Insurer Sues City of Ferguson, Seeking Declaration of 'No Duty to Defend'

An insurance company contracted with the city of Ferguson wants a judge to release it from any obligation to cover a class-action lawsuit over costly court fees.

Allied World Insurance filed suit in federal court in St. Louis yesterday, asking the judge to issue a declaration saying it has "no duty to defend or indemnify" the St. Louis County suburb in the case of Carter vs. Ferguson.

That lawsuit, filed by attorney John Campbell, ArchCity Defenders and the Saint Louis University Law School legal clinic in 2014, takes aim at Ferguson's past practice of slapping defendants with fees to recall warrants issued when they were late to court — sometimes even just by a few minutes — or failed to appear. (The city of St. Louis, which also used to charge such fees, voluntarily stopped the practice after publicity in the Ferguson matter.) Everyone who paid Ferguson such fees after December 2009 has been certified as part of the class in the litigation.

Such fees are illegal under Missouri law, the suit alleges — they are, the suit explains, "not a tax nor is it related to actual costs incurred; rather it is charged by Defendant as a means of profiting from the issuance of traffic tickets and other violations."

In its lawsuit, Allied World acknowledges that Ferguson has an insurance policy with it, one with a $2 million liability limit. But it believes it shouldn't have to pay up for this litigation — a position it says it's made clear to the city via letters beginning in January 2015 and up through last December. The city, however, continues to demand it cover the litigation's costs.

Angela Higgins, an attorney for Allied World at Baker Sterchi Cowden & Rice, did not respond to a message seeking comment yesterday.

In its suit, Allied World says the allegations in the suit simply do not match the city's coverage. "The knowing and willful violation of the law, designed to profit the City 'at the expense of the general welfare,' is not insurable under Missouri law and public policy. Additionally or alternatively, the disgorgement of unlawfully-obtained fees is not a 'Loss' as defined by the Policy. Additionally or alternatively, the knowing and willful violation of the law, designed to profit the City 'at the expense of the general welfare,' is not a 'Public Officials Wrongful Act' as defined by the Policy." Ergo, the insurer argues, it should be off the hook.

The city did not immediately respond to a call seeking comment. We'll update this post if we hear back.

Carter vs. Ferguson remains active in St. Louis County Circuit Court, court records show, with the parties continuing the discovery process.

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