In a brief filed Tuesday, Lexington Insurance Co. wrote that it had sued as early as 2022 seeking a declaration that it didn't have to cover a judgment rendered following litigation brought by stepbrothers Henry Lee McCollum and Leon Brown. The stepbrothers brought the litigation against North Carolina State Bureau of Investigation enforcement agents Kenneth Snead and Leroy Allen. The insurer said its case should remain active because the underlying North Carolina federal litigation and the insurance coverage case concerned different matters and parties entirely.
In 2015, the wrongfully convicted men sued the agents and amended their complaint to include other entities they blamed for their wrongful prosecution and conviction, according to the brief.
"The federal action had nothing to do with insurance coverage," the insurer said, "Appellees did not add Lexington or any claims involving insurance to the federal action until April 2024, after final judgment had been entered on the original claims and years after Lexington filed this suit."
In 2022, Lexington sued North Carolina; the North Carolina Public Officers and Employees Liability Insurance Commission; Allen; and Charlotte Fox, as administratrix of the estate of Snead, seeking a declaration that there was no coverage under policies issued by Lexington for the judgment against Snead and Allen in connection with the wrongful convictions.
A federal jury had returned a verdict against the agents in connection with the wrongful conviction of McCollum and Brown, who were intellectually disabled and spent over 30 years in prison, sentenced to death for the rape and murder of Sabrina Buie, according to court records.
DNA testing conducted years after their convictions showed they were innocent of all crimes, according to court records. Both men received pardons from then-North Carolina Gov. Pat McCrory and said they were forced to confess to crimes they didn't commit, court records show.
The insurer said the parties in the federal suit were different from the parties in the state suit and there was no way for Lexington to obtain the "same relief" in federal court as it could in state court.
North Carolina and its Public Officers and Employees Liability Insurance Commission, the policyholder, "enjoy Eleventh Amendment immunity in federal court and cannot be made parties to the federal action. As a result, this case is necessary because it is the only forum in which a judgment will bind all relevant stakeholders," the insurer said.
Lexington said the trial court decided to grant McCollum and Brown's request to dismiss its case because of efficiency but "never expounded on what efficiencies it believed would be gained by having the coverage issues resolved in the federal action."
The insurer said the appellees argued that U.S. District Judge Terrence Boyle's familiarity with the underlying civil rights trial was relevant; however Lexington disagreed. The insurer said the matters in this case concerned "whether particular language in the definition of 'occurrence' in the policies was included as a result of a mutual mistake" by the insured and insurer and whether both "acted in good faith in reforming the policies to reflect their true intent at the time of issuing."
The issues have nothing to do with the prosecution or convictions of Brown and McCollum, the insurer said.
"In fact, because the coverage claims involve exclusively matters of North Carolina state law, a North Carolina state court is better equipped to resolve the issues at stake than a federal judge, who would have to make an 'Erie guess' as to what the state courts would do."
Representatives of the parties did not respond to requests for comment Wednesday.
Lexington is represented by Kelsey L. Kingsbery and Alexander S. Lorenzo of Alston & Bird LLP.
North Carolina is represented by Orlando L. Rodriguez of the North Carolina Department of Justice.
Leroy Allen is represented by John T. Honeycutt of Pettey & Patrick LLP.
J. Duane Gilliam is represented by Elliot S. Abrams of Cheshire Parker & Schneider PLLC.
Henry Lee McCollum and Leon Brown are represented by Tyler Weinblatt of Covington & Burling LLP.
The case is Lexington Ins. Co. v. The State of North Carolina et al., case number 24-1048, in the North Carolina Court of Appeals.
--Editing by Nick Petruncio.
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