                United States Court of Appeals
                           For the Eighth Circuit
                       ___________________________

                               No. 14-1112
                       ___________________________

Nicholas J. Minden; L.A.M., a minor, by and through her natural mother and next
    friend Lisa Minden; Daniel M. Minden, Jr., Individually and as Personal
    Representative of the Estate of Daniel M. Minden, Sr.; Shannon Minden

                     lllllllllllllllllllll Plaintiffs - Appellants

                                          v.

                      Atain Specialty Insurance Company

                      lllllllllllllllllllll Defendant - Appellee
                        ___________________________

                               No. 14-1116
                       ___________________________

Nicholas J. Minden; L.A.M., a minor, by and through her natural mother and next
    friend Lisa Minden; Daniel M. Minden, Jr., Individually and as Personal
    Representative of the Estate of Daniel M. Minden, Sr.; Shannon Minden

                      lllllllllllllllllllll Plaintiffs - Appellees

                                          v.

                      Atain Specialty Insurance Company

                     lllllllllllllllllllll Defendant - Appellant
                                     ____________

                   Appeals from United States District Court
                 for the Eastern District of Missouri - St. Louis
                                 ____________
                            Submitted: January 15, 2015
                               Filed: May 26, 2015
                                 ____________

Before COLLOTON, BEAM, and KELLY, Circuit Judges.
                          ____________

BEAM, Circuit Judge.

       Nicholas Minden (Minden) appeals, and Atain Specialty Insurance Company
cross appeals the district court's1 order in this equitable garnishment and vexatious
refusal to defend insurance coverage dispute. We affirm.

I.    BACKGROUND

       In the early morning hours of April 5, 2009, Daniel Minden (Daniel) was struck
by a vehicle driven by Curtis Lammert in a parking lot owned by and situated next to
The Dry Dock tavern (Gannon's2) in St. Louis County, Missouri. A private birthday
party for a St. Louis County police officer had been held at Gannon's earlier that
evening and Daniel was a friend of the officer and an invited guest. Lammert was
there at the invitation of Lammert's sister, who was a friend of another invited guest
named Gene Mehrtens. At Gannon's closing, shortly before 1:00 a.m., Mehrtens was
going to escort home another female guest named Sherri who appeared to be
intoxicated. While in the parking lot, Lammert, who was also acquainted with Sherri,
approached Mehrtens and insisted that he should take her home because Lammert was
concerned that Mehrtens was going to take advantage of Sherri's intoxicated state.

      1
        The Honorable Audrey G. Fleissig, United States District Judge for the Eastern
District of Missouri.
      2
     The Dry Dock is owned and operated by The Gannon Parker and Wooten
Company.

                                         -2-
Following a heated discussion at Sherri's car, Mehrtens threw the keys at Lammert and
told Lammert to go ahead and take Sherri home. Lammert escorted Sherri to his
pickup truck, where Lammert's girlfriend was also waiting. As the three drove out of
the parking lot in Lammert's truck, Lammert stopped, got out of his truck, and
attempted to lock Sherri's car via the remote key fob. Instead of locking it, however,
he caused the car alarm to go off. Lammert began pushing buttons on the key fob, but
was not immediately able to stop the noise. Mehrtens, Daniel, and perhaps others,
began yelling unflattering remarks about Lammert's intelligence as Lammert struggled
to turn off the car alarm. Daniel, who had left the bar from the rear entrance and was
in the main parking lot carrying a tray of cupcakes leftover from the party, headed
toward the remote parking lot located across the street from Gannon's. Once Lammert
was able to silence Sherri's car alarm, Lammert got back in his pickup. Mehrtens
testified in a deposition that Lammert looked "right at" Mehrtens, popped his clutch,
and drove toward Mehrtens on the way out of the parking lot. Mehrtens was able to
get out of the way, but Daniel apparently did not see Lammert coming. Another party
guest attempted to pull Daniel out of the way, but was unsuccessful. Upon the initial
contact with the right side of the pickup, Daniel was thrown in the air and landed in
the street located between the remote parking lot and Gannon's main parking lot. As
Lammert's vehicle exited the main parking lot into the street, the right side of the
pickup again ran over Daniel's body lying in the street.

       Daniel was transported to the hospital, and just over one month later, he died
from complications due to the injuries. Lammert left the scene but turned himself into
the police later that morning. He contended in his police interview that he saw Daniel
in front of him, but that he thought a woman had pulled him out of the way before
Lammert proceeded through the parking lot toward the street. He further contended
that he did not intend to hit Daniel and that he was afraid to stop once he realized that
he had hit someone. Another witness, the police officer in whose honor the birthday
party was held, told investigators that Daniel was yelling at Lammert while Lammert
attempted to negotiate the key fob, and that in the officer's opinion, Lammert hit

                                          -3-
Daniel on purpose because of this. Sherri gave a statement to police that after
Lammert hit Daniel and drove off, Lammert repeatedly stated that it was an accident
and that he did not mean to hit the man.

        Lammert was initially charged with assault and leaving the scene of an accident.
When Daniel succumbed to his injuries, Lammert's assault charge was changed to
involuntary manslaughter. Lammert pleaded guilty to the manslaughter and leaving-
the-scene charges, and at his change-of-plea hearing, Lammert again maintained that
he did not purposefully hit Daniel, but instead thought Daniel was out of the way. The
trial court accepted3 the plea and sentenced Lammert to seven years in prison on the
manslaughter charge, and four years on the leaving-the-scene charge.

      Minden brought wrongful death claims in state court against Lammert and
premises liability and dram shop claims against Gannon's based upon the incident.
Gannon's liquor liability insurer defended the dram shop claims, but the general
commercial liability insurer, Atain, refused to defend the premises liability and
negligence claims. Minden and Gannon's proceeded to mediation, and while Atain
was invited to the mediation, it did not appear. All of the claims between Minden and
Gannon's4 were settled, and Minden received from Gannon's an assignment of any
claim it might have against Atain based upon the failure to defend. Gannon's also
agreed not to contest a consent judgment entered against it in state court on the
premises liability action, and a $2 million judgment in state court was entered against
Gannon's.




      3
        Noting the discrepancy between the state's contention that it could show that
Lammert could have avoided Daniel, and Lammert's contention that he thought Daniel
was out of the way, the court asked Lammert if what the prosecuting attorney said was
"for the most part true?" Lammert replied "[y]es."
      4
       Minden ultimately dismissed the claims against Lammert.

                                          -4-
       Minden brought the present lawsuit against Atain, alleging equitable
garnishment and a vexatious failure to defend and indemnify.5 Atain alleges it did not
defend or indemnify based upon two policy exclusions–an automobile exclusion
precluding coverage for any injuries caused by automobiles, and an assault and battery
exclusion. Upon cross motions for summary judgment, the district court ruled that the
two exclusions did not apply to the facts of the underlying dispute and therefore
entered summary judgment in favor of Minden on the equitable garnishment claim.
Nonetheless, the district court granted summary judgment in favor of Atain on the
vexatious-refusal-to-defend claim, finding that Atain's refusal was not "vexatious"
under the circumstances, because the two exclusions arguably could have applied and
coverage was a close call. Minden appeals the district court's ruling on the vexatious
refusal issue, while Atain appeals the district court's conclusions regarding the
applicability of the exclusions and the judgment entered on the equitable garnishment
claim.

II.   DISCUSSION

       We review the district court's grant of summary judgment de novo. Porter v.
Sturm, 781 F.3d 448, 451 (8th Cir. 2015). Missouri substantive law applies to this
diversity case, and our task is to predict how the Missouri courts would resolve the
issues. Allstate Ins. Co. v. Blount, 491 F.3d 903, 908 (8th Cir. 2007).




      5
       Minden also initially alleged a count for bad faith refusal to defend; however,
this count was dismissed because we have previously held that bad-faith-refusal-to-
defend claims are not assignable under Missouri law. See Quick v. Nat'l Auto Credit,
65 F.3d 741, 746-47 (8th Cir. 1995).

                                         -5-
      A.     Equitable Garnishment

       Minden seeks equitable garnishment, a cause of action governed by statute in
Missouri. Missouri statutes provide that when a personal injury plaintiff has
recovered a final judgment against a defendant for what should have been an insured
loss, he is entitled to have insurance proceeds applied to satisfy the judgment. Mo.
Rev. Stat. § 379.200. The action is a suit in equity against the insurance company to
seek satisfaction of a judgment under an insurance policy. Id. The party seeking the
judgment is in the shoes of the insured, so the insurer may raise the same defenses in
an equitable garnishment action that it could have in an action by the insured. Glover
v. State Farm Fire and Cas. Co., 984 F.2d 259, 260 (8th Cir. 1993) (per curiam). To
collect a judgment through equitable garnishment, the plaintiff has the burden to show
by substantial evidence that the claim is within the coverage provided within the
insurance contract. Heacker v. Safeco Ins. Co. of Am., 676 F.3d 724, 727 (8th Cir.
2012) (applying Missouri law). However, if the insurance company relies on a policy
exclusion to deny coverage, the insurance company bears the burden of proving that
such exclusion is applicable, and we must construe the exclusion clause strictly
against the insurer. Jensen v. Allstate Ins. Co., 349 S.W.3d 369, 374-75 (Mo. Ct. App.
2011). In addition, if the language of the policy is ambiguous and reasonably open
to different constructions, the language will be construed against the insurer and as
ordinarily understood by the lay person who bought and paid for the policy. Pruitt v.
Farmers Ins. Co., 950 S.W.2d 659, 664 (Mo. Ct. App. 1997).

      Atain argues that it cannot be liable for equitable garnishment because the
automobile exclusion and the assault and battery exclusion in Gannon's policy both
exclude coverage for Minden's claims. The auto exclusion provides that the insurance
policy does not apply to: bodily injury arising out of any auto "whether or not owned,
maintained, used, rented, leased, hired, loaned, borrowed or entrusted to others or
provided to another by any insured." Further, the "exclusion applies even if the claims
allege negligence or other wrongdoing in the supervision, hiring, employment,

                                         -6-
entrustment, permitting, training or monitoring of others by an insured." The district
court found that while it was a "close question," the exclusion did not bar coverage
because a lay person could reasonably have understood the exclusion to apply only
to autos related to the insured, in other words, a car operated by or on behalf of
Gannon's.

       Given the above standard applicable to an insurance company seeking to
exclude coverage, we agree with Minden and the district court that Atain cannot prove
that the auto exclusion bars coverage here. Specifically at issue is the construction of
the phrase "whether or not." Minden argues that the phrase simply modifies the
insured's act of possessing the auto, and does not modify the term "any insured."
Atain argues that the phrase means whether the insured owned/used the auto or
whether the insured did not own/use the auto (which would include Lammert's use of
his auto to injure Minden), and that the district court impermissibly removed the
"whether or not" phrase from the policy.

       The parties agree that no particular Missouri case is on point, but Minden cites
a Louisiana case involving somewhat similar facts, and an identically worded
exclusion. In Lewis v. Jabbar, 5 So. 3d 250 (La. Ct. App. 2009), the Louisiana Court
of Appeals considered an insurance company's argument that the same auto exclusion
barred coverage in a premises liability case brought by a grocery store patron injured
by a vehicle in the parking lot. The Louisiana court noted that neither the injured
victim, nor the owner of the store was using the auto, and the auto was not being used
with the store owner's permission. Id. at 257. The court further found that the
"common and essential element" of the premises liability claim against the grocery
store did not involve use of an auto. Instead, allegedly improper lighting was the crux
of the negligence claim against the insured. Id. Accordingly, the exclusion did not
bar coverage. Id. at 257-58.




                                          -7-
        The instant matter is not directly on point with Lewis, as the crux of Minden's
premises liability complaint does not involve improper lighting, but instead an
unreasonably dangerous design that placed pedestrian patrons in harm's way while
proceeding to the remotely located parking lot. Nonetheless, if the wording of the
auto exclusion were as clear as Atain alleges, the Lewis court would not have had
occasion to consider whether it applied in the circumstances alleged in that case and
would have simply upheld the decision to bar coverage. As the district court noted,
the auto exclusion could be interpreted as Atain urges, but also reasonably could be
understood as Minden advocates. "A layperson, especially one purchasing general
liability insurance for a bar whose premises included a parking lot, could reasonably
have thought that the auto exclusion only excluded coverage for injuries arising out
of an auto somehow connected to the insured." Minden v. Atain Specialty Ins. Co.,
No. 4:11CV01284, 2013 WL 5106519 at *8 (E.D. Mo. Sept. 12, 2013). In this
situation, because the insurer is seeking to bar coverage by way of an exclusion, the
"tie" goes to the insured, see Jensen, 349 S.W.3d at 374-75, and the auto exclusion
does not bar coverage for Minden's premises liability claims.

       With regard to the assault and battery exclusion, the policy states that it does
not apply to any bodily injury arising out of "Assault and Battery committed by any
Insured, any employee of any Insured or any other person;" or "Assault or Battery,
whether or not caused by or arising out of negligent, reckless or wanton conduct of
the Insured, the Insured's employees, patrons or other persons lawfully or otherwise
on, at or near the premises owned or occupied by the Insured, or by any other person."
The district court found that because Lammert pleaded guilty to manslaughter, a
"reckless" mens rea crime rather than an intentional one, Atain could not rely upon the
conviction to deny coverage, and there was enough other evidence in the record to
lead to the conclusion that the act was not intentional. Accordingly, Atain could not
meet its burden of proving the exclusion applied. Atain appears to argue that the
convoluted wording of this "assault and battery" exclusion entitles it to exclude from



                                         -8-
coverage acts caused by something less than intentional conduct. An examination of
Missouri case law leads us to the conclusion that Atain's argument cannot prevail.

        In Missouri, civil assault and battery both include the element of intent. Phelps
v. Bross, 73 S.W.3d 651, 656 (Mo. Ct. App. 2002) (holding that an element of civil
assault is intent to cause offensive contact); Baltzell v. Van Buskirk, 752 S.W.2d 902,
906 (Mo. Ct. App. 1988) (defining battery as an intentional tort which, "by definition,
is not a cause of action for negligence"). If an intentional act is required before one
can commit "assault and battery," we cannot fathom that Missouri courts would allow
insurance companies to use the exclusion to bar coverage when there has been no
intentional act that caused the initial injury. Unfortunately, though there are legions
of Missouri cases discussing insurance policies with an "assault and battery"
exclusion, none of them illuminate the precise issue here. The instant case does not
present the usual tavern "assault and battery" scenario, which tends to involve either
patrons injuring one another or bouncers forcibly removing patrons and shoving them.
See, e.g., Trainwreck West Inc. v. Burlington Ins. Co., 235 S.W.3d 33, 36 (Mo. Ct.
App. 2007); Hunt v. Capitol Indem. Corp., 26 S.W.3d 341, 342 (Mo. Ct. App. 2000).
These "assault and battery" cases generally focus on the identity of the person
committing the assault and battery, not whether the act itself was an assault and
battery. Hunt, 26 S.W.3d at 344 (discussing whether an assault and battery committed
by fellow patron as opposed to a bar employee fell within the exclusion). With
respect to the exclusion's reference to negligent or reckless conduct, cases analyzing
both intentional and negligent conduct frequently do so in the context of whether a bar
employee was negligent or reckless in allowing the initial assault or battery to
happen–not whether the initial injury was caused by merely negligent conduct. E.g.,
Capitol Indem. Corp. v. Callis, 963 S.W.2d 247, 249 (Mo. Ct. App. 1997) (holding
that assault and battery exclusion in policy precluded coverage of claim for negligent
failure to protect patron from assault and battery).




                                          -9-
       This case, on the other hand, involves a patron who by all accounts was upset,
had been drinking, was driving in the parking lot at night, and ultimately hit another
patron with the right side of his vehicle as he exited the parking lot. There is certainly
record evidence6 supporting both the idea that the incident was intentional, or that it
was an unfortunate accident; this, and the fact that Lammert ultimately pleaded guilty
to a reckless and not intentional crime, leads us to conclude that Atain cannot meet its
burden of proving the exclusion applied to bar coverage. See Jensen, 349 S.W.3d at
374-75. Accordingly, we affirm the district court's equitable garnishment ruling.

      B.     Vexatious Refusal to Defend

       Even though the district court found that the exclusions did not bar coverage,
the court found that Atain's refusal to defend was not "vexatious" as a matter of law.
The court found that Atain did have the duty to defend, but its failure to do so did not
meet the rigorous test to prove a vexatious claim under Missouri Revised Statute §
375.420, which requires an insured to prove: (1) the existence of the insurance policy;
(2) the insurance company's refusal to pay; and (3) such refusal was without
reasonable cause or excuse. Thus, under Missouri law, there is no vexatious refusal
where the insurer has reasonable cause to believe there is no liability and there is a
meritorious defense to the policy. Watters v. Travel Guard Int'l, 136 S.W.3d 100,
108-10 (Mo. Ct. App. 2004). While generally a question of fact, the vexatious refusal
issue can be determined as a matter of law based upon undisputed facts. Id. at 109.

      The district court determined that because it was a close call on whether the
above exclusions applied, there was reasonable cause for Atain to believe there was
no coverage and corresponding duty to defend. Minden asserts that there is at the very

      6
       Atain does not argue that the "intentional or not" issue is a factual issue
precluding summary judgment. Instead Atain repeatedly argues that it is entitled to
summary judgment because an intentional act is not required in order for the exclusion
to apply.

                                          -10-
least a factual dispute about what Atain reasonably believed, and points to the
following allegedly disputed facts: that if Atain had conducted any sort of
investigation it would have discovered via numerous witness statements that the issue
of Lammert's intent was in dispute; and that Minden's expert, George Smith, testified
in a deposition that insurance industry practices would generally indicate a defense
was warranted. Minden also cites Pace Properties v. American Manufacturers Mutual
Insurance Co., 918 S.W.2d 883 (Mo. Ct. App. 1996), wherein the court held that the
vexatious claim was a factual issue to be decided by the jury, even where the coverage
issue was "litigable." Id. at 888. "The existence of a litigable issue does not preclude
a vexatious penalty where evidence shows the insurer was vexatious and recalcitrant."
Id. In Pace, the issue was submitted to the jury because, while the insurance company
asserted that it relied upon an expert's report in refusing to defend, there was sufficient
evidence that reliance upon that expert's report was unreasonable, and that a modicum
of independent investigation would have indicated as much to an insurer. Id.

       Atain persuasively cites Trainwreck in support of its argument that its refusal
to defend cannot be considered vexatious in this case. In Trainwreck, the Missouri
Court of Appeals held that the duty to defend is determined from the cause of action
pleaded at the time the action is commenced, not from what an investigation may later
show the facts to be. 235 S.W.3d at 39. The Trainwreck court held the insurer was
not required to go beyond the initial police report, the plaintiff's petition, and a letter
from the insured to avoid a vexatious refusal to defend judgment after denying
coverage and defense of the claim. Id. at 36-39.

       Similar to Trainwreck, Atain relied upon the initial police report charging
Lammert with second-degree assault in its decision to deny coverage. While a further
investigation might have unearthed the possibility of coverage, Missouri law does not
seem to require such conduct for an insurance company to avoid a "vexatious" claim.
And there seems to be no evidence that the situation is similar to Pace, as Minden has
not established that Atain has acted particularly recalcitrant. Given our above analysis

                                           -11-
regarding the exclusions, and the lack of any Missouri cases directly on point
concerning the exclusions at issue, we find that Atain had reasonable cause to believe
there was no coverage. Accordingly, we agree with the district court that Atain's
failure to defend was not vexatious within the meaning of Missouri Revised Statute
§ 375.420.

III.   CONCLUSION

       We affirm the district court.
                       ______________________________




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