FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

OCT 18 2002

THOMAS K. KAHN

CLERK

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 02-10786

________________________

D. C. Docket No. 01-01062-CV-BU-M

EMPLOYERS MUTUAL CASUALTY COMPANY,

an insurance company incorporated in the State 

of Iowa,

Plaintiff-Appellee,

versus

FLETCHER MALLARD,

BARNIE GILLILAND

Defendants,

JANICE SHRADER,

DEBRA LYNN MINNIX LIVINGSTON,

Defendants-Appellants.

________________________

Appeal from the United States District Court

for the Northern District of Alabama

_________________________

(October 18, 2002)

Before HULL, WILSON and FAY, Circuit Judges.

PER CURIAM:
2

In this declaratory judgment action, Janice Shrader and Debra Lynn Minnix

Livingston appeal the district court’s order concluding that the insurance policy

issued by Employers Mutual Casualty Company (“EEMC”) does not provide

coverage for their 42 U.S.C § 1983 claims and other claims made against

employees of the City of Attalla, Alabama. After review, we certify a question to

the Alabama Supreme Court.

I. BACKGROUND

The facts in this case largely are undisputed.

A. Underlying § 1983 Actions

In February 2000, Shrader filed a complaint against the City of Attalla,

Fletcher Mallard, a city police officer, and Barnie Gilliland, a part-time bailiff at

the city jail. Shrader’s complaint alleges that Mallard and Gilliland sexually

abused her after her arrest for driving under the influence, driving with a

suspended or revoked license, and reckless driving on April 7, 1999. Shrader’s

complaint asserts claims for violation of her constitutional rights pursuant to 42

U.S.C. § 1983 and for negligence, wantonness, and civil conspiracy. 

In July 2000, Livingston filed a similar complaint against the City of Attalla,

Mallard, and Gilliland, alleging that Mallard and Gilliland sexually abused her

after she was arrested for driving under the influence, reckless driving, and

resisting arrest on August 9, 1998. Livingston’s complaint asserts claims for
1

The parties do not dispute that Mallard and Gilliland, while employed by

the City of Attalla, sexually abused Shrader and Livingston. According to Shrader,

Mallard and Gilliland sodomized and coerced her into performing oral sex on them

while she was in jail. Livingston alleges that she was raped by Mallard and that

Gilliland touched her all over her body and briefly attempted intercourse.

2

Although the facts indicate that EMCC issued two separate CGL policy

numbers and two separate linebacker policy numbers to the City of Attalla, the two

3

violation of her constitutional rights pursuant to 42 U.S.C. § 1983 and for civil

conspiracy against Mallard and Gilliland.1

 

On March 12, 2001 the district court granted summary judgment in favor of

the City of Attalla in Shrader’s case. On April 20, 2001, the district court likewise

granted summary judgment in favor of the City of Attalla in Livingston’s case. 

Neither Shrader nor Livingston appealed the entry of summary judgment in favor

of the City. Both cases remained pending against Mallard and Gilliland.

Shrader and Livingston subsequently settled their claims against Mallard and

Gilliland. On April 27, 2001, the district court entered identical orders in both

cases, dismissing each case without prejudice and allowing any party to reopen the

case within thirty days or to submit a stipulated form of final judgment. The

district court’s order also reserved jurisdiction for thirty days for the filing of

motions to enforce the settlements. No such motions were filed in either case.

B. EMCC’s Insurance Policies and Declaratory Judgment Action

EMCC issued a commercial general liability policy (“CGL”), as well as a

linebacker policy, to the City of Attalla.2 Shrader and Livingston conceded that
respective policy numbers refer to the same policy issued in two consecutive years. 

 As to the CGL policy, policy number 1K4-62-00-99 covers from April 3, 1998 to

April 3, 1999, and policy number 1K4-62-00-00 covers from April 3, 1999 to April

3, 2000. As to the linebacker policy, policy number 1M4-62-00-99 covers from

April 3, 1998 to April 3, 1999, and policy number 1M4-62-00-00 covers from

April 3, 1999 to April 3, 2000.

4

neither of the CGL policies provide coverage for their claims and stipulated that

their claims for coverage are limited to the linebacker policies. 

On April 27, 2001, EMCC filed a declaratory judgment action in the district

court seeking a declaration that the linebacker policy did not cover Shrader’s and

Livingston’s claims against Mallard and Gilliland. On January 11, 2002, the

district court granted summary judgment in favor of EMCC, holding that the

linebacker policy was “unambiguous” and did not provide coverage to Mallard and

Gilliland for their sexual abuse of Shrader and Livingston. The district court

concluded that Mallard and Gilliland’s conduct was outside the scope of their

duties in conducting the business of the City of Attalla, and, therefore, not covered

by the linebacker policy. Shrader and Livingston timely appealed. 

II. STANDARD OF REVIEW

We review de novo the district court’s rulings on motions for summary

judgment. SCI Liquidating Corp. v. Hartford Fire Ins. Co., 181 F.3d 1210, 1212

(11th Cir. 1999) (citing Maniccia v. Brown, 171 F.3d 1364, 1367 (11th Cir. 1999)).
5

III. DISCUSSION

A. Alabama Law

In this diversity action, Alabama’s substantive law governs the interpretation

of the linebacker policy at issue. Provau v. State Farm Mut. Auto. Ins. Co., 772

F.2d 817, 819 (11th Cir. 1985) (holding that, under Erie Railroad v. Tompkins, 304

U.S. 64 (1938), a federal court hearing a diversity action must apply the controlling

substantive law of the state and that the construction of insurance contracts is

governed by substantive state law); see Hartford Fire Ins., 181 F.3d at 1214. 

Under Alabama law, the burden is on the insured to establish coverage exists under

an insurance policy. See Life & Casualty Ins. Co. of Tenn. v. Garrett, 35 So. 2d

109, 111 (Ala. 1948); see also Universal Underwriters Ins. Co. v. Stokes Chevrolet,

Inc., 990 F.2d 598, 602 (11th Cir. 1993) (citing Colonial Life & Accident Ins. Co.

v. Collins, 194 So, 2d 532, 535 (Ala. 1967)). Alabama law further provides that

while an insurance policy that contains no ambiguities must be enforced as written,

where an ambiguity exists, they “are to be resolved in favor of the insured.” 

Southern Guaranty Ins. Co. v. Wales, 218 So. 2d 822, 826 (Ala. 1969); see also

Guaranty National Ins. Co. v. Marshall County Bd. Of Educ., 540 So. 2d 745 (Ala.

1989). 

B. Shrader and Livingston’s Contentions
6

Shrader and Livingston argue that the district court erred because the

linebacker policy expressly covers civil rights violations, such as sexual assault

committed by City of Attalla employees. Shrader and Livingston emphasize that,

at a minimum, there is an ambiguity in the terms of the linebacker policy that

should be construed against EMCC, thereby resulting in coverage. 

As argued by Shrader and Livingston, Part I of the linebacker policy

provides coverage for personal injury damages paid in connection with a civil

rights violations as follows:

PART I–COVERAGE

A. Agreement

We will pay “Loss” and/or “Defense Expenses” to

which this insurance applies excess of the

deductible stated in the Declarations provided that:

 . . .

B. “Loss” means sums:

1. Which an “insured” is legally obligated to

pay as compensatory damages . . . 

because of a wrongful act.

. . .

D. “Personal Injury” means:

. . . 

f. Violations of constitutional/civil rights or

improper service of process as it relates

solely to the “organization’s” law

enforcement activities.

Although Part I provides coverage for personal injury, Part III of the linebacker

policy then excludes coverage for personal injury claims. But then an endorsement

to the linebacker policy deletes the exclusion for personal injury and amends the
3

The endorsement provides as follows:

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE

READ IT CAREFULLY.

PERSONAL INJURY ENDORSEMENT

For the additional premium charged, Exclusion H

[(“Personal Injury”] is deleted and

1. The definition of “Wrongful Act” is amended to read

as follows:

J. “Wrongful Act” means any of the following:

1. Actual or alleged errors;

2. Misstatement or misleading statement;

3. Act or omission or neglect or breach of

duty by an “insured”;

4. “Personal Injury”

in the discharge of “organization duties.”

2. The following Exclusions are added with respect to

“Personal Injury” Coverage.

This Policy does not apply to “Personal Injury”:

A. arising out of oral or written publication of

material if done by or at the direction of the

“Insured” with knowledge of its falsity;.[sic]

B. arising out of the willful violation of a penal

statute or 

 ordinance committed by or with the consent of the

“Insured”. 

7

definition of “Wrongful Act” to include personal injury.3 The net result is the

linebacker policy covers claims for personal injury, which is defined to include

civil rights violations.

Although providing coverage for civil rights violations, the linebacker policy

also limits the definition of “insured” to employees acting within the scope of their

duties as follows:
8

PART II–DEFINITIONS

. . . 

C. “Insured” means:

. . .

3. Employees of the “organization”

while acting within their scope of

duties while conducting the business

of the “organization” . . . . 

Shrader and Livingston emphasize that civil rights violations frequently involve

conduct outside of the scope of a police officer’s duties. Thus, Shrader and

Livingston argue that the policy’s language providing coverage for “[v]iolation of

constitutional/civil rights,” when read together with its definition of “insured” with

its limiting “scope of duties” language creates conflict between the provisions and

creates an inherent ambiguity within the policy which must be construed for the

insured’s benefit. 

Alternatively, Shrader and Livingston argue that limiting coverage for civil

rights violations only to those civil rights violations that occur in the scope of an

employee’s duties would result in illusory coverage. Shrader and Livingston

contend that most, if not all, civil rights violations occur outside the scope of an

employee’s duties. Therefore, according to Shrader and Livingston, denying

coverage will result in an exclusion or limitation essentially swallowing up the

purported coverage which, under Alabama law, violates the doctrine of illusory

coverage. See Industrial Chem. & Fiberglass Corp. v. Hartford Acc. & Indem. Co.,
4

As an alternative ground for denying recovery to Shrader and Livingston,

EMCC argues that the manner in which the underlying sexual assault claims were

settled does not result in Mallard and Gilliland’s being “legally obligated to pay

[any] compensatory damages” as required by the linebacker policy. After review

and oral argument, we conclude that this contention is without merit. 

5

To the extent that EMCC argues that coverage also should be denied

because “wrongful acts” as defined by the policy must be committed “in the

discharge of [City] duties,” we note that this argument is essentially a permutation

of their scope-of-duties argument.

9

475 So. 2d 472, 478-79 (Ala. 1985) (noting that “the law cannot countenance . . .

illusory ‘coverage’” in the context of construing ambiguous policies); see also

Titan Indem. Co. v. Newton, 39 F. Supp. 2d 1336, 1344-45 (N.D. Ala. 1999)

(noting that “Alabama recognizes [the illusory coverage doctrine] that the language

or interpretation of an ambiguous provision by an insurance company may be so

tortured as to result in ‘illusory’ coverage”)

C. EMCC’s Contentions

In response, EMCC argues that Shrader and Livingston cannot recover under

the linebacker policy because Mallard and Gilliland cannot show that they were

entitled to coverage as “insureds” as defined in the policy.4

 In making this

assertion, EMCC suggests that Mallard and Gilliland are excluded from coverage

because the linebacker policy defines an “insured” as “employees of the [City]

while acting within their scope of duties while conducting the business of the

[City],” (emphasis added), and that the act of sexual assault is always outside the

scope of a law enforcement officer’s duties.5
10

It is a well-settled principle of Alabama law that sexual assault lies outside

the scope of an employee’s duties. Doe v. Swift, 570 So. 2d 1209, 1211 (Ala.

1990) (citing numerous cases in which Alabama courts held that sexual misconduct

was outside the scope of employment). In defining the outer limits of the scope of

employment, the Alabama Supreme Court in Doe stated that “‘[t]he conduct of the

employee . . . must not be impelled by motives that are wholly personal, or to

gratify his own feelings or resentment, but should be in promotion of the business

of his employment.’” Id. (quoting Solmica of the Gulf Coast, Inc. v. Braggs, 232

So. 2d 638, 642 (Ala. 1970)) (emphasis in original). 

Moreover, the Alabama Supreme Court previously has held that an

insurance policy containing a definition of “insured” similar to that at issue in the

EMCC policy did not cover sexual assault by an employee of a private company. 

In Capital Alliance Insurance Co. v. Thorough-Clean, Inc., the Alabama Supreme

Court stated that where an insurance policy defined an “insured” as “‘employees . .

. but only for acts within the line and scope of their employment,’” an employee

from a private company who raped another employee “d[id] not qualify for

coverage under the terms of the policy, because he would have been acting outside

the line and scope of his employment in raping.” 639 So. 2d 1349, 1351 (Ala.

1994). However, the Alabama Supreme Court’s discussion in Capital Alliance

neither alludes to the insurance policy at issue covering civil rights violations nor 
11

addresses the construction of a policy containing coverage for civil rights

violations but restricting coverage to employees acting within their scope of duties. 

See generally Capital Alliance Ins. Co. v. Thorough-Clean, Inc., 639 So. 2d 1349

(Ala. 1994). Thus, the two clauses at issue here were not addressed in Capital

Alliance.

D. Titan I and Titan II

 We recognize that Titan Indemnity Co. v. Riley, 641 So. 2d 766, 768 (Ala.

1994) (Titan I) and the subsequent case of Titan Indemnity Co. v. Riley, 679 So.

2d 701 (Ala. 1996) (Titan II), did involve the interpretation of two insurance

clauses similar to those in dispute here. Titan II, 679 So. 2d at 705. However, as

explained below, the solution to the issue here is not clear from those decisions.

The underlying facts in Titan I and Titan II are the same. Titan Indemnity

Company brought a declaratory action seeking a determination of whether Titan

was obligated to defend (Titan I) and indemnify (Titan II) four City of

Montgomery police officers in connection with a 42 U.S.C. § 1983 action based on

violation of the plaintiff’s constitutional rights. The insurance policy in question

covered “Personal Injury,” which the policy defined as, inter alia, “[v]iolation of

civil rights,” and limited the definition of “insured” to “[law enforcement officers] .

. . but only for acts within the scope of their duties for [the City].” Titan II, 679 So.

2d at 703 & n.1 (citing Titan I, 641 So. 2d at 768). In Titan I, the Alabama
12

Supreme Court concluded that “the language of the policy d[id] preclude coverage

for intentional acts, but it also specifically provide[d] coverage for . . . offenses that

require proof of intent . . . [and] specifically provide[d] coverage for claims

brought under the Federal Civil Rights Act.” Titan I, 641 So. 2d at 768. As a

result, the conflict between the provisions created “an inherent ambiguity within

the policy.” Id. This conflicting language and resulting ambiguity in the policy,

when interpreted in favor of the insured, resulted in coverage for the defense of the

42 U.S.C. § 1983 claims against the officers. Id.

Titan II followed two years later and concluded that Titan Indemnity

Company must also indemnify the employees for any monetary claim paid in

settlement of the § 1983 claim. The Alabama Supreme Court rejected the

argument, which EMCC makes on appeal here, that a scope-of-duties limitation

restricts coverage for constitutional or civil rights violations, stating as follows:

Specifically, [Titan Indemnity Company] argues:

The Titan policy expressly requires

that the matters for which coverage is sought

must result from law enforcement activities,

and that no person claiming coverage is an

insured unless the acts complained of are

‘acts within the scope of their duties for’ the

City of Montgomery. The allegations made

against the Defendant officers in no way can

be construed to be in the furtherance of law

enforcement activities or within the scope of

their duties for the City. . . . 
13

 We are unpersuaded by these arguments–they are

essentially restatements of the ones Titan relied on in

[Titan I].

Titan II, 679 So 2d. at 705 (citing Brief for Titan Indemnity Co. at 58). Based on

the above quoted passage, Shrader and Livingston argue that in Titan II, the

Alabama Supreme Court considered and rejected the argument that a scope of

duties limitation in the definition of “insured” can limit broader insurance policy

provisions providing coverage for violations of constitutional and civil rights. 

The basis for this rejection, however, is unclear. As EMCC points out,

another section of the Titan II opinion appears to indicate that the Alabama

Supreme Court rejected this argument based only on a law-of-the-case ground. In

this regard, the Alabama Supreme Court stated as follows:

Given our conclusion in [Titan I], it would be inconsistent for us to

hold in this case, that the officers, who committed the conduct, were

not covered. Otherwise stated, if the conduct giving rise to this

dispute was covered as to Titan’s duty to defend, that same conduct

also provides the basis for imposing on Titan a duty to indemnify. We

conclude, therefore, that Titan I establishes the law of this case as to

Titan’s liability for indemnification under the policy. 

Titan II, 679 So. 2d at 705. Thus, it is unclear in Titan II whether the Alabama

Supreme Court rejected Titan Indemnity Company’s arguments on the merits,

concluding that coverage was required due to the ambiguity in coverage, or
6

Although we leave the proper construction of Titan II to the Alabama

Supreme Court, we note the argument that the language in the opinion appears to

point toward the Alabama Supreme Court’s conclusion that it was bound by the

prior decision in Titan I. First, there is no discussion of the conflict between the

“scope of duties” provision and the purported coverage for civil rights violations. 

See Titan II, 679 So. 2d at 704-06. Second, and more indicative, the Alabama

Supreme Court, in rejecting Titan’s argument, immediately thereafter concludes

that “Titan I establishes the law of this case as to Titan’s liability for

indemnification under the policy.” Id. at 705. 

14

whether the court simply was bound by the prior ruling in Titan I.

6

 As a result, this

Court faces an unsettled issue of Alabama law that is determinative of the issue in

this appeal. We, therefore, certify this question for resolution by the Alabama

Supreme Court. 

E. Certification to the Alabama Supreme Court

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR

THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF ALABAMA

PURSUANT TO RULE 18 OF THE ALABAMA RULES OF APPELLATE

PROCEDURE.

TO THE SUPREME COURT OF ALABAMA AND ITS HONORABLE

JUSTICES:

Because this appeal depends on resolution of this question of unsettled Alabama

law, we certify the following question to the Supreme Court of Alabama:

DOES AN INSURANCE POLICY PROVISION LIMITING AN “INSURED” TO

AN EMPLOYEE ACTING “WITHIN THE SCOPE OF DUTIES” WHILE
15

CONDUCTING THE BUSINESS OF THE EMPLOYER CONFLICT WITH A

SEPARATE PROVISION IN THE SAME INSURANCE POLICY PROVIDING

COVERAGE FOR “VIOLATIONS OF CONSTITUTIONAL/CIVIL RIGHTS”

SO AS TO CREATE AN AMBIGUITY THAT MUST BE CONSTRUED

AGAINST THE INSURER?

The phrasing used in this certified question should not restrict the Supreme Court’s

consideration of the problem posed by this case. This extends to the Supreme

Court’s restatement of the issues and the manner in which the answer is given. To

assist the Supreme Court’s consideration of the case, the entire record, along with

the briefs of the parties, shall be transmitted to the Supreme Court of Alabama.

QUESTION CERTIFIED.