Opinion ID: 2067104
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Heading: Applicable law. Iowa Code section 670.2 subjects municipalities to liability for their torts and those of their officers and employees. It states in pertinent part:

Text: Except as otherwise provided in this chapter, every municipality is subject to liability for its torts and those of its officers and employees, acting within the scope of their employment or duties, whether arising out of a governmental or proprietary function. For the purposes of section 670.2, a county is a municipality. See Iowa Code § 670.1(2). Iowa Code section 670.4 immunizes municipalities from tort liability arising in several specific instances. At issue here is Iowa Code section 670.4(2), immunizing municipalities from tort liability for [a]ny claim in connection with the assessment or collection of taxes. Iowa Code section 670.12with several exceptionsimmunizes all officers and employees of municipalities from tort liability as to all claims exempted in section 670.4: All officers and employees of municipalities are not personally liable for claims which are exempted under section 670.4, except claims for punitive damages, and actions permitted under section 85.20. An officer or employee of a municipality is not liable for punitive damages as a result of acts in the performance of a duty, unless actual malice or willful, wanton and reckless misconduct is proven. Municipalities waive section 670.4 immunities when they purchase liability insurance under the conditions specified in Iowa Code section 670.7. B. Background. Before considering the issues raised, we think it would aid our analysis to review the state of the law leading up to the enactment of section 670.7. Before enactment of statutes waiving governmental immunity, counties were not as a rule liable for torts committed by them in the exercise of a governmental function. The rule was otherwise if the tort was committed in the exercise of a county's proprietary or private function. Wittmer v. Letts, 248 Iowa 648, 650-52, 80 N.W.2d 561, 562-63 (1957). County employees were still liable for their own torts even though such employees were engaged in a governmental function and even though the county was exempt under governmental immunity. Anderson v. Calamus Community Sch. Dist., 174 N.W.2d 643, 644 (Iowa 1970) (citation omitted). In addition, if the county purchased liability insurance, such purchase in no way waived the county's right to raise its defense of governmental immunity. McGrath Bldg. Co. v. City of Bettendorf, 248 Iowa 1386, 1392-94, 85 N.W.2d 616, 620-21 (1957). We considered the insurance as protecting against liability and not as creating or increasing liability. Id. The Iowa Tort Claims Act was enacted in 1965. See 1965 Iowa Acts ch. 79. It allowed claims against the State of Iowa but not against its political subdivisions, such as counties, school districts, cities, and the like. Graham v. Worthington, 259 Iowa 845, 853-55, 146 N.W.2d 626, 632-33 (1966). In 1967 the legislature passed legislation allowing claims against named governmental subdivisionsincluding countiesunder certain stated conditions. See 1967 Iowa Acts ch. 405. This legislation was first codified in the 1971 Iowa Code as chapter 613A. Iowa Code section 613A.7 (1971), now section 670.7, pertinently provided: The governing body of any municipality may purchase a policy of liability insurance insuring against all or any part of liability which might be incurred by such municipality or its officers, employees and agents under the provisions of section 613A.2 [now section 670.2] and may similarly purchase insurance covering torts specified in section 613A.4 [now section 670.4].... The procurement of such insurance constitutes a waiver of the defense of governmental immunity as to those exceptions listed in section 613A.4 [now section 670.4] to the extent stated in such policy but shall have no further effect on the liability of the municipality beyond the scope of this chapter.... See Iowa Code § 613A.1 (defining municipality to include counties). In 1986 the legislature substantially modified and amended section 613A.7. See 1986 Iowa Acts ch. 1211, § 34. Section 613A.7 with those amendments now appears as section 670.7. This change from chapter 613A to chapter 670 occurred in the 1993 Iowa Code. Section 670.7with the 1986 amendments italicizednow pertinently provides: The governing body of a municipality may purchase a policy of liability insurance insuring against all or any part of liability which might be incurred by the municipality or its officers, employees, and agents under section 670.2 [formerly section 613A.2] and section 670.8 [formerly section 613A.8] and may similarly purchase insurance covering torts specified in section 670.4 [formerly section 613A.4]. The governing body of a municipality may adopt a self-insurance program, including but not limited to the investigation and defense of claims, the establishment of a reserve fund for claims, the payment of claims, and the administration and management of the self-insurance program, to cover all or any part of the liability. The governing body of a municipality may join and pay funds into a local government risk pool to protect itself against any or all liability.... The procurement of such insurance constitutes a waiver of the defense of governmental immunity as to those exceptions listed in section 670.4 [formerly section 613A.4] to the extent stated in the policy ..., but if a municipality adopts a self-insurance program or joins and pays funds into a local government risk pool such action does not constitute a waiver of the defense of governmental immunity as to the exceptions listed in section 670.4 [formerly section 613A.4].... A self-insurance program or local government risk pool is not insurance and is not subject to regulation under chapters 505 through 523C. Before the 1986 amendments, a municipality could purchase liability insurance to cover claims specified in section 670.4. If it did so, such a purchase constituted a waiver of governmental immunity as to those claims to the extent stated in the policy. After the 1986 amendments, the municipality has several options to protect itself against liability for claims specified in section 670.4. It can (1) purchase insurance, (2) self-insure, or (3) join and pay funds into a local government risk pool. If the municipality purchases insurance, such purchase constitutes a waiver of the defense of governmental immunity as to the claims listed in section 670.4 to the extent stated in the policy. If the municipality self-insures or joins and pays funds into a local governmental risk pool, its actions do not constitute such a waiver. C. The merits. The city contends the county undisputably purchased a liability insurance policy that covers any claim in connection with the assessment or collection of taxes. Therefore, the city concludes, the county's purchase waived any governmental immunity as to such claims. The assessor and auditor seek to uphold the district court ruling on several grounds. First, neither the county's participation in the risk pool nor the risk pool's procurement of the errors and omissions policy constituted a waiver of the immunity of section 670.4(2). Second, the errors and omissions policy did not expressly state, as required by section 670.7, that it was providing coverage for claims in connection with the assessment or collection of taxes. Last, the errors and omissions policy definition of loss excluded insurance coverage for the city's assessment or collection of taxes claims. This is so because the assessor and auditor would not be legally obligated to pay any claim for which there existed an immunity for the assessment or collection of taxes under section 670.4(2). For all these reasons, the assessor and auditor assert they are entitled to the immunity of section 670.4(2). 1. County's participation in the risk pool and the risk pool's procurement of the errors and omissions policy for the county. In interpreting statutes, our ultimate goal is to determine legislative intent. Peffers v. City of Des Moines, 299 N.W.2d 675, 678 (Iowa 1980). When the language of a statute is plain and its meaning is clear, we should not reach for meaning beyond its express terms. Meier v. Sac & Fox Indian Tribe, 476 N.W.2d 61, 63-64 (Iowa 1991). Nor should we resort to statutory rules of construction to determine legislative intent. Id. at 64. When the statute's language is not clear and plain, we do resort to well-established rules of statutory construction. Peffers, 299 N.W.2d at 678. One such rule provides that we are bound by what the legislature said, rather than what it should or might have said. State v. Jones, 464 N.W.2d 241, 242 (Iowa 1990); Iowa R.App.P.14(f)(13). We may not, under the guise of statutory construction, enlarge or otherwise change the terms of a statute. Jones, 464 N.W.2d at 242. Finally, [w]e may consider the language used in the statute, the objects sought to be accomplished, the evils and mischiefs sought to be remedied and place a reasonable construction on the statute which will best effect its purpose rather than one which will defeat it. Peffers, 299 N.W.2d at 678. We agree with the assessor and auditor that the county's mere participation in the risk pool did not constitute a waiver of governmental immunity as to the exceptions in section 670.4. Section 670.7 clearly says so: if a municipality ... pays funds into a local government risk pool such action does not constitute a waiver of the defense of governmental immunity as to the exceptions listed in section 670.4. The risk pool's procurement of the errors and omissions policy for the county is another matter. The county paid a $10,798 premium for the errors and omissions policy and the insurance company issued a separate errors and omissions policy to the county. The assessor and auditor think there was no waiver of immunity because the county purchased insurance through a risk pool rather than directly from a private insurer. In passing section 613A.7now section 670.7we think the legislature intended to keep intact, to a limited extent, the common law rule that existed before the enactment of statutes waiving governmental immunity. As mentioned, that rule provided that a municipality's mere purchase of insurance does not constitute a waiver of its immunity. As this court explained, there is good reason for the common law rule. At common law, governmental immunity did not cover all potential liability of a municipality. For example, [n]either the city nor its employees were protected against liability for negligence incurred in performing proprietary functions; and the city at least had liability for its failure to keep its streets and parks reasonably safe and free from nuisance. McGrath, 248 Iowa at 1393, 85 N.W.2d at 621 (holding Iowa Code section 368A.1(12) authorizing cities and towns to purchase liability insurance was not intended to enlarge liability of a city or town purchasing such insurance). Likewise, now, there are claims to which governmental immunity does not apply. See Iowa Code §§ 670.2, 670.12. Also, municipalities have a duty to defend and indemnify officers and employees against any tort claims arising out of their employment. See Iowa Code § 670.8. The language of section 670.7 makes clear that the legislature intended to authorize municipalities to purchase liability insurance insuring against such claims. The language of section 670.7 makes it equally clear thatas to claims listed in section 670.4 to which governmental immunity does applymunicipalities have authority to purchase a liability insurance policy insuring against them. And governmental immunity as to those claims is waived but only to the extent stated in such policy. So, to this extent, the legislature has modified the common law rule that the mere purchase of insurance does not constitute a waiver of immunity. That brings us to the decisive language in section 670.7: [I]f a municipality adopts a self-insurance program or joins and pays funds into a local government risk pool such action does not constitute a waiver of the defense of governmental immunity as to the exceptions listed in section 670.4. A risk pool is another form of self-insurance but on a group basis. The members of the group share the risks. The following excerpt from an affidavit supporting the assessor's and auditor's summary judgment motion buttresses this description of the risk pool here: In summary, Cedar County, Iowa is and has been a member of the Heartland Insurance Risk Pool since January 1, 1988. That Risk Pool provides certain coverages for Cedar County which the Risk Pool members have decided to fund [themselves]. Certain other coverages are procured by the Risk Pool for its members. The Risk Pool procured for Cedar County and other County Risk Pool members the public officer's errors and omissions coverages. The Risk Pool members then confirmed the appropriateness of self-funding certain coverages and of procuring certain other coverages from private vendors. The Risk Pool members further confirmed the premiums for the different coverages which each member could select and would be required to pay. The Risk Pool, for all of its members, would search out private insurance companies (with regard to those coverages that the Risk Pool did not choose to self-fund) and obtained quotes based upon a group basis for different insurance coverages which its members could select. This was done in the procurement of the public officer's errors and omissions policy which Cedar County procured effective July 1, 1994 through June 30, 1995. The Risk Pool then would bill all of its members for the amounts necessary to pay premium charges either for self-funded coverages made available by the Risk Pool and for the amounts such privately selected vendors required as premiums for the policies the Risk Pool procured for its members. The self-funded coverages in the risk pool are different from coverages provided through private policies the pool procures on behalf of its members. In the former, the pool pays the claims from the pool of money collected from pool members. In effect, pool members share and pay the claims. In the latter, the insurer issuing the policies pays the claims, and pool members do not share and pay the costs of such claims. Additionally, each county pays a separate premium for the private policies. We think the pool's procurement of private policies on behalf of pool members is substantially no different from insurance policy coverage any agent might procure on behalf of a municipality. The latter clearly waives governmental immunity. We see no reason why the same rule should not apply to the former. As the city points out, a contrary interpretation would require the following additional italicized language to be read into section 670.7: [I]f a municipality adopts a self-insurance program or joins and pays funds into a local government risk pool, which in turn purchases a liability insurance policy, such action does not constitute a waiver of the defense of governmental immunity.... Additionally, the legislature made sure that a county's self-insurance program and the risk pool are not insurance that would waive governmental immunity as to the section 670.4 exceptions. See Iowa Code § 670.7 ([I]f a municipality adopts a self-insurance program or joins and pays funds into a local government risk pool such action does not constitute a waiver of the defense of governmental immunity as to the exceptions listed in section 670.4....). This indicates to us that the legislature knew how to exemptfor section 670.7 purposesprivate policy coverage purchased by the pool on behalf of pool members. Because it did not provide such an exemption, we take that to mean it did not intend to do so. Section 670.4 clearly provides that if a liability insurance policy is purchased covering the section 670.4 exceptions, governmental immunity is waived as to those exceptions to the extent stated in the policy. The undisputed facts show that the pool purchased an errors and omissions policy on behalf of the county and the county paid $10,798 in premiums for it. This purchase waived governmental immunity as to claims in connection with the assessment or collection of taxes provided the policy covered such claims. That brings us to the second ground the assessor and auditor rely on to uphold the district court's ruling. 2. Policy did not expressly state it was providing coverage for claims arising from the assessment or collection of taxes. As mentioned, section 670.7 provides that the procurement of 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. The pertinent section 670.4 exception is any claim in connection with the assessment or collection of taxes. The question then is whether the public official's errors and omissions policy here covers claims in connection with the assessment or collection of taxes. Section I.A of the policy designates public officials as insureds. The policy pertinently defines public officials as those persons, individually or collectively, acting within the scope of their official capacity who were, now are, or shall be duly elected or appointed officials ... of the public entity. The policy defines public entity as the county named insured in the policyin this case, Cedar County. The assessor and auditor are appointed or elected officials of Cedar County. See Iowa Code §§ 39.17, 441.1, 441.6. Therefore, they are insureds under the policy. The insuring clause in the policy pertaining to public officials provides: In consideration of the payment of the required premium, and in reliance upon the statements in the written application made a part hereof, the Underwriters agree as follows: