Gage County v. Employers Mut. Cas. Co. , 304 Neb. 926 ( 2020 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
01/31/2020 08:05 AM CST
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Nebraska Supreme Court Advance Sheets
304 Nebraska Reports
GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
Gage County, Nebraska, appellant, v.
Employers Mutual Casualty
company, appellee.
___ N.W.2d ___
Filed January 31, 2020. No. S-18-1118.
1. Summary Judgment: Appeal and Error. In reviewing a summary
judgment, the court views the evidence in the light most favorable to the
party against whom the judgment was granted and gives such party the
benefit of all reasonable inferences deducible from the evidence.
2. Declaratory Judgments: Appeal and Error. In an appeal from a
declaratory judgment, an appellate court, regarding questions of law, has
an obligation to reach its conclusion independently of the conclusion
reached by the court below.
3. Insurance: Contracts: Appeal and Error. The interpretation of an
insurance policy presents a question of law that an appellate court
decides independently of the trial court.
4. Insurance: Contracts. A court construes insurance contracts like
other contracts, according to the meaning of the terms that the parties
have used.
5. ____: ____. In construing an insurance contract, a court must give effect
to the instrument as a whole and, if possible, to every part thereof.
6. Insurance: Contracts: Proof. In a coverage dispute between an insured
and the insurer, the burden of proving prima facie coverage under a
policy is upon the insured.
7. ____: ____: ____. If the insured meets the burden of establishing cover-
age of the claim, the burden shifts to the insurer to prove the applicabil-
ity of an exclusion under the policy as an affirmative defense.
8. Insurance: Contracts. Contracts of insurance, like other contracts,
are to be construed according to the sense and meaning of the terms
which the parties have used, and if they are clear and unambiguous,
their terms are to be taken and understood in plain, ordinary, and popu-
lar sense.
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
9. Contracts. When the terms of a contract are clear, a court may not
resort to rules of construction, and the terms are to be accorded their
plain and ordinary meaning as the ordinary or reasonable person would
understand them.
10. Insurance: Contracts. In situations involving the interplay between pri-
mary and umbrella coverages, courts should examine the overall pattern
of insurance and construe each policy as a whole.
Appeal from the District Court for Lancaster County:
Jodi L. Nelson, Judge. Reversed and remanded for further
proceedings.
Joel D. Nelson and Joel Bacon, of Keating, O’Gara, Nedved
& Peter, P.C., L.L.O., for appellant.
Karen K. Bailey and L. Paige Hall, of Engles, Ketcham,
Olson & Keith, P.C., for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Funke, J.
This is a declaratory judgment action brought by Gage
County, Nebraska, alleging that its insurer, Employers Mutual
Casualty Company (EMC), has defense and indemnity obliga-
tions for federal court judgments entered against Gage County
in 2016. The district court overruled Gage County’s motion
for partial summary judgment and entered summary judgment
in favor of EMC. We reverse the district court’s decision and
remand the cause for further proceedings.
I. BACKGROUND
The following background describes the judgments underly-
ing Gage County’s insurance claim, the nature of the insur-
ance dispute between Gage County and EMC, and the district
court’s decision granting summary judgment in favor of EMC.
1. Murder and Prosecution
Helen Wilson was raped and murdered in Beatrice, Nebraska,
on February 5, 1985. After months of investigation, the case
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
became cold. In 1989, Gage County Sheriff Jerry DeWitt and
five deputy sheriffs—Burdette Searcey; Wayne Price, who
was also a psychologist; Gerald Lamkin; Kent Harlan; and
Mark Meints—reopened the investigation. DeWitt, Searcey,
and Price were the primary investigators and interviewed mul-
tiple witnesses and suspects.
After the additional investigative efforts, the Gage County
Attorney Richard Smith charged six people with crimes
related to Wilson’s death: Joseph White, James Dean, Kathleen
Gonzalez, Thomas Winslow, Ada Joann Taylor, and Debra
Shelden. They became known as the Beatrice Six. Dean,
Gonzalez, Taylor, and Shelden agreed to plead guilty and
testify against White and Winslow. In November 1989, a jury
convicted White of Wilson’s murder, and in December 1989,
Winslow entered a no contest plea. Nearly two decades later,
the Beatrice Six were exonerated after DNA evidence showed
that they were not present at the crime scene. In 2009, the
Nebraska Board of Pardons granted pardons to each member
of the Beatrice Six.
2. Civil Rights Lawsuits
In July 2009, five members of the Beatrice Six filed civil
rights lawsuits in the U.S. District Court for the District of
Nebraska. The sixth member, Shelden, filed suit in 2011, and
the cases were consolidated. The defendants were Gage County,
the Gage County sheriff’s office, the Gage County Attorney’s
office, and, in their individual and official capacities, DeWitt,
Smith, Searcey, Price, Lamkin, Harlan, and Meints. The com-
plaints alleged that the defendants had manufactured and
coerced false or misleading evidence for the purpose of arrest-
ing, prosecuting, convicting, and imprisoning the Beatrice Six
for Wilson’s death. The complaints alleged that the defendants
made intentional misrepresentations in arrest warrants, utilized
improper interrogation techniques, conducted a reckless inves-
tigation, and intentionally prosecuted the plaintiffs without
proper evidentiary support. The complaints asserted claims
for malicious prosecution, false arrest, conspiracy, and having
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
policies, practices, and customs that deprived the plaintiffs of
their civil rights.
3. Insurance Policies
On February 2, 1989, Gage County purchased three insur-
ance policies from EMC: (1) a commercial general liability
(CGL) policy, (2) a linebacker policy, and (3) an umbrella
policy. The effective period of the three policies was from
February 2, 1989, to February 2, 1990.
(a) CGL Policy
The CGL policy was written on an occurrence basis, with a
$1 million limit per occurrence and $2 million aggregate limit.
Under the insuring clause, EMC agreed to pay sums that Gage
County becomes legally obligated to pay as damages because
of “‘personal injury’ . . . to which this insurance applies.” The
policy states, “This insurance applies to ‘personal injury’ only
if caused by an offense: (1) [c]ommitted . . . during the policy
period; and (2) [a]rising out of the conduct of your business . .
. .” The policy defines “personal injury” to mean “injury, other
than ‘bodily injury,’ arising out of one or more of the follow-
ing offenses: . . . [f]alse arrest, detention or imprisonment [or]
[m]alicious prosecution.”
An endorsement to the CGL policy excludes coverage for
“‘personal injury’ . . . due to the rendering [of] or failure to
render any professional service.” The endorsement applies to
“any and all professional services” but the term “professional
services” is not defined in the CGL policy or endorsement.
(b) Linebacker Policy
The linebacker policy is a claims-made policy covering losses
from errors or omissions in the discharge of organizational
duties. The linebacker policy excludes coverage for “[a]ny
liability for personal injury” (emphasis omitted). Like that of
the CGL policy, the linebacker policy’s definition of “personal
injury” includes injury arising out of the offenses of false
arrest, detention, or imprisonment or malicious prosecution.
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
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The linebacker policy similarly excludes liability arising from
the “rendering [of] or failure to render professional services”
(emphasis omitted). The policy defines “professional services”
as “anyone employed in any of the following professions while
performing their duties as such”:
1. The practice of medicine, such as (but not limited to)
physician, surgeon, osteopath, chiropractor, anesthesiolo-
gist, dentist, psychiatrist, psychologist, nurse, paramedic,
EMT, pharmacist, etc.
2. The practice of law (including the judiciary).
3. The practice of accounting.
4. Architects, engineers, surveyors or draftsmen.
Gage County does not contend that the linebacker policy
provides coverage for the federal court judgments. In not doing
so, Gage County acknowledges that the linebacker policy is a
claims-made policy and that no claims were made during the
effective period.
(c) Umbrella Policy
The umbrella policy covers “loss in excess of the primary
limit” of the policies “listed in Schedule A . . . because of
. . . Personal Injury” (emphasis omitted). Schedule A lists both
the CGL policy and the linebacker policy issued by EMC to
Gage County. In an endorsement applicable to political sub-
divisions, coverage under the umbrella policy was expressly
conditioned on the availability of coverage under a primary
policy described in schedule A. Like the two other policies,
the umbrella policy’s definition of “personal injury” includes
injuries arising out of the offenses of false arrest, detention,
or imprisonment or malicious prosecution. Under certain cir-
cumstances, the umbrella policy will drop down and provide
primary coverage if the primary aggregate limit is totally
used up.
The umbrella policy contains an exclusion for liability aris-
ing out of “professional liability” or “excluded occupations
liability,” but the exclusion states that it does not apply to
the extent that “professional or excluded occupations liability
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
coverage” is provided by a CGL policy (emphasis omitted).
The umbrella policy defines “professional liability” as “liabil-
ity arising out of the rendering of a service relating to a profes-
sion in a manner which is reasonable and in keeping with the
standards of that profession and formal accreditation or failure
to render a service.” The definition
includes but is not necessarily limited to, professions
such as:
A. The practice of medicine, i.e., physician, surgeon,
osteopath, chiropractor, anesthesiologist, dentist, psy-
chiatrist, psychologist, nurse, paramedic, EMT, pharma-
cist, etc.
B. The practice of law
C. The practice of accounting
D. Insurance sales or consulting
E. Real estate sales or management
F. Architects, engineers, surveyors, or draftsmen
G. Stockbrokers
The umbrella policy separately defines “excluded occupa-
tions liability” as
liability arising out of the rendering of a service relating
to an occupation listed below or the failure to render a
service:
A. A Director or Officer of an Organization
B. Data Processing or Computer Software Development
C. Law Enforcement
D. Travel Agents
E. Publishers, Printers, or Broadcasters[.]
4. Tender of Defense
In July 2009, Gage County tendered defense of the first
five Beatrice Six lawsuits to EMC and provided copies of the
five complaints which had been filed. In October, EMC denied
Gage County’s request for a defense and indemnification under
all three insurance policies. EMC denied coverage under the
linebacker policy, because no claims were brought during the
policy period, from 1989 to 1990.
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
With respect to the CGL policy, EMC noted it covered
personal injury arising out of offenses such as false arrest
or imprisonment and malicious prosecution. However, EMC
stated that the professional services exclusion applied. EMC
stated:
The lawsuits filed by the Plaintiffs against you allege the
use of improper investigative techniques, improper train-
ing techniques, malicious prosecution, false arrest and
conspiracy to violate civil rights. A professional service
has been determined to be a service involving special-
ized skill, training or knowledge. Your investigation
leading to the arrests of the Plaintiffs involved special
skill, training and knowledge, which constitutes a profes-
sional service.
EMC stated that it did not have a duty under the CGL policy
to defend or indemnify Gage County in the lawsuits. EMC
denied coverage under the umbrella policy due to the profes-
sional liability and excluded occupations liability exclusions.
That section of the denial letter stated:
The definition of “professional liability” includes “the
practice of law” and psychiatry or psychology and the
definition of “excluded occupations liability” includes
“law enforcement”. Consequently, . . . the [u]mbrella
[policy] does not provide coverage for liability arising
out of law enforcement or the practice of law, psychology
or psychiatry.
5. Jury Finds in Favor
of Beatrice Six
The claims that went to the federal district court jury were
whether DeWitt, Searcey, and Price manufactured evidence
or conducted a reckless investigation which resulted in the
convictions or pleas of the Beatrice Six. The jury also con-
sidered whether DeWitt, Searcey, and Price engaged in a
conspiracy to violate constitutional rights and whether Gage
County through DeWitt had a policy or custom of violating
civil rights.
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
The jury concluded that Searcey and Price had manufac-
tured evidence or engaged in a reckless investigation with
respect to each of the plaintiffs. The jury found that DeWitt
had not violated the plaintiffs’ rights and that the defendants
had not engaged in a conspiracy. The jury found Gage County
liable through DeWitt’s policy or custom of allowing viola-
tions of civil rights. In total, the jury entered judgments in
favor of the plaintiffs and against Gage County for more
than $28 million in damages. The jury’s decision was upheld
on appeal.
6. Present Insurance Lawsuit
In January 2017, Gage County filed its complaint for declar-
atory judgment against EMC alleging that under the CGL
policy, EMC had a duty to defend Gage County in the Beatrice
Six litigation and a duty to indemnify Gage County up to the
$2 million aggregate policy limit. The complaint also alleged
there “may be” additional limits available under the linebacker
or umbrella policy. EMC filed an answer in which it alleged,
among other affirmative defenses, that Gage County’s claims
were not covered under the CGL policy due to the profes-
sional services exclusion. EMC also alleged that neither the
linebacker policy nor the umbrella policy afforded coverage for
Gage County’s claims.
In April 2018, EMC moved for summary judgment on all
Gage County’s coverage claims, and in May, Gage County
moved for partial summary judgment on the question whether,
“[f]or purposes of [Gage County’s] coverages with [EMC], law
enforcement was an occupation and not a profession.”
On November 1, 2018, the district court granted EMC’s
summary judgment motion and denied Gage County’s partial
summary judgment motion. The court ruled that the CGL
policy’s professional services exclusion barred coverage under
the CGL policy for all claims brought against the Gage County
defendants in the Beatrice Six litigation. The court also held
that there was no coverage under either the linebacker policy
or the umbrella policy.
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
The court found that pursuant to Marx v. Hartford Acc. &
Ind. Co.,1 the professional services exclusion applied, because
the allegations about the investigation concerned law enforce-
ment’s decisionmaking process based on training and experi-
ence. The court found that the professional services exclusion
applied to the claims based on the acts of the county attorney
and the acts of Price as a psychologist, in addition to those acts
Price provided as a sheriff’s deputy.
Gage County appealed, and we granted its petition to bypass
the Nebraska Court of Appeals.
II. ASSIGNMENTS OF ERROR
Gage County assigns, restated, that the district court erred (1)
in concluding the professional services exclusion in the CGL
policy barred coverage; (2) in failing to conclude that when the
policies are considered in context, the parties intended for law
enforcement to be an occupation and not a professional service;
(3) in relying upon the definition of “professional service”
from Marx 2; (4) alternatively, in failing to conclude that the
term “professional services” in the CGL policy is ambiguous;
(5) in concluding that there was no excess coverage under the
umbrella policy; and (6) in concluding that Price was engaged
in providing professional services as a psychologist.
III. STANDARD OF REVIEW
[1,2] In reviewing a summary judgment, the court views the
evidence in the light most favorable to the party against whom
the judgment was granted and gives such party the benefit of
all reasonable inferences deducible from the evidence.3 In an
appeal from a declaratory judgment, an appellate court, regard-
ing questions of law, has an obligation to reach its conclusion
independently of the conclusion reached by the court below.4
1
Marx v. Hartford Acc. & Ind. Co., 183 Neb. 12, 157 N.W.2d 870 (1968).
2
Id.
3
Chase County v. City of Imperial, 302 Neb. 395, 923 N.W.2d 428 (2019).
4
Id.
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
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[3] The interpretation of an insurance policy presents a
question of law that an appellate court decides independently
of the trial court.5
IV. ANALYSIS
[4,5] The issue presented is whether the district court cor-
rectly applied the professional services exclusion in the context
of the insurance policies and claims at issue here. We construe
insurance contracts like other contracts, according to the mean-
ing of the terms that the parties have used.6 In construing an
insurance contract, a court must give effect to the instrument as
a whole and, if possible, to every part thereof.7
[6,7] In a coverage dispute between an insured and the
insurer, the burden of proving prima facie coverage under a
policy is upon the insured.8 If the insured meets the burden
of establishing coverage of the claim, the burden shifts to the
insurer to prove the applicability of an exclusion under the
policy as an affirmative defense.9
Due to a stipulation entered into between the parties, the
sole issue before us on appeal is the applicability of the profes-
sional services exclusion. We therefore express no opinion on
any other coverage-related issue in the case. As the case comes
before the court, in denying Gage County’s insurance claim,
EMC did not contest that the allegations of malicious prosecu-
tion or false arrest, detention, and imprisonment asserted in the
Beatrice Six complaints sufficiently alleged a “personal injury”
as defined under the CGL policy. The question is therefore
whether EMC met its burden to prove that the professional
5
Drake-Williams Steel v. Continental Cas. Co., 294 Neb. 386, 883 N.W.2d
60 (2016).
6
Federated Serv. Ins. Co. v. Alliance Constr., 282 Neb. 638, 805 N.W.2d
468 (2011).
7
Harleysville Ins. Group v. Omaha Gas Appliance Co., 278 Neb. 547, 772
N.W.2d 88 (2009).
8
Drake-Williams Steel, supra note 5.
9
Id.
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GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
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services exclusion applies on these facts. To answer that ques-
tion, we must determine the meaning of the term “professional
services” under the policies at issue.
EMC urges us to apply the definition of “professional serv­
ices” announced in Marx and conclude as a matter of law that
the conduct of law enforcement in this case qualifies as a pro-
fessional service.10 Gage County urges us to apply the defini-
tion of “profession” from our cases construing Neb. Rev. Stat.
§ 25-222 (Reissue 2016), the statute of limitations governing
professional negligence, and conclude as a matter of law that
law enforcement is not a profession. We address both argu-
ments below. We find that neither body of case law is control-
ling and that the unambiguous terms of the insurance policies
are controlling.
1. Case Law Definitions
Not Controlling
The district court found that the seminal meaning of “profes-
sional services,” when undefined in an insurance policy, comes
from our decision in Marx. In Marx, in considering the mean-
ing of the term “professional services” as it appeared in a pro-
fessional liability insurance coverage provision, we defined a
professional act or service to mean “one arising out of a voca-
tion, calling, occupation, or employment involving specialized
knowledge, labor, or skill, and the labor or skill involved is
predominantly mental or intellectual, rather than physical or
manual.”11 We said that to “determin[e] whether a particular act
is of a professional nature or a ‘professional service’ we must
look not to the title or character of the party performing the act,
but to the act itself.”12 Marx held that the boiling of water for
sterilization purposes was not a professional service, because it
was a routine equipment cleaning act that any unskilled person
10
See Marx, supra note 1.
11
Id. at 14, 157 N.W.2d at 872.
12
Id.
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could perform. The Marx definition of “professional services”
has been “‘widely accepted’”13 by both state and federal courts
and is the “most commonly employed”14 definition.
Before the district court, Gage County argued that Marx
does not control this case, because Marx concerned a claim
under a professional liability policy and because subsequent
Nebraska jurisprudence concerning the statute of limitations
applicable to actions for professional negligence further devel-
oped the meaning of “professional services.”15 The district
court disagreed with Gage County, stating that a more recent
case, R.W. v. Schrein,16 relied upon Marx to define the term
“professional services” as used in an insurance policy. The
court stated that although Nebraska’s appellate courts have not
yet decided the issue, courts in other jurisdictions have applied
Marx and held that law enforcement services qualify as profes-
sional services.17
On appeal, Gage County argues that Marx and Schrein,
which also concerned a professional liability policy, do not
control the meaning of “professional services” in the context of
a professional services exclusion in a CGL policy. In support
13
Medical Records Assoc. v. American Empire Surplus, 142 F.3d 512, 514
(1st Cir. 1998), quoting Roe v. Federal Ins. Co., 412 Mass. 43, 587 N.E.2d
214 (1992). See Harad v. Aetna Cas. and Sur. Co., 839 F.2d 979 (3d Cir.
1988).
14
Bank of California, N. A. v. Opie, 663 F.2d 977, 981 (9th Cir. 1981). See
Nautilus Ins. Co. v. Strongwell Corp., 968 F. Supp. 2d 807 (W.D. Va.
2013).
15
See, Wehrer v. Dynamic Life Therapy & Wellness, 302 Neb. 1025, 926
N.W.2d 107 (2019); Churchill v. Columbus Comm. Hosp., 285 Neb. 759,
830 N.W.2d 53 (2013); Tylle v. Zoucha, 226 Neb. 476, 412 N.W.2d 438
(1987).
16
R.W. v. Schrein, 264 Neb. 818, 652 N.W.2d 574 (2002).
17
See, Western World Ins. v. American and Foreign Ins., 180 F. Supp. 2d 224
(D. Me. 2002); Lansing Community College v. National Union Fire, No.
1:09-CV-111, 2010 WL 774877 (W.D. Mich. Mar. 1, 2010) (unpublished
opinion). See, also, Yatsko v. Graziolli, No. 1:18 CV 1675, 2019 WL
2497794 (N.D. Ohio June 17, 2019).
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of this view, Gage County relies upon our jurisprudence in the
area of professional negligence in which we have held that in
determining whether the statute of limitations for a professional
negligence claim applies, the court must determine whether the
defendant is a professional and then must determine whether
the defendant was acting in a professional capacity in render-
ing the services upon which the claim is based.18 Gage County
contends that we analyze the same two questions in the insur-
ance context to determine whether a particular act qualifies as
a professional service.
According to Gage County, the first inquiry is whether an
individual’s occupation rises to the level of a profession. The
definition of “profession” for the purpose of determining the
professional negligence statute of limitations under § 25-222
is (1) a calling requiring specialized knowledge and often long
and intensive preparation, including instruction in skills and
methods, as well as in the scientific, historical, or scholarly
principles underlying such skills and methods; (2) maintaining
by force of organization or concerted opinion high standards of
achievement and conduct; and (3) committing its members to
continued study and to a kind of work which has for its prime
purpose the rendering of a public service.19 The second inquiry
under Gage County’s argument is whether a particular act falls
within the scope of a profession and arose out of the special-
ized skill, knowledge, or training associated with the profes-
sion. Gage County argues that based on the first inquiry alone,
we should reverse the district court’s decision. Gage County
further contends that Marx and Schrein did not address the first
inquiry, because the insured in an insurance dispute involving a
professional liability policy necessarily will be a professional.
Gage County argues that Marx and Schrein address only the
second inquiry of whether a particular act falls within the
scope of a profession.
18
See Churchill, supra note 15.
19
Wehrer, supra note 15.
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In response, EMC contends that courts have applied Marx
to define a professional services exclusion in a CGL policy.20
For example, the district court relied upon Western World Ins.
v. American and Foreign Ins.,21 a decision issued by a U.S.
magistrate judge which addressed a claim under a CGL policy
based on a death from an officer-involved shooting. The magis-
trate judge relied upon the definition of “professional services”
from Marx and found that the professional services exclusion
applied, because the officer’s decision to use deadly force was
based on the officer’s specialized training and experience.
The district court also relied upon a federal district court
decision which involved facts similar to those of this case.22
At issue in Lansing Community College v. National Union
Fire 23 was a college’s defense and indemnity request based on
a claim that college law enforcement officers had manufactured
evidence in a murder investigation. The court relied upon Marx
and found that the activities of police officers fell within a pro-
fessional services exclusion in a CGL policy, because police
officers receive specialized training and education and often
are called upon to make decisions using this training. The court
found that police activities such as interviewing suspects and
witnesses, investigating crimes, and assisting in the prosecu-
tion of criminal cases are the types of activities that may be
considered professional services.24
While we agree with EMC and the district court that Marx
has been followed by courts across the country, we need not
decide, in this case, whether it is more appropriate to apply
20
See, American Economy Ins. Co. v. Jackson, 476 F.3d 620 (8th Cir. 2007);
Harad, supra note 13; Boggs v. Camden-Clark Memorial Hosp. Corp., 225
W. Va. 300, 693 S.E.2d 53 (2010); Hollingsworth v. Commercial Union
Ins., 208 Cal. App. 3d 800, 256 Cal. Rptr. 357 (1989).
21
Western World Ins., supra note 17.
22
Lansing Community College, supra note 17.
23
Id.
24
Id.
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the definition from Marx or the definition from our cases
defining “profession” for purposes of § 25-222. This case
does not require us to import definitions from our case law to
answer the question of whether law enforcement is considered
a profession, because the plain language of the EMC policies
answers that question for the parties to this dispute.
2. Contract Is Clear
and Unambiguous
[8,9] Contracts of insurance, like other contracts, are to be
construed according to the sense and meaning of the terms
which the parties have used, and if they are clear and unambig-
uous, their terms are to be taken and understood in their plain,
ordinary, and popular sense.25 When the terms of the contract
are clear, a court may not resort to rules of construction, and
the terms are to be accorded their plain and ordinary meaning
as the ordinary or reasonable person would understand them.26
[10] We have generally recognized that in situations involv-
ing the interplay between primary and umbrella coverages,
courts should examine the overall pattern of insurance and
construe each policy as a whole.27 All three EMC policies have
exclusions for either “professional services” or “professional
liability,” and two of the three policies contain definitions
of these terms. When determining the meaning of “profes-
sional services,” we cannot overlook the plain language of the
EMC policies.
When the CGL policy, linebacker policy, and umbrella policy
are analyzed as a whole, we are persuaded that an ordinary and
reasonable person would understand the professional services
exclusion to be inapplicable to the acts of law enforcement.
25
See Safeco Ins. Co. of America v. Husker Aviation, Inc., 211 Neb. 21, 317
N.W.2d 745 (1982).
26
American Fam. Mut. Ins. Co. v. Hadley, 264 Neb. 435, 648 N.W.2d 769
(2002).
27
Harleysville Ins. Group, supra note 7.
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304 Nebraska Reports
GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
The CGL policy, linebacker policy, and umbrella policy
provide an interrelated pattern of insurance. According to the
deposition testimony of the EMC claims manager, at the time
these three policies were issued, it was common for insureds
like Gage County to purchase all three lines of coverage. In
fact, the claims manager testified that in the early 1990’s,
approximately 100 to 200 municipalities were insured with
EMC and most of those municipalities had a CGL policy, a
linebacker policy, and an umbrella policy.
The umbrella policy is related to both the CGL policy and
the linebacker policy and, under certain conditions, provides
excess coverage for both policies. To the extent the umbrella
policy provided excess coverage for the linebacker policy, it
did so on a claims-made basis. Both the CGL policy and the
umbrella policy cover claims for damages arising out of false
arrest, detention, or imprisonment or malicious prosecution. In
certain circumstances, the umbrella policy provides primary
coverage depending on the availability of coverage under the
CGL policy. In addition, the applicability of the umbrella poli-
cy’s professional or excluded occupations liability exclusion in
the umbrella policy depends on whether the CGL policy covers
professional or excluded occupations liability.
On appeal, both parties argue in their briefs that the policies
here are interrelated and must be considered together.
The CGL policy does not define the term “professional
serv­ices” as used in the professional services exclusion.
However, the linebacker policy expressly defines “profes-
sional services” to mean anyone employed in an exclu-
sive list of professions, including the practice of medicine,
the practice of law, the practice of accounting, architects,
engineers, surveyors, or draftsmen. Similarly, the umbrella
policy provides a nonexhaustive list of professions which are
included within the “professional liability” exclusion, which
applies to “liability arising out of the rendering of a service
relating to a profession.” The list includes services related to
the practice of medicine, the practice of law, the practice of
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304 Nebraska Reports
GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
accounting, insurance sales or consulting, real estate sales or
management, architects, engineers, surveyors or draftsmen,
and stockbrokers. Law enforcement does not appear within
the list of professions, but instead appears as one of five
specified categories of occupations under the occupations
liability exclusion, along with data processing, travel agents,
publishers, printers, and broadcasters.
Based on these policy provisions, we conclude that the pro-
fessional services exclusion under the EMC policies does not
apply to law enforcement. Under both the linebacker policy
and the umbrella policy, law enforcement clearly does not
qualify as a professional service; it is not listed in the exclusive
list of professions in the linebacker policy, and it is listed as an
“occupation” rather than a profession in the umbrella policy.
The fact that the umbrella policy lists law enforcement as an
occupation rather than a profession is a particularly compelling
indication of the parties’ understanding. It indicates that the
parties understood professions and occupations to have sepa-
rate meanings and include different types of acts or services.
It also indicates that they understood law enforcement not to
be a profession. Had the parties understood law enforcement
as being a profession, it would have been unnecessary to sepa-
rately list law enforcement as an excluded occupation. And
while the umbrella policy contains an “occupations liability
. . . exclusion” (emphasis omitted), there is no similar exclu-
sion in the CGL policy that would lead a reasonable person
to understand that the CGL policy excludes coverage for law
enforcement services. Additionally, the CGL policy’s defini-
tion of covered “personal injuries” includes “injury . . . arising
out of . . . [f]alse arrest, detention or imprisonment [or] [m]ali-
cious prosecution,” which are typically understood as acts per-
formed by law enforcement.
Because the result in this case is dictated by a definition
of “professional services” supplied by the parties’ contract,
we reject the parties’ arguments which suggest that we apply
definitions from case law. Were we to apply definitions from
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Nebraska Supreme Court Advance Sheets
304 Nebraska Reports
GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
our case law rather than the definitions the parties have used,
we would be rewriting insurance policies. We have recognized
that “‘it is imperative that the contract made by the parties
shall be respected and that a new contract is not interpolated
by construction.’”28
Upon de novo review, we find merit to Gage County’s
assignments of error that the district court erred in (1) conclud-
ing that the professional services exclusion barred coverage,
(2) determining on summary judgment that no excess cover-
age is available under the umbrella policy, and (3) concluding
that the professional exclusion applies to the acts of Price as
a psychologist.
The extent of EMC’s liability under the CGL policy remains
for the district court to determine in the first instance upon
remand. Provisions within the umbrella policy suggest that
there may be coverage available under that policy if EMC
is found to be responsible under the CGL policy. We there-
fore determine that the district court erred in finding a lack
of coverage under the umbrella policy as a matter of law at
this stage.
We determine that the court erred in finding that coverage
for the claims asserted against Price may be excluded because
he is a psychologist, because we do not find that the claims
asserted against Price were based on his work as a psycholo-
gist. None of the claims against Price were based on medical
malpractice, and we agree with Gage County that in manu-
facturing evidence and engaging in a reckless investigation,
Price rendered acts and services as a sheriff’s deputy and not
as a psychologist. Even if Price was acting as both a sheriff’s
deputy and a psychologist, the result would be the same. When
the underlying lawsuit alleges injuries resulting from the provi-
sion of both professional services and nonprofessional services,
a professional services exclusion does not negate the insured’s
28
Safeco Ins. Co. of America, supra note 25, 211 Neb. at 25-26, 317 N.W.2d
at 748.
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304 Nebraska Reports
GAGE COUNTY v. EMPLOYERS MUT. CAS. CO.
Cite as 304 Neb. 926
claim.29 Our decision does not affect Gage County’s concession
that the claims based on the acts of the county attorney come
within the professional services exclusion.
For the foregoing reasons, we reverse the district court’s
decision granting EMC’s motion for summary judgment and
remand the cause with directions to sustain Gage County’s
motion for partial summary judgment and find that the profes-
sional services exclusion in the CGL policy does not preclude
coverage for Gage County’s insurance claims.
V. CONCLUSION
Based upon the preceding analysis, we conclude that it
was error to enter summary judgment in favor of EMC and
to overrule Gage County’s motion for partial summary judg-
ment. Accordingly, we reverse the district court’s decision
and remand the cause for further proceedings consistent with
this opinion.
Reversed and remanded for
further proceedings.
29
See National Cas. Co. v. Western World Ins. Co., 669 F.3d 608 (5th Cir.
2012).