Save the Date:
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.
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Missouri Supreme Court Overturns Cap On Punitive Damages
The Missouri Supreme Court continues its trek to dismantle Missouri's tort reform legislation. In its most recent decision addressing the Missouri General Assembly's recent tort reforms, Lewellen v. Franklin, No. SC92871 (Mo. banc, Sept. 9, 2014), the Supreme Court refused to enforce Missouri's cap on punitive damages. Under Missouri's tort reform legislation, punitive damage awards were limited to the greater of $500,000 or five times the net amount of the judgment entered in the plaintiff's favor. The Court, in overturning this legislative limitation on punitive damages, held the cap to be an unconstitutional infringement on the "inviolate" right to a jury trial guaranteed by Missouri Constitution. Previously, in 2012, the Supreme Court, on similar grounds, declared unconstitutional Missouri's cap on non-economic damages in medical malpractice cases. See Watts v. Lester E. Cox Med. Ctrs., 376 S.W.3d 633 (Mo. banc 2012), for that opinion.
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Missouri Court Imposes Bad Faith Liability On Insurer Despite Judicial Finding That There Is No Coverage For The Underlying Claim
Advantage Buildings, the Western District of the Missouri Court of Appeals subjected an insurer to extra-contractual liability for bad faith and punitive damages even though the insurer had prevailed in its separate declaratory judgment action and obtained a judicial determination that there was no coverage for the underlying claim. In a very broadly written decision, the Court of Appeals held the insurer had acted in bad faith by refusing to settle the underlying claim within its policy limits because, when the insurer failed to do so, there was, at that time, no coverage determination in the declaratory judgment action. The Court also criticized at length the sufficiency of the insurer's reservation of rights letters and the quality of its communications with the insured. Moreover, as if the Court's decision were not already punitive enough, the Court of Appeals upheld the trial court's ruling during the trial of the bad faith claim that barred the insurer from offering evidence that it had prevailed on coverage in its separate declaratory judgment action. The Court of Appeals explained the coverage determination was irrelevant because, at the time of the settlement negotiations, the insurer had not yet received a declaration of no coverage. For a more detailed discussion of the Advantage Buildings decision, see the Brown & James Client Alert issued on September 4, 2014.
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Co-Employee Owes No Common-Law Duty To Another Co-Employee
The conflict between the three districts of the Missouri Court of Appeals over the legal standards governing co-employee liability claims that fall between Missouri's 2005 and 2012 workers' compensation reform legislation continues to grow. In Leeper v. Asmus, No. WD76772 (Mo. App. W.D., May 27, 2014), the Western District of the Missouri Court of Appeals, in an opinion sharply critical of decisions of the Eastern District of the Missouri Court of Appeals, held that only simple negligence, and not satisfaction of the "something more" doctrine, must be shown to subject an employee to liability for injuries sustained by another employee so long as the employee's conduct falls outside the employer's non-delegable duty to provide a safe workplace. In contrast, recent decisions by the Eastern and Southern Districts of the Missouri Court of Appeals recognized the continued viability of the "something more" doctrine and refused to subject a co-employee to liability based on simple negligence in absence of a breach of an independent duty owed by the co-employee to the other. See Parr ex rel. Waid v. Breeden, No. SD 32602 (Mo. App. S.D., Aug. 6, 2014), and Peters v. Wady Indus., Inc., No. ED 100699 (Mo. App. E.D., Sept. 9, 2014). Both the Parr and Peters decisions are presently on transfer to the Missouri Supreme Court. In both cases, dissenting judges certified the cases to the Supreme Court because of the conflict with Leeper.
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The Named Insured's President Is An "Execution Officer" And, Therefore, Entitled To Coverage For A $7 Million Judgment Entered In A Co-Employee Liability Claim
The Missouri Court of Appeals in Piatt v. Indiana Lumbermen's Mut. Ins. Co., No. WD76645 (Mo. App. W.D., June 10, 2014), held an individual employee subject to a co-employee wrongful death claim was entitled to coverage because he qualified as an insured under the policy as one of the named insured's executive officers. Based on a superficial coverage analysis, the insurer had denied coverage and walked away from the claim. Thereafter, the defendant employee entered into a Section 537.065 agreement with the decedent's family, which was followed by a "bench trial" at which a $7 million judgment was entered for the claimants. The Court's decision will ultimately expose the insurer to extra-contractual liability for the entire judgment above its $1 million per occurrence limit. The decision merits reading as a cautionary tale as to what can happen when an insurer in Missouri declines coverage with only a minimal investigation, an insufficient coverage analysis, and no follow up.
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Court Upholds Owned-Vehicle Exclusion In Uninsured Motorist Coverage Part In Wrongful Death Case
For damages in excess of Missouri's minimum $25,000 requirement for uninsured motorist coverage, the Missouri Supreme Court, in Floyd-Tunnel v. Shelter Mut. Ins. Co., No. SC93904 (Mo. banc, July 29, 2014), enforced the insurer's "owned-vehicle" partial exclusion, which, by its terms, applies when any part of the insured's damages were sustained while the insured was occupying a vehicle owned by the insured, but not covered by the policy. In addition, the Court held the exclusion applied to the insured's spouse who claimed coverage for the damages that she sustained because of her husband's wrongful death. The Court explained that the spouse, who was not in the owned vehicle at the time of the accident, was subject to the exclusion because she had not sustained any "bodily injury" and all of her damages originated from the "bodily injury" (death) of her husband.
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Cause of Action for Breach Of Fiduciary Duty Based On An Insurer's Failure To Produce Claim File Fails In The Absence Of Actual Damages
In a unique case involving an insurer's refusal to turn over a liability claim file to its insureds, as required by the decisions in Grewell v. State Farm Mut. Auto. Ins. Co., 102 S.W.3d 33 (Mo. banc 2003), and Grewell v. State Farm Mut. Auto. Ins. Co., 162 S.W.3d 503 (Mo. App. W.D. 2005), the Missouri Court of Appeals, in Henry v. Farmers Ins. Co., No. WD76953 (Mo. App. W.D., July 22, 2014), affirmed the trial court's summary judgment for the insurer on the insureds' breach of fiduciary duty claim. The Court concluded under the two Grewell decisions that the insurer had breached its fiduciary duty by failing to give the insureds complete access to the claim file, but affirmed the trial court's summary judgment for the insurer. The Court explained that the insureds could show no actual damages flowing from the insurer's conduct. This case makes for recommended reading for a full understanding of the insurer's duty to provide its insured with the claim file for a third-party liability claim.
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Open And Obvious Condition Is A Complete Defense To Fall
The Missouri Court of Appeals, in Rapp v. Eagle Plumbing, Inc., No. ED100042 (Mo. App. E.D., June 10, 2014), reaffirmed Missouri's longstanding rule that a landowner has no liability for injuries resulting from an open and obvious condition on the landowner's premises. In Rapp, the plaintiff fell into an open trench at a construction site. This case merits reading for a good discussion of the "open and obvious" defense under Missouri law.
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Landlord Not Liable For Tenant's Injury Unless The Landlord Controlled The Area
The Missouri Court of Appeals, in a personal injury action brought against a landlord for injuries sustained by a tenant's child who fell from a second story window, affirmed the jury's verdict for the landlord. Stephenson v. Countryside Townhomes, LLC, No. ED100327 (Mo. App. E.D., July 29, 2014). The Court so ruled despite the plaintiffs' claim that the landlord had failed to properly maintain the apartment window. The Court explained there was sufficient evidence supporting the jury's verdict based on the jury's finding that the landlord had no control over the apartment's window for purposes of making repairs. The Stephenson decision provides a good discussion of Missouri law governing landlord liability claims.
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Supervisor Is Not An Insured For Purposes Of A Co-Employee Liability Claim
In another insurance coverage action arising from an underlying co-employee liability claim, the Eighth Circuit of the United States Court of Appeals, in United Fire & Cas. Ins. Co. v. Thompson, No. 13-2352 (8th Cir., July 11, 2014), held that a supervisor, who held the title of "Director of Operations" was not a "director" within the meaning of the insurer's "who is an insured" provision making "directors" insureds for claims brought by the named insured's employees. The Eighth Circuit explained that the word "directors," as used in the policy, clearly referred to a member of the named insured's Board of Directors. Thus, since the supervisor who allegedly caused the co-employee's injuries was not a board member, the supervisor was not an insured for purposes of the plaintiff's co-employee liability claim.
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Multiple Drownings At Camp Constituted One "Occurrence" Under Commercial General Liability Policy
When two minors, who could not swim, drowned at a pool party at a camp as a result of the camp's negligent supervision and training of its employees, the drownings constituted a single "occurrence" for purposes of the insurer's liability limits. In Fellowship of Christian Athletes v. Axis Ins. Co., the Eighth Circuit of the United States Court of Appeals, No. 13-2776 (8th Cir., July 11, 2014), held that since the minor boys both drowned during the same party and at about the same time there was only one occurrence since the drownings were caused by "exposure to substantially the same harmful conditions."
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Russ Watters and Cynthia Juedemann persuaded a Jackson County, Missouri, trial court to enter summary judgment for their insurer client in a declaratory judgment action addressing the stacking of automobile liability policies. The court ruled that only a single $1 million limit was available for the claim, although the policy insured four autos, while the plaintiff claimed a total $4 million in available coverage.
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John Cunningham and Denise Baker-Seal obtained summary judgment for a commercial business and its owner in a wrongful death motor vehicle case in Randolph County, Illinois. The plaintiff argued that evidence of the defendant driver's speed in excess of the posted limit, as well as his inadequate evasive action, prevented summary judgment. However, the trial court, in entering judgment as a matter of law for the defendant business owner, found that the accident's sole proximate cause was the decedent's failure to yield the right of way to the defendant driver who was traveling on a preferential roadway.
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Bob Brady, once again, successfully defended an insurer in an arson fraud case in which the insured claimed a fire resulted in the complete destruction of the insured's business. The Jackson County, Missouri, jury found for Bob's insurer client, finding the insured was involved in setting the fire.
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A jury in Pike County, Missouri, found for Brendon Sanders' client, a contractor who performed wiring work at the plaintiff's home that was destroyed by fire. The plaintiff contended the fire started as a result of defectively installed wiring while the contractor claimed the fire started in three different areas of the home and had nothing to do with any of the wiring work.
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Russ Watters and Brendon Sanders won a summary judgment for their client, a condominium association, in a lawsuit brought by association members claiming a reimbursement of fees and monies that the members claimed were being illegally held by the association. The trial court ruled that the association was acting within the by-laws and the Condominium Laws of Missouri and was not liable to the association members.
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A trial court granted summary judgment for an insurance broker represented by Tim Wolf and Cynthia Juedemann. The broker had been sued by a competing broker who sought to recover allegedly stolen and misappropriated monies. Tim and Cynthia persuaded the trial court that their client, as a matter of law, had complied with all the terms of the agreement and had performed an appropriate accounting of the funds at issue.
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Bob Brady and Matt Haas obtained a jury verdict for their insurer client in Jefferson County, Illinois, after a three-day jury trial of an arson fire claim. This was Bob's third consecutive defense verdict in 2014 for an insurer in an arson/fraud case.
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Irene Marusic received a defense verdict in an uninsured motorist phantom vehicle case tried in St. Louis City. The jury, in ruling for Irene's client, concluded there had been no phantom vehicle involved in the accident. The plaintiff insured had over $200,000 in medical bills.
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NSPII Mo. Chapter Annual Fraud Conference
Bob Brady, Jackie Kinder, and Jon Morrow will be speaking at the NSPII Missouri Chapter's annual Fraud Conference on September 18.
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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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