United States Court of Appeals
               For the Eighth Circuit
           ___________________________

                   No. 12-4012
           ___________________________

              Chicago Insurance Company

           lllllllllllllllllllll Plaintiff - Appellee

                              v.

Archdiocese of St. Louis; Robert J. Carlson, Archbishop

        lllllllllllllllllllll Defendants - Appellants

               Father Michael S. McGrath

                lllllllllllllllllllll Defendant

                ------------------------------

      Archdiocese of St. Louis; Robert J. Carlson

    lllllllllllllllllllllCounter Claimants - Appellants

                              v.

        Lloyd's London and London Companies

           lllllllllllllllllllllCounter Defendant
                         ____________

        Appeal from United States District Court
     for the Eastern District of Missouri - St. Louis
                     ____________
                           Submitted: September 24, 2013
                              Filed: January 29, 2014
                                  ____________

Before WOLLMAN, BEAM, and SMITH, Circuit Judges.
                          ____________

BEAM, Circuit Judge.

      In this insurance coverage dispute, the Archdiocese of St. Louis and Archbishop
Robert J. Carlson (collectively, the "Archdiocese") appeal from the district court's1
grant of summary judgment in favor of their insurer, Chicago Insurance Company
("CIC"). Because the Archdiocese has failed to establish coverage, we affirm.

I.    BACKGROUND

        On June 10, 2003, Allen Klump, the father of Christopher Klump, commenced
several claims against the Archdiocese in Missouri state court, premised on the theory
that a priest employed by the Archdiocese sexually molested Christopher, eventually
leading to Christopher's suicide. The Archdiocese moved to dismiss for failure to
state a claim, and the state trial court dismissed all but three claims against the
Archdiocese. Of the three claims that remained viable against the Archdiocese,
Count I ("the wrongful death claim") alleged that the Archdiocese "inappropriately,
recklessly and or intentionally placed young Christopher Klump in a knowingly
dangerous environment . . . which acts caused young Christopher Klump emotional
and psychological" harm and directly caused or contributed to Christopher's death.
The remaining two claims alleged that the Archdiocese engaged in intentional
conduct. Subsequently, the parties entered into a settlement that released the
Archdiocese from any future liability associated with the alleged misconduct. After


      1
        The Honorable Carol E. Jackson, United States District Judge for the Eastern
District of Missouri.

                                         -2-
paying Allen Klump the settlement amount, the Archdiocese turned to its insurers for
indemnification.

       At times relevant to this dispute, the Archdiocese held excess liability insurance
policies with Certain Underwriters at Lloyd's London and The London Companies
("Lloyd's")2 as a primary excess carrier and with CIC as a secondary excess carrier.
The Lloyd's policy agreed "to indemnify the Assured for all sums which the Assured
shall be obligated to pay by reason of the liability imposed upon the Assured by law
or assumed by the Named Assured under contract or agreement . . . on account of
personal injuries . . . arising out of any occurrence." The CIC policy explicitly
incorporated the terms of the Lloyd's policy but contained additional language.
Specifically, the CIC policy promised to indemnify the Archdiocese for an
enumerated amount of loss and defined the term "loss" as "the sums paid as damages
in settlement of a claim or in satisfaction of a judgment for which the insured is
legally liable." "Loss" also included "investigation, adjustment, defense or appeal
costs, and expenses, costs and expenses incident to any of the same."

       CIC denied the Archdiocese's demand for coverage, and on June 23, 2009, CIC
commenced action against the Archdiocese in federal court, seeking a declaration that
its policy did not provide coverage for the underlying litigation. CIC then moved for
summary judgment. In resolving the coverage issue, the district court determined that
because the wrongful death claim in the underlying complaint alleged a form of
negligence against a religious organization, the Archdiocese could not be held legally
liable under current Missouri Supreme Court precedent. If the insured could not be
held legally liable, the court reasoned, the Archdiocese failed to establish that a
defined "loss" occurred. Further, because the remaining underlying claims against the
Archdiocese alleged intentional conduct, they did not fit within the policy's definition



      2
       The Archdiocese has voluntarily dismissed Lloyd's from this appeal.

                                          -3-
of "occurrences."3 Accordingly, the district court concluded that CIC's policy did not
provide coverage for the underlying claims and granted the insurer's motion for
summary judgment. The Archdiocese now appeals.

II.   DISCUSSION

       In Gibson v. Brewer, the Supreme Court of Missouri concluded that
negligence-based actions against a religious organization that require a court to
evaluate the reasonableness of religious doctrine, policy and administration offend the
First Amendment and cannot be maintained. 

, 249-50 (Mo. 1997).
Our task on this appeal is to determine how Gibson impacts the present coverage
dispute in light of the specific policy language. We review de novo the district court's
interpretation of the policies at issue, as well as its ultimate grant of summary
judgment. Doe Run Res. Corp. v. Lexington Ins. Co., 

, 870 (8th Cir.
2013). The parties agree that Missouri law applies to this diversity case.

        We begin with the actual language of the policy, which agrees to indemnify the
Archdiocese for "sums paid as damages in settlement of a claim or in satisfaction of
a judgment for which the insured is legally liable." Although the policy does not
define the term "legally liable," it is generally understood that "[t]he term 'legal
liability,' as used in a policy of insurance, means a liability such as a court of
competent jurisdiction will recognize and enforce between parties litigant." Steven
Plitt et al., 7A Couch on Insurance § 103:14 (2013 rev. ed.). In a practical sense, the
term "legal liability" serves to limit the insuring clause as "the fact that a loss is
occasioned through the fault of the insured does not alone trigger the insurer's
liability." 

common requirement is that the insured be legally liable for
the third party's claim before there is such a loss as the insurer is obligated to pay."


      3
       The Archdiocese has not appealed the district court's judgment on the claims
involving intentional conduct.

                                          -4-


general principles, long ago in Brinkman v. Western
Automobile Indemnity Assoc., the Missouri Court of Appeals held that to recover
under a pure indemnity policy, the insured must show "that he was legally liable to
[the injured claimant], and that the amount of the settlement he made and the other
items demanded are reasonable, and the burden is on him to so show." 

,
946 (Mo. Ct. App. 1920). With this backdrop, we turn to the Archdiocese's
arguments.

       Nearly all of the Archdiocese's arguments stem from one common claim of
error. That is, the district court erred, the Archdiocese asserts, by requiring it to
establish actual liability to trigger coverage. According to the Archdiocese, Missouri
law only requires that it show potential liability to trigger indemnification of its
settlement. Even if we assume that Missouri follows a potential liability standard–a
question we need not decide–under the unique circumstances of this case, the
Archdiocese is unable to show that it faced potential liability in the underlying action.

        The Missouri Court of Appeals has recognized that Missouri law "does not
require the insured, as a condition of reimbursement, to prove that it is ultimately
liable for the settled claims." Hyatt Corp. v. Occidental Fire & Cas. Co. of N.C., 

, 388 (Mo. Ct. App. 1990). To the extent this statement indicates the
court's endorsement of the potential liability standard, the case provides little guidance
in the present dispute for two reasons. First, at the time the insured settled in Hyatt,
the claims pending against the insured "were not automatically precluded under
Missouri law." 

(quotation omitted). Second, Hyatt involved a situation
where the insurer breached its duty to consider offers of settlement in good faith,
allowing the insured to bind the insurer to a reasonable settlement with the claimants.

Therefore, because Missouri courts have not specifically dealt with the
coverage issue under the circumstances we now confront, we turn to other
jurisdictions for guidance concerning the potential liability standard. Balke v. Cent.



                                           -5-
Mo. Elec. Coop., 

, 22 (Mo. Ct. App. 1997) ("[W]e look to other
jurisdictions which have addressed this issue for guidance.").

      In Luria Bros. & Co. v. Alliance Assurity Co., the Second Circuit explained the
potential liability standard:

      In order to recover the amount of the settlement from the insurer, the
      insured need not establish actual liability to the party with whom it has
      settled so long as . . . a potential liability on the facts known to the
      [insured is] shown to exist, culminating in a settlement in an amount
      reasonable in view of the size of possible recovery and degree of
      probability of claimant's success against the [insured].

, 1091 (2d Cir. 1986) (alterations in original) (internal quotation
omitted). Under this standard, "[i]f an insured settles an underlying claim prior to
verdict, it must show that it settled an otherwise covered loss in reasonable
anticipation of liability." Fed. Ins. Co. v. Binney & Smith, Inc., 

, 48
(Ill. Ct. App. 2009) (internal quotation omitted). And, consistent with Luria Bros. and
Binney, the Missouri Court of Appeals has indicated that an insured contemplating
settlement should "take into consideration the likelihood of success or failure" on the
merits, among other factors. 

(emphasis and internal
quotation omitted).

       Here, even if we apply the standard the Archdiocese advocates, the Archdiocese
is unable to show that it settled "in reasonable anticipation of liability," 

, or "in an amount reasonable in view of the . . . degree of probability of
claimant's success against the [insured]," Luria 

(second
alteration in original). To be sure, the Supreme Court of Missouri in Gibson rejected
several negligence-based claims against a Catholic Diocese stemming from the alleged
sexual misconduct of a 

. In rejecting the negligence
claims, the court opined that "[w]hether negligence exists in a particular situation


                                          -6-
depends on whether or not a reasonably prudent person would have anticipated danger
and provided against it. In order to determine how a 'reasonably prudent Diocese'
would act, a court would have to excessively entangle itself in religious doctrine,
policy, and administration." 

omitted). And, here, the Gibson rule
logically extends to the allegations of recklessness in the wrongful death claim. See
Nichols v. Bresnahan, 

, 573 (Mo. 1948) (defining reckless conduct
to include "knowing or having reason to know of facts which would lead a reasonable
man to realize that the actor's conduct not only creates an unreasonable risk of bodily
harm to the other but also involves a high degree of probability that substantial harm
will result to him." (quotation omitted)); Hatch v. V.P. Fair Found., Inc., 

, 139 (Mo. Ct. App. 1999) (highlighting that "[r]ecklessness is an aggravated form
of negligence," and "[i]t is applied to conduct which is negligent, rather than
intentional"). Based on Gibson's application of the First Amendment, the Archdiocese
has failed to show settlement was in reasonable anticipation of liability. Thus, the
Archdiocese did not "affirmatively establish that [it] was legally liable"–potentially
or otherwise–for the conduct alleged in the wrongful death claim, and we conclude the
Archdiocese is not entitled to indemnity coverage under CIC's policy. 

.4

      Notwithstanding the Archdiocese's assertions to the contrary, we are aware of
no authority, and the Archdiocese cites none, that allows a settling insured to recover
under an indemnity policy where governing law does not permit the claimant's

      4
          The Archdiocese seems to suggest that, even in light of the Gibson decision,
it still faced potential liability because Gibson is a minority view that is subject to
possible reversal and changes in the law. Although Gibson has been challenged, we
think the point is irrelevant as virtually every law is subject to possible change or
reconsideration at some unknown time. Ultimately, Gibson remained the law of
Missouri when the Archdiocese settled, see, e.g., Weaver v. African Methodist
Episcopal Church, Inc., 

, 586 (Mo. Ct. App. 2001), and continues to
enjoy validity today, see, e.g., D.T. v. Catholic Diocese of Kansas City-St. Joseph,
No. WD 76025, 

, at *4-5 (Mo. Ct. App. Nov. 12, 2013).
                                          -7-
underlying cause of action against the insured. Moreover, our conclusion harmonizes
with cases applying the potential liability standard and fits within the broader context
of Missouri's insurance coverage jurisprudence. Indeed, in Luria Bros., the court
made clear that even under a potential liability standard, governing law affecting the
settling insured's underlying liability remains significant for coverage 

(noting that while the insured generally owed no duty to claimants,
potential liability existed because an exception to the general rule may have applied
under the unique circumstances). Binney, too, examined whether governing law
provided the insured an absolute defense to the claims asserted in the underlying
action, ultimately concluding an absolute defense was not available to the 

, 52. While we agree with the Archdiocese that an insured must
evaluate several risks in contemplation of settlement, these cases applying the
potential liability standard also reveal that the insured must remain cognizant of the
underlying liability rules, which the Archdiocese failed to appreciate in this case.

       And, when we move past the specific context of settlement, Missouri cases
confirm that if governing rules preclude the underlying action against the insured, the
insured is not entitled to coverage. See, e.g., Auto Owners (Mut.) Ins. Co. v. Sugar
Creek Mem'l Post No. 3976, 

, 192 (Mo. Ct. App. 2003) (determining
that insured tavern not entitled to liability coverage because negligence claims alleged
against the insured not recognized under governing dram shop liability law); cf., e.g.,
Oates v. Safeco Ins. Co. of Am., 

, 716 (Mo. 1979) (opining that to
recover uninsured motorist benefits, the insured must show the uninsured motorist is
legally liable, and a substantive limitation in the underlying tort action against such
motorist precludes recovery from insurer). We see no reason why Missouri would
apply a different rule in the settlement context.

      Next, the Archdiocese complains that the district court's ruling second-guesses
the state court's prior order concerning the Archdiocese's motion to dismiss.
Essentially, the Archdiocese seems to believe that once the state court denied its

                                          -8-
motion to dismiss as to the wrongful death claim, the coverage issue was decided, and
the district court could not later determine that an underlying legal liability did not
exist for coverage purposes. In the words of the Archdiocese, "the [state] trial court
wore the robe that matters." The Archdiocese cites no authority for this proposition,
and the argument lacks merit. For one thing, when the state court evaluated the
motion to dismiss with regard to the wrongful death claim, it solely focused on
whether the complaint sufficiently alleged facts showing that the Archdiocese caused
Christopher to commit suicide. Indeed, the state court's order does not even mention
Gibson. For another thing, the wrongful death claim alleged both reckless and
intentional conduct–the intentional aspect of the claim remained viable even after
Gibson. 

("Religious conduct intended or certain to cause harm
need not be tolerated under the First Amendment."). In the end, the district court did
not reevaluate the state court's judgment but merely considered an issue pertaining to
insurance coverage that had not been previously examined.5

       Finally, for the first time in this litigation, the Archdiocese attempts to offer a
new construction for the policy's definition of "loss." The Archdiocese concedes it did
not raise this argument before the district court. Having failed to present this policy
construction argument to the district court, we decline to address it for the first time



      5
         Before the district court and on appeal, the Archdiocese primarily challenged
the district court's ruling concerning the wrongful death claim–a claim left viable by
the state trial court's dismissal order. In passing, however, the Archdiocese also
indicates that the several other claims the state trial court did dismiss may have
triggered coverage under a potential liability standard because the dismissals were
interlocutory and remained subject to reconsideration or appeal. The Archdiocese
does not offer any meaningful analysis on this point, nor does it parse each dismissed
claim and explain how it triggered specific coverage under the policy and potential
liability standard. We decline to undertake such a venture on their behalf. See Ulrich
v. Pope Cnty., 

, 1059 n.4 (8th Cir. 2013) (refusing to consider issue
where party did not provide "meaningful argument" separate from other issue).
                                           -9-
on appeal. Stone Motor Co. v. Gen. Motors Corp., 

, 608 n.2 (8th Cir.
2005).

III.   CONCLUSION

       We affirm the judgment of the district court.
                       _____________________________




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