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Mar 30, 2015

Successful Dismissal of Lawsuit Seeking to Enforce $82 Million Judgment Obtained

A favorable Order was recently handed down in the United States District Court for the Eastern District of Missouri granting judgment on the pleadings in a garnishment action following a 537.065 agreement. In Williams v. Employers Mutual Casualty Company, et al., Case No. 4:13-CV-2393 RLW, the plaintiff filed a petition for equitable garnishment as a representative of a class of residents of a mobile home park.  The petition sought to satisfy a judgment entered in favor of the class in the underlying lawsuit in the amount of $82,037,000.00.  The underlying lawsuit was a pollution case which alleged that water dispensed to the class members was contaminated with radioactive materials, bacteria and other contaminants.  The insurer of the defendant in the underlying lawsuit denied coverage for the allegations asserted in the underlying lawsuit.

A motion for judgment on the pleadings in the equitable garnishment action was filed on the basis that the insurer had no duty to defend the insured in the underlying lawsuit and therefore no duty to indemnify, successfully demonstrating that the pollution exclusion was not ambiguous.  After a comparison of the allegations alleged in the underlying lawsuit to the applicable pollution exclusion, Judge White of the United States District Court for the Eastern District of Missouri, found the insurer had no duty to defend the insured in the underlying lawsuit. 

The court also addressed plaintiff’s claims that the insurer had a duty to defend the claim in the underlying lawsuit relating to the insured’s alleged breach of contract. Plaintiff’s claim regarding the amenities was pleaded in the underlying lawsuit as a negligence claim and therefore plaintiff argued it was covered by the applicable policy of insurance.  However, the court agreed with the insurer and held that the plaintiff’s purported negligence claim was not covered under the insurance policy.  The court further noted that, although the claim was styled as a “negligence” claim, the alleged cause of action clearly arose from a breach of contract.

Ultimately, the court found that because the insurer owed no duty to defend, there similarly was no duty to indemnify.  The court therefore held that the insurer was entitled to judgment as a matter of law on plaintiff’s equitable garnishment claim and dismissed the case, with prejudice, as to the insurer.