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Ferguson v. St. Paul Fire and Marine Insurance Co.

Court of Appeals of Missouri, Western District, Third Division

December 10, 2019

RYAN FERGUSON, Respondent-Appellant,
v.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY, ET AL., Appellants-Respondents.

          Appeal from the Circuit Court of Boone County, Missouri The Honorable Glen A. Dietrich, Judge

          Before Alok Ahuja, Presiding Judge, Gary D. Witt, Judge and Anthony Rex Gabbert, Judge

          Gary D. Witt, Judge

         St. Paul Fire & Marine Insurance Company ("St. Paul") and Travelers Indemnity Company ("Travelers") (collectively "the Insurers") appeal from the Circuit Court of Boone County's judgment of partial summary judgment in favor of Ryan Ferguson awarding an equitable garnishment in the amount of $5, 354, 000.00. The Insurers raise two allegations of error and request this Court reverse the judgment and direct the circuit court to enter summary judgment in their favor. In his cross-appeal, Ferguson raises one allegation of error and asks this Court to order the circuit court to amend its judgment to award prejudgment and post-judgment interest at the statutory rate of nine percent. We affirm.

         Factual Background [1]

         On March 10, 2004, Ferguson was arrested and charged with robbery and homicide in Boone County, Missouri, and was convicted on October 21, 2005. He was incarcerated from the date of his arrest until his conviction was vacated on November 12, 2013. Ferguson v. Dormire, 413 S.W.3d 40 (Mo. App. W.D. 2013). The State elected not to retry Ferguson on the charges, and he was discharged from custody.

         On March 10, 2014, Ferguson initiated a lawsuit against the City of Columbia ("Columbia") and five of its police officers in the U.S. District Court for the Western District of Missouri alleging the officers violated Ferguson's constitutional rights and engaged in malicious prosecution.[2] Columbia tendered the defense of the action to the Insurers under its insurance policies and the Insurers denied coverage. First, the Insurers asserted that the underlying 'wrongful acts' committed by the officers occurred two years before St. Paul's policy was in effect. Second, the Insurers asserted that "injuries for malicious prosecution and related civil rights violations are manifest at the time of indictment or arraignment," and because Ferguson was arraigned two years before St. Paul's policy was in effect, neither insurer owed a duty to defend the suit or indemnify the officers for the judgment.

         During the course of the lawsuit, Columbia and its officers entered into a partial settlement agreement with Ferguson under section 537.065.[3] The agreement provided that Columbia would pay Ferguson $500, 000 and another insurance company, which is not a party to this appeal, would pay Ferguson a minimum of $2, 250, 000 regardless of any subsequent damage award. Columbia and its officers did not contest liability, and the district court held a bench trial to determine damages. On July 10, 2017, the district court found the officers and Columbia liable for the constitutional violations and awarded Ferguson a sum of $10, 000, 000, providing $1, 000, 000 in damages for each year of Ferguson's incarceration. Additionally, the district court awarded $150, 000 for Ferguson's cost of defense in the criminal trial and $854, 000 in attorneys' fees for the civil action. Ferguson's total award was $11, 004, 000.00.

         Columbia and its officers were insured by Law Enforcement Liability ("LEL") insurance policies through St. Paul from October 1, 2006, through October 1, 2010, and insured by a similar LEL policy through Travelers from October 1, 2010, through October 1, 2011. As a judgment creditor, Ferguson petitioned the circuit court for an equitable garnishment against the Insurers on January 5, 2018. Ferguson and the Insurers filed cross-motions for summary judgment. The parties stipulated that the facts were undisputed, and the only issue before the circuit court was the extent of coverage provided by St. Paul's and Travelers's policies.

         Under the terms of its policy, St. Paul agreed to:

pay amounts any protected person[4] is legally required to pay as damages for covered injury or damage that:
• results from law enforcement activities or operations by or for [Columbia];
happens while this agreement is in effect; and
• is caused by a wrongful act that is committed while conducting law enforcement activities or operations.
[St. Paul will] consider damages to include the attorneys' fees of the person or organization bringing the claim if such fees are awarded, or paid in a settlement, for covered injury or damage. . . .
Injury or damage means bodily injury, personal injury, or property damage.
Bodily injury means any harm to the health of other persons. It includes care, loss of services, or death that results from such harm.
Harm includes any of the following:
• Physical harm, sickness, or disease.
Mental anguish, distress, injury, or illness.
Emotional distress.
• Humiliation.
Personal injury means injury, other than bodily injury, caused by any of the following wrongful acts:
• False arrest, detention, or imprisonment.
• Malicious prosecution. . . .
Violation of civil rights protected under any federal, state, or local law.

(emphasis added).

         At some point, St. Paul merged with Travelers, and Columbia renewed its St. Paul policy under the Traveler's name. At the time of renewal, Travelers offered to "adjust any claims under [the] new Travelers policy based upon the terms and conditions of either [the] expiring St. Paul policy or [the] new Travelers policy, whichever is broader. . . ." (emphasis added). Like the St. Paul policy, the Travelers policy covers "'bodily injury', 'property damage' or 'personal injury' [] caused by a 'wrongful act' committed by [Columbia] or on [Columbia's] behalf while conducting law enforcement activities or operations." Additionally, the Travelers policy contained, what is commonly referred to as a "deemer" clause, which states that "[injuries] caused by the same 'wrongful act' or 'related wrongful acts' will be deemed to occur when the first part of such [injury] occurs." Because of the "deemer" clause in the Travelers policy, the circuit court found that St. Paul's policy provided broader coverage for the claims in this action. For this reason, the court applied the terms of St. Paul's coverage for all five policy years.

         Each policy had self-insurance retention endorsements, which reduced the Insurers' liability. St. Paul's policy had a $500, 000 self-insurance retention for each policy year, and Travelers had a $500, 000 self-insurance retention for each wrongful act. The court found that St. Paul's policy would have reduced the Insurers' liability by $2, 500, 000 and Travelers would have only reduced the Insurers' liability by $500, 000, and therefore the court found that Travelers's coverage was broader for the purposes of the self-insurance retention. The court used the Travelers's self-insurance retention provisions in calculating its award.

         On July 25, 2018, the circuit court awarded Ferguson partial summary judgment and ordered equitable garnishment against the Insurers for $5, 354, 000.00. In calculating the award, the circuit court assessed $1, 000, 000 for each of the five years that Ferguson was incarcerated within the policy period and assessed $854, 000 in attorneys' fees for a sum of $5, 854, 000, which was then reduced by $500, 000 pursuant to the self-insurance retention provision of the policy. The court also awarded "interest calculated at the statutory rate applicable to federal district court judgments." The court made an alternative finding that the St. Paul's policy language was ambiguous because the policy lacked "a temporal requirement stating when a 'wrongful act' must occur for there to be coverage, nor [did the policy] predicate coverage on the date of 'first injury.'" Both parties appealed.

         Analysis

         The Insurers allege two points of error on appeal. First, they argue that the circuit court misapplied the law asserting that coverage under St. Paul's policy was not triggered because Ferguson's injury "happened" before the policy period began. Second, they argue that the circuit court incorrectly found that St. Paul's policy was ambiguous.

         On his cross appeal, Ferguson raises one point alleging that the circuit court erred because it awarded interest at the "interest calculated at the statutory rate applicable to federal district court judgments" rather than awarding prejudgment and post-judgment interest at the rate of nine percent as required by section 408.040.

         Standard of Review

         Appellate review of the grant of summary judgment is de novo. ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Summary judgment will be affirmed if the movant is entitled to judgment as a matter of law and no genuine issues of material fact exist. Id. at 377. Here, the parties agree that there are no genuine issues of material fact, and each party argues they are entitled to judgment as a matter of law. "Generally, an order denying a party's motion for summary judgment is not a final judgment and is therefore not subject to appellate review." Schroeder v. Duenke, 265 S.W.3d 843, 850 (Mo. App. E.D. 2008). "However, the denial of a motion for summary judgment may be reviewable when, as in this case, the merits of the motion for summary judgment are intertwined with the ...


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