Brown & James
General Defense & Insurance Law Symposium
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January 22, 2015
Brown & James presents its annual Symposium on trends in the law. Invitations will be forthcoming this fall. Save the date.
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NEW NOTICE REQUIREMENTS FOR CANCELLATION OF INSURANCE POLICIES IN MISSOURI
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LAW EFFECTIVE AUGUST 28, 2014
On July 11, 2014, Missouri Governor Jay Nixon signed Senate Bill 691 into law. The new law rewrites Missouri's existing statutes governing the cancellation of insurance policies, Mo. Rev. Stat. § 375.003 and Mo. Rev. Stat. § 379.118. The new law, which takes effect on August 28, 2014, prescribes a new mandatory procedure for giving notice to insureds when their policies are cancelled for premium non-payment. The law requires cancellation notices based on the insured's non-payment of premiums to be printed in bold conspicuous type and contain the following or substantially similar language: "THIS POLICY IS CANCELLED EFFECTIVE AT THE DATE AND TIME INDICATED IN THIS NOTICE. THIS IS THE FINAL NOTICE OF CANCELLATION WE WILL SEND PRIOR TO THE EFFECTIVE DATE AND TIME OF CANCELLATION INDICATED IN THIS NOTICE."
This law also responds to litigation over policy cancellation notices, including disputes over whether the insurers' notices represent a "present" policy cancellation or a "conditional" one. Addressing this litigation, the new law makes every cancellation notice a "present and unequivocal act of cancellation of the policy." Finally, the new law permits insurers to reinstate a policy any time after a cancellation notice is issued if the reason for the cancellation is remedied. Insurers may also send post-cancellation communications to the insured, "including but not limited to billing notices for past due premium, offers to reinstate the policy if past due premium is paid, notices confirming cancellation of the policy, or billing notices for payment of earned but unpaid premiums." The law further provides that such post-cancellation communications do not invalidate or void any cancellation and do not defeat the present and unequivocal nature of a policy cancellation. (Click here for the full text of Senate Bill 691.)
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Another Insurer Is Stung By A Consent Judgment Entered After A Section 537.065 Agreement In A Case In Which The Insurer Denied Coverage For A Co-Employee Liability Claim
In another example of the pitfalls to taking a no coverage and no defense posture in Missouri, the Western District of the Missouri Court of Appeals in Piatt vs. Indiana Lumbermen's Mut. Ins Co, No. WD76645 (Mo. App. W.D., June 10, 2014), upheld a $7 million judgment in an equitable garnishment action brought against an insurer by judgment creditors to satisfy a consent judgment entered in the underlying wrongful death tort action brought by the family of a co-employee who died in a workplace accident against another co-employee who also happened to be the owner and only officer of the employer company. The insurer took an early position that the co-employee exclusion applied and denied coverage and a defense. Over several years, the underlying litigation went forward and the plaintiffs' pleadings were amended to include an allegation that the defendant employee was not only the decedent's co-employee but also an officer and director of the company. Following a Section 537.065 agreement between the plaintiffs and the defendant, a consent judgment was entered against the defendant that included a finding that the defendant was liable in his capacity as an executive officer as well as an employee. Thereafter, the plaintiffs filed a garnishment action against the insurer. In the garnishment action, the Missouri Court of Appeals held the insurer was bound by the findings in the underlying judgment, and further held that since the defendant was both an employee and executive officer at the same time, the insurer was on notice of this fact when it first denied the defendant coverage and a defense. Accordingly, the Court held the amended petition made no difference, despite the inadequate and untimely notice given by the insured to insurer concerning the amended pleadings, because the insurer had already made its position clear and could not have been prejudiced.
This case makes for required reading for claims personnel and lawyers evaluating coverage under commercial general liability policies in Missouri. The decision illustrates the collusive nature of consent judgments following Section 537.065 agreements and highlights the great lengths that Missouri courts go to find coverage for what may otherwise be non-covered claims. Finally, the decision is a cautionary tale for insurers who do not understand Missouri law and deny coverage in the early stages of a claim without a full investigation or an appreciation of the risks presented by an outright coverage declination.
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Missouri Supreme Court Rules Insurers Have No Duty To Defend So Long As The Allegations Against Their Insureds At The Case's Outset Do Not Present A Potentially Covered Claim
In a significant insurance coverage decision, the Missouri Supreme Court in Allen v. Continental Western Ins. Co., No. SC93502 (Mo. banc, May 27, 2014), restated the standards that govern an insurer's defense obligation under Missouri law. The Supreme Court, in a well-reasoned decision, held that if the allegations in the underlying petition brought against the insured do not present a potentially covered claim at the case's outset, the insurer has no duty to defend. The Court emphasized that the insurer's defense obligation "arises only when there is a potential or possible liability to pay based on the facts at the outset of the case," i.e., from potential coverage based on facts: (1) alleged in the petition; (2) the insurer knows at the outset of the case; or (3) that are reasonably apparent to the insurer at the outset of the case. Thus, under the Supreme Court's decisions, facts adduced at trial or in discovery are irrelevant in deciding whether the insurer had a duty to defend.
We recommend a full reading of the Allen case. The Missouri Supreme Court's summation of the law governing an insurer's duty to defend makes for essential reading by anyone making coverage decisions subject to Missouri law.
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The "Something More" Doctrine No Longer Required For Co-Employee Liability Claims In The Western District Of The Missouri Court of Appeals
The battle over co-employee liability claims in Missouri continues. The recent decision of the Western District of the Missouri Court of Appeals in Leeper v. Asmus, No. WD76772 (Mo. App. W.D., May 27, 2014), creates a direct conflict with the recent co-employee liability decisions handed down by the Eastern District of the Missouri Court of Appeals. Under the Western District's Leeper decision, plaintiffs bringing co-employee liability claims in western Missouri need only plead common-law negligence. In the Eastern District, in contrast, plaintiffs bringing co-employee liability claims for workplace injuries must prove "something more," namely, a purposeful affirmative act by another co-employee directed at a co-employee with knowledge that an injury was likely. So far the Southern District of the Missouri Court of Appeals has not weighed in on the question. The Leeper case is now on transfer to the Missouri Supreme Court. Given the conflict between the two districts of the Missouri Court of Appeals, the prospects are strong that the Missouri Supreme Court will take the case to resolve the split in the districts.
The Leeper decision is another must-read decision for its impact on Missouri co-employee liability law. However, the decision's long-term impact will be limited. The case only applies to accidents occurring before Jaunary 1, 2014. Work place accidents occurring after January 1, 2014, will be subject to Mo. Rev. Stat. § 287.120.1 (Cum. Supp. 2013), which restores statutory co-employee immunity in Missouri except in exceptional cases in which the employee engaged in an affirmative negligent act that purposefully and dangerously caused or increased the risk of injury to a co-employee.
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Non-Owned Vehicle Provision Barred Underinsured Motorist Coverage
The Eastern District of the Missouri Court of Appeals, in a divided decision, upheld an automobile insurer's "non-owned vehicle" exclusion, and further held the insurer's policy did not stack on top of another applicable UIM policy. Naeger v. Farmers Ins. Co., No. ED100012 (Mo. App. E.D., May 6, 2014). The Court explained that the policy's "other insurance" clause and "limits of liability" provision did not create an ambiguity because the "non-owned auto" exclusion eliminated all UIM coverage because the insured was injured in a vehicle other than her insured vehicle and the owner of that vehicle had applicable UIM coverage.
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Statutory Immunity For Injuries Sustained On Property Used Solely For Recreation Only Applies To Property Where No Fee Is Charged For Its Use
The Western District of the Missouri Court of Appeals in Anderson vs. Union Electric Co., No. WD76927 (Mo. App. W.D., June 10, 2014), declared that Union Electric was not entitled to immunity under Missouri's Recreational Use Act, Mo. Rev. Stat. §§ 537.345 to 537.348, because Union Electric charged a dock user fee to all landowners having docks on the Lake of the Ozarks. In Anderson, two minors were electrocuted while swimming off a private dock due to a short in the dock's electric lines. Their mother, in bringing a wrongful death action against Union Electric, claimed that Union Electric was negligent, among other things, in failing to require all dock owners to have properly grounded electric systems. In reversing the trial court's judgment dismissing the mother's action, the Western District held the dock "user fee" charged by Union Electric met the definition of "charging" an admission or user fee; therefore, the Recreational Use Act did not afford immunity to Union Electric against the mother's claim. The Court's decision provides an excellent discussion of Missouri's Recreational Use Act.
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In the United States District Court for the Eastern District of Missouri, Bob Brady and Stacey McCullough, on behalf of their insurer client, convinced a jury, after a week-long trial, that the insureds in a business fire case committed arson and misrepresented their claim to the insurer. On the judgment entered on the jury's verdict, the insureds collected nothing for the fire that completely destroyed their business.
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Brad Hansmann obtained a defense verdict after a lengthy jury trial in federal court in an underinsured motorist case. The insured had claimed brain damage and other injuries as a result of a rollover accident and had asked for $1.4 million in damages. Brad persuaded the jury that the insured's alleged physiological injury and treatment were unrelated to the accident.
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Bob Brady and Patrick Bousquet convinced the Missouri Court of Appeals to reinstate a jury verdict for their insurer client in an arson/fraud case. Bob had obtained a verdict for his client in the trial court, which subsequently found that the jury's verdict was against the weight of the evidence and entered judgment for the insureds as a matter of law. Bob and Patrick appealed the trial court's decision and, in a 2-1 decision, the Missouri Court of Appeals reversed the trial court and reinstated the jury's verdict for the insurer.
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Mike Maguire and Kevin Glynn obtained a summary judgment for the defendant employee in an occupational disease case in which the plaintiff employee claimed severe and permanent injuries. The trial court held the plaintiff employee's exclusive remedy was his workers' compensation award.
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Kristie Crawford and Megan Dittmann successfully persuaded the trial court in Christian County, Missouri, to enter summary judgment for their real estate agent defendants on claims of negligent and intentional misrepresentation. The plaintiff claimed the defendants failed to disclose a potential sewer assessment in the subdivision in which she was purchasing a home until the closing. Kristie and Megan convinced the court that the plaintiff did not rely on anything the defendants did or did not do because she admitted to knowing about the potential assessment before signing the final closing documents.
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John Greffet successfully tried a contribution action on behalf of his client who had contributed fifty percent to a settlement with the plaintiff who had been injured as a passenger in a car driven by the co-defendant who also contributed fifty percent to the settlement. Following the settlement, the driver's insurer pursued a contribution action against John's client, claiming John's client bore more than fifty percent responsibility for the accident because John's client had allegedly failed to yield the right of way. After a two-day trial, the jury came back with the same 50/50 split so the pay-out stood as originally agreed.
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ALFA Seminar Panelists
At the recent ALFA EPLI, Professional Liability, and Insurance Defense seminar in New York, Elaine Moss moderated the Women's Initiative Practice Group program discussing the recent ABA report on the gender pay gap, and the unique strategies women should use when negotiating compensation, both in law firms and corporations.
At the same ALFA seminar, Steve Schwartz moderated a panel discussion entitled, "Privacy and Cyber Liability - An Evolving Risk for All Companies and Employers." In addition, Teresa Young participated in a panel discussion on FDIC receiver claims against professionals.
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American Trucking Association Forum Panelist
Kurt Schmid, a principal in the firm's transportation practice group, recently spoke at the American Trucking Association's Motor Carrier General Counsel Forum in Los Angeles. Kurt moderated a panel discussion on responding to Federal Motor Carrier Safety Administration audits and resulting legal proceedings. The American Trucking Association is the transportation industry's lobbying arm based in Washington, D.C.
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About Us
Brown & James, P.C. is a Midwest regional law firm with more than 100 attorneys representing companies in litigation, appeals and insurance coverage matters.
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Contact Us
If you have any questions:
Managing Principal
314-242-5306
Principal
314-242-5252
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