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Insurance Law Update
October 2014
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Co-Employee Immunity Still Viable
The conflict between the three districts of the Missouri Court of Appeals over the contours of co-employee liability claims in Missouri continues to evolve. In Peters v. Wady Indus, Inc., No. ED100699 (Mo. App. E.D., Sept. 9, 2014), the Eastern District of the Missouri Court of Appeals, in holding that an injured worker could not bring a co-employee liability because the claim fell squarely within the employer's non-delegable duty to provide a safe workplace, refused to follow the Western District's decision in Leeper v. Asmus, No. WD76772 (Mo. App. W.D., May 27, 2014), a decision that was harshly critical of the Eastern District's jurisprudence concerning co-employee liability claims. The Eastern District's decision in Peters was not unanimous. A dissenting judge concluded that the case should be bound by the Western District's Leeper decision and transferred the case to the Missouri Supreme Court for review. The Peters decision joins Parr ex rel. Waid v. Breeden, No. SD32602 (Mo. App. S.D., Aug. 6, 2014), a Southern District co-employee liability decision that was also transferred to the Supreme Court because of a perceived conflict with Leeper. The Supreme Court now has the opportunity to resolve this conflict in the law. The Supreme Court's ruling should be forthcoming late this year or in early 2015. Interestingly, the Supreme Court, on September 30, 2014, declined to grant post-opinion review in Leeper. We will have to wait and see whether the Supreme Court's ruling signals its approval of the Leeper analysis.
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Exclusive Jurisdiction over Workers' Compensation Settlement Rests with the Division of Workers' Compensation
When a dispute arises over the terms of a workers' compensation award or settlement, the Missouri Division of Workers' Compensation has exclusive jurisdiction to hear the dispute. In Pierce v. Zurich Am. Ins. Co., No. WD77095 (Mo. App. W.D., Sept. 9, 2014), the Western District of the Missouri Court of Appeals held that a dispute over a settlement agreement's reactivation provision and whether the provision applied to the employee's claim for a knee replacement fell within the exclusive remedies provided by the Missouri Workers' Compensation Law and that any dispute over the agreement rested with the Division of Workers' Compensation, and not before the civil courts.
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Physician Could Be "Employee" of Hospital even if Formally Paid by a Third Party
In Jefferson v. Missouri Baptist Med. Ctr., No. ED99895 (Mo. App. E.D., Aug. 19, 2014), the Eastern District of the Missouri Court of Appeals held that the common-law rules of agency provide the framework for determining whether a physician working with a third-party radiology group providing radiological services to a hospital was also a hospital employee. While the decision discusses the unique nature of the physician-hospital relationship, the decision provides a detailed overview of the test for determining whether someone is an agent or employee versus an independent contractor and reiterates that the principal's exercise of control is ultimately the dispositive question upon which the employment or agency determination turns.
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Indemnity Provisions and Exculpatory Clauses Must Be Clear
In Village of Big Lake v. BNSF Rwy. Co., Inc., No. WD77016 (Mo. App. W.D. , June 3, 2014), the Western District of the Missouri Court of Appeals discussed in detail the legal requirements for indemnity agreements and "contracts of release" for future negligence under Missouri law. The Court held that these contracts must clearly and conspicuously use the words "negligence" or "fault," and contain language evidencing a clear and unmistakable waiver and agreement to shift the risk to be enforceable.
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Five-Year Statute of Limitations Governs Class Action Claims under The Missouri Merchandising Practices Act
A plaintiff must bring a Missouri Merchandising Practices Act claim within five years after the plaintiff's damages are capable of ascertainment. In Huffman v. Credit Union of Texas, No. 13-1881 (8th Cir., July 11, 2014), the United States Court of Appeals for the Eighth Circuit, applying Missouri law, held that the borrowers whose vehicles were repossessed and sold failed to bring their class action lawsuit under the MMPA within the applicable five-year statute of limitations because their damages were capable of ascertainment more than five years earlier based on the post-repossession deficiency notices that they had received.
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Malicious Prosecution Claim May Not Be Brought until Underlying Claim Is Successfully Defended
In State ex rel. O'Basuyi v. Vincent, No. SC93652 (Mo. banc, June 24, 2014), the Missouri Supreme Court held that a malicious prosecution claim may not be brought unless and until there is a "termination of the underlying suit in the party's favor." Accordingly, the Court held that a defendant was not permitted to file a "counterclaim" for malicious prosecution in the original lawsuit because there had not yet been a "termination" in the defendant's favor of that claim.
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Court Refuses to Stack Liability Policies
In Chandler v. Allied Prop. & Cas. Ins. Co., No. WD76365 (Mo. App. W.D., June 30, 2014), the Western District of the Missouri Court of Appeals refused to permit the stacking of four per-person limits under an automobile liability insurance policy and held there was only one $50,000 per person limit, and not $200,000 as claimed by the plaintiffs. The Court, in enforcing the insurer's anti-stacking language, explained that the four vehicles were insured under a single policy and that the insurer's declarations page and anti-stacking language clearly and unambiguously demonstrated that only a single per-person limit was applicable to the underlying claim. In dicta, the Court noted that a different result might have been reached if the insurer had issued four separate liability policies instead.
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Insureds' Submission of False Inventories Defeats Entire
First-Party Property Claim
The Eighth Circuit of the United States Court of Appeal, in a first-party property claim brought by the insureds following a fire loss to their home, affirmed the jury's verdict for the insurer based on the insureds' submission of false inventories. In Young v. Allstate Ins. Co., No. 13-1457 (8th Cir., July 16, 2014), the Eighth Circuit, in rejecting the insureds' claim of instructional error, held that the district court properly instructed the jury on the insurer's material misrepresentation defense. The instructions permitted the jury to find for the insurer if the jury concluded that the insureds had consciously filed a contents claim without knowledge of the truth or falsity of their claim, when, in fact, their inventories were false. This case provides a good overview of the misrepresentation defenses available to insurers in first-party insurance claims.
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General Condition of Snow and Ice Is a Complete Defense
In two recent cases, the Southern District of the Missouri Court of Appeals addressed the general rule that holds a possessor of land has no duty to remove snow or ice that accumulates naturally and which is a condition general to the community. In Medlock vs St. John's Health System, Inc., No. SD32776 (Mo. App. S.D., April 4, 2014), the Southern District reaffirmed the rule by upholding the trial court's summary judgment for the defendant in a case where the plaintiff fell while walking on a sidewalk during a freezing rainstorm and the evidence established without contradiction that the ice had naturally accumulated and that the condition was general to the community. In Hill v. Barry County, Mo., No. SD32994 (Mo. App. S.D., June 24, 2014), the Southern District reiterated the general rule, holding if there is a fact dispute over the nature of the condition, the question must go to the jury, and if the jury finds there was a general condition, then that finding provides a complete defense to the plaintiff's claim. These two cases make any slip-and-fall case involving snow and ice in Missouri during or after major winter weather events very problematic for the plaintiff.
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Bob Brady and Jon Morrow received a defense verdict in the United States District Court for the Eastern District of Missouri, sitting in Hannibal, Missouri, for their insurer client. The plaintiff claimed over $700,000 in roof damage and another $378,000 in consequential damages for failure to repair/pay for the roof repairs. Bob and Jon convinced the jury that the roof was old and the alleged damage was not caused by covered, weather-related events.
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John Cunningham and Jessica Holliday successfully defended a motor vehicle accident case in Madison County, Illinois. John's client made a left turn in front of plaintiff's vehicle; the plaintiff alleged that the accident caused a full thickness rotator cuff tear in his left shoulder. The plaintiff's spouse made a loss of consortium claim. Liability was admitted at trial. The plaintiffs' last demand before trial was $450,000. John and Jessica's last offer was $40,000. The jury returned a verdict of $29,000 for the plaintiff and entered a defense verdict on the wife's loss of consortium claim.
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John Rahoy successfully defended a major retailer client in a slip-and-fall case in which the plaintiff had over $100,000 in past and future medical bills and the plaintiff's medical expert had linked the plaintiff's injuries to subsequent surgeries and a third future surgery. Videotaped evidence at trial established that the plaintiff had clearly slipped on a wet surface in the store, that John's client was on notice of the spill, and that a store employee had actually mopped the area of the fall just before it happened. The plaintiff asked for $700,000 in damages during closing argument; the jury returned a verdict of only $25,500.
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Brad Hansmann, with the assistance of Jon Greffet, prevailed on appeal before the Southern District of the Missouri Court of Appeals, winning an affirmance of the trial court's summary judgment for their client in a co-employee liability lawsuit.
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Bob Carter obtained summary judgment for a subdivision board of trustees in the Circuit Court of St. Charles County based on the expiration of the applicable statute of limitations. The plaintiffs, who owned a home in the subdivision, claimed the board failed to enforce restrictions that prohibited construction in an easement that changed the property's natural drainage channels. Bob established that the plaintiffs were aware of the construction in the late 1990s but failed to file suit until 2011.
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Patrick Bousquet, assisted by Patrick Cody, prevailed on appeal before the Fifth District of the Appellate Court of Illinois. At trial, there were contradicting stories concerning how the auto accident giving rise to the plaintiff's claim occurred. The Appellate Court affirmed the jury's verdict for Patrick's client, adopting his argument that the jury was free to disbelieve plaintiff's self-serving testimony concerning his injuries and could have found that he was not injured at all.
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The United States District Court for the Eastern District of Missouri dismissed several bad faith counts in a first-party underinsured motorist case defended by Jackie Kinder and Russ Watters. The District Court held that all common-law bad faith claims were pre-empted by Missouri's vexatious-refusal-to-pay statute, finding there could be no stand-alone, common-law tort claim for bad faith in such circumstances.
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Contact us with any questions:
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T. Michael Ward
Managing Principal
314-242-5306
| Russell F. Watters
Principal
314-242-5252
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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. www.brownjames.com
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