United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                               ________________

                                  No. 05-2754
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Missouri Public Entity       Risk        *
Management Fund,                         *
                                         *
            Appellee,                    *      Appeal from the United States
                                         *      District Court for the
      v.                                 *      Western District of Missouri.
                                         *
Investors Insurance Company of           *             [PUBLISHED]
America,                                 *
                                         *
            Appellant.                   *

                               ________________

                               Submitted: January 13, 2006
                                   Filed: June 28, 2006
                               ________________

Before SMITH and HANSEN, Circuit Judges, and BOGUE,1 District Judge.
                         ________________

HANSEN, Circuit Judge.

       This diversity-based declaratory judgment case involves a dispute over the
interpretation of an excess insurance policy issued by Investors Insurance Company
of America ("Investors") to the Missouri Public Entity Risk Management Fund
("MOPERM"). There is no dispute that Missouri law governs the interpretation and


      1
       The Honorable Andrew W. Bogue, United States District Judge for the District
of South Dakota, sitting by designation.
application of the insurance contract at issue. The district court2 granted summary
judgment to MOPERM, concluding that excess insurance coverage exists under the
policy, and Investors appeals.

        MOPERM is a statutorily-created corporate body that provides liability
insurance coverage for Missouri public officials, cities, counties, and various other
public entities. MOPERM purchased an excess insurance policy from Investors to
cover claims exceeding $900,000 for a single incident or exceeding $6,000,000 for the
annual aggregate of all claims. The policy states that Investors "will pay those sums
that the Insured becomes legally obligated to pay as damages because of 'wrongful
acts' to which this coverage applies." (Appellant's App. at 48.) The policy defines an
"Insured" as "Member Agencies of MOPERM and any elected or appointed official
of the Member Agency . . . while acting within the course and scope of duties." (Id.
at 51.) As relevant here, the excess policy provides coverage for wrongful acts of a
county or an official acting within the scope of the official's duties. The policy defines
a "wrongful act" as including "any alleged or actual act, error or omission, or breach
of duty, or violation of any federal, state or local civil rights, by a[n] Insured while
acting within the scope of his/her duties as a public official." (Id. at 53.) The policy
was later modified to add Endorsement No. 19, which expressly provides "coverage
for discrimination prohibited by law." (Id. at 85.)

        MOPERM filed this declaratory judgment action, seeking a determination of
liability under the excess insurance policy with regard to four unrelated employment
discrimination claims that it had either settled or lost at trial but for which Investors
had denied coverage under the excess insurance policy. MOPERM alleged it was
entitled to indemnification for the claims under Endorsement 19 of the policy because
the claims all involved "discrimination prohibited by law." While the district court


      2
      The Honorable Nanette K. Laughrey, United States District Judge for the
Western District of Missouri.
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found coverage for all four claims, only one of these claims is at issue in this
appeal–that of Darlene Hellerich against Jerome Biggs and Andrew County, Missouri
("the Hellerich claim").

       The allegations of the Hellerich claim are these: Darlene Hellerich worked for
Jerome Biggs, a lawyer who had a private practice and served as the Andrew County
prosecuting attorney. Hellerich worked as an assistant in the private law firm and was
also a county employee, serving as clerk for the prosecutor's office. In the office and
during work time, Biggs engaged in outrageously offensive and discriminatory
conduct toward Hellerich. Also, Hellerich alleged that a custodian for the county,
Gary Reed, engaged in inappropriate touching of Hellerich's breasts on more than one
occasion and joined in Biggs's harassing and discriminatory banter as well. Hellerich
finally felt forced to resign due to their conduct toward her.

       Hellerich filed suit against Biggs in state court, alleging intentional and
negligent infliction of emotional distress on the basis of Biggs's conduct in the
workplace. She also filed charges of discrimination with the Missouri Human Rights
Commission and the Equal Employment Opportunity Commission ("EEOC") against
Andrew County (her employer) and Biggs (her immediate supervisor), alleging sexual
harassment and a hostile environment at work due to the conduct of Biggs and Reed.
In the EEOC charge, Hellerich further asserted that during her employment with the
county, there was no established procedure for registering discrimination complaints,
nor was there an existing antisexual harassment policy in effect governing county
employees.

       MOPERM settled the Hellerich claim in its entirety. In exchange for the
settlement proceeds, Hellerich dismissed the pending state court lawsuit against Biggs,
withdrew the EEOC charges of discrimination against Biggs and the county, and
relinquished her right to sue on the administrative charges. Andrew County agreed
to maintain thereafter an antiharassment policy and to provide appropriate training on

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harassment issues to all county employees. The Hellerich settlement did not exceed
the single claim floor of MOPERM's policy with Investors, but it caused MOPERM's
annual aggregate claims to exceed $6,000,000, triggering coverage on the excess
insurance policy. Thus, MOPERM sought indemnification from Investors. Investors
disputed the claim on several grounds. The district court granted summary judgment
to MOPERM, concluding that excess coverage existed for this claim under the
language of the policy and Missouri law.

       We review de novo both the district court's grant of summary judgment, see
Baum v. Helget Gas Prods., Inc., 

, 1021 (8th Cir. 2006), and the district
court's interpretation of state law, Salve Regina Coll. v. Russell, 

, 231
(1991); Myers v. Richland County, 

, 749 (8th Cir. 2005). Under
Missouri law, "[a]n insured must bring itself within the terms of the policy and must
carry the burden of offering substantial evidence that the underlying claim is covered
by the policy." Trans World Airlines, Inc. v. Associated Aviation Underwriters, 

, 618-19 (Mo. Ct. App. 2001) (internal marks omitted). "The courts are
to enforce insurance contracts as written unless an ambiguity requires the court to
impose various rules of interpretation." Hunt v. Everett, 

, 250 (Mo.
Ct. App. 2006). "[W]e construe ambiguous provisions in an insurance policy against
the insurer." 

however, "will not distort unambiguous policy language
to create an ambiguity." Haulers Ins. Co. v. Wyatt, 

, 546 (Mo. Ct.
App. 2005). We give effect to the intent of the parties as expressed in the contract
"unless to do so would violate public policy." E. Attucks Cmty. Housing, Inc v. Old
Republic Sur. Co., 

, 319 (Mo. Ct. App. 2003). Additionally, if "an
insured risk and an excluded risk constitute concurrent proximate causes [for a loss],
a liability insurer is liable so long as one of the causes is covered by the policy."
Centermark Props., Inc. v. Home Indem. Co., 

, 101 (Mo. Ct. App.
1995) (internal marks omitted).




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       On appeal, Investors first argues that there is no coverage for the Hellerich
claim because it did not involve "wrongful acts" by an "insured" within the meaning
of the policy. Investors points to policy language that an "insured" is an official acting
within the scope of his duties as a public official and that "wrongful acts" are only acts
by an insured who is acting within the scope of those official duties. Investors asserts
that the alleged wrongful acts of intentional sexual harassment were not within the
scope of Biggs's official duties as county attorney, and thus they cannot serve as the
basis of the claim for excess insurance coverage. That argument misses the point.
The county is itself an insured as a member agency of MOPERM. (See Appellant's
App. at 51.) For the reasons that follow, the county's own failure to act deprives it of
its defense to vicarious liability under federal law for the hostile environment Biggs
allegedly created. That liability then serves as an independent basis for coverage
under the language of the excess insurance policy that covers discrimination
prohibited by law.

        "The general rule is that sexual harassment by a supervisor is not conduct
within the scope of employment[]" for purposes of determining an employer's agency
liability for the acts of its employees. Burlington Indus., Inc. v. Ellerth, 

,
757 (1998). However, conduct that is within the "[s]cope of employment does not
define the only basis for employer liability under agency principles," 

and
as noted, the insurance policy at issue covers not only "wrongful acts" within the
scope of an official's duties but also "discrimination prohibited by law." (Appellant's
App. at 85.) An employer may be vicariously liable for intentional acts of
discrimination committed by an employee where "the employee was aided in
accomplishing the tort by the existence of the agency relation." 

(internal
marks omitted). For the agency relation to have aided in accomplishing the tort, there
must be "something more than the employment relation itself." 

Thus, the
Court established the following rule:




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      An employer is subject to vicarious liability to a victimized employee for
      an actionable hostile environment created by a supervisor with
      immediate (or successively higher) authority over the employee. When
      no tangible employment action is taken, a defending employer may raise
      an affirmative defense to liability or damages . . . [which is comprised
      of] two necessary elements: (a) that the employer exercised reasonable
      care to prevent and correct promptly any sexually harassing behavior,
      and (b) that the plaintiff employee unreasonably failed to take advantage
      of any preventive or corrective opportunities provided by the employer
      or to avoid harm otherwise.

Faragher v. Boca Raton, 

, 807 (1998).

       The state court petition and the EEOC charges assert that all of Biggs's
offending conduct occurred in the workplace, during work hours, while he was
functioning in his official capacity as county prosecutor and as Hellerich's supervisor.
Not only did Biggs allegedly harass and demean Hellerich himself, he allegedly
condoned, encouraged, and joined in Reed's harassment of Hellerich as well.
Hellerich's administrative charge against the county asserts that the county had no
antiharassment policy and no established complaint procedure in place to offer
protection to a county employee placed in this type of situation by a supervisor, and
none is independently shown by the other evidence in the record before us. The
settlement proceeds were paid in exchange for Hellerich's agreement to dismiss both
the state lawsuit against Biggs personally and the EEOC charges against the county,
which grew out of Biggs's misbehavior.

       Because the insurance policy covers not only wrongful acts within the scope of
an official's duties but also discrimination prohibited by law, the fact that Biggs's
alleged conduct was not within the scope of his duties does not preclude coverage for
the county. The county's own failure to protect employees by not providing a
preventive antiharassment policy, adequate training, or a complaint procedure renders
it unable to defend against its vicarious liability for Biggs's prohibited discriminatory

                                           -6-
supervisory misconduct in the workplace. Investors even admits in its brief that this
policy language could be construed to provide coverage "where the basis for the
insured's liability is because of purely vicarious liability." (Appellant's Br. at 28 n.60.)
The district court correctly concluded that the excess coverage applied in light of the
administrative charges against the county. See Centermark Props., 

(holding that coverage exists under a liability policy as long as at least one
insured risk is a cause of the loss).

       Investors also argues that it is against Missouri public policy to allow a person
to insure against his or her own intentional unlawful conduct. See E. Attucks Cmty.
Housing, 

(stating that the court "agree[s] with the trial court
that in Missouri, it is against public policy to allow one to insure against one's own
thefts, dishonest acts or intentionally inflicted damage"). However, Investors points
to no clear public policy in Missouri that prevents a public entity from insuring itself
against intentional acts of employment discrimination by supervising employees or
the county's own purely vicarious liability. In fact, Missouri has held in an analogous
context that it is not "against public policy to permit an association of law enforcement
officers to insure themselves against alleged willful and intentional acts." Colson v.
Lloyd's of London, 

, 47 (Mo. Ct. App. 1968). Also, in considering an
insurance policy that expressly covered an insured's intentional acts, our court has
anticipated that the Missouri Supreme Court would not prohibit insurance coverage
for civil rights violations on the basis of public policy. New Madrid County
Reorganized Sch. Dist. No. 1 v. Cont’l Cas. Co., 

, 1242-43 (8th Cir.
1990) (involving a § 1983 claim by teachers against a school district regarding the
teachers' First Amendment rights). We see no reason to differentiate that holding, or
the holding of Colson, from the public employee employment discrimination context
at issue in this case. The excess insurance policy at issue does not violate Missouri
public policy.




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Accordingly, the judgment of the district court is affirmed.
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