ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Aрpellee, v. MISSOURI UNITED SCHOOL INSURANCE COUNCIL, Appellant, Pacific Employers Insurance Company, formerly known as Cigna Insurance Company, Defendant.
No. 96-1702.
United States Court of Appeals, Eighth Circuit.
Decided Oct. 8, 1996.
Submitted Sept. 11, 1996.
98 F.3d 343
Last, Pollington аrgues that Tooley‘s consent to search was not voluntary. Given the totality of the circumstances, the district court did not err in finding that Tooley‘s consent to search was voluntary. See United States v. Chaidez, 906 F.2d 377, 381 (8th Cir.1990) (listing relevant factors in determination of voluntariness of consent to search). Of special significance, we note that Tooley offered to open the motor home‘s back door to facilitate Thompson‘s search. See United States v. Gleason, 25 F.3d 605, 607 (8th Cir.) (consent to search could be inferred from fact defendant fаcilitated trooper‘s search), cert. denied, 513 U.S. 911, 115 S.Ct. 283, 130 L.Ed.2d 199 (1994); United States v. Armstrong, 16 F.3d 289, 295 (8th Cir.1994) (consent voluntary where defendant cooperated in search). Contrary to Pollington‘s suggestion on appeal, written consent to search is unnecessary, Gleason, 25 F.3d at 607, and an officer need not inform an individual that he can refuse consent to search, Armstrong, 16 F.3d at 295.
Accordingly, the judgment is affirmed.
Terese A. Drew, argued, St. Louis, MO, for appellee.
Before MAGILL, FLOYD R. GIBSON, and LAY, Circuit Judges.
MAGILL, Circuit Judge.
St. Paul Fire and Marine Insurance Company (St. Paul) and Missouri United School Insurance Council (MUSIC) insured the Parkway School District (Parkway) in St. Louis, Missouri. Parents of disabled children brought suit against Parkway for allegedly violating their children‘s rights to special education services and a nondiscriminatory education. St. Paul expended $644,000 in settling the suit and reimbursing Parkway for its defense, and now seeks contribution from MUSIC for these costs. The district court1 tried the case on stipulated facts and concluded that, under MUSIC‘S “claims-made” policy with Parkway, MUSIC was liable for half of the settlement and defense costs. The district court issued a judgment against MUSIC for $322,000. We affirm.
I.
The facts of this case are not in dispute. In May of 1986, the Merrys, parents of a disabled student at Parkway, first complained to the school district about the treatment of their son. On June 15, 1988, the Merrys requested a due process hearing with the school, which took place in July 1988. Dissatisfied with the results of the hearing, the Merrys filed a lawsuit agаinst the school district on November 17, 1988. Other parents joined the suit, which alleged unequal treatment of disabled children, discrimination, deprivation of due process, and failure to provide for special education needs. The suit was later cеrtified as a class action. Although the suit generally sought injunctive relief, paragraph 20 of the requested relief section of the second amended complaint specifically requested “appropriate compensatory rеlief to members of the plaintiff class who have been required to expend their own funds because they were denied special education and related services by defendants’ practices that violate federal law.” Appellаnt‘s App. at 50. The suit was settled before trial, and St. Paul covered the cost of the settlement and the school district‘s legal fees.
MUSIC began insuring the school district on July 1, 1988, and provided coverage to the school district for the duration of 1988 pursuant to MUSIC‘s 1988 coverage outline. The 1988 coverage outline included a section on “Errors and Omissions Liability.” See Appellant‘s App. at 164. Under “Conditions of Coverage,” this section provided:
“Claims-Made Form”
Covers Claims from Third Parties against an insured under the program for alleged errors or omissions causing a monetary loss to that third party
Defense Costs Included
Id. Under “Examples of Losses,” the section includes “Improper Board Action, Failure to give a Proper Education, Discrimination, etc.” Id.
St. Paul brought the instant action against MUSIC and another insurance provider for
because the Merrys made their claim against the Parkway School District in November 1988, and M.U.S.I.C.‘s 1988 coverage became effective on July 1, 1988, M.U.S.I.C. is liable to St. Paul Fire and Marine Insurance Company for coverage for its share of the settlement amоunt in the underlying Merry suit. The claim was made during 1988, making the 1988 coverage outline the governing document, so Defendant M.U.S.I.C. is liable for the underlying claim amount and for attorney‘s fees.
Id. at 8.
MUSIC now appeals, arguing that the district court erred in (1) interpreting the claims-made provision of MUSIC‘s policy with the school district; (2) allowing recovery because the action against Parkway was for injunctive relief, and MUSIC‘s policy only covered suits for monetary damages; and (3) holding MUSIC liable for a portion of the school district‘s dеfense costs.
II.
The substantive law of Missouri controls this diversity action. See Langley v. Allstate Ins. Co., 995 F.2d 841, 844 (8th Cir.1993) (“[W]hen federal courts are exercising diversity jurisdiction, the rules for construing insurance policies are controlled by state law.“). This Court reviews de novo the district court‘s interprеtation of Missouri law. See Empire Bank v. Fidelity & Deposit Co. of Md., 27 F.3d 333, 335 (8th Cir.1994). We also review the district court‘s interpretation of the insurance contract‘s terms de novo. See GRE Ins. Group v. Metropolitan Boston Hous. Partnership, Inc., 61 F.3d 79, 81 (1st Cir.1995); Principal Health Care of La., Inc. v. Lewer Agency, Inc., 38 F.3d 240, 242 (5th Cir.1994).
Under Missouri law, we must construe an insurance contract in favor of the insured, so long as that construction is reasonable. West v. Jacobs, 790 S.W.2d 475, 477 (Mo.App.1990). We must, however, “accept the written policy as the expression of the agreement made by the parties, and give effect to the intentions of the parties as disclosed by сlear and unambiguous language.” Childers v. State Farm Fire & Casualty Co., 799 S.W.2d 138, 140 (Mo.App.1990). See also Haggard Hauling & Rigging Co. v. Stonewall Ins. Co., 852 S.W.2d 396, 399 (Mo.App.1993) (“An insurance policy that is unambiguous will be enforced as written....“). Ambiguity in an insurance contract “exists when there is duplicity, indistinctness or uncertainty in the meaning of the language used in the policy.” Haggard Hauling, 852 S.W.2d at 399. See also Southern Gen. Ins. Co. v. WEB Assocs./Elecs., Inc., 879 S.W.2d 780, 782 (Mo.App.1994) (“The language of a contraсt is ambiguous when there is uncertainty as to its meaning, and it is fairly susceptible of multiple interpretations.“). An ambiguous policy “will be interpreted in the manner that would ordinarily be understood by the lay person who bought and paid for the policy.” Haggard Hauling, 852 S.W.2d at 399. See also Missouri Property аnd Casualty Ins. Guar. Ass‘n v. Petrolite Corp., 918 S.W.2d 869, 872 (Mo.App.1996) (“If an insurance policy is open to different constructions the one most favorable to the insured must be adopted.“); Universal Underwriters Ins. Co. v. Dean Johnson Ford, Inc., 905 S.W.2d 529, 533 (Mo.App.1995) (“[I]f the language [of an insurance policy] is ambiguous, it will be construed against the insurance cоmpany.“). Whether the language of an insurance contract is ambiguous is a question of law. Haggard Hauling, 852 S.W.2d at 399.
A claims-made insurance policy generally “covers negligent or omitted acts discovered and brought to the attention of the insurer during the policy pеriod, regardless of when the act or omission occurred.” Universal Underwriters, 905 S.W.2d at 535 n. 2.
In Katz Drug Co. v. Commercial Standard Ins. Co., 647 S.W.2d 831 (Mo.App.1983), thе Missouri Court of Appeals considered a notice provision in an insurance policy which provided that, “[i]f claim is made or a suit is brought against the Insured, the Insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.” Id. at 835. The court stated that:
The parties disagree only as to whether the policy equates a claim with a suit, requiring that absent a filing of a lawsuit, no claim has been filed. We hold that in this context, a claim and a suit are not equal.
First, both paragraph thirteen and the endorsement distinguish between a claim and a suit by using both terms. If the terms were equivalent, the wording would be redundant.
Id. The Katz court noted that this interpretation favored the insured, and would apply even if the provision was ambiguоus. See id.:
Here, the term “claim” can be considered either a demand for some asserted right (as argued by plaintiffs) or an actual lawsuit (as argued by defendant). Assuming arguendo that either of these interpretations is reasonable, we apply the meaning most favorable to [the insured], and determine that “claim” ... must include any demand made upon [the insured] as a result of the company‘s negligent acts, errors or omissions ... and cannot be restricted to lawsuits alone.
(emphasis in original).
Applying the principles of Katz to the facts of the instant case, we believe that, in this context, a claim and a suit are equal. Unlike the policy in Katz, MUSIC‘s 1988 coverage outline describes only a “claim.” The 1988 coverage outline does not mention “suits,” and does not otherwise distinguish between a suit and a claim. Withоut this distinction, it is unclear whether under MUSIC‘s 1988 coverage outline a phone call from an irate parent constitutes a “claim,” or if a claim arises only when a lawsuit is filed against the insured. Based on the language of the policy, we cannot say that one interpretation is more necessary or likely than the other. This uncertainty regarding when coverage would apply constitutes an ambiguity in the policy.3 We must therefore disagree with the district court—although we arrive at the same ultimate сonclusion that MUSIC is liable under its policy—and hold that this element of the 1988 coverage outline is ambiguous.
Because of ambiguity in MUSIC‘s 1988 coverage outline, we must construe the claims-made provision in favor of Parkway. Under this construction, we conclude that the claim against Parkway was not made until the lawsuit was filed in November 1988. Because MUSIC‘s coverage of Parkway began in July 1988 and included the November 1988 filing of the lawsuit, MUSIC is liable for contribution to St. Paul for the settlement and defense of the claim.4
Accordingly, the judgment of the district court is affirmed.
Notes
(1) Any written or oral notice from any party to the [Insured] or a covered person that it is the intention of such party to hold them responsible for a specified Wrongful Act ... or (2) Any occurrence which the [insured] or a covered person shall become aware of which may subsequently give rise to a claim being made in respect to any alleged Wrongful Act.
Appellant‘s App. at 196. While MUSIC‘s clarification of ambiguous language in its pоlicies will undoubtedly be of help to it in the future, we must reject MUSIC‘s invitation to use this ex post facto definition to assist us in our interpretation of its 1988 coverage outline.