Does an Insurance Policy Void Sovereign Immunity?
The legal principle of sovereign immunity, which makes governmental bodies and employees immune from being sued in their own courts without governmental consent, was the center of a case recently decided in the United States District Court for the Eastern District of Missouri. The court needed to decide if the defendant, a commission in a political subdivision of Missouri that dispatched emergency services in the county, would be allowed to claim sovereign immunity or if that claim would be prevented by a general liability insurance policy held by the commission.
The plaintiffs in the case insured, owned and operated grocery stores, one of which was operating in the jurisdiction of the defendant county. A security alarm panel was located at the defendant’s premises and was monitored directly by the defendant’s employees. Individuals broke into the store and set a fire to avoid detection, but the defendant never reported an alarm to the plaintiff’s insured. The plaintiff paid its insured under the policy, but filed an action against the defendant claiming negligence and reckless, willful and wanton misconduct that resulted in the fire, causing damage to the store. The complaint alleged that the defendant was aware that the alarm monitoring panel was broken, yet had taken no steps to repair it.
The defendant was insured under a general liability insurance policy that provided coverage for the acts alleged by the plaintiff. Plus, the defendant raised the defense of sovereign immunity under Missouri statutory and common law. However, the plaintiff claimed that under Missouri law the defendant had actually waived sovereign immunity by virtue of having purchased the insurance policy. The defendant answered with several defenses, among them, a claim for reformation, or the act of changing a written contract when one of the parties can prove that the actual agreement was different than what’s written. Reformation is usually made by a court, for example, when both parties overlooked a mistake in the document — in this case, the unintended cancellation of sovereign immunity. The defendant claimed the policy was not intended to act as a waiver of any defense available to the insured and was a mutual mistake between the defendant and the insured. However, the plaintiff moved the court to strike the affirmative defense of sovereign immunity claiming the defendant could not rely on sovereign immunity because under Missouri Statute §379.195 the plaintiff’s insured’s rights under the defendant’s policy became absolute on the date of the fire and thus were not subject to reformation.
The court in its discussion pointed out that it was undisputed under Missouri law that a public entity did not waive sovereign immunity by maintaining an insurance policy that includes a provision stating that the policy is not meant to constitute a waiver of sovereign immunity. The court pointed out, however, that to support a claim for reformation under Missouri law due to mutual mistake, the party seeking reformation must say that 1) a preexisting agreement between the parties affected by the proposed reformation is consistent with the change sought; 2) a mistake was made in that the contract was prepared other than as agreed; and 3) the mistake was mutual, i.e,. it was common to both parties.
The court concluded that the Missouri Supreme Court would allow, upon proper proof, reformation of the defendant’s policy so that the policy did not act to waive the defendant’s sovereign immunity, even with respect to third parties such as the plaintiff’s insured. The court pointed out that whether or not the defendant would convince the court, at the trial, based on a more developed record, that reformation of the defendant’s policy was in order remained to be seen. At this point in the proceedings, the court was just deciding that defendant was not precluded from reforming its policy with its insurance carrier such that the purchase of the policy did not waive defendant’s sovereign immunity.
Question: I have been requested to install a series of CCTV cameras in the common areas in a rest home. The subscriber has also requested that we install cameras in some of the rooms so that they can monitor the activities of the residents. Can I install the cameras in the common areas and can the cameras be installed in the private rooms?
Answer: The test for installing a camera is whether or not the person using the facility had a reasonable expectation to the right of privacy. In a common area there probably would be no right to expect the right of privacy. The installation in a private room presents a different issue. Normally the answer would be that one can expect an expectation to the right of privacy in their own private room, however, there may be extenuating circumstances in a rest home where the proprietors may have a responsibility to monitor the activities of the occupant. It would probably be wise to make certain that the proprietor of the rest home signs an agreement to the effect that they understand that the resident has an expectation to the right of privacy but because of the circumstances they are required to monitor the room. It would also be prudent to get an indemnification from the proprietor. It is also a good idea to make certain to impress upon the proprietor that if they cannot obtain a consent or waiver from the occupant, that a waiver or consent be obtained from the guardian or family of the person or persons occupying the room where the camera is installed. Good judgment would dictate that a camera not be installed in a private room except when the specific circumstances may dictate circumstance to the contrary.