Missouri Law Review: Argonaut Great Central Ins. Co. v. Audrain County Joint Communications

Opinion issued
February 11, 2015

Link to U.S. Court of Appeals for the Eighth Circuit Opinion

In 2011, Argonaut Great Central Insurance Company (Argonaut) sued Audrain County Joint Communications (Audrain County) for damages its insured suffered because of Audrain County’s negligence in monitoring security alarm panels. Audrain County motioned for summary judgment arguing it was entitled to immunity as a matter of statutory and common law. The district court denied the county’s motion for summary judgment and Audrain County filed interlocutory appeal. On appeal, the Eighth Circuit affirmed the district court’s determination that Audrain County waived its common law sovereign immunity by purchasing insurance. It then refused to address the issue of statutory immunity for lack of jurisdiction.

In its opinion, the Court emphasized that the issue of immunity may only be addressed on interlocutory appeal when the immunity is immunity from a lawsuit. It distinguished immunity from a lawsuit from mere immunity from liability by noting that the latter is not “lost” if the case is erroneously brought to trial. On the other hand, immunity from a suit (i.e., the substantive right to be free from the burdens of litigation) would be defeated should the issue be deferred to post-trial appeal.

I. Facts & Holding

In 1977, Hickman Foods, Inc. (Hickman’s) entered into an agreement with Q Security[i] for burglar alarm services at its IGA grocery store.[ii] Although Q Security was a private company, its alarm panels were located at the public 911 call center operated by Audrain County Joint Communications (Audrain County).[iii] Public employees at Audrain County, further, monitored the alarm panels.[iv] When an alarm at a Q Security customer’s location was triggered, Audrain County employees would hear an alarm at the panel board.[v] At that same time, a light bulb corresponding to a particular customer’s location would light up.[vi] This system allowed the dispatcher-on-duty to quickly determine the location of the particular breach and notify the necessary parties.[vii]

In April 2006, two Audrain County employees noticed that six light bulbs (including one which corresponded to Hickman’s IGA grocery store) were not working.[viii] The employees reported the problem to their supervisor, but the message never reached Q Security.[ix] The problem, consequently, remained unresolved.[x]

Three months later, burglars entered Hickman’s IGA grocery store and activated the store’s alarm system.[xi] The alarm sounded at Audrain County’s call center, but no corresponding light bulb illuminated.[xii] As a result, the dispatcher on duty could not determine which Q Security customer’s alarm had been triggered.[xiii] Before fleeing the scene, the burglars set fire to the grocery store.[xiv] Some time thereafter a second alarm sounded at Audrain County (likely triggered by the fire).[xv] Again, however, no corresponding bulb illuminated.[xvi] About thirty minutes later (approximately a full hour after the first alarm had sounded), a bystander noticed smoke coming out of the grocery store and call 911.[xvii] By the time the fire had been subdued, the store had suffered over $2 million in damages.[xviii]

The grocery store was insured under a policy issued by Argonaut Great Central Insurance Company (Argonaut).[xix] After Argonaut paid Hickman’s for the property damage, Hickman assigned to Argonaut its right to sue any parties responsible for the damage.[xx] In 2011, Argonaut filed an action against Audrain County seeking damages caused by Audrain County’s alleged negligence in monitoring Q Security’s alarm panels.[xxi] Argonaut also asserted that Audrain County had waived its sovereign immunity by purchasing a liability insurance policy through American Alternative Insurance Corporation (the Policy).[xxii] Audrain County filed a motion for summary judgment.[xxiii] It argued, in part, that it and its insurer had retroactively reformed the Policy to include an endorsement excluding coverage for claims to which its sovereign immunity applied.[xxiv] Audrain County also asserted it was entitled to statutory immunity under Section 190.307 of the Missouri Revised Statues for its operating of an emergency 911 call center. [xxv]

The district court denied Audrain County’s motion for summary judgment on the issue of immunity. [xxvi] The court held that Audrain County failed to prove that it had a pre-existing agreement with its insurer so as to preserve the call center’s sovereign immunity. [xxvii] It further found Audrain County’s purchase of insurance to have waived both its common law sovereign immunity and any statutory immunity it might have enjoyed under § 190.307 as a call center.[xxviii] Audrain County then filed this interlocutory appeal.[xxix] On appeal, the Eighth Circuit affirmed the district court’s determination that Audrain County waived common law sovereign immunity by purchasing insurance.[xxx] It then failed to address the remaining issues for lack of jurisdiction. [xxxi]

II. Legal Background

An appellate court ordinarily lacks jurisdiction over an interlocutory appeal challenging the denial of summary judgment.[xxxii] Such a court, however, does have jurisdiction when summary judgment is denied on the grounds of sovereign immunity or qualified immunity “because immunity is effectively lost if a case is erroneously permitted to go to trial.”[xxxiii] Thus, whether the Eighth Circuit had jurisdiction over this particular case turned on whether the immunity was from a suit or merely from liability.[xxxiv]

In this case, Audrain County put forth two distinct bases for its claim of immunity.[xxxv] It argued that it was entitled to (1) sovereign immunity as a Missouri state entity and to (2) statutory immunity as a 911 call center.[xxxvi] The first argument was founded in common law and Section 537.600 of the Missouri Revised Statutes, which specifically preserves Missouri’s “sovereign or governmental tort immunity as existed at common law.”[xxxvii] Audrain County’s second argument relied on Section 190.307 of the Missouri Revised Statutes which holds that “[n]o public agency . . . shall be liable for any civil damages as a result of any act or omission except willful and wanton misconduct or gross negligence, in connection with” the operation of a 911 system.[xxxviii]

III. Instant Decision

In Argonaut, the Eighth Circuit was asked to consider, on interlocutory appeal, the viability of two immunity arguments that had been dismissed at the district level.[xxxix] The Eighth Circuit, before reaching the merits, addressed whether it had jurisdiction to consider the issues.[xl] It noted that it may only review the denial of summary judgment on interlocutory appeal when the issue is immunity from the suit itself.[xli] It, then, distinguished this type of immunity (immunity from the burdens of litigation) from immunity from mere liability.[xlii] The Eighth Circuit finally considered Audrain County’s two distinct bases for immunity and whether either was qualified for interlocutory review.[xliii]

The court first considered Section 537.600 of the Missouri Revised Statutes.[xliv] As stated earlier, section 537.600 statute generally preserves Missouri’s “sovereign or governmental tort immunity as existed at common law.”[xlv] The statute, further, makes specific reference to the “immunity of [a] public entity from liability and suit.”[xlvi] The court held that this language made it clear that entities like Audrain County are to be free from not only the imposition of damages but also the burdens of litigation.[xlvii] The court, therefore, found the issue appropriate for interlocutory review.[xlviii]

Finding the issue appropriate for review, the Eighth Circuit considered whether the district court was correct in holding that Audrain County’s purchase of insurance had waived its sovereign immunity. [xlix] It noted that in order to preserve the call center’s sovereign immunity, Audrain County had to present evidence that it and its insurer “had a pre-existing agreement to attach the severing immunity endorsement to the Policy and made a mutual mistake when they failed to do so.”[l] After finding that there was no evidence that the representatives of the insurer ever discussed sovereign immunity with Audrain County, the Eighth Circuit affirmed the District Court’s holding as to that point.[li]

The Eighth Circuit also considered the Section 190.307 claim of immunity.[lii] Under section 190.307, “[n]o public agency . . . [may be held] liable for any civil damages as a result of any act or omission except willful and wanton misconduct or gross negligence, in connection with” the operation of a 911 system.[liii] The court noted that this language did not protect public agencies from the burdens of litigation; instead, it provided public agencies like Audrain County, with limited protection from liability for damages.[liv] Consequently, the court held that it did not have jurisdiction to consider whether Audrain County’s purchase of insurance also waived any statutory immunity it might have enjoyed under section 190.307.[lv]

IV. Comment

The Eighth Circuit, in handing down this decision, made it clear that an entity entitled to immunity from damages but not from the suit itself will still be subject to the burdens of litigation and all that it entails. Consequently, a public entity that may not be subjected to civil damages will still be required to appear in court, defend itself in litigation, and comply with all the other rules of civil procedure. This holding will prove beneficial to Missouri. It will require organizations that may not be liable for damages to act with caution for other reasons. The consequences of litigation are not limited to damages. For example, litigation makes problems otherwise private available to the public eye. It encourages public discourse and can effect the average consumer’s day-to-day decisions. Consequently, although an agency like Audrain County may be protected from liability for damages, this holding reinforces the inadequacies of that protection – it is not freedom from the suit itself but rather freedom from suffering a limited set of financial repercussions.

[i] The 1997 agreement was technically with a company called Crow Security, Inc.

No. 13-3252 (8th Cir. Feb. 11, 2015), available at http://media.ca8.uscourts.gov/opndir/15/02/133252P.pdf. The West Reporter citation is Argonaut Great Cent. Ins. Co. v. Audrain Cnty. Joint Comm’ns, No. 13-3252, 2015 WL 542295 (8th Cir. Feb. 11, 2015). However, in 2005, Q Security Solutions, L.L.C. purchased Crow Security and all of its contracts. Id.

[ii] Id.

[iii] Id.

[iv] Id.

[v] Id.

[vi] Id.

[vii] Id.

[viii] Id.

[ix] Id.

[x] Id.

[xi] Id.

[xii] Id.

[xiii] Id.