Heacker v. Safeco Insurance Co. of America, 2012 U.S. App. LEXIS 7633

Heacker sued Jessica Wright and her insurers in state court for harassment and related torts; the insurers settled with Heacker, and the judge later could award damages within the settlement limit.
Heacker obtained a Missouri judgment totaling $7.3 million ($5 million punitive) against Wright for multiple tort theories, including negligent infliction of emotional distress and defamation.
Heacker then pursued equitable garnishment against Wright’s insurers, which was removed to federal court; the district court granted summary judgment for Nationwide.
For about six months in 2006, Wright was insured by Nationwide Homeowner’s Policy; for about a year, by a Nationwide Umbrella Policy; acts at issue were text messages, emails, and harassing calls.
Missouri law governs equitable garnishment coverage issues; Kansas law governs interpretation of the policies; the court analyzed which acts and damages fell within policy coverage.
Nationwide argued no duty to defend or coverage; Heacker contends the acts qualify under the policies’ definitions, but the court ultimately held no coverage for mental distress or defamation under the umbrella and homeowner policies.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the Homeowner's Policy cover the alleged damages as an occurrence?	Heacker argues acts fall within occurrence and bodily injury coverage.	Nationwide contends no occurrence and no bodily injury under policy terms.	No coverage; acts do not constitute an accident under policy.
Does the Umbrella Policy cover defamation and privacy claims given a mental abuse exclusion?	Umbrella covers personal injury from defamation but excludes mental abuse; argues ambiguity should favor coverage.	Mental abuse exclusion applies to all acts regardless of intent or type; no coverage.	Exclusion applies; mental abuse not covered.
Is Nationwide estopped from raising defenses due to lack of defense/reservation in original action?	Nationwide should be estopped from later defense due to failure to defend/reserve rights.	Coverage cannot be created by estoppel where it does not exist.	Estoppel not available to create coverage.
What law governs interpretation and what is the governing jurisdiction for coverage?	Choice-of-law should align with insured risk location and contractual interpretations.	Missouri and Kansas law apply; Kansas narrowly construes exclusionary provisions and focuses on the insured risk.	Missouri governs garnishment coverage; Kansas law governs interpretation, with narrow construction of exclusions.

Peck v. Alliance Gen. Ins. Co., 998 S.W.2d 71 (Mo.App.1999) (burden to show coverage under insurance contract)
Marquis v. State Farm Fire & Cas. Co., 961 P.2d 1213 (Kan. 1998) (seek narrow construction of exclusions; theory governs coverage)
Lee Builders, Inc. v. Farm Bureau Mut. Ins. Co., 137 P.3d 492 (Kan. 2006) (definition of accident and scope of bodily injury in Kansas policy)
Harris v. Richards, 867 P.2d 325 (Kan. 1994) (definition of accident in Kansas policy language)
Clark Equip. Co. v. Hartford Accident & Indem. Co., 608 P.2d 903 (Kan. 1980) (interpretation of insurance policy terms)
K.G. v. R.T.R., 918 S.W.2d 795 (Mo.banc 1996) (negligent infliction of emotional distress elements and injury)
Cook v. Smith, 33 S.W.3d 548 (Mo.App.2000) (negligence theories and injury requirements under Missouri law)
Rockgate Management Co. v. CGU Insurance, Inc., 88 P.3d 804 (Kan. App. 2004) (bodily injury interpretation under Kansas contract language)
Sheehan v. Northwestern Mut. Life Ins. Co., 44 S.W.3d 389 (Mo.App.2000) (location of insured risk governs choice of law in insurance contracts)
Aks v. Southgate Trust Co., 844 F. Supp. 650 (D.Kan.1994) (estoppel and noncreating coverage arguments)
Lee Builders, Inc. v. Farm Bureau Mut. Ins. Co. (duplicate for emphasis), 281 Kan. 844 (2006) (definition of accident under Kansas policy)