County of Scotland v. Missouri Public Entity Risk Management Fund
537 S.W.3d 358
Mo. Ct. App.2017Background
- Scotland County (a Missouri political subdivision) purchased liability coverage from Missouri Public Entity Risk Management Fund (MOPERM) under a Memorandum of Coverage; exclusions included Section IV.K (claims arising out of eminent domain/inverse condemnation) and IV.R (injunctive or non-monetary relief).
- Hauk applied for a county health permit to operate a CAFO; the Scotland County Commission denied the permit based on a setback ordinance.
- Hauk sued the Commission and commissioners in their official capacities alleging (Count I) judicial review/requests for declaratory and injunctive relief and (Count II) federal constitutional violations including an alleged regulatory taking; the bench judgment found the denial arbitrary/unconstitutional, ordered issuance of the permit, and awarded monetary damages; judgment was affirmed on appeal.
- Scotland tendered defense and indemnity to MOPERM; MOPERM denied coverage relying on Sections IV.K and IV.R; Scotland sued MOPERM for breach of contract and the parties submitted stipulated facts and cross-motions for summary judgment.
- The trial court entered judgment for Scotland; the Court of Appeals reviewed de novo and reversed, holding Section IV.K unambiguously excluded coverage for all claims in Hauk’s petition and therefore MOPERM had no duty to defend or indemnify; judgment was entered for MOPERM.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Section IV.K (inverse condemnation exclusion) bars MOPERM’s duty to defend Hauk’s suit | Hauk’s claims (as framed by Scotland) were not inverse condemnation; Count I was judicial review/equal protection challenge independent of a taking | MOPERM: Hauk’s claims all arose from denial of the permit and alleged regulatory taking — therefore they fall within the inverse condemnation exclusion | Held: Exclusion is unambiguous; Hauk’s claims were grounded in a regulatory taking/inverse condemnation, so no possibility of coverage and no duty to defend |
| Whether MOPERM had a duty to indemnify Scotland for the Hauk judgment | Scotland: Even if some claims excluded, MOPERM must indemnify monetary award/defense costs | MOPERM: No duty to defend → no duty to indemnify because all claims were excluded | Held: No duty to indemnify (where no duty to defend exists) |
| Whether the Hauk judgment was unenforceable (court lacked authority to award monetary damages on Count I) | MOPERM argued the trial court lacked authority to award monetary damages under section 536.150 judicial review | Scotland: Judgment was valid and later affirmed on appeal | Held: Court declined to reach merits of this issue as moot after finding no coverage; Point denied as moot |
Key Cases Cited
- Penn-Star Ins. Co. v. Griffey, 306 S.W.3d 591 (Mo. App. W.D.) (duty-to-defend analysis comparing petition allegations to policy)
- Fischer v. First Am. Title Ins. Co., 388 S.W.3d 181 (Mo. App. W.D.) (duty to defend broader than duty to indemnify)
- Murr v. Wisconsin, 137 S.Ct. 1933 (U.S. 2017) (regulatory takings can be compensable takings)
- Palazzolo v. Rhode Island, 533 U.S. 606 (U.S. 2001) (regulatory takings may sound in inverse condemnation)
- First English Evangelical Lutheran Church v. Los Angeles Cty., 482 U.S. 304 (U.S. 1987) (inverse condemnation claims seek compensation grounded in the Constitution)
- Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (U.S. 2005) (regulatory action functionally equivalent to a taking can require compensation)
- Clay County Realty Co. v. City of Gladstone, 254 S.W.3d 859 (Mo. banc 2008) (Missouri recognition of regulatory takings doctrine)
- Missouri Intergovernmental Risk Mgmt. Ass’n v. Gallagher Bassett Servs., 854 S.W.2d 565 (Mo. App. E.D.) (inverse condemnation exclusion applied broadly to claims generated by condemnation)