ST. LOUIS – A federal court is asked to decide if an insurance company has a duty to pay the legal defense costs for the city of Ferguson, which is accused of charging illegal fees.
The May 31 complaint for declaratory judgment was filed on behalf of Allied World Specialty, formerly known as Darwin Select Insurance Co., in the U.S. District Court for the Eastern District of Missouri, Eastern Division. The insurance company is asking the court to declare it has no duty to defend the city against a March 2015 lawsuit brought by Roelif and Rosalyn Carter because the relief sought “constitutes uncovered or uninsurable loss.”
“The disgorgement of unlawfully obtained fees is not an insurable loss under Missouri law and public policy,” the complaint said.
The Carters claim the city “charges a variety of illegal fees, designed to profit the municipal corporation at the expense of the general welfare.”
The alleged fees include a failure to appear (FTA), “letter” and “warrant recall” fee. The plaintiffs claim the fees are aren’t a tax and not “related to actual costs incurred,” but charged “as a means of profiting from the issuance of traffic tickets and other violations.”
The fee refund lawsuit reportedly seeks to require the city “to disgorge unlawful profits that it has obtained.”
In February 2017, Rosalyn Carter dismissed her claims without prejudice, leaving Roelif Carter as the sole plaintiff, the complaint states.
According to the complaint, Allied World agreed to defend the city in connection to the suit, “subject to a full and complete reservation of rights.”
“While Allied World continues to defend the city subject to a full and complete reservation of rights, Allied World now seeks a declaration that it has no duty to continue to defend or indemnify the city,” the complaint said.
The insurance company also argues that it has no duty to defend the city because of the city’s alleged “deliberate misconduct or deliberate dishonest, fraudulent, criminal, or malicious act, error, or omission.”