In Navigators Ins. Co. v. American Home Assurance Co., 2019 WL 2583253, — S.W.3d —- (Mo. Ct. App. 2019), the Missouri Court of Appeals held that a commercial general liability insurance policy provided no coverage for claims that an electrical cooperative wrongfully installed fiber optic cable on electrical transmission easements. The court held that there was no “property damage” coverage because the use of the easement did not involve tangible property damage and there was no “personal and advertising injury” coverage because the electrical cooperative was not the “owner” of the property on which it was alleged to have trespassed.
Navigators arose from a class action against an electrical cooperative, KAMO, alleging that KAMO exceeded the scope of its electric easements on class members’ property by installing fiber optic cable. The class members alleged claims for declaratory judgment, trespass, unjust enrichment and injunctive relief and sought recovery of KAMO’s revenues and rents, profits and other benefits arising from its use of the easements. At summary judgment, the court found in favor of certain class members whose easements did not permit commercial telecommunications use with respect to their claims for trespass and unjust enrichment, and KAMO ultimately settled the class action. One of KAMO’s CGL insurers, Navigators, defended KAMO pursuant to a reservation of rights, and ultimately sued two non-defending CGL insurers for unjust enrichment seeking recovery of their share of KAMO’s defense costs. In Navigators, the court held the non-defending insurers owed no duty to defend.
First, the court held that the class action did not allege “property damage,” which was defined to mean physical injury to or loss of use of “tangible property.” The court rejected Navigators’ argument that trespass in the form of expansion of an easement involves physical injury to or loss of use of “tangible” property because an easement is intangible. The court found the pleadings established there was no duty to defend and noted that even if the court was to look outside the pleadings, KAMO repeatedly argued that the use of fiber optic cable is intangible and does not involve any physical interference with plaintiff’s property.
Second, the court held that the class action did not involve “personal and advertising injury” focusing on the offense for “wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor.” The court held the class action did not allege this offense because an easement holder is not an “owner,” “landlord,” or “lessor” of the property, and even if an easement holder “owned” an easement, the claim alleged that KAMO trespassed outside the scope of its easement.
For decades, property owners and easement holders have disputed whether easement holders have the right to install or use fiber optic cable on easements or whether doing so exceeds the scope of the easements and unjustly enriches easement holders. There are many reasons that CGL coverage for such claims is questionable that the court in Navigators did not need to address, including whether installation or use of fiber optic cable causes “injury” to property, whether property owners can suffer a “loss of use” of or have “right of private occupancy” in an easement from which it is excluded, whether intentional installation of fiber optic cable may qualify as an “occurrence,” and whether an easement holder’s use of an easement, even if improper, is a “wrongful entry.” While the court did not address every potential issue that can emerge in these cases, Navigators offers perspective as to whether CGL policies cover such losses and demonstrates that there are good reasons why such coverage may not be available.