Chicago Insurance v. City of Council Bluffs

United States Court of Appeals
For the Eighth Circuit

___________________________

No. 12-1918
___________________________

Chicago Insurance Company, an Illinois corporation

lllllllllllllllllllll Plaintiff

v.

City of Council Bluffs; Daniel C. Larsen, in his individual and official capacities;
Lyle Brown, in his individual and official capacities

lllllllllllllllllllll Defendants

------------------------------

Columbia Casualty Company

lllllllllllllllllllll Plaintiff - Appellee

v.

City of Council Bluffs; Daniel C. Larsen; Lyle Brown; David Dawson; Terry J. Harrington

lllllllllllllllllllll Defendants

Curtis W. McGhee, Jr.

lllllllllllllllllllll Defendant - Appellant
 ___________________________

No. 12-1922
___________________________

Chicago Insurance Company, an Illinois corporation

lllllllllllllllllllll Plaintiff - Appellee

v.

City of Council Bluffs; Daniel C. Larsen, in his individual and official capacities;
Lyle Brown, in his individual and official capacities

lllllllllllllllllllll Defendants - Appellants

------------------------------

Columbia Casualty Company

lllllllllllllllllllll Plaintiff - Appellee

v.

City of Council Bluffs; Daniel C. Larsen; Lyle Brown; David Dawson

lllllllllllllllllllll Defendants - Appellants

Terry J. Harrington; Curtis W. McGhee, Jr.

lllllllllllllllllllll Defendants
____________

Appeal from United States District Court
for the Southern District of Iowa - Council Bluffs
____________

-2-
 Submitted: December 12, 2012
Filed: April 30, 2013
____________

Before WOLLMAN, BYE, and BENTON, Circuit Judges.
____________

WOLLMAN, Circuit Judge.

The City of Council Bluffs, police officers Daniel Larsen, Lyle Brown, and
David Dawson (collectively the City), and Curtis McGhee appeal from the district
court’s order granting summary judgment to Chicago Insurance Company (CIC) and
Columbia Casualty Company (Columbia), on CIC’s and Columbia’s declaratory
judgment claims concerning coverage under various insurance policies. We affirm
as to those policies in effect after 1977, but reverse as to Columbia’s 1977-78 policy.

I. Background

Many of the background facts are set forth in Genesis Insurance Co. v. City of
Council Bluffs, 677 F.3d 806 (8th Cir. 2012). We summarize them only briefly here.
In 1977, McGhee and Terry Harrington were arrested for the murder of retired police
officer John Schweer and were convicted on May 11, 1978, and August 4, 1978,
respectively. McGhee and Harrington both received life sentences. In 2003, the Iowa
Supreme Court concluded that “Harrington’s due process right to a fair trial was
violated by the State’s failure to produce . . . police reports documenting the[]
investigation of an alternative suspect in Schweer’s murder.” Harrington v. State, 659
N.W.2d 509, 525 (Iowa 2003). McGhee and Harrington were released from prison
later that year.

In 2005, McGhee and Harrington brought claims under 42 U.S.C. §§ 1983 and
1985(3) against, among others, the City, alleging violations of civil rights sounding
in malicious prosecution. See Genesis, 677 F.3d at 808. The City sought coverage

-3-
under the following insurance policies issued by CIC and Columbia: (1) two excess
liability policies issued by CIC; (2) five special excess liability policies issued by
Columbia; and (3) one commercial umbrella liability policy issued by Columbia.

A. CIC Excess Liability Policies

CIC issued the City two excess liability policies, one in effect from July 1,
1983, to July 1, 1984; and the other in effect from July 1, 1984, to July 1, 1985. The
policies contain Endorsement 6, which reads:
POLICE PROFESSIONAL LIABILITY - FOLLOWING FORM

It is agreed that, except insofar as coverage is available to the Insured in
the underlying insurance, this policy shall not apply to Personal Injury
or Property Damage caused by Negligent Acts, Errors and/or Omissions
of Police Officers including but not limited to[:] false arrest, erroneous
service of civil papers, false imprisonment, malicious prosecution,
assault and battery, libel, slander, defamation of character, violation of
property rights, or deprivation of any rights, privileges or immunities
secured by the Constitution and the laws of the United States.

Appellants’ App. 579.1 The “underlying insurance” was issued by Admiral Insurance
Company.2 The relevant portions of the policies read:

1
We agree with the district court that, notwithstanding the absence of the word
“exclusion,” Endorsement 6 is clear, explicit, and enforceable. See, e.g., Essex Ins.
Co. v. Fieldhouse, Inc., 506 N.W.2d 772, 776-77 (Iowa 1993) (exclusions contained
in “endorsements” were valid and enforceable). See generally Nationwide Agri-Bus.
Ins. Co. v. Goodwin, 782 N.W.2d 465, 470 (Iowa 2010) (“An exclusion that is clear
and unambiguous must be given effect.” (quoting Farm & City Ins. Co. v. Gilmore,
539 N.W.2d 154, 157 (Iowa 1995))).
2
According to the City, Admiral issued the City six policies, in effect for
various one-year periods from 1979 to 1985, under which the City seeks coverage.
Appellants’ App. 611, 618-51. Admiral is not a party to this case; the City has filed

-4-
 INSURING AGREEMENT

In consideration of the payment of premium in reliance upon the
statements herein or attached hereto, and subject to all of the terms of
this policy, the Company(s) agrees with the Named Insured and will
indemnify the Insured for ultimate net loss in excess of the retained limit
hereinafter stated which the Insured shall become legally obligated to
pay by reason of liability imposed by law, or liability assumed by
contract, insofar as the Named Insured may legally do so, for damages
because of:

....

COVERAGE D - PERSONAL INJURY LIABILITY

....

to which this policy applies, caused by an occurrence, during the policy
period.

Appellants’ App. 620. For purposes of Coverage D, the Admiral policies define an
“occurrence” as “any injury or damage sustained during the policy term, by any
person or organization and arising out of the personal injury as defined herein” and
define “personal injury” as including “malicious prosecution[.]” Appellants’ App.
625.

B. Columbia Special Excess Liability Policies

Columbia issued the City five special excess liability policies: one in effect
from August 8, 1977, to August 8, 1978; one in effect from August 8, 1978, to August

a declaratory judgment action seeking coverage against Admiral in the Southern
District of Iowa, which currently remains pending. See City of Council Bluffs v.
Admiral Ins. Co., No. 4:11-cv-00061-RP-TJS (S.D. Iowa).

-5-
8, 1979; one in effect from August 8, 1979, to August 8, 1980; one in effect from
August 8, 1980, to August 8, 1981; and one in effect from July 1, 1981, to July 1,
1982. These policies provide that Columbia “will indemnify the Insured for ultimate
net loss in excess of the retained limit hereinafter stated which the Insured shall
become legally obligated to pay as damages because of . . . personal injury . . . to
which this policy applies, caused by an occurrence.” Appellants’ App. 762. These
policies define “personal injury” as including “malicious prosecution” and define an
“occurrence” as “an accident, including injurious exposure to conditions, which
results, during the policy period, in personal injury or property damage neither
expected nor intended from the standpoint of the Insured[.]” Appellants’ App. 765.

C. Columbia Commercial Umbrella Liability Policy

Columbia also issued the City a commercial umbrella liability policy, in effect
from July 1, 1982, to July 1, 1983, which reads:

1. COVERAGE A—EXCESS LIABILITY INDEMNITY

The company will indemnify the insured for loss in excess of the total
applicable limits of liability of underlying insurance stated in the
schedule. The provisions of the [i]mmediate underlying policy are, with
respect to Coverage A, incorporated as a part of this policy, except for
any obligation to investigate and defend and pay for costs and expenses
incident to any of the same, the amounts of the limits of liability, an
“other insurance” provision and any other provisions therein which are
inconsistent with this policy.

....

2. COVERAGE B—EXCESS LIABILITY INDEMNITY OVER
RETAINED LIMIT

The company will indemnify the insured, with respect to any occurrence
not covered by underlying insurance, or with respect to damages not

-6-
 covered by underlying insurance but which result from an occurrence
covered by underlying insurance, for loss in excess of the insured’s
retained limit which the insured shall become obligated to pay as
damages by reason of liability imposed upon the insured by law or
assumed by the insured under any contract because of

personal injury,
property damage, or
advertising injury

to which this coverage applies, caused by an occurrence.

Appellants’ App. 828 (emphasis omitted). The policy defines “personal injury” as:
(1) bodily injury, shock, mental injury or mental anguish,

(2) false arrest, detention or imprisonment, wrongful entry or eviction or
other invasion of private occupancy, malicious prosecution or
humiliation; except that maliciously inflicted by, at the direction of, or
with the consent of the insured[.]

....

Appellants’ App. 844 (emphasis omitted). The policy defines an “occurrence” as:
(1) with respect to subsection (1) of the definition of personal injury and
with respect to property damage, an accident, including continuous or
repeated exposure to conditions, which results, during this policy period,
in such personal injury or property damage neither expected nor intended
from the standpoint of the insured. All loss arising out of continuous or
repeated exposure to substantially the same conditions shall be
considered as arising out of one occurrence,

(2) with respect to subsection[] (2) . . . of the definition of personal
injury, an act or series of acts of the same or similar nature, committed
during this policy period which causes such personal injury. All loss
arising out of such act or series of acts, regardless of the frequency

-7-
 thereof or the number of claimants, shall be deemed to arise out of one
occurrence[.]

....

Appellants’ App. 844 (emphasis omitted).

D. Declaratory Judgment Actions

CIC and Columbia filed declaratory judgment actions on the issue of coverage.
On summary judgment, the district court rejected the “multiple triggers” coverage
theory; denied the use of extrinsic evidence for contract interpretation or contract
construction purposes; and determined that only the 1977-78 Columbia special excess
liability policy potentially provided coverage. As to that policy, the district court
concluded that because the alleged malicious prosecution was not caused by an
accident and did not result in unexpected or unintended personal injuries, that policy
was inapplicable. The district court accordingly granted CIC and Columbia summary
judgment on each of the policies.

II. Discussion

We review de novo the district court’s grant of summary judgment, “applying
the same standards as the district court and viewing the evidence in the light most
favorable to the nonmoving party.” Zike v. Advance Am., Cash Advance Ctrs. of
Mo., Inc., 646 F.3d 504, 509 (8th Cir. 2011) (quoting Travelers Prop. Cas. Co. of Am.
v. Gen. Cas. Ins. Cos., 465 F.3d 900, 903 (8th Cir. 2006)). “The court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a).

-8-
 “The parties agree that Iowa law governs this diversity action. Under Iowa law,
a court must construe insurance policies to give effect to the intent of the parties.”
Genesis, 677 F.3d at 811 (quoting R & J Enterprizes v. Gen. Cas. Co. of Wis., 627
F.3d 723, 726 (8th Cir. 2010)).

The rules of construction of insurance policies [under Iowa law]
are well established. The insurance policy is a contract which must be
construed as a whole. The words used must be given their ordinary, not
technical, meaning to achieve a practical and fair interpretation.
Youngwirth v. State Farm Mut[.] Auto. Ins. Co., [140 N.W.2d 881, 884
(Iowa 1966)].

If the words are fairly susceptible to two interpretations the one
which will sustain the insured’s claim will be accepted. Thus the policy
will be strictly construed against the insurer. State Auto. & Cas.
Underwriters v. Hartford Acc[ident] & Ind[em.] Co., [166 N.W.2d 761,
763 (Iowa 1969)]. This rule is amplified by the statement that the court
should ascertain what an insured as a reasonable person would
understand the policy to mean, not what the insured actually intended.
Goodsell v. State Auto[.] & Cas. Underwriters, [153 N.W.2d 458, 461
(Iowa 1967)].

Stated otherwise, the climate under which an insurance policy is
examined favors imposition of coverage largely because the carrier drew
the contract and has the expertise in the field. However, if after
construing both the policy in question, the pleadings of the injured party
and any other admissible and relevant facts in the record, it appears the
claim made is not covered by the indemnity insurance contract issued,
the insurer has no duty to defend or indemnify. Hagen Supply Corp. v.
Iowa Nat[’l] Mut[.] Ins. Co., [331 F.2d 199, 203-04 (8th Cir. 1964),] and
authorities cited therein. If such be the case, the words and phrases of
the policy should not be strained to impose liability that was not intended
and not purchased.

Cent. Bearings Co. v. Wolverine Ins. Co., 179 N.W.2d 443, 445 (Iowa 1970), quoted

-9-
in Genesis, 677 F.3d at 811. “Insurance disputes are particularly well suited for
summary judgment because the proper construction of an insurance contract is always
an issue of law for the court.” Genesis, 677 F.3d at 811 (quoting Modern Equip. Co.
v. Cont’l W. Ins. Co., 355 F.3d 1125, 1128 (8th Cir. 2004)).

The City [and McGhee] ha[ve] the initial burden of proving that
[Harrington’s and McGhee’s] disputed claims are comprehended by the
policy’s general coverage provisions. Once this burden is met, [CIC and
Columbia] must in turn prove the applicability of any exclusion which
allegedly precludes coverage. Thereafter, the burden . . . shifts back to
[the City and McGhee] to prove, if applicable, any exception to the
exclusion.

Id. (third alteration and omission in original) (internal quotation marks and citations
omitted).

A. Extrinsic Evidence

The City and McGhee argue that the district court should have considered
extrinsic evidence concerning the parties’ intent and that the district court should have
granted their motions for discovery of additional, related extrinsic evidence. We
review de novo the district court’s interpretation of state law. Super Wings Int’l, Ltd.
v. J. Lloyd Int’l, Inc., 701 F.3d 870, 873 (8th Cir. 2012).

Under Iowa law, the admissibility of extrinsic evidence depends on the
purported purpose of the evidence, that is, contract interpretation or contract
construction. Contract “[i]nterpretation involves ascertaining the meaning of
contractual words; [contract] construction refers to deciding their legal effect.” Peak
v. Adams, 799 N.W.2d 535, 543 (Iowa 2011) (quoting Fashion Fabrics of Iowa, Inc.
v. Retail Investors Corp., 266 N.W.2d 22, 25 (Iowa 1978)). Though admissible for
interpretation purposes, see Pillsbury Co. v. Wells Dairy, Inc., 752 N.W.2d 430, 436
(Iowa 2008), extrinsic evidence is admissible for construction purposes only when the
contract is ambiguous, see Peak, 799 N.W.2d at 543.

-10-
 The City and McGhee do not identify what policy terms the extrinsic evidence
would aid in interpreting. Instead, they argue generally that the extrinsic evidence
would establish that the parties “believed and intended that coverage be provided.”
Appellants’ Br. 32. This, however, is an improper attempt “to alter the meaning of the
contract, not to facilitate its interpretation[.]” See Mid-Am. Real Estate Co. v. Iowa
Realty Co., 406 F.3d 969, 973 (8th Cir. 2005) (applying Iowa law). Nor do the City
and McGhee identify any ambiguity that the extrinsic evidence would resolve. “In the
construction of written contracts, the cardinal principle is that the intent of the parties
must control, and except in cases of ambiguity, this is determined by what the contract
itself says.” Peak, 799 N.W.2d at 543 (quoting Iowa R. App. P. 6.904(3)(n)).
Accordingly, the district court correctly refused to consider and correctly denied
additional discovery of the extrinsic evidence.

B. Multiple Triggers

The City and McGhee argue that coverage is available under each of the CIC
and Columbia policies because McGhee’s and Harrington’s alleged injuries and
damages span the duration of their imprisonment.

Following the district court’s grant of summary judgment in the present action,
our court decided Genesis, which, as described above, was a related action concerning
whether two insurance policies issued by Genesis Insurance Company (Genesis)
afforded coverage to the City for liability arising from McGhee’s and Harrington’s
claims. 677 F.3d at 808-10. The Genesis policies provided coverage for losses
“because of . . . personal injury . . . which occur[ed] during this policy period[.]” Id.
at 809 (emphasis omitted). The “personal injury” had to have been “caused by an
occurrence[,] and the occurrence must [have] take[n] place in the coverage territory.”
Id. The policies defined an “occurrence” as “an offense or series of related offenses”
and defined “offense” as “any of the offenses included in the definition[] of . . .
personal injury.” Id. at 810. And, the policies defined “personal injury” as including
“injury . . . arising out of . . . malicious prosecution[.]” Id. at 809. Thus, to be entitled

-11-
to coverage, the City was required to prove that at least one of either “Harrington or
McGhee [was] seeking damages for an injury . . . arising out of malicious prosecution
or a civil rights violation, that occur[red] during [the] policy period.” Id. at 812
(omission and second and third alterations in original) (internal quotation marks and
citations omitted). Because the court predicted that the Iowa Supreme Court would
hold that “the tort of malicious prosecution occurs, for insurance purposes, on the date
the underlying charges are filed[,]” the court concluded that the policies offered no
coverage for McGhee’s and Harrington’s claims. Id. at 816 (quoting City of Erie, Pa.
v. Guar. Nat’l Ins. Co., 109 F.3d 156, 165 (3d Cir. 1997)).

The City and McGhee of course recognize the holding in Genesis, but argue
that the CIC and Columbia policies contain different language that yields different
results.3 They argue that the Columbia policies, unlike the Genesis policies, require
only that some injury arise during the policy period, and that the injury need not occur
first during the policy period. Similarly, they argue that the CIC policies require only
that some injury or damage arise sometime during the policy period. They further
argue that because McGhee and Harrington allege injuries and damages spanning the
duration of their imprisonment, the CIC and Columbia policies provide coverage.

We see no meaningful distinction between the Columbia policies that would
necessitate a result different from that reached in Genesis. The Columbia policies
require that the alleged injuries have been sustained during the respective policy
coverage periods. The holding from Genesis—that “Harrington’s and McGhee’s
injuries ‘occurred,’ for insurance purposes, in 1977” and “did not ‘occur,’ for
insurance purposes, [between 2002 and 2004]”—is equally forceful when applied to
the Columbia policies. Id. at 815. Indeed, the City’s contention that “there are
allegations of continuing misconduct and continuing personal injury during the terms

3
To the extent the City and McGhee challenge Genesis, we note that “[i]t is a
cardinal rule in our circuit that one panel is bound by the decision of a prior panel.”
Sisney v. Reisch, 674 F.3d 839, 843 (8th Cir. 2012) (quoting Owsley v. Luebbers, 281
F.3d 687, 690 (8th Cir. 2002)).

-12-
of the . . . policies” was expressly rejected in Genesis. See id. (“But we reject the
contention that ‘the tort of malicious prosecution constitutes a continuing injury.’”
(quoting City of Erie, 109 F.3d at 164)); see also Royal Indem. Co. v. Werner, 979
F.2d 1299, 1300 (8th Cir. 1992) (explaining that for purposes of malicious prosecution
insurance coverage, the term “personal injury” was “more likely intended to describe
the time when harm begins to ensue, when injury occurs to the person, that is, . . .
when the relevant law suit is filed”).

We also conclude that the CIC policies are controlled by Genesis. The CIC
policies, by virtue of the Admiral policies, define an occurrence as “any injury or
damage . . . arising out of the [malicious prosecution.]” The City and McGhee
contend that because, unlike the policies in Genesis, the CIC policies define an
occurrence as “any . . . damage[,]” the CIC policies are triggered by the damages
alleged by McGhee and Harrington from their imprisonment while the CIC policies
were in effect. The issue whether McGhee’s and Harrington’s imprisonment could
constitute “damage” contemplated by the CIC policies aside, this theory is essentially
the same “multiple trigger” approach to the tort of malicious prosecution that was
rejected in Genesis. In Genesis, our court explained:

[I]n malicious prosecution cases, there is no interval between arrest and
injury that would allow an insurance company to terminate coverage.
The plaintiff faces incarceration, humiliation, and damage to reputation
as soon as charges are filed. Perhaps for this reason, no federal or state
court has adopted the multiple trigger theory in malicious prosecution
cases.

677 F.3d at 815-16 (quoting City of Erie, 109 F.3d at 165).

We also reject the City and McGhee’s arguments that rely on extrinsic
evidence, see supra Section II(A), as well as their arguments of ambiguity, see
Genesis, 677 F.3d at 815 (“Although the City and Genesis ‘disagree about the terms
of their insurance policies, disagreement between the parties over the proper

-13-
interpretation of a contract does not necessarily mean that a contract is ambiguous.’”
(quoting City of Erie, 109 F.3d at 163)).

Accordingly, we consider only whether the Columbia special excess liability
policy in effect from August 8, 1977, to August 8, 1978, remains potentially
applicable, because the alleged malicious prosecution and resulting personal injuries
occurred when the underlying charges were filed against McGhee and Harrington, in
1977.

C. 1977-78 Columbia Special Excess Liability Policy

The City and McGhee argue that the district court erred in concluding that the
1977-78 Columbia special excess liability policy offered no coverage. The policy
covers losses incurred as a result of damages from malicious prosecution that are
“caused by an occurrence” and defines an occurrence as “an accident, including
injurious exposure to conditions, which results, during the policy period, in personal
injury . . . neither expected nor intended from the standpoint of the Insured[.]”
Appellants’ App. 762, 765.

The City and McGhee argue that, although McGhee’s and Harrington’s alleged
injuries were intentional, not accidental, coverage should nonetheless be afforded
under the reasonable expectations doctrine.4 “Under the reasonable expectations
doctrine, ‘the objectively reasonable expectations of applicants and intended
beneficiaries regarding insurance policies will be honored even though painstaking
study of the policy provisions would have negated those expectations.’” Johnson v.
Farm Bureau Mut. Ins. Co., 533 N.W.2d 203, 206 (Iowa 1995) (quoting Clark-

4
Although the district court found the City and McGhee’s argument concerning
the reasonable expectation doctrine not to be sufficiently supported with explanation
or analysis, see D. Ct. Order of Mar. 12, 2012, at 34, we conclude that the argument
was sufficiently developed to merit consideration on appeal.

-14-
Peterson Co. v. Indep. Ins. Assocs., Ltd., 492 N.W.2d 675, 677 (Iowa 1992)). The
doctrine applies when an exclusion “(1) is bizarre or oppressive, (2) eviscerates terms
explicitly agreed to, or (3) eliminates the dominant purpose of the transaction.”
Boelman v. Grinnell Mut. Reinsurance Co., 826 N.W.2d 494, 506 (Iowa 2013)
(quoting Clark-Peterson, 492 N.W.2d at 677). “For the doctrine to apply, a
prerequisite must first be satisfied[:] ‘[t]he insured must prove circumstances
attributable to the insurer that fostered coverage expectations or show that the policy
is such that an ordinary layperson would misunderstand its coverage.’” Id. (emphasis
omitted) (quoting Nationwide Agri-Bus., 782 N.W.2d at 473).

The City and McGhee rely on Clark-Peterson, where the plaintiff became liable
in another suit for damages arising from intentional discrimination and sought
coverage under an insurance policy. 492 N.W.2d at 676. Despite defining “personal
injury” as including “discrimination[,]” the policy effectively eliminated such
coverage by requiring that any occurrence “unexpectedly or unintentionally result[]”
in the personal injury, and by excluding coverage of discrimination “committed by or
at [the insured’s] direction[.]” Id. at 676-77 & n.3. The Iowa Supreme Court held
that the plaintiff was entitled to coverage under the reasonable expectations doctrine
because an ordinary layperson would expect coverage under these circumstances and
because a holding of no coverage would “eviscerate[] terms explicitly agreed to.” Id.
at 677-79. The court explained:

To deny discrimination coverage in the present case would be to
withdraw with the policy’s left hand what is given with its right. In a
fundamental sense, of course, this is the proper function of any exclusion
clause in an insurance policy. The reasonable expectations doctrine does
no violence to this proper function by its limited intrusion into it. The
doctrine means only that when, within its metes and bounds definition,
an exclusion acts in technical ways to withdraw a promised coverage, it
must do so forthrightly, with words that are, if not flashing, at least
sufficient to assure that a reasonable policy purchaser will not be caught
unawares.

-15-
 The reasonable expectations doctrine is a recognition that insurance
policies are sold on the basis of the coverage they promise. When later
exclusions work to eat up all, or even substantially all, of a vital
coverage, they cannot rest on technical wording, obscure to the average
insurance purchaser. At some point fairness demands that the coverage
clause itself be self-limiting. Clark-Peterson’s claim could not have
arisen if the coverage promised in the coverage clause had been clearly
worded so as to extend coverage only as far as the insurer contends it
does extend. The difficulty arises because a much broader coverage is
promised, but an attempt is made to withdraw it in violation of the
doctrine of reasonable expectations.

Id. at 679.

The 1977-78 Columbia special excess liability policy technically excludes
expected damages arising from intentional acts; nevertheless, given the policy’s
express inclusion of coverage for damages arising from “malicious prosecution[,]” we
conclude that an ordinary layperson would have misunderstood the policy’s scope of
coverage. See id. at 678 (“We also think the answer is clearly yes, that an ordinary
layperson could expect coverage. The policy purports to provide some discrimination
coverage; the insured here seeks coverage for an unusual and controversial liability,
liability which no doubt came as a shock to it.” (footnote omitted)). In addition,
enforcement of the Columbia policy’s requirement that personal injuries be caused by
“an accident” and result in personal injuries “neither expected nor intended from the
standpoint of the insured” would effectively “eviscerate[] terms explicitly agreed to,”
namely, coverage for damages arising from malicious prosecution—an intentional
tort. See Wilson v. Hayes, 464 N.W.2d 250, 259 (Iowa 1990) (elements of a
malicious prosecution claim). Columbia’s speculation that the policy provisions
could, under some circumstances, be harmonized so as to provide coverage for
damages arising from malicious prosecution, is unpersuasive, for “evisceration can
occur on something less than total obliteration of all possibilities of coverage.” See
Clark-Peterson, 492 N.W.2d at 678.

-16-
 Because the reasonable expectations doctrine applies to the facts of this case,
the City is entitled to coverage under the 1977-78 Columbia special excess liability
policy. In light of this holding, we need not address the City and McGhee’s alternate
argument that the policy is ambiguous.

III. Conclusion

We affirm the district court’s judgment that the following policies do not afford
coverage to the City for McGhee’s and Harrington’s malicious prosecution claims: the
two excess liability policies issued by CIC; four of the special excess liability policies
issued by Columbia; and the commercial umbrella liability policy issued by Columbia.
As to the 1977-78 special excess liability policy issued by Columbia, we reverse the
district court’s judgment regarding the applicability of the reasonable expectations
doctrine. The case is remanded to the district court for further proceedings.

BYE, Circuit Judge, concurring in part and dissenting in part.

I agree the 1977-78 policy Columbia Casualty Company (Columbia) issued to
the City of Council Bluffs provides coverage for the malicious prosecution claims
brought by Curtis McGhee and Terry Harrington. I also agree the five special excess
policies Columbia issued to the City between August 1977 and July 1982 do not
provide coverage because the provisions in those policies are governed by our
decision in Genesis Insurance Co. v. City of Council Bluffs, 677 F.3d 806 (8th Cir.
2012). I disagree, however, with the majority’s conclusion that the two excess
policies Chicago Insurance Company (CIC) issued to the City for the period between
July 1983 and July 1985 are governed by Genesis and therefore do not provide
coverage. As a result, I respectfully concur in part and dissent in part.

As the majority acknowledges, the two CIC excess policies provide coverage
if the underlying Admiral policies would provide coverage. The Admiral policies, in
relevant part, provide personal injury liability coverage for damages “caused by an

-17-
occurrence, during the policy period.” Appellants’ App. 620. Significantly, two
distinct coverage-triggering events are defined as occurrences under the Admiral
policies: either “injury or damage sustained during the policy term . . . arising out of
the personal injury as defined herein” is considered an “occurrence.” Id. at 625
(emphasis added). Personal injury is defined to include “malicious prosecution.” Id.
Thus, damage sustained during the policy term and arising out of a malicious
prosecution is a coverage-triggering event under the Admiral policies.

Under Genesis, we held the “injury” consisting of the malicious prosecution
itself occurred, for insurance purposes, on the date the underlying charges were filed.
677 F.3d at 812. But in Genesis, the only coverage-triggering event defined as an
“occurrence” was the “injury” itself. Id. at 809. In sharp contrast, the Admiral
policies plainly and unambiguously include “damage sustained during the policy
term” arising out of a malicious prosecution as a coverage-triggering occurrence,
separate and apart from the malicious prosecution itself. By defining not only the
injury as an occurrence, but also damage arising out of the injury as a separate
coverage-triggering occurrence, the terms of the Admiral policies show a clear intent
to provide coverage for the continuing tort of malicious prosecution.

McGhee and Harrington sustained damage arising out of the malicious
prosecution from 1978 through 2003, the year the two men were finally released from
prison. The period of time during which the two men were imprisoned included July
1983 through July 1985. Thus, McGhee and Harrington clearly sustained damage
arising out of the 1978 malicious prosecution during the time the CIC excess policies
were in effect. Nowhere do the CIC/Admiral policies limit coverage only to an injury
occurring during the policy period, unlike the policies interpreted in Genesis. Since
“damage sustained during the policy term” is expressly included as a coverage-
triggering occurrence under the Admiral policies, the majority errs when it concludes
the two CIC excess policies are governed by Genesis, which involved dispositively
different policy provisions.

-18-
 In rejecting the City’s straightforward attempt to enforce the plain and
unambiguous terms of the CIC/Admiral policies, the majority effectively removes the
word “damage” from the two Admiral policies as a distinct and separate coverage-
triggering “occurrence.” The majority justifies rewriting the terms of the
CIC/Admiral policies by claiming the City’s argument “is essentially the same
‘multiple trigger’ approach to the tort of malicious prosecution that was rejected in
Genesis.” Ante at 13. I could not disagree more.

The City’s argument is not the same argument rejected in Genesis for the plain
and simple reason that the policy terms involved here are different from the policy
terms interpreted in Genesis, and the difference is dispositive. Under Iowa law,
“[o]ccurrence policies provide coverage if the incident insured against occurs during
the policy period.” Tacker v. Am. Family Mut. Ins. Co., 530 N.W.2d 674, 676 (Iowa
1995). The Admiral policies unambiguously insure against damage sustained during
the policy term arising out of a malicious prosecution. As a court, we should not
rewrite the terms of an insurance policy and replace them with some hypothetical
language an insurer wishes it had used. Instead, our task should be limited to
interpreting and enforcing the terms of the policy before us, as written.5

The majority’s cryptic justification for not enforcing the plain language of the
CIC/Admiral policies is because “no federal or state court has adopted the multiple

5
As the author of the majority opinion has noted, “the terms of an insurance
contract are not to be rewritten under the rule of strict construction against the
company issuing it so as to bind the insurer to a risk which is plainly excluded and for
which it was not paid.” Grisham v. Commercial Union Ins. Co., 951 F.2d 872, 875
(8th Cir. 1991) (citation omitted). We refrain from rewriting the terms of a policy
because to do so “would fly in the face of the principle that courts should not indulge
in a forced construction outside the intent of either party.” Id. (citations and internal
quotation marks omitted). The same principles apply when an insured is asking a
policy to be enforced as written, to require an insurer to provide coverage for a risk
plainly included within the policy’s coverage terms, and consistent with the intent of
both parties. The majority’s opinion defies the same well-worn principles the author
once touted.

-19-
trigger theory in malicious prosecution cases.” Ante at 13 (quoting Genesis, 677 F.3d
at 815-16 (in turn quoting City of Erie, Pa. v. Guar. Nat’l Ins. Co., 109 F.3d 156, 165
(3d Cir. 1997)). The fact that no state or federal court has adopted a multiple trigger
theory when interpreting a multiple trigger policy is hardly remarkable, and not a valid
reason for rewriting an insurance contract, especially when those state and federal
courts have not interpreted the policy provisions we are called upon to interpret.6
Indeed, in addition to already having the benefit of the plain and unambiguous
language of the Admiral policies to support my argument, I can similarly claim that
no federal or state court has ever denied coverage when interpreting the insurance
provisions involved in this case.

The majority’s invalid reason for refusing to enforce the CIC/Admiral policies
can only be interpreted as the adoption of a per se rule prohibiting enforcement of
multiple trigger insurance coverage in malicious prosecution cases as a matter of
policy–no matter what the insurance contract says–merely because it has not been
done before. In a case where the terms of the insurance contract are unambiguous and
evince a clear intent to cover subsequent damage arising out of a malicious
prosecution, the only valid reason for refusing to enforce the contract would be on
policy grounds. What is disturbing about the majority’s approach, however, is its
decision to invalidate unambiguous contract language as a matter of policy without
addressing the propriety of that approach under Iowa law.

6
I have already explained that the policy terms in Genesis are dispositively
different from the policy terms at issue here. Similarly, the policy provisions in City
of Erie are not the same. There, one group of the insurance policies at issue applied
“only to acts committed or alleged to have been committed during the policy period”
while the other group of policies only provided coverage for “‘bodily injury’,
‘property damage’ or ‘personal injury’ . . . occurring during the policy period as a
result of a ‘law enforcement incident.’” 109 F.3d at 158 n.4. The majority does not
cite any cases involving a policy where damage sustained during the policy term and
arising out of a malicious prosecution was a separate coverage-triggering event from
the malicious prosecution itself.

-20-
 The Iowa courts have never addressed a multiple trigger approach in a
malicious prosecution case and therefore have never rejected the theory. Iowa law
does not suggest the state would reject the theory, either, and thus shows the
majority’s invalidation of the CIC/Admiral policies is unjustified.

The Iowa Supreme Court has repeatedly instructed courts to exercise caution
before excising terms from an insurance contract on policy grounds. See Robinson
v. Allied Prop. & Cas. Ins. Co., 816 N.W.2d 398, 408 (Iowa 2012); Thomas v.
Progressive Cas. Ins. Co., 749 N.W.2d 678, 687 (Iowa 2008); Grinnell Mut.
Reinsurance Co. v. Jungling, 654 N.W.2d 530, 540 (Iowa 2002); Shelter Gen. Ins. Co.
v. Lincoln, 590 N.W.2d 726, 730 (Iowa 1999); DeVetter v. Principal Mut. Life Ins.
Co., 516 N.W.2d 792, 794 (Iowa 1994); Walker v. Am. Family Mut. Ins. Co., 340
N.W.2d 599, 601 (Iowa 1983); Skyline Harvestore Sys., Inc. v. Centennial Ins. Co.,
331 N.W.2d 106, 109 (Iowa 1983).

Under Iowa law, “[i]t is not the court’s function to curtail the liberty to contract
by enabling parties to escape their valid contractual obligation on the ground of public
policy unless the preservation of the general public welfare imperatively so demands.”
Tschirgi v. Merchants Nat. Bank of Cedar Rapids, 113 N.W.2d 226, 231 (1962)
(citing Twin City Pipe Line Co. v. Harding Glass Co., 283 U.S. 353 (1931)). “This
is a patently high standard.” Aurora Nat’l Life Assurance Co. v. Harrison, 462 F.
Supp. 2d 951, 971 (S.D. Iowa 2006). “[F]or a court to undertake to invalidate private
contracts upon the ground of public policy is to mount a very unruly horse, and when
you once get astride it you never know where it will carry you.” Skyline, 331 N.W.2d
at 109 (internal quotation marks and citation omitted).

Thus, Iowa law requires an insurer to identify general public welfare interests
that prohibit enforcement of an insurance policy before a court is justified in refusing
to enforce the policy as written. Neither the majority nor the insurers involved in this
case have identified any general public welfare interests implicated by the

-21-
enforcement of the CIC/Admiral policies, let alone implicated to the point where
invalidation of the contracts is “imperatively” demanded.

For the reasons stated, I respectfully dissent from the majority’s refusal to
enforce the plain and unambiguous terms of the CIC/Admiral policies, but otherwise
concur in the rest of the majority’s decision.
_______________________________

-22-