Court of Appeals of Missouri, Western District, Third Division
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
Anthony Rex Gabbert, Judge
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.
and Procedural Background
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.
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
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.
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
IV was a claim for injunctive relief, requesting KAMO be
enjoined from continuing use of the fiber-optic cable on
electric easement land.
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.
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
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'
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.
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.
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.
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
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.
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.
I - Coverage A
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).
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
• 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