the claim on several grounds. The district court granted summary judgment to MOPERM, concluding that excess coverage existed for this claim under the language of the policy and Missouri law.

We review de novo both the district court's grant of summary judgment, see Baum v. Helget Gas Prods., Inc., 440 F.3d 1019, 1021 (8th Cir.2006), and the district court's interpretation of state law, Salve Regina Coll. v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991); Myers v. Richland County, 429 F.3d 740, 749 (8th Cir.2005). Under Missouri law, "[a]n insured must bring itself within the terms of the policy and must carry the burden of offering substantial evidence that the underlying claim is covered by the policy." Trans World Airlines, Inc. v. Associated Aviation Underwriters, 58 S.W.3d 609, 618-19 (Mo.Ct. App.2001) (internal marks omitted). "The courts are to enforce insurance contracts as written unless an ambiguity requires the court to impose various rules of interpretation." Hunt v. Everett, 181 S.W.3d 248, 250 (Mo.Ct.App.2006). "[W]e construe ambiguous provisions in an insurance policy against the insurer." Id. The court, however, "will not distort unambiguous policy language to create an ambiguity." Haulers Ins. Co. v. Wyatt, 170 S.W.3d 541, 546 (Mo.Ct.App.2005). We give effect to the intent of the parties as expressed in the contract "unless to do so would violate public policy." East Attucks Cmty. Housing, Inc. v. Old Republic Sur. Co., 114 S.W.3d 311, 319 (Mo.Ct.App.2003). Additionally, if "an insured risk and an excluded risk constitute concurrent proximate causes [for a loss], a liability insurer is liable so long as one of the causes is covered by the policy." Centermark Props., Inc. v. Home Indem. Co., 897 S.W.2d 98, 101 (Mo.Ct.App.1995) (internal marks omitted).

On appeal, Investors first argues that there is no coverage for the Hellerich claim because it did not involve "wrongful acts" by an "insured" within the meaning of the policy. Investors points to policy language that an "insured" is an official acting within the scope of his duties as a public official and that "wrongful acts" are only acts by an insured who is acting within the scope of those official duties. Investors asserts that the alleged wrongful acts of intentional sexual harassment were not within the scope of Biggs's official duties as county attorney, and thus they cannot serve as the basis of the claim for excess insurance coverage. That argument misses the point. The county is itself an insured as a member agency of MOPERM. (See Appellant's App. at 51.) For the reasons that follow,...