*

The Honorable John A. Jarvey, United States District Judge for the Southern

District of Iowa, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 10-2787

___________

Tactical Stop-Loss, LLC, et al., *

*

Plaintiffs - Appellants, *

* Appeal from the United States

v. * District Court for the

* Western District of Missouri.

Travelers Casualty and Surety *

Company of America, *

*

Defendant - Appellee. *

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Submitted: April 14, 2011

Filed: September 30, 2011 

___________

Before LOKEN and MURPHY, Circuit Judges, and JARVEY,*

 District Judge.

___________

LOKEN, Circuit Judge.

Tactical Stop-Loss and an affiliate (the “Tactical Group”) administer trust

accounts for insurance companies that provide stop-loss coverage to employeebenefit-plan sponsors. Tactical Group purchased a Crime Policy from Travelers

Casualty and Surety Company insuring against loss from theft or forgery by an

employee “acting alone or in collusion with other persons,” but excluding loss

“resulting directly or indirectly from any fraudulent, dishonest or criminal act by . . .
1

The Honorable Fernando J. Gaitan, Jr., Chief Judge of the United States

District Court for the Western District of Missouri. 

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an Officer-Shareholder, whether acting alone or in collusion with others.” The Policy

defined Officer-Shareholder as “any officer who has a twenty-five percent (25%) or

greater ownership interest.” 

Tactical Group filed a claim under the Policy when it discovered that its Chief

Executive Officer, James E. Fox, a forty-percent shareholder, had fraudulently

transferred $930,104.31 from Tactical Group’s operating account to his personal bank

account with the assistance of Chief Operating Officer Terry M. Griffith, who was not

a shareholder. When Travelers did not promptly advise whether the claim would be

paid, Tactical Group commenced this diversity action, asserting claims for breach of

the insurance contract and for vexatious refusal to pay. Applying Missouri law, the

district court1

 granted Travelers summary judgment, concluding that the Policy

unambiguously excluded losses caused by Fox, and by Griffith acting in collusion

with Fox. Tactical Group appeals. Reviewing the district court’s interpretation of the

Policy and its grant of summary judgment de novo, as Missouri law requires, we

affirm. See DeMeo v. State Farm Mut. Auto. Ins. Co., 639 F.3d 413, 415 (8th Cir.

2011) (standard of review).

In 2006, Griffith noticed transfers from Tactical Group’s operating account to

an unknown bank account. Fox admitted he was transferring money to his personal

account. Rather than blow the whistle, Griffith helped Fox conceal his on-going

embezzlement. She transferred funds from client trust accounts to the operating

account to cover shortfalls caused by Fox. She reported to Fox the amounts of money

transferred to his personal account every month. She created a fraudulent bank

statement for one trust account to conceal the theft from a client. She also failed to

answer inquiries from claims and accounting personnel that would divulge

information about the scheme and misled the Tactical Group’s auditors about trust
2

Tactical Group cites cases in which a “collusion with others” provision in a

policy’s insuring clause was held to limit a covered loss to a single policy limit. See

Scirex Corp. v. Fed. Ins. Co., 313 F.3d 841, 851-52 (3d Cir. 2002). Here, by contrast,

the issue is whether the Policy covers losses caused by the collusive acts of Griffith

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account liabilities. Fox rewarded Griffith for these efforts, paying her an inordinate

salary for her position, paying bonuses when “there was enough cash flow,” and

employing her son, daughter-in-law, and former husband at Tactical Stop-Loss.

Tactical Group discovered the loss and in April 2008 submitted a claim under

the Policy a few days after Fox committed suicide. The sworn Proof of Loss stated

that the cause of loss was “Griffith acting either alone or in collusion with Fox to

misappropriate company funds and funds belonging to the Company’s clients.” In an

earlier Notice of Claim letter, Tactical Group explained that its claim was not based

on Fox’s actions “as we realize that said loss is excluded.” However, “evidence that

we have now uncovered demonstrates that Griffith not only aided and abetted Fox in

stealing from [Tactical Group and clients] but that her conduct was intentional and

unlawful, both by her silence and her affirmative acts.”

A. On appeal, Tactical Group first argues that the Policy’s insuring clause

unambiguously provides coverage for losses caused by the dishonesty of nonshareholder employee Griffith, whether or not she acted “alone or in collusion with

other persons” such as Officer-Shareholder Fox. The Officer-Shareholder exclusion

applies to loss caused by the acts of Fox, Tactical Group concedes, but not to loss

caused by the acts of a colluding employee, Griffith. Relying on the Second Circuit’s

decision in Hall v. Aetna Casualty & Surety Co., 89 F.2d 885 (2d Cir. 1937), Tactical

Group argues that coverage exists if Griffith’s acts were a “but for” cause of the loss,

regardless whether Fox was involved. The purpose of the exclusion, Tactical Group

asserts, is to permit the insurer to limit coverage by aggregating losses from multiemployee conspiracies under a single loss limitation, not to deny coverage when a

non-excluded employee has caused loss while colluding.2
despite the “collusion with others” provision in the Officer-Shareholder exclusion.

3

Although Tactical Group asserts that Griffith “acted independently” in causing

the loss, we agree with the district court that these assertions “are belied by the

allegations and evidence in this case.” 

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Rejecting this interpretation of the Policy as “strained, at best,” the district court

concluded that the Officer-Shareholder exclusion unambiguously denies coverage for

the loss, even if caused in part by employee Griffith’s dishonesty, because the

undisputed evidence shows that “acts alleged to have been committed by Griffith were

all part of her active participation” in Fox’s criminal scheme, and the OfficerShareholder exclusion unambiguously excludes “losses attributable to the OfficerShareholder [Fox] and the ‘other’ colluding with him.” We agree. The Policy

excludes loss resulting from the dishonest acts of Officer-Shareholder Fox, “whether

acting alone or in collusion with others.” The exclusion includes losses “resulting

directly or indirectly” from the Officer-Shareholder’s dishonesty, reflecting a clear

intent to exclude such a loss even if the colluder’s acts were a “but for” cause. The

policy at issue in Hall was materially different: the term “whether acting alone or in

collusion with others” appeared in the insuring clause, but the provision excluding

loss caused by “acts of any director of the Insured” did not include acts “in collusion

with others.” 89 F.2d at 885. Thus, unlike the Officer-Shareholder exclusion here

at issue, the exclusion in Hall did not unambiguously include the acts of colluders. 

It is not genuinely disputed that the acts of Griffith were all part of her active

collusion in Fox’s crime.3

 Therefore, applying the exclusion to the facts of this case

is consistent with the Missouri public policy against “allow[ing] one to insure against

one’s own thefts, dishonest acts or intentionally inflicted damage.” East Attucks

Cmty. Housing, Inc. v. Old Republic Sur. Co., 114 S.W.3d 311, 319 (Mo. App. 2003).

It would be inconsistent with this public policy, as well as contrary to the plain

meaning of the exclusion, to allow the insured to recover an otherwise excluded loss

simply because the dishonest owner persuaded a lesser employee to help him
4

Missouri law generally provides that, when there are concurrent proximate

causes of an injury, a liability insurer is liable so long as one is a covered cause. See

Bowan v. Gen. Sec. Indem. Co. of Ariz., 174 S.W.3d 1, 5 (Mo. App. 2005). 

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perpetrate the theft. Like the acts of minor children in In re Payroll Express Corp.,

216 B.R. 344, 364 (S.D.N.Y. 1997), Griffith’s dishonest conduct did not

independently cause the loss that was proximately caused by Fox’s theft. Thus, we

need not consider whether the exclusion would extend to loss caused by a dishonest

lesser employee who perpetrated a distinct scam in knowing collaboration with a

dishonest owner’s independent scam. Cf. Purdy Co. of Ill. v. Transp. Ins. Co., 568

N.E.2d 318, 322-24 (Ill. App. 1991).4

Tactical Group further argues that, if we properly apply Missouri’s “reasonable

expectations” doctrine, we must conclude that the Policy unambiguously provides

coverage. We disagree. “Absent . . . statutory or public policy consideration, the

principle of ‘reasonable expectations’ is of no avail to alter the terms of an otherwise

unambiguous policy of insurance.” Nabil v. State Farm Mut. Auto. Ins. Co., 877

S.W.2d 177, 179 (Mo. App. 1994). Here, the Officer-Shareholder exclusion is

consistent with Missouri public policy. East Attucks, 114 S.W.3d at 319. Its

unambiguous terms must be enforced. 

B. Alternatively, Tactical Group argues that its claim is covered because the

Officer-Shareholder exclusion is ambiguous. Missouri courts construe policy

language that is susceptible to two meanings favorably to the insured, particularly

“[p]rovisions restricting coverage.” Meyer Jewelry Co. v. Gen. Ins. Co. of Am., 422

S.W.2d 617, 623 (Mo. 1968). But exclusions that “are clear and unambiguous within

the context of the policy as a whole . . . are enforceable.” Todd v. Mo. United Sch.

Ins. Council, 223 S.W.3d 156, 163 (Mo. 2007). Ambiguity arises when “duplicity,

indistinctness, or uncertainty” makes the policy “reasonably open to different
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constructions.” Krombach v. Mayflower Ins. Co., 827 S.W.2d 208, 210 (Mo. banc

1992) (citations omitted). 

Tactical Group focuses its argument on the use of an undefined word, “others,”

in both the insuring clause and the exclusion. This creates an ambiguity, Tactical

Group suggests, as to whether the exclusion applies only to collusion with nonemployees, not to collusion with employees such as Griffith whose dishonesty is

covered in the insuring clause. Like the district court, we disagree. The insuring

clause limits coverage to theft by “employees,” so the reference to “in collusion with

other persons” necessarily refers to collusion with non-employees. The term

“collusion with others” in the Officer-Shareholder exclusion, on the other hand, must

be construed by reference to its antecedent, the person whose dishonesty is excluded,

in this case Officer-Shareholder Fox. See United States v. Brumley, 116 F.3d 728,

741 (5th Cir.) (en banc) (Jolly, J., dissenting) (“Grammarians teach that the word

‘another,’ when used as a pronoun, is an indefinite pronoun which has no specific

meaning in and of itself but draws its meaning from the context in which it is used.”),

cert. denied, 522 U.S. 1028 (1997). Thus, consistent with Missouri public policy, the

exclusion unambiguously includes loss caused by an owner acting in collusion with

other employees. We agree with the district court that the Officer-Shareholder

exclusion is unambiguous and excludes Tactical Group’s claim.

C. Our decision that the Policy does not cover Tactical Group’s claim for loss

caused by the dishonest acts of Griffith means that we need not consider the claim that

Travelers vexatiously refused to pay that claim. See Calvert v. Safeco Ins. Co. of

Am., 660 S.W.2d 265, 269 (Mo. App. 1983).

The judgment of the district court is affirmed. 

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