Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Navigators Insurance Co. v. American Home Assurance Co.

Court of Appeals of Missouri, Western District, Third Division

June 25, 2019

NAVIGATORS INSURANCE COMPANY, Appellant,
v.
AMERICAN HOME ASSURANCE COMPANY AND ARCH INSURANCE COMPANY, Respondents.

          Appeal from the Circuit Court of Jackson County, Missouri The Honorable David Michael Byrn, Judge

          Before: Thomas H. Newton, Presiding Judge, Anthony Rex Gabbert, Judge, Edward R. Ardini, Jr., Judge

          OPINION

          Anthony Rex Gabbert, Judge

         Introduction

         Navigators Insurance Company ("Navigators") appeals the circuit court's grant of summary judgment to American Home Assurance Company ("American Home") and Arch Insurance Company ("Arch") ("Respondents" collectively) on Navigators' claim for attorneys' fees and defense costs for Navigators's defense of Respondents' insured whom Navigators claimed Respondents had a duty to defend. Navigators contends the circuit court erred in entering summary judgment in favor of Respondents because the potential for coverage existed under Coverage A and Coverage B of Respondents' policies at the time of tender. We affirm.

         Factual and Procedural Background

         KAMO Electric Cooperative, Inc. and its wholly-owned subsidiary, K-PowerNet, LLC, (KAMO collectively) were named as defendants in a federal class action suit filed November 2011 by Chase Barfield, Michael D. Biffle, Gina Biffle, and Dwight K. Robertson ("Barfield Plaintiffs" or "Plaintiffs"). On or about February 17, 2012, Barfield Plaintiffs filed a First Amended Complaint. Barfield Plaintiffs alleged they owned land in Missouri underlying electricity transmission or distribution lines and on or in which KAMO had installed or used, or announced plans for the installation or use of, fiber-optic cable. KAMO, as well as another defendant, were alleged to have illegally installed or used over 2, 000 miles of fiber-optic cable throughout the state on class members' land that was subject only to a limited electric-utility easement or occupancy. According to the class complaint, KAMO was using fiber-optic cable installed on electric easement land to offer commercial communications services as a separate business distinct from the generation, transmission, or distribution of electricity. Barfield Plaintiffs claimed KAMO's use of their land for telecommunications purposes went beyond the easements granted to KAMO and that they were entitled to compensation for KAMO's use of the land.

         Count I of the first amended class action complaint was a claim for declaratory judgment declaring KAMO had no legal right to control or use electric easement land to construct and operate a fiber-optic-cable network for commercial-communications purposes. It also requested a declaration that KAMO had no legal right or interest in the electric easement land beyond an electric power easement for the limited purpose of transmitting or distributing electricity.

         Count II was a claim for trespass, alleging that KAMO's intentional and unauthorized entry upon the electric easement land constituted trespass. It requested damages proximately caused by the trespass including the reasonable value of the use of the land or, at Barfield Plaintiffs' election, all revenues arising from the trespass or title to the fiber-optic cable and related equipment.

         Count III was a claim for unjust enrichment, alleging that as a result of KAMO's intentional and unlawful use and occupation of class members' land, class members had been deprived of the rents, profits, and other benefits arising from KAMO's commercial use and occupation of the electric easement land for purposes other than transmission of electricity. The claim alleged that KAMO had been unjustly enriched and asked that KAMO be required to disgorge all sums received as rents, profits, and other benefits arising from their unlawful commercial use and occupation of the electric easement land for purposes other than transmitting or distributing electricity.

         Count IV was a claim for injunctive relief, requesting KAMO be enjoined from continuing use of the fiber-optic cable on electric easement land.

         On March 31, 2014, the federal court issued an Order after the parties filed cross-motions for summary judgment. Therein the court found it undisputed that KAMO Electric Cooperative created K-Powernet, LLC to operate commercial telecommunication companies because Missouri law does not permit electric cooperatives to operate commercial telecommunication companies. KAMO Electric Cooperative then leased to K-Powernet excess space on fiber optic cables that had been laid on KAMO's electric transmission easements. K-Powernet then used their space to transmit commercial telecommunications, returning the profits from their enterprise to their electric cooperative parent. KAMO Electric Cooperative had installed over 1, 000 miles of fiber optic cable on class members' land which was being used for KAMO's internal, electric transmission business as well as K-Powernet's commercial telecommunications services to third parties.

          The federal court defined the issue before it as a claim by Barfield Plaintiffs that KAMO's use of the electricity easements for the generation of commercial telecommunications exceeded the scope of the easements and deprived Plaintiffs and the class of the right to benefit from the use of their land as an information highway. The court synopsized the dispute as being "whether Missouri law requires third parties to compensate land owners when they operate this information highway under the landowners' real property for a purpose not permitted by a valid easement." The court defined Plaintiffs' theory of liability as KAMO Electric Cooperative licensing rights they did not have to subsidiaries and, as a result, the subsidiaries' use of Plaintiffs' land for commercial telecommunications purposes was unauthorized and, therefore, trespass. The court discussed that, under Missouri law, trespass occurs either by unauthorized entry on land or by exceeding the scope of any license to enter upon the land. (citing Illig v. Union Elec. Co., 652 F.3d 971, 977 (8th Cir. 2011)). The court reiterated settled Missouri precedent that, an easement does not grant complete ownership of land with the right to use it for all lawful purposes perpetually and throughout its entire extent, but, instead, is a right that extends only to one or more particular uses. (citing Maasen v. Shaw, 133 S.W.3d 514, 518-19 (Mo. App. 2004)). Further, the court stated that, even an easement granted in general terms without limitations as to its use is still one of unlimited reasonable use. (citing Branson West, Inc. v. city of Branson, 980 S.W.2d 604, 606 (Mo. App. 1998) (emphasis original)). The court narrowed the issue of Plaintiffs' trespass claim to whether the operation of a commercial telecommunications network was reasonable and necessary to KAMO Electric Cooperative's authorized use of their easements. The court found that, where easements expressly allowed KAMO Electric Cooperative to use and lease Plaintiffs' land for commercial telecommunications purposes, no trespass occurred.

          KAMO disputed that trespass had occurred at all on the grounds that there was no interference with Plaintiffs' possession. The court found, as it had previously in denying a Motion to Dismiss filed by KAMO, that Missouri courts recognize claims based on violations of the manner and extent of usage rights provided by an easement regardless of whether those violations include actual physical injury. KAMO also disputed that trespass had occurred on the grounds that plaintiffs had no legal right to control the electromagnetic spectrum. The court concluded that, Plaintiffs were not claiming ownership of or the exclusive right to the electromagnetic spectrum but were challenging whether KAMO could use fiber optic cables physically installed on their land to transmit those wavelengths. The court stated that, "[a]lthough use of the spectrum may be free, use of the conduit in Plaintiffs' land is not. Outside that conduit, movement of light would not achieve Defendants' telecommunication purpose."

         The court granted KAMO's motion for summary judgment, in part, limiting KAMO's potential liability and exposure to only 496 easements of the 3, 691 for which the Barfield Plaintiffs initially alleged liability. This limitation was due to express provisions in some of the easement agreements allowing KAMO to use and lease the land for commercial telecommunications purposes. The court granted Barfield Plaintiffs' motion for summary judgment, in part, on their claims for trespass and unjust enrichment on specified easements (Category 1A-1C easements) where the easement provisions did not allow use and lease of the land for commercial telecommunications purposes.

         In mid-April 2014, and after the aforementioned Order by the federal court establishing KAMO's liability, KAMO notified Respondents of Barfield Plaintiffs' claims. KAMO had initially tendered the claims to Navigators and demanded a defense and coverage under commercial general liability policies issued by Navigators. Navigators defended KAMO under a reservation of rights and thereafter sought to recover from Respondents a portion of the expenses incurred in that defense; Respondents had issued commercial general liability insurance policies to KAMO that partially or wholly covered the time frame of KAMO's alleged infractions. On June 12, 2014, Navigators demanded that Respondents contribute to KAMO's defense. Respondents denied coverage for the claims in the Barfield suit, did not defend KAMO, and did not pay any money toward any defense costs incurred.

         Mid-October 2014, KAMO notified the court that a tentative settlement had been reached between KAMO and Plaintiffs as to all claims against KAMO. The court preliminarily approved the settlement in December 2014. Final approval occurred June 2015. Meanwhile, the underlying suit went to jury trial on Plaintiffs' claims against KAMO's co-defendant. Because the federal district court had already granted summary judgment to Plaintiffs on their trespass and unjust enrichment claims, the trial was on damages only, which Plaintiffs submitted on the unjust enrichment claim alone.

         On November 29, 2016, Navigators filed its Petition against Respondents alleging Respondents wrongfully refused to defend KAMO under the policies of insurance issued to KAMO, and that Navigators was entitled to equitable subrogation and equitable contribution for having solely defended KAMO.[1]

         Following the parties filing a Joint Stipulation of Authenticity and Admissibility of documents on January 19, 2018, all parties filed cross-motions for summary judgment on the issue of Respondents duty to defend KAMO in the underlying case. On July 17, 2018, the court entered an Order and Judgment regarding those motions. The court concluded that, after comparison of the First Amended Complaint to Respondents' insurance policies, Respondents owed no duty to defend KAMO. The court entered an Amended Order and Judgment on August 24, 2018, effectively stating the same. This appeal follows.

         Standard of Review

         We review the grant of a summary judgment de novo. Brehm v. Bacon Tp., 426 S.W.3d 1, 3 (Mo. banc 2014). We consider the record in the light most favorable to the party against whom judgment was entered and give the non-moving party the benefit of all reasonable inferences. Id. at 3-4. Summary judgment is appropriate where there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Allen v. Continental Western Ins. Co., 436 S.W.3d 548, 551-552 (Mo. banc 2014). A material fact in the summary judgment context is one from which the right to judgment flows. Id. at 552.

         Point I - Coverage A

         In Navigators's first point on appeal, Navigators contends the trial court erred in entering summary judgment in favor of Respondents on the issue of Respondents' duty to defend KAMO against Barfield Plaintiffs' claims. Navigators argues there is no genuine dispute that the potential for coverage existed under Coverage A of Respondents' insurance policies because the pleadings, record from the Barfield lawsuit, and the facts known and reasonably available to Respondents at the time the Barfield lawsuit was tendered for defense, conclusively established that Barfield Plaintiffs were alleging loss of use of tangible property and that KAMO was liable for the monetary equivalent of the damage sustained for such loss of use, all of which resulted from a covered "occurrence" under Respondents' policies of liability insurance. Navigators contends that the court erroneously focused only on the allegations in the Barfield Plaintiffs' complaint to determine the facts known to the insurer at the outset of the case, and ignored the substantial record that had been developed at the time the claim was tendered to Respondents.

An insurer's duty to defend is broader than its duty to indemnify. The duty to defend arises only when there is a possibility or potential for coverage at the outset of the case. The duty to defend is determined by comparing the insurance policy language with facts: (1) alleged in the petition; (2) the insurer knows at the outset of the case; or (3) that are reasonably apparent to the insurer at the outset of the case. If the complaint merely alleges facts that give rise to a claim potentially within the policy's coverage, the insurer has a duty to defend. Even if the plaintiff bringing a claim against the insured initially pleads the 'wrong' cause of action, or one that is likely to be subject to a motion to dismiss, if, at the time the claim is made, facts are known to the insurer or could reasonably be ascertained by the insurer that would potentially put the claim within the scope of the policy, the insurer must defend the insured. To extricate itself from the duty to defend the insured, the insurance company must prove that there is no possibility of coverage.

Allen v. Bryers, 512 S.W.3d 17, 31 (Mo. banc 2016) (internal quotation marks and citations omitted).

         Barfield Plaintiffs alleged the following, in part:

• Defendants have illegally installed or used over 2, 000 miles of fiber-optic cable throughout the state on Class Members' land that is subject only to a limited electric-utility easement or occupancy ('Electric Easement Land'). Defendants are using the fiber-optic cable installed on Electric Easement Land to offer commercial-communications services as a separate business distinct from the generation, transmission, or distribution of electricity…
• As owners of Electric Easement Land they are entitled to compensation for Defendants' improper commercial use and occupation of their land for purposes other than the transmission or distribution of electricity; disgorgement of the revenues wrongfully flowing to Defendants from that improper use and occupation; and declaratory relief; …
• On information and belief, Defendants made the business decision to forgo a time-consuming negotiation and compensation process to obtain the necessary easement rights, and instead deliberately undertook to disregard Class Members' property rights and install or operate on their land a fiber-optic network for purposes other than those permitted by the limited Electric Power Easements.
• Defendants knew or should have known that they held or used easements valid only for electric-transmission purposes.
• Defendants' intentional and unauthorized entry upon Named Plaintiffs' and other Class Members' Electric Easement Land for construction, installation, maintenance, lease, or other operation of a fiber-optic-cable network for commercial-communications purposes constitutes a present and continuing trespass.
Respondents' insurance policies contain the following ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.