984 F.3d 583
8th Cir.2020Background
- ACE issued two consecutive claims-made-and-reported educators' legal-liability policies to Pine Bluff School District (PBSD): the 2015 Policy (4/2/2015–2/1/2016, 60-day extended reporting) and the 2016 Policy (2/1/2016–2/1/2017).
- Teacher Celeste Alexander filed an EEOC charge on December 1, 2015 alleging retaliation after reporting sexual harassment; PBSD responded to the EEOC and produced documents in January 2016.
- The policies define "Claim" to include an EEOC charge and a later civil complaint; a "single claim" provision treats all claims from the same wrongful act as one claim, deemed first-made on the earliest date.
- Alexander received a right-to-sue letter June 24, 2016 and sued PBSD on September 22, 2016; PBSD notified ACE of the lawsuit on October 3, 2016.
- ACE requested EEOC materials, ultimately denied coverage (Feb. 2018) because the claim was "first made" Dec. 1, 2015 (within the 2015 Policy) but not reported within that policy's reporting period; the 2016 Policy predated the first-made date.
- PBSD settled the underlying suit, sued ACE for coverage and fees; district court granted summary judgment to ACE; the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the policies' "single claim" provision applies so that the EEOC charge (Dec. 1, 2015) and later lawsuit are one claim deemed first-made on Dec. 1, 2015 | PBSD: the single-claim language appears in "Limits of Liability" and thus only governs aggregation/limits, not coverage timing; because PBSD reported the lawsuit during the 2016 Policy, coverage should apply under that policy | ACE: the single-claim provision governs what constitutes a claim for coverage timing; the EEOC charge and lawsuit arise from the same wrongful act and are one claim first-made on Dec. 1, 2015, so reporting in 2016 was untimely for the 2015 Policy and too late for the 2016 Policy | Held: Single-claim provision applies to scope/timing of coverage; the claim is deemed first-made Dec. 1, 2015, so PBSD failed to report within the 2015 policy period and the 2016 policy does not cover a claim first-made before its period. |
| Whether ACE waived defenses or is estopped from denying coverage because of delay or conduct (e.g., reserving rights, investigating, hiring counsel) | PBSD: ACE’s conduct (long delay in asserting coverage defenses, reserving rights while investigating, and engaging coverage counsel) led PBSD reasonably to believe coverage existed and ACE should be estopped/waived from denying coverage | ACE: timely reservation-of-rights and investigation do not create or expand coverage; reporting timing is a coverage question that cannot be expanded by waiver/estoppel under Arkansas law | Held: Waiver/estoppel inapplicable to expand coverage scope; under Arkansas law, those doctrines cannot create coverage where policy language excludes it. |
Key Cases Cited
- Russell v. Liberty Ins. Underwriters, 950 F.3d 997 (8th Cir. 2020) (standard of review for summary judgment and contractual interpretation)
- McGrew v. Farm Bureau Mut. Ins. Co. of Ark., 268 S.W.3d 890 (Ark. 2007) (insuring language construed in plain, ordinary sense; unambiguous policy language enforced)
- Corn v. Farmers Ins. Co., 430 S.W.3d 655 (Ark. 2013) (definition of ambiguity and when construction against insurer applies)
- Worthington Fed. Bank v. Everest Nat'l Ins. Co., 110 F. Supp. 3d 1211 (N.D. Ala. 2015) (single-claim timing provision affects coverage scope, not merely limits)
- J-McDaniel Constr. Co. v. Mid-Continent Cas. Co., 761 F.3d 916 (8th Cir. 2014) (Arkansas law bars using waiver/estoppel to broaden policy coverage)
- Peoples Protective Life Ins. v. Smith, 514 S.W.2d 400 (Ark. 1974) (estoppel/waiver cannot create coverage or expand scope of a policy)
- Cont'l Cas. Co. v. Walker, 741 F. Supp. 2d 987 (E.D. Ark. 2008) (claims-made-and-reported policies require claim and notice during the policy period)