Allstate Insurance v. Tonja Blount

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
________________
No. 06-3628
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Allstate Insurance Company, *
*
Appellant, *
*
v. * Appeal from the United States
* District Court for the
Tonja Blount; Nathan Smith; * Western District of Missouri.
Andrew J. Grimes; Barbara *
Grimes; Mitchell Y. Choi, *
*
Appellees. *
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Submitted: March 15, 2007
Filed: June 26, 2007
________________
Before COLLOTON, HANSEN and GRUENDER, Circuit Judges.
________________
GRUENDER, Circuit Judge.
Allstate Insurance Company (“Allstate”) brought a declaratory judgment suit
seeking a determination that the homeowner’s insurance policy it issued to Barbara
Grimes (“Grimes”) did not provide coverage for damages awarded against her in a
wrongful death suit. The district court held that the damages were covered by the
policy and granted summary judgment against Allstate. For the reasons that follow,
we affirm in part and reverse in part.
I. BACKGROUND
This case arises out of the underlying wrongful death suit Tonja Blount filed in
the Circuit Court for Greene County, Missouri, against Nathan Smith, Grimes,
Andrew Grimes and Mitchell Y. Choi (collectively, “defendants”), alleging that
defendants negligently caused or contributed to the death of her son, Jeffrey Cale
Gormley, who had became ill, and eventually died, after drinking alcohol and using
drugs while at Grimes’s home.1
At the time of the alleged actions, Grimes was insured under a homeowner’s
insurance policy with Allstate. The policy covered “damages which an insured person
becomes legally obligated to pay because of bodily injury or property damage arising
from an occurrence to which the policy applies” (“damages provision”). Allstate
defended Grimes under a reservation of rights in the wrongful death proceeding.2 At
the same time, however, Allstate filed the instant declaratory judgment suit in federal
court seeking a determination that the negligence claims in the wrongful death suit
were not covered by the damages provision and, alternatively, were excluded under
the policy’s exclusion for “bodily injury or property damage intended by, or which
may be reasonably expected to result from the intentional or criminal acts or
omissions of, any insured person” (“criminal acts exclusion”).
1
With respect to Grimes, the suit alleged that she negligently: failed to supervise
Gormley, failed to control Gormley, failed to protect Gormley, failed to provide
assistance to Gormley, supervised Gormley, and created a substantial risk to the life
of Gormley. We will refer to these collectively as the “negligence claims.”
2
Defending an insured under a “reservation of rights” allows the insurer to
assume the defense of the claim and later “contest whether or not a judgment
ultimately entered in the case f[alls] within the policy coverage.” Butters v. City of
Independence, 513 S.W.2d 418, 424-25 (Mo. 1974).
-2-
While the wrongful death and declaratory judgment suits were pending, Grimes
faced state criminal charges related to the death of Gormley. In the criminal
proceeding, Grimes pled guilty to first-degree involuntary manslaughter, a violation
of Mo. Rev. Stat. § 565.024.1.3 Specifically, Grimes admitted to “recklessly caus[ing]
the death of Jeffrey Cale Gormley by providing her home to minors for the
consumption of alcohol and/or controlled substances without adult supervision.”
At the guilty plea hearing, the prosecutor recited the factual basis for the charge.
Following the prosecutor’s factual recitation, Grimes admitted to the facts and entered
her guilty plea.4 The admitted facts established that Choi, Smith, Andrew Grimes and
Gormley drove to a convenience store where they purchased two cases of beer and a
bottle of bourbon. The boys then drove to Grimes’s home where they arrived around
7:30 p.m. There, Gormley drank alcohol and consumed Xanax. At some point during
the evening Gormley fell and hit his head, creating a knot above his eye. Thereafter,
Gormley laid down underneath a coffee table where he passed out. Around 11:00
p.m. that evening, Smith called Tracie Whitlock, Gormley’s girlfriend, to inform her
that Gormley was “having problems.” Andrew Grimes called her around 1:00 a.m.
to tell her that Gormley did not “look right” and was having trouble breathing.
Whitlock instructed Andrew Grimes to alert his mother of Gormley’s condition and
to call her back if the problems persisted. Whitlock did not receive any other phone
calls. Grimes was aware that Gormley was sixteen years old and had been drinking
and doing drugs in her home. Her only instruction to the boys was to move the coffee
table so that Gormley would not break it when he awoke. Eventually, emergency
personnel arrived at Grimes’s home where they pronounced Gormley dead. Gormley
3
The statute provides that “[a] person commits the crime of involuntary
manslaughter in the first degree if he or she . . . [r]ecklessly causes the death of
another person.” Mo. Rev. Stat. § 565.024.1.
4
In the response to Allstate’s motion for summary judgment before the district
court, Grimes admitted that she pled guilty because she acted as alleged by the
prosecution in the criminal complaint and at the plea hearing.
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died from respiratory failure resulting from intoxication. The medical examiner
concluded that had Gormley received medical attention he would have lived.
Following Grimes’s criminal conviction, Allstate moved for summary judgment
against Grimes, Andrew Grimes and Blount in the declaratory judgment suit. In
effect, Allstate argued for the application of non-mutual collateral estoppel,5 asserting
that Grimes’s guilty plea and resulting criminal conviction prevented her from
challenging the fact that the policy’s damages provision does not apply and that the
criminal acts exclusion does apply, thereby precluding coverage for any damages
awarded against her in the wrongful death suit. The district court denied Allstate’s
summary judgment motion, holding that the negligence cause of action pled in the
wrongful death suit was “separate and distinct” from the conduct established by the
guilty plea and conviction and that “it is likely coverage exists for this separate cause
of action.”
Also subsequent to Grimes’s criminal conviction, Blount, Grimes and Andrew
Grimes entered into an agreement under Mo. Rev. Stat. § 537.065 with respect to the
wrongful death suit. An agreement under this provision “expressly authorizes an
insured to settle a personal injury or wrongful death action by agreeing that the
plaintiff may collect the settlement only against the insurer.” Esicorp, Inc. v. Liberty
Mut. Ins. Co., 193 F.3d 966, 971 (8th Cir. 1999). It does not determine the insured’s
liability but merely limits enforceability of a judgment. O’Donnell v. St. Luke’s
Episcopal Presbyterian Hosps., 800 F.2d 739, 741 (8th Cir. 1986). In the present
case, the agreement provided that:
5
Non-mutual collateral estoppel “allow[s] strangers to the prior suit to assert
collateral estoppel against parties to the prior suit to bar relitigation of issues
previously adjudicated.” Oates v. Safeco Ins. Co. of Am., 583 S.W.2d 713, 719 (Mo.
banc 1979).
-4-
The § 537.065 agreement also provided that the parties agreed to allow a consent
judgment of $1,500,000 to be entered in favor of Blount and against Grimes and
Andrew Grimes, jointly and severally. Finally, the agreement noted that Grimes and
Andrew Grimes expressly denied all liability. The parties waived a trial by jury. The
trial court stated that:
[h]aving heard the evidence, and with the consent of defendants Andrew
Grimes and Barbara Grimes, [the court] finds the issues in favor of
plaintiff Tonja Blount for the wrongful death of [Gormley]. . . . The
Court, also with the consent of defendants Andrew Grimes and Barbara
Grimes, awards damages in the amount of $1,500,000 . . . and further
finds this amount to be fair and reasonable.
The trial court then entered a consent judgment consistent with the § 537.065
agreement.
Thereafter, Grimes, Andrew Grimes and Blount moved for summary judgment
in the declaratory judgment suit, asserting that the judgment in the wrongful death suit
“serves as res judicata as to the issue of the validity of the claims of negligent failure
to render aid.” They argued that because it had been conclusively established that
Grimes acted negligently and because negligence constitutes an “occurrence” under
the policy’s damages provision, there was no genuine issue of material fact as to
whether the civil damages award was covered under that provision. The district court
agreed and entered summary judgment in favor of Grimes, Andrew Grimes and
Blount.
-5-
The next day, the district court issued an order directing the parties to show
cause as to why the suit should not be dismissed as to defendants Smith and Choi,
neither of whom were parties to the motions for summary judgment. No party filed
a response. Consequently, the district court dismissed these two defendants. Allstate
now appeals the district court’s denial of summary judgment in favor of Allstate, its
entry of summary judgment in favor of Grimes, Andrew Grimes and Blount
(collectively, “Appellees”), and its dismissal of Smith and Choi.
II. DISCUSSION
1. Standard of Review
“In reviewing the district court’s grant of summary judgment, we review de
novo its conclusions of law, including the availability of issue preclusion,” also called
collateral estoppel. Liberty Mut. Ins. Co. v. FAG Bearings Corp., 335 F.3d 752, 757
(8th Cir. 2003) (internal citations omitted); see also Boudreau v. Wal-Mart Stores,
Inc., 249 F.3d 715, 719 (8th Cir. 2001) (“A trial court’s determination as to whether
the legal prerequisites for issue preclusion have been met on the facts before it is a
mixed question of law and fact, subject to de novo review by this court.”).
Interpretation of an insurance policy and application of collateral estoppel are
matters of state law. Am. Family Mut. Ins. Co. v. Co Fat Le, 439 F.3d 436, 439 (8th
Cir. 2006); FAG Bearings, 335 F.3d at 758. It is undisputed that the issues in this case
are governed by Missouri law. “In interpreting state law, we are bound by the
decisions of the state’s highest court.” Minn. Supply Co. v. Raymond Corp., 472 F.3d
524, 534 (8th Cir. 2006) (internal quotation omitted). “When a state’s highest court
has not decided an issue, it is up to this court to predict how the state’s highest court
would resolve that issue.” Id. “Decisions of intermediate state appellate courts are
persuasive authority that we follow when they are the best evidence of what state law
is.” Id.-6-
2. Appellees’s Motion for Summary Judgment
Although Appellees’s motion for summary judgment was filed and decided
after Allstate’s motion, we choose to address it first. Once the district court had
denied Allstate’s motion for summary judgment—concluding that Grimes’s guilty
plea and conviction did not, by way of collateral estoppel, establish that the criminal
acts exclusion applied—it granted Appellees’s motion for summary judgment. In so
doing, the district court held that the wrongful death consent judgment conclusively
established that there was an “occurrence” under the policy’s damages provision and
that therefore the damages entered against Grimes were covered under the policy.
Allstate argues that the district court erred in granting summary judgment to Appellees
because the consent judgment entered in the wrongful death suit pursuant to the
§ 537.065 agreement does not prevent, or collaterally estop, Allstate from litigating
the issue of coverage.
In support of its grant of summary judgment to Appellees, the district court
relied on Short v. Taylor and Gunning v. State Farm Mutual Automobile Insurance
Co. for the proposition that a “judgment entered by consent of the parties . . . within
the court’s jurisdiction . . . should be given the same force as any other judgment.”
Gunning, 598 S.W.2d 479, 481 (Mo. Ct. App. 1980); accord Short, 38 S.W. 952, 954
(Mo. 1897). This proposition is generally true when the judgment is being enforced
against a party to the underlying § 537.065 agreement that precipitated the consent
judgment. By contrast, where the consent judgment is sought to be enforced against
a non-party to the underlying agreement, the analysis is somewhat different. In a
scenario such as the present one, the Missouri Supreme Court has held that § 537.065
agreements do not deprive an insurer of its right to be heard on the question of policy
coverage. Butters v. City of Independence, 513 S.W.2d 418, 425 (Mo. 1974). In
Butters, the insured city entered into a § 537.065 agreement with an injured party and
sought to enforce it against the insurer. Id. at 424-25. The Missouri Supreme Court
noted that, by entering judgment pursuant to the § 537.065 agreement, the trial court
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had “purported to determine the question [of the insured’s liability] without a trial.”
Id. at 425. Noting that the “insurer has had no opportunity to be heard on the issue of
the factual basis for the [insured]’s liability,” the Missouri Supreme Court held that
the insurer “was entitled to a trial on the coverage issue.” Id. Such is the case here.
Neither the § 537.065 agreement nor the consent judgment indicate the factual basis
for Grimes’s liability, and both are unclear as to which of the several negligence
claims are the basis upon which the consent judgment was entered. Thus, Allstate has
had no opportunity to develop the factual basis for Grimes’s liability or be heard on
its policy defenses. See id. As a result, Allstate is entitled to litigate these issues. See
id.
As Allstate points out, the result obtained by applying Butters can also be
reached by examining the traditional elements of collateral estoppel.6 “The underlying
goal of issue preclusion, also known as collateral estoppel, is to promote judicial
economy and finality in litigation.” FAG Bearings Corp., 335 F.3d at 758 (applying
Missouri law). To determine whether to apply non-mutual collateral estoppel,
Missouri courts consider the following four factors:
(1) whether the issue decided in the prior adjudication was identical to the
issue presented in the present action; (2) whether the prior adjudication
resulted in a judgment on the merits; (3) whether the party against whom
estoppel is asserted was a party or was in privity with a party to the prior
adjudication; and (4) whether the party against whom collateral estoppel
is asserted had a full and fair opportunity to litigate the issue in the prior
suit.
6
Although Appellees broadly characterized their argument before the district
court as res judicata, the Supreme Court has recognized that res judicata encompasses
“issue preclusion, long called ‘collateral estoppel’ (an issue of fact or law, actually
litigated and resolved by a valid final judgment, binds the parties in a subsequent
action, whether on the same or a different claim).” Baker v. General Motors Corp.,
522 U.S. 222, 233 n. 5 (1998) (internal citations omitted).
-8-
James v. Paul, 49 S.W.3d 678, 682 (Mo. banc 2001). The doctrine will not apply
where doing so would be inequitable. Id. In the present matter, we need not decide
whether Appellees can satisfy the first, second or fourth prongs because we hold that
they cannot satisfy the third.
James was decided on facts similar to those in this case and resulted in the
Missouri Supreme Court’s holding that the third factor in the collateral estoppel
analysis had not been satisfied. In that case, the insured pled guilty to first-degree
assault and was subsequently sued for negligently causing the injuries resulting from
the assault. Id. at 680-81. As in the present matter, in James the insured and the
injured party entered a § 537.065 agreement whereby the injured party agreed to limit
execution of the judgment in the negligence suit to the insured’s homeowner’s policy.
Id. at 681. After obtaining a judgment, the injured party filed a garnishment action
against the insurer to collect on it, arguing that the insurer was bound by the judgment
in the negligence suit and that collateral estoppel prevented it from denying coverage.
Id. at 681-82. The Missouri Supreme Court held that the insurer was not a party and
was not in privity with any party to the underlying negligence suit, and it refused to
apply collateral estoppel. Id. at 689. The court stated that in the underlying
negligence suit:
[b]oth [the insured] and [the injured party] had identical interests in
having [the insured]’s conduct declared unintentional so as to shift the
obligation of paying damages to [the insurer]. [The insurer]’s interest in
relying on the criminal plea and the coverage exclusion were not aligned
with either that of [the injured] or [the insured] in the civil action. As a
result, the privity necessary to impose collateral estoppel against [the
insurer] was absent. Finally, the inherent conflict between [the insurer]
and [the insured] prevented [the insurer] from effectively asserting its
policy defenses in the civil action until the garnishment proceeding.
-9-
Id. The same is true here.7 An inherent conflict of interest prevented Allstate from
raising its policy defenses in the underlying civil suit while defending the Grimeses
under a reservation of rights. See id. Thus, Appellees cannot satisfy the third prong
necessary for collateral estoppel because Allstate, like the insurer in James, was not
a party and was not in privity with any party to the underlying wrongful death suit.
Accordingly, we hold that the wrongful death consent judgment does not bar Allstate
from litigating the issue of policy coverage, and we reverse the district court’s grant
of summary judgment to Appellees.
3. Allstate’s Motion for Summary Judgment
Having determined that the district court’s grant of summary judgment in favor
of Appellees must be reversed, we next turn to Allstate’s argument that the district
court erred in denying summary judgment in its favor. In its motion for summary
judgment, Allstate argued that Grimes is collaterally estopped by her guilty plea and
conviction from challenging the fact that the policy’s damages provision does not
apply and, alternatively, that the criminal acts exclusion does apply.
First we address the damages provision, which provides that “Allstate will pay
damages which an insured person becomes legally obligated to pay because of bodily
injury or property damages arising from an occurrence to which this policy applies.”
The policy defines an “occurrence” as “an accident, including continuous or repeated
exposure to substantially the same general harmful conditions during the policy
period, resulting in bodily injury or property damage.” The policy does not define the
term “accident.”
7
Allstate defended the Grimeses under a reservation of rights whereas the
insurance company in James declined to defend the insured in the civil case. Id. at
681. This difference is irrelevant to the collateral estoppel analysis. See Cox v. Steck,
992 S.W.2d 221, 225 (Mo. Ct. App. 1999) (applying the same reasoning as James
where an insurance company defended the insured under a reservation of rights).
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Allstate argues that Grimes’s act of committing first-degree involuntary
manslaughter cannot be an “accident” and, therefore, Gormley’s death is not an
occurrence under the damages provision of the policy. Allstate’s characterization of
the issue is flawed. To determine coverage issues, Missouri law provides that courts
should “compare the allegations of the underlying complaint to the language of the
insurance policy.” Reliance Ins. Co. v. Shenandoah South, Inc., 81 F.3d 789, 791 (8th
Cir. 1996) (citing Benningfield v. Avemco Ins. Co., 561 S.W.2d 736, 737 (Mo. Ct.
App. 1978)). The underlying complaint in the wrongful death suit alleged claims of
negligence. Therefore, the correct question is whether these claims constitute an
“occurrence” under the policy’s damages provision. The district court held that they
do, and we agree.
Under Missouri law, a liability policy defining “occurrence” as an accident
necessarily encompasses a negligence claim. Woods v. Safeco Ins. Co., 980 S.W.2d
43, 49 (Mo. Ct. App. 1998) (“[W]hen a liability policy defines ‘occurrence’ as
meaning ‘accident’ . . . Missouri courts [consider this] to mean injury caused by the
negligence of the insured.”) (internal quotation omitted) (alteration in original).
Accordingly, we hold that each negligence claim in the wrongful death suit constitutes
“an occurrence to which the policy applies” under the damages provision.
Although we hold that the negligence claims are covered by Grimes’s
homeowner’s policy, Allstate may still avoid liability if it can demonstrate that the
criminal acts exclusion applies and the so-called “concurrent cause doctrine” does not.
Under Missouri law, the concurrent cause doctrine “provides that when an insured risk
and an excluded risk constitute concurrent proximate causes of an injury, a liability
insurer is liable so long as one of the causes is covered by the policy.” Co Fat Le, 439
F.3d at 439. In determining whether there are concurrent proximate causes of an
injury, Missouri courts examine whether each alleged cause could have independently
brought about the injury. Id. (citing Hunt v. Capitol Indem. Corp., 26 S.W.3d 341,
345 (Mo. Ct. App. 2000)). Under the doctrine, an insured seeking coverage under a
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provision of a policy must be able to establish an independent claim under that
provision, while at the same time not relying on an element of a claim that falls under
an exclusion of the policy. Id. (citing Centermark Props., Inc. v. Home Indem. Co.,
897 S.W.2d 98, 103 (Mo. Ct. App. 1995)). If the insured cannot so establish, the
exclusion prevails. See id. at 440. Thus, in the present case, only if Grimes’s
negligent failure to supervise, control, protect and provide assistance to Gormley and
her negligent creation of a substantial risk to his life could have independently caused
Gormley’s death may we employ the concurrent cause doctrine. Focusing only on
Grimes’s negligent failure to provide assistance to Gormley, the district court held that
this claim was “clearly distinct” from Grimes’s act of providing her home to minors
for the consumption of alcohol and/or controlled substances without adult
supervision.” We disagree.
In Hunt, a lounge patron was killed outside a lounge. 26 S.W.3d at 342. The
victim’s family sued the lounge owner, claiming that he negligently failed to protect
the victim from his assailant. Id. The court held that the failure to protect was not a
distinct cause from the assault and battery—the latter being excluded under the
insurance policy—because “[w]ithout the underlying assault and battery, there would
have been no injury and therefore no basis for the [family]’s action against the [lounge
owner] for negligence.” Id. at 345. Similarly, in Co Fat Le, the insured’s son and his
four friends parked a vehicle inside the insured’s garage and closed the garage door.
439 F.3d at 438. The next morning, the son and his friends were found dead inside
the vehicle. Id. The parents of the friends sued the insured for wrongful death,
asserting a claim of negligent failure to warn the decedents of the risks of carbon
monoxide poisoning. Id. The insurer brought a declaratory judgment action seeking
a determination that the claim for negligent failure to warn was excluded under the
policy’s vehicle-use exclusion. Id. The insured argued that the failure to warn was
an independent cause of death and was therefore covered under the concurrent cause
doctrine. Id. at 439. Our court disagreed. Applying Missouri law, we held that “there
would have been no injury if [the insured] had not run the automobile in the closed
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garage. Accordingly, the failure to warn was not an independent concurrent
proximate cause of the decedents’ deaths.” Id. at 440.
The present case fits squarely within Hunt and Co Fat Le. Without Grimes’s
underlying act of providing her home to minors for the consumption of alcohol and/or
controlled substances without supervision, there would be no injury and no basis for
the wrongful death suit. In other words, any negligent failure to supervise, control,
protect and provide assistance to Gormley, or any negligent creation of a substantial
risk to his life, was derivative of, not independent of, Grimes’s act of providing her
home to the minors for the consumption of alcohol and controlled substances without
adult supervision. Because Appellees have failed to show that the covered negligence
claims could have independently brought about Gormley’s injury and resulting death,
the concurrent cause doctrine is not applicable. See id. at 439.8
Having determined that the concurrent cause doctrine does not apply, if Allstate
can prove that the criminal act exclusion applies, then the exclusion will prevail and
the damages entered against Grimes will not be covered under her homeowner’s
insurance policy. See Co Fat Le, 439 F.3d at 439 (“Under Missouri law, the insured
has the burden of proving coverage, and the insurer has the burden of proving that an
insurance policy exclusion applies. “). To this end, Allstate argues that Grimes’s
guilty plea and conviction preclusively establish, under the doctrine of offensive
collateral estoppel, that the policy’s criminal acts exclusion applies. Offensive
collateral estoppel9 depends on the same four factors outlined previously. Appellees
8
The case cited by the district court, Am. Home Assurance Co. v. Pope, 360 F.3d
848 (8th Cir. 2004), is not instructive. That case only addressed whether the claims
were covered or excluded by the policy at issue. Id. at 851-52. Significantly, it did
not reach the issue of whether the two claims were “concurrent and proximate causes.”
9
Offensive collateral estoppel is an “attempt by a plaintiff to rely on a prior
adjudication of an issue to prevent the defendant from challenging a fact necessary to
the plaintiff’s case and on which the plaintiff carries the burden of proof.” James, 49
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do not challenge Allstate’s satisfaction of the second, third or fourth prongs, and we
therefore focus on the first—“whether the issue decided in the prior adjudication was
identical to the issue presented in the present action.” See James, 49 S.W.3d at 682.
The language of an insurance contract is to be given its ordinary and plain
meaning. Walters v. State Farm Mut. Auto. Ins. Co., 793 S.W.2d 217, 219 (Mo. Ct.
App. 1990). The policy’s criminal acts exclusion states that “we do not cover any
bodily injury or property damage intended by, or which may reasonably be expected
to result from the intentional or criminal acts or omissions of, any insured person.”
The parties do not dispute that Grimes is an insured person under the policy and that
she did not intend to injure Gormley. Thus, the plain language of the exclusion
requires Allstate to prove that: (1) Grimes committed an intentional or criminal act;
and (2) bodily injury may have reasonably been expected to result from that act. In
order for collateral estoppel to apply, Allstate must show that these questions were
conclusively decided in a prior adjudication. See James, 49 S.W.3d at 682. We
address each in turn.
S.W.3d at 685. Although Missouri “courts have been less inclined to allow offensive
use of the doctrine rather than defensive when mutuality of parties is lacking,” id. at
685, we note that it is nonetheless allowed, e.g., In re Caranchini, 956 S.W.2d 910,
912 (Mo. 1997); State v. Daniels, 789 S.W.2d 243, 245 (Mo. Ct. App. 1990).
Moreover, although Allstate, as the plaintiff in the declaratory judgment suit, seeks
to assert the doctrine offensively, the suit was filed in anticipation of a garnishment
action foreshadowed by the § 537.065 agreement. In this inevitable garnishment
action, we have no doubt that Allstate, the putative defendant, would have raised the
same collateral estoppel argument in a defensive fashion. This unique posture
assuages any concern we may have regarding the reluctance of Missouri courts to
apply the doctrine offensively.
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As to the exclusion’s first requirement, Allstate argues that Grimes’s guilty plea
and criminal conviction conclusively establish that there was a criminal act. We
agree. It is undisputed that Grimes pled guilty to and was convicted of first-degree
involuntary manslaughter. The conviction conclusively establishes that Grimes
committed a criminal act, and we hold that Appellees are collaterally estopped from
challenging the satisfaction of this part of the exclusion. See Allstate Ins. Co. v.
Burrough, 120 F.3d 834, 837-40 (8th Cir. 1997) (applying Arkansas law) (applying
the same criminal acts exclusion presently at issue and holding that the act of
furnishing a deadly weapon to a minor as proscribed by the Arkansas criminal code
qualified as a criminal act under the exclusion).10
In order for Grimes to be collaterally estopped from challenging the satisfaction
of the exclusion’s second requirement, Allstate must demonstrate that the question of
whether bodily injury may have reasonably been expected to result from Grimes’s
criminal act was decided in a prior adjudication. Because defining the question
presented in the present action is “crucial in determining whether issue preclusion is
available,” see FAG Bearings, 335 F.3d at 759, we proceed by applying Missouri law
to the language of the policy in an effort to define clearly the question presented under
the second part of the exclusion.
First, it is important to note that the policy defines bodily injury as “physical
harm to the body,” and states that whether the bodily injury is “of a different kind or
degree than that intended or reasonably expected” is irrelevant. Even if the policy had
not included this provision, such would be the default rule in Missouri. See Hanover
Ins. Co. v. Newcomer, 585 S.W.2d 285, 289 (Mo. Ct. App. 1979) (holding that where
10
In light of Burrough, we need not address Allstate’s argument that acting
“recklessly” under Missouri’s first-degree involuntary manslaughter statute amounts
to acting intentionally. Under the policy, our holding that Grimes’s guilty plea
conclusively establishes that she acted criminally is sufficient to satisfy this part of the
exclusion.
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policies exclude coverage for injuries that are intended or expected, the exclusion is
“applicable if the insured acts with the intent or expectation that bodily injury will
result even though the bodily injury that does result is different either in character or
magnitude from the injury that was intended”). Thus, the issue is narrowed to
whether, in a prior adjudication, it was established that some degree of physical harm
to the body was reasonably expected to result from Grimes’s criminal act.
Second, Missouri has employed two different tests to determine whether bodily
injury is reasonably expected to result from an insured’s act. “Under the subjective
test, the coverage is excluded based upon the insured’s own actual subjective intent
to cause harm. Conversely, under the objective test, coverage is excluded if it is
determined that a hypothetical reasonable person would have foreseen harm from his
or her acts.” Cameron Mut. Ins. Co. v. Moll, 50 S.W.3d 329, 332 (Mo. Ct. App. 2001)
(internal citations and quotations omitted). Where the policy language is clear and
unambiguous, the language of the policy determines which test to apply. See id. at
333.
In Cameron, the policy excluded claims for bodily injury that were “expected
[]or intended” from the “standpoint of the insured.” Id. at 331. The Cameron court
found that “[t]his language plainly suggests a subjective standard should be used.”
Id. at 333. Likewise, in Am. Family Mut. Ins. Co. v. Pacchetti, the policy excluded
claims for bodily injury “which is expected or intended by any insured.” 808 S.W.2d
369, 370 (Mo. 1991). The court therefore stated that “[i]t remains for the insurer to
show that this particular insured expected or intended the result which occurred.” Id.
at 371.11
11
It was later noted by the Missouri Court of Appeals that “[n]owhere in the
Pacchetti opinion does the court prohibit the use of the objective standard.” United
Servs. Auto. Ass’n Cas. Ins. Co. v. Sorrells, 910 S.W.2d 774, 778 (Mo. Ct. App.
1995). But see Am. Family Mut. Ins. Co. v. Franz, 980 S.W.2d 56, 59 n.1 (Mo. Ct.
App. 1998) (“Pacchetti, with its emphasis on the subjective intent of the insured, also
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However, where a policy excluded claims for bodily injury that “[results] from
any occurrence caused by an intentional act of an insured person where the results are
reasonably foreseeable,” the objective test was used. Mid-Century Ins. Co. v. L.D.G.,
835 S.W.2d 436, 437 (Mo. Ct. App. 1992). The Mid-Century court distinguished this
policy language from that in Pacchetti, noting that “[t]he insurance policy pertaining
to this appeal, unlike the policy in Pacchetti, contains an additional provision
excluding coverage for injuries resulting from the intentional acts of the insured which
are reasonably foreseeable.” Id. “This clause requires a determination . . . of whether
the transmission of a venereal disease, such as chlamydia, is a reasonably foreseeable
result of rape,” that is, “one that a reasonable person would recognize . . . could or
might occur.” Id. at 438 (internal quotation omitted). The Mid-Century court
ultimately applied the exclusion holding that “the transmission of a venereal disease,
as a matter of law, is a reasonably foreseeable consequence of rape.” Id.In the present case, the language of the policy excludes claims for “bodily
injury . . . which may reasonably be expected to result from the intentional or criminal
acts or omissions of, any insured person.” Because the policy language at issue here
does not focus on the subjective intent of the insured, as it did in Cameron and
Pacchetti, and because it looks to what “may reasonably be expected,” we believe that
it is more akin to the language of the policy exclusion in Mid-Century. Thus, in even
more narrow terms, the issue becomes whether, in a prior adjudication, it was
established that the hypothetical reasonable person would have reasonably expected
some degree of physical harm to the body to result from Grimes’s criminal act. See
Cameron, 50 S.W.3d at 332.
implicitly rejects the objective test.”). We agree with the Sorrells court that Pacchetti
did not reject the objective test altogether. The language of the policy at issue in
Pacchetti simply required use of the subjective test. See Cameron, 50 S.W.3d at 332(implicitly holding, post-Pacchetti, that both tests are intact).
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Third, under Missouri law, something is “expected” if there exists a “strong
probability [that] the consequences in question would result from [the] acts.” United
Servs. Auto. Ass’n Cas. Ins. Co. v. Sorrells, 910 S.W.2d 774, 777-78 (Mo. Ct. App.
1995) (quotation omitted). The consequence in question in this case is physical harm
to the body. Therefore, the issue presented in its most narrow form becomes whether,
in a prior adjudication, it was established that a hypothetical reasonable person would
conclude that Grimes’s criminal conduct created a strong probability that some degree
of physical harm to the body would result. The prior adjudication is Grimes’s guilty
plea and conviction of first-degree involuntary manslaughter.
Arguably, a conviction for first-degree involuntary manslaughter, ipso facto,
establishes that a reasonable person would conclude that there was a strong probability
that the consequences in question would result. Indeed, the Missouri criminal code
defines recklessness, the mental state required under its first-degree involuntary
manslaughter statute, as the “conscious[ ]disregard[] [for] a substantial and
unjustifiable risk . . . and such disregard constitutes a gross deviation from the
standard of care which a reasonable person would exercise in the situation.” Mo. Rev.
Stat. § 562.016.4. While one might reasonably conclude that a “substantial and
unjustifiable risk” equates to a consequence with a “strong probability”of occurring,
our duty in this diversity action is to predict how the Missouri Supreme Court would
apply its law to the facts of this case. Raymond, 472 F.3d at 534. In Pacchetti, the
Missouri Supreme Court stated that “[w]e also reject the suggestion that a showing
that the insured acted recklessly compels a finding that injury was expected.” 808
S.W.2d at 371. Although this isolated statement could be characterized as dictum, we
are nonetheless reluctant to disregard such a plain statement from the Missouri
Supreme Court. Accordingly, we predict that the Missouri Supreme Court would hold
that the issue of whether a reasonable person would conclude that Grimes’s criminal
conduct created a strong probability that some degree of physical harm to the body
would result was not ipso facto decided by Grimes’s guilty plea and conviction. Thus,
because the first prong of collateral estoppel is not met with respect to the second
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requirement of the criminal acts exclusion, Appellees are not barred from litigating
whether it is satisfied.
In sum, we first hold that the negligence claims are covered by the policy’s
damages provision. We further hold that because the concurrent cause doctrine does
not apply in this matter, Allstate can avoid liability if it demonstrates that the criminal
acts exclusion applies. With respect to that provision, Appellees are collaterally
estopped by Grimes’s guilty plea and conviction from challenging the satisfaction of
the first requirement, whether Grimes committed a criminal act. Collateral estoppel,
however, does not prevent Appellees from challenging the satisfaction of the second
requirement of the exclusion, whether bodily injury may have reasonably been
expected to result from that criminal act. Thus, we affirm the district court’s denial
of Allstate’s motion for summary judgment.12
4. The District Court’s Dismissal of Defendants Smith and Choi
Finally, we address Allstate’s argument that the district court erred in
dismissing defendants Smith and Choi. After granting summary judgment to
Appellees, the district court issued an order to show cause why the case should not be
dismissed as to Smith and Choi. No party responded, and the district court dismissed
them. The district court’s order dismissing the defendants stated that it was “in light
of” its grant of summary judgment to Grimes, Andrew Grimes and Blount. Having
reversed that order, we also reverse the district court’s dismissal of Smith and Choi.
12
Having reached these conclusions, and as Allstate concedes, we need not
address whether Andrew Grimes is covered by the policy’s joint-obligations
provision, as it is not ripe until a determination is made with respect to whether the
criminal acts exclusion applies to Grimes.
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III. CONCLUSION
We reverse the district court’s entry of summary judgment to Appellees and its
dismissal of defendants Smith and Choi, and we affirm its denial of summary
judgment to Allstate. We remand for proceedings consistent with this opinion.
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