Williams v. Emp'rs Mut. Cas. Co.
| Decision Date | 02 March 2015 |
| Docket Number | No. 4:13-CV-2393 RLW,4:13-CV-2393 RLW |
| Parties | BARBARA WILLIAMS, Class Representative, Plaintiff, v. EMPLOYERS MUTUAL CASUALTY COMPANY, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on the Defendant Owners Insurance Company's Motion for Judgment on the Pleadings (ECF No. 73), Capitol Indemnity Insurance Company's Motion for Judgment on the Pleadings (ECF No. 76), and Defendant Employers Mutual Casualty Company's Motion for Judgment on the Pleadings (ECF No. 79). These matters are fully briefed and ready for disposition.
Plaintiff Barbara Williams filed the Petition for Equitable Garnishment ("Petition") as a representative of a class of residents of a mobile home park owned by insured The Collier Organization ("Collier").
The Petition seeks to satisfy a judgment entered in an action filed in the Circuit Court of Lincoln County, Missouri, originally captioned Pratt v. The Collier Organization, Inc., et al., Cause No. 08L6-CC00042 (later styled Williams v. The Collier Organization) (hereinafter "theUnderlying Lawsuit").1 The Underlying Lawsuit was a pollution case, which alleged that the water dispensed by Collier to the class members was contaminated with radioactive materials, bacteria and other contaminants. All three of the Defendants have issued policies that provide coverage to Collier for damages because of bodily injury and property damage. All three of the Defendants' policies, however, contain pollution exclusions. Collier requested that Defendants defend the Underlying Lawsuit. Defendants denied coverage for the Underlying Lawsuit because they contended coverage was not available under the policies because, among other reasons, the Policies' Pollution Exclusions barred coverage and because the Underlying Lawsuits did not allege either "bodily injury" or "property damage." On January 29, 2009, the Lincoln County Court certified a class of past and present residents of the mobile home park. Barbara Williams, Plaintiff in this equitable garnishment action, was named class representative.
On December 7, 2012, Williams, as class representative, entered into an agreement with Collier under Mo.Rev.Stat. §537.065, whereby Collier assigned to Williams, as class representative, the rights and interests Collier had in the insurance policies issued by the insurers to Collier during the class period. In addition, Collier agreed to execute an affidavit drafted by class counsel and to provide information to assist the class with its claims. In exchange,Williams, on the class's behalf, agreed that any judgment obtained by the class against Collier would be satisfied only by proceeding against Collier's insurance policies.
Without the Defendants' involvement, Collier did not contest an evidentiary hearing on liability, which was held on December 10, 2012. The hearing resulted in a Underlying Judgment in favor of the Class and against Collier on December 14, 2012.2 In the Underlying Judgment, although the Pratt Petition had not asserted any trespass or alleged that any class member suffered "bodily injury" or "property damages," the Circuit Court determined that "(1) Collier is liable to the Class for claims of negligence and trespass; and (2) members of the Class, in fact, suffered bodily injuries and property damages that were proximately caused by Collier's negligence and trespass." In addition, the Circuit Court ruled that "alpha particles are subatomic and are therefore not classifiable as solid, liquid, or gas," that the particles "are not inherently thermal, and that they are "typically not an irritant to humans." The Underlying Judgment further noted that The Underlying Judgment stated that alpha particles 3
On August 28, 2013, the Lincoln County Circuit Court held a hearing on damages at which the class counsel presented some affidavits and documentary evidence, but called no livewitnesses and provided no taped deposition testimony. Neither Collier nor Collier's counsel appeared at the hearing. The Lincoln County Circuit Court found that the Class had suffered injury and had been damaged in the total amount of $82,037,000, $70,085,000 of which was for future medical monitoring, plus $11,952,000 for diminution in value to the class members' mobile homes, based upon their receipt of contaminated well water.
In the instant action for equitable garnishment, Plaintiff seeks to garnish amounts owing to Collier under Collier's insurance policies. Defendants removed the Petition to federal court on November 26, 2013. The Petition alleges that Defendants' "denial of coverage and refusal to defend Collier constituted a breach of [Defendants'] contractual duty to indemnify and defend." Plaintiff further states that the Class is "entitled to recover and apply the insurance money" owed to Collier to satisfy the Class Judgment and asks for judgment against the insurers "in the total amount of $82,037,000, plus post-judgment interest at the maximum statutory rate, subject only to the applicable limits of liability."
The Court reviews a motion for judgment on the pleadings under "the same standard used to address a motion to dismiss for failure to state a claim under [Fed.R.Civ.P.] 12(b)(6)." demons v. Crawford, 585 F.3d 1119, 1124 (8th Cir. 2009)(citing Ashley County, Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009)). "A grant of judgment on the pleadings is appropriate 'where no material issue of fact remains to be resolved and the movant is entitled to judgment as a matter of law.'" demons, 585 F.3d at 1124 (citing Poehl v. Countrywide Home Loans, Inc., 528 F.3d 1093, 1096 (8th Cir. 2008)). The Court must view the allegations in the complaint liberally in the light most favorable to Plaintiff. Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008) (citing Luney v. SGS Auto Servs., 432 F.3d 866, 867 (8th Cir. 2005)).Additionally, the Court "must accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party." Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005) (citation omitted).
Missouri Revised Statutes §379.200 provides:
Upon the recovery of a final judgment against any person, firm or corporation by any person ... for loss or damage on account of bodily injury or death, or damage to property if the defendant in such action was insured against said loss or damage at the time when the right of action arose, the judgment creditor shall be entitled to have the insurance money, provided for in the contract of insurance ..., and if the judgment is not satisfied within thirty days after the date when it is rendered, the judgment creditor may proceed in equity against the defendant and the insurance company to reach and apply the insurance money to the satisfaction of the judgment....
Missouri Revised Statutes §379.200 (2014). "A judgment creditor stands in the shoes of the insured and has rights no greater and no less than the insured's rights would have been if the insured paid the judgment and then sought reimbursement from the insurer." James v. Paul, 49 S.W.3d 678, 683-84 (Mo. 2001)(citing Greer v. Zurich Ins. Co., 441 S.W.2d 15, 30 (Mo. 1969)).
"Once an insurer unjustifiably refuses to defend or provide coverage, the insured may, without the insurer's consent, enter an agreement with the plaintiff to limit its liability to its insurance policies." Schmitz v. Great Am. Assur. Co., 337 S.W.3d 700, 710 (Mo. 2011). If an insurer unjustifiably refuses to defend a claim because it is outside the policy it "renders the insurer liable to the insured for all resultant damages from that breach of contract." Schmitz, 337 S.W.3d at 710 (citing Whitehead v. Lakeside Hosp. Ass'n, 844 S.W.2d 475, 481 (Mo. Ct. App. 1992)); see also Columbia Cas. Co. v. HIAR Holding, L.L.C, 411 S.W.3d 258, 273 (Mo. 2013)("Columbia cannot refuse to defend and then relitigate the already-determined reasonableness issue where it has been the subject of a court judgment after a hearing anddetermination of reasonableness by the court."). Under existing Missouri case law, however, an insurer who does not have an obligation to defend under the policy does not breach its contract with its insured and, therefore, does not waive any defenses to coverage as to the judgment. That is, an insurer who properly declines to defend an underlying claim may raise all proper defenses to coverage when the insured (or the underlying claimant) later seeks to establish a duty to indemnify under an underlying judgment.
Here, Plaintiff argues that Defendants cannot attack the Underlying Judgment because they chose not to defend Collier in that action. See Schmitz, 337 S.W.3d at 710 (). However, Defendants argue that they did not wrongly deny a duty to defend and likewise did not breach their contracts with Collier and, therefore, did not waive any defenses as to coverage with respect to the ultimate judgment. Thus, Defendants maintain that they properly declined to defend an underlying claim and can raise all proper defenses to coverage because Plaintiff seeks to establish a duty to indemnify an Underlying Judgment. The Court, therefore, addresses whether Defendants breached their duty to defend.
Under Missouri law, the duty to defend arises when there is potential liability...
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