Opinion ID: 2067104
Heading Depth: 1
Heading Rank: 5

Heading: insuring agreement and claims made clause

Text: A. With the insured public officials (hereinafter insureds) that if, during the policy period, any claim or claims are first made against the insureds, individually or collectively, for a wrongful act, the underwriters will pay on behalf of, in accordance with the terms of this policy, the insureds, or any of them, their executors, administrators or assigns, for all loss incurred by said insureds, or any of them by reason of any wrongful act. The policy pertinently defines loss as such amounts ... which the insureds are legally obligated to pay, arising out of a wrongful act ... Wrongful act is defined in the policy as any actual or alleged error or misstatement, omission, act of neglect or breach of duty including misfeasance, malfeasance or nonfeasance by the public officials in their official capacity, individually or collectively, or any manner claimed against them solely by reason of their having served or acted in an official capacity under the definition of public officials. The exclusion section of the policy does not exclude any claims in connection with the assessment or collection of taxes. So we are left with the question whether failures to correctly assess or collect taxes are wrongful acts within the meaning of the policy. For reasons that follow, we think such failures are wrongful acts within the meaning of the policy. Iowa Code section 331.510(4) requires the county auditor to make [a]n annual report not later than January 1 to the governing body of each taxing district [here the city] in the county of the assessed valuations of taxable property in the taxing district [here the city] as reported to the department of management. In addition, Iowa Code section 331.512(11) requires the auditor to [f]urnish the assessor a plat book which is platted with the lands and lots within the assessment district as provided in section 441.29. As to the county assessor, Iowa Code section 441.17(2) requires this official to [c]ause to be assessed, in accordance with section 441.21, all the property in the assessor's county or city, except property exempt from taxation, or the assessment of which is otherwise provided for by law. In addition, Iowa Code section 441.17(3) gives the assessor access to all public records of the county and requires the assessor to make or cause to be made a careful examination of all such records and files in order to obtain all available information which may contribute to the accurate listing at its taxable value, and to the proper persons, of all property subject to assessment by the assessor. In their statement of material facts as to which no genuine controversy exists, the assessor and auditor concede that through omission, act of neglect, or breach of duty the county auditor and the county assessor failed to properly show on the tax lists of the City of West Branch the inclusion of the annexed properties described in Exhibit A to the Petition for the fiscal years of 1989/1990, 1990/1991, 1991/1992 and 1992/1993. Given the breach of the statutory duties we set out above and given this concession, we conclude as a matter of law that the assessor and auditor committed wrongful acts within the meaning of the policy. Nevertheless, the assessor and auditor contend that governmental immunity has not been waived because the policy did not expressly state, as required by Iowa Code section 670.7, that it was providing coverage for the assessment or collection of taxes, otherwise immune under section 670.4(2). In short, the assessor and auditor would require coverage language in the policy like the following: The insureds are hereby provided coverage for failing to correctly assess or collect taxes. The assessor and auditor insist that the following italicized language in section 670.7 supports their contention: The procurement of such insurance constitutes a waiver of the defense of governmental immunity as to those exceptions listed in section 670.4 to the extent stated in the policy. We refuse to give the language to the extent stated in the policy such a narrow construction. Had the legislature intended such a narrow meaning it could easily have used language to accomplish this aim. Because the legislature did not, we refuse to ascribe such an intention on its part. In addition, we thinkat least as to the assessorthat a contrary interpretation would render coverage for errors in connection with the assessment or collection of taxes meaningless as to that office. We can hardly conceive of any duty pertaining to the assessor that does not relate to the assessment and collection of taxes. 3. Policy's definition of loss as excluding coverage for claims in connection with the assessment or collection of taxes. The policy pertinently defines loss as such amounts ... which the insureds are legally obligated to pay, arising out of a wrongful act. The assessor and auditor argue that they are not legally obligated to pay the city's claims because section 670.4(2) immunizes them against any liability for the assessment or collection of taxes. The short answer to this argument is that the defense of governmental immunity was waived when the county purchased the policy. The city's claim in connection with the assessment and collection of taxes was therefore not a claim exempted from liability because of governmental immunity. See Iowa Code § 670.12 (All officers and employees of municipalities are not personally liable for claims which are exempted under section 670.4....) (emphasis added). The undisputed facts show that the two officials committed a wrongful act within the meaning of the policy and the city suffered loss as a result. The two officers are therefore legally obligated to pay the city's claims.