Insurance Law Update
March 2015




Since the 2005 amendments to the Missouri Workers' Compensation Act and the subsequent judicial decisions interpreting the Act to eliminate the immunity that had long protected employees from common-law negligence claims by their co-employees, there has been a flood of co-employee liability cases in Missouri that have been the bane of employers, their employees, and their insurers. These claims have resulted in conflicting decisions from Missouri's appellate courts that have left the law unsettled concerning the duties owed by employees to their fellow employees for workplace accidents.


The Missouri Supreme Court now has the opportunity to resolve these issues for the guidance of employers, employees, and their insurers. On February 24, 2015, the Supreme Court heard oral arguments in Peters v. Terrio, No. SC94442 (Mo. banc), a co-employee liability case. Teresa M. Young, of our Appellate Practice Group, argued the case on behalf of the defendant co-employee. On the same date, the Court also heard oral arguments in Parr v. Breeden, No. SC94393 (Mo. banc), a co-employee liability companion case.


Together, the Peters and Parr cases should define for the future Missouri co-employee liability law for all cases subject to the 2005 amendments to the Missouri Workers' Compensation Act. Here are links to audio mp3 files of the oral arguments:

Decisions in these cases are expected sometime this spring. As soon as the Missouri Supreme Court rules, we will report to you.


In This Issue
Case Law Updates

No Stacking of Auto Liability Policies

In Dutton v. American Family Mut. Ins. Co., No. SC94075 (Mo. banc, Feb. 3, 2015), the Missouri Supreme Court addressed the impact of Missouri's Motor Vehicle Financial Responsibility Law on the stacking of automobile liability insurance policies.  Overturning an appellate decision to the contrary, the Missouri Supreme Court, which emphasized the distinction between owners' policies and operators' policies, held the Financial Responsibility Law only requires the policy insuring the car involved in the accident to respond to a loss. Thus, when an insured has two owner's policies, coverage is limited exclusively to the policy insuring the at issue vehicle.


The Missouri Supreme Court's decision in Dutton also corrects an anomaly under recent Missouri insurance law - one that permitted the stacking of automobile liability policies in the multiple policy context but not in cases in which a single liability policy covered multiple vehicles. For the future, the Dutton decision should have a salutary effect on Missouri insurance law by limiting the risks faced by automobile insurers issuing multiple automobile liability policies to their insureds.

Waiver by Insurer of Its Coverage Defenses Requires Intentional Relinquishment of a Known Right

In Smith v. Maryland Cas. Co., No. SD33341 (Mo. App. S.D., Jan. 23, 2015), the Missouri Court of Appeals reversed a trial court decision finding an insurer had waived its coverage defenses by not issuing another reservation of rights letter when the lawsuit against its insured had been re-filed following a voluntary dismissal. The Court explained, on the factual record before it, that the insured had failed to show as a matter of law that the insurer had waived its coverage defenses. In so ruling, the Court held a waiver can only be established when the insurer's conduct clearly and unequivocally shows an intentional relinquishment of a known right. In Smith, the insured's evidence fell far short of this high standard.

Co-Employee Not Liable as a Matter of Law

In an unpublished opinion, the Missouri Court of Appeals, in Krehbiel v. Tharp, No. WD77364 (Mo. App., Dec. 23, 2014), held that a co-employee supervisor was not liable for the plaintiff's eye injury that occurred when a bungee cord used to secure equipment for transport snapped and hit the plaintiff in the eye. The Court of Appeals ruled that the plaintiff's co-employee liability claim failed as a matter of law because the decision to use bungee cords to secure equipment for transport fell within the employer's non-delegable duty to maintain a safe workplace and provide safe equipment and, thus, was not a matter for which the supervisor owed a separate and independent duty to the plaintiff.

Plaintiff Must Show that Defendant Had Actual Knowledge that a Representation about a Future Event Was False to Maintain a Fraudulent Misrepresentation Claim

The Missouri Supreme Court, in Stevens v. Markirk Constr., Inc., No. SC94074 (Mo. banc, Feb. 3, 2015), affirmed the trial court's judgment for a defendant in a fraudulent misrepresentation case in which the plaintiff had alleged that the defendant had falsely represented that a lot would not flood. The Supreme Court's decision, which focused on the proper way to submit a fraudulent misrepresentation claim to the jury, turned on whether the defendant's representation was one of existing fact or one addressing a future event. The Supreme Court, in ruling for the defendant, held that the mere fact that the defendant's representations about a future event proved to be false was insufficient to sustain the plaintiff's claim. Rather, as held by the Court, the proper submission of the case required the plaintiff to prove and submit to the jury the ultimate fact that the defendant knew the statement was false when the statement was made.

In a Wrongful Death Case, Negligence Must Be the Cause of the Death

In a wrongful death action alleging medical malpractice, the Missouri Court of Appeals, in Mickels v. Danrad, No. ED101147 (Mo. App. E.D., Dec. 23, 2014), held that a doctor's alleged malpractice must be the "cause" of the death to be actionable. The plaintiffs argued the trial court erred in entering summary judgment for the defendant physician because they had shown that the decedent would have lived approximately six months longer if the physician had timely diagnosed his terminal brain tumor. The Court of Appeal rejected their claim, holding that mere allegations and proof that the decedent's death due to a terminal illness was "accelerated" by six months failed to establish that the physician's alleged malpractice proximately caused the death. Restated, under Missouri law, a wrongful death claim requires the plaintiffs to establish the decedent would not have died but for the physician's negligence, and not that he would have lived a few months longer.

Defendant Need Not Plead Non-Negligence of a Party or Sole Cause as an Affirmative Defense

In Varsalona v. Ortiz, No. WD76797 (Mo. App. W.D., Oct. 14, 2014), the Missouri Court of Appeals re-affirmed the long-held rule that a defendant has no obligation to plead the defendant's "non-negligence" or "sole cause" as affirmative defenses in order to offer evidence on these defenses or to argue them to the jury.

Defendant Has an Absolute Right to File a Motion to Transfer for Improper Venue

The Missouri Supreme Court, in State ex rel. Schwarz Pharma, Inc. v. Dowd, No. SC93516 (Mo. banc, June 10, 2014), reversed a trial court's ruling that barred a newly served defendant from challenging venue because the defendant's motion was not filed within sixty days of the service of process obtained on the other defendants, although the newly served defendant's motion was filed within sixty days of its service date. On appeal, the plaintiffs argued the defendant's motion was insufficient because it did not include an explanation as to why its motion was timely filed. The Supreme Court, in ruling for the newly served defendant, emphasized that Missouri's venue transfer rule contains no such pleading requirement. Thus, since the newly served defendant's motion was timely filed, the trial court had no choice but to transfer the entire case to the only proper venue where that defendant could be sued under Missouri's venue statute.

Court Sets a High Barrier for Piercing the Corporate Veil of a Missouri LLC

In a lengthy and well-written opinion, the Missouri Court of Appeals, in Hibbs v. Berger, No. ED100114 (Mo. App. E.D., May 6, 2014), affirmed the trial court's summary judgment for the defendant limited liability company and against the plaintiff, who was a minority member in the company, who sought to pierce the corporate veil and subject the majority members and a related corporation to liability. In rejecting the plaintiff's efforts to pierce the corporate veil, the Court held there are only very narrow circumstances under which a court may disregard the separate legal existence of a corporation and subject the entity's owners, shareholders, or members to liability. The Court explained that, in order to make the requisite showing, the plaintiff must show that the others had complete domination of all aspects of the corporate entity, that their control must have been exercised to commit a fraud or wrong on the plaintiff, and that their control was the proximate cause of plaintiff's loss. The Court's decision, which provides a thorough review of the law governing the piercing of the corporate veil, makes for recommended reading.

Health Care Affidavit Is a Prerequisite for Maintaining Medical Malpractice Action

The Missouri Court of Appeals, in Thomas v. Miller, No. ED98955 (Mo. App. E.D., June 17, 2014), again upheld the statutory requirement that requires a plaintiff to file a health care affidavit as a prerequisite for filing a medical malpractice action. The Court so held even though the plaintiff attempted to escape the affidavit requirement by pleading a "battery" cause of action based upon the physician's "intentional" insertion of the scalpel without the patient's consent.

Sudden Onset of Medical Condition Is Insufficient to Prove Causation in Toxic Exposure Case

In Kruse v. Seven Trails Investors, LLC, No. ED100593 (Mo. App. E.D., June 24, 2014), an action for personal injuries allegedly resulting from mold exposure, the Missouri Court of Appeals addressed in detail the standard for medical causation in personal injury actions. The Court held the "sudden onset" doctrine does not apply in toxic substances exposure cases. In addition, the Court held that a doctor's opinion that an incident "might" have caused an injury is insufficient to constitute substantial evidence of causation. The Court explained that expert medical testimony, based on actual facts in evidence linking the exposure to the medical condition, is required to prove causation.

Recent Trial Results

Summary Judgment Obtained for Employer Client in Employment Discrimination Claim

Denise Baker-Seal prevailed in the United States Court of Appeals for the Seventh Circuit in an employment discrimination case brought by a plaintiff physician. The Seventh Circuit, in affirming the district court's summary judgment for Denise's client, rejected the physician's claim of racial discrimination and retaliation under Title VII arising out of the employer's decision to offer the physician a non-management position. 

Supervisor Not Liable to Co-Worker for Workplace Accident

In a co-employee liability case, David P. Bub and David W. Reynolds convinced the Missouri Court of Appeals that their defendant co-employee, a supervisor, was not liable as a matter of law for the injuries of the plaintiff co-employee because the allegations against the defendant fell under the employer's non-delegable duty to provide a safe work place. The Court, in ruling for the firm's client, held the supervisor could have no duty to the plaintiff for a company policy that the supervisor did not create and for which he had no responsibility to implement.  

Unanimous Defense Verdict in Wrongful Death Case

Brian R. Plegge and Justin A. Hardin obtained a unanimous defense verdict in a wrongful death case tried in Stoddard County, Missouri. In the case against a 911 operator, the decedent called 911 to report that a carpenter checking a bare wire in his attic had collapsed and was unresponsive. The 911 operator asked the decedent to see if the carpenter was breathing. The decedent allegedly touched the carpenter or a "hot" electrical wire and both the decedent and the carpenter were found dead because of electrocution. Plaintiffs claimed that the 911 operator should have advised the decedent to turn off the electricity in the house immediately and/or not to touch the decedent.

Jury Rejects Plaintiff's Injury Claim in Auto Case
A St. Louis County jury returned a defendant's verdict for J.C. Pleban's  client in a T-Bone type automobile collision in which his client, while attempting to cross a through street, was hit by the plaintiff who had the right of way. J.C. convinced the jury that since there was very little damage to the plaintiff's car, the plaintiff could not have been injured as the plaintiff had claimed.  The plaintiff had run up $10,000 in medical bills in what was a very minor accident.

Claims-Made Policy Provisions Upheld on Appeal

Steven H. Schwartz and Teresa M. Young prevailed before the United States Court of Appeals for the Eighth Circuit in an appeal brought by the insured following a district court ruling for their insurance company client in a declaratory judgment action addressing coverage under a claims-made policy. The Eighth Circuit held that emails obtained during discovery established that a claim had been made against the insured during the first policy period, but not reported until a later policy period. The Court also rejected the insured's argument that a carrier must show prejudice to succeed on a policy defense, explaining that notice is the heart of a claims-made policy and, therefore, not subject to a prejudice requirement.

Jury Finds for Insurer in First-Party Fire Loss Case
Robert L. Brady came in with a defendant's verdict in an insurance fraud case. The plaintiff insured had submitted a false and grossly exaggerated personal property inventory claim. Although the plaintiff had initially presented a covered claim, the jury, after five hours of deliberation, returned a defense verdict for Bob's insurance company client on the insured's entire claim based on the insured's phony personal property claim. 
Missouri Supreme Court Finds for Defendant in Fraud Case

Patrick A. Bousquet prevailed in the Missouri Supreme Court in a business litigation case involving allegations of fraud. The Supreme Court, in affirming the jury verdict for his client, held that even though the defendant's representation of a future event was false, the plaintiff had failed to prove that the defendant knew the statement was false when the representation was made.

Slip and Fall Case Decided for Property Manager

Jeffrey D. Lester came in with a victory in St. Louis City Circuit Court. The plaintiff claimed a slip and fall at a commercial building where our client was the property manager. The plaintiff claimed he slipped on cardboard on a stairway that was not properly lit. The plaintiff's last demand was $250,000; the last offer was $10,000. The jury, which attributed only eighteen percent fault to the plaintiff, did not believe the plaintiff's injury claim and awarded a net verdict of only $3,690 against Jeff's client. 

Defense Verdict in Auto Collision Case

In Greene County Circuit Court, Irene J. Marusic persuaded the jury that her client, who rear-ended the plaintiff, had been forced into the plaintiff's car by another vehicle coming from the defendant's left. The plaintiff claimed our client caused the plaintiff to require rotator cuff surgery with over $70,000 in medical bills. The twelve jurors, who returned a unanimous verdict for Irene's client, commented after trial that the plaintiff should have sued the other driver who was involved in the collision. Throughout the case, Irene had argued that the other driver's conduct was the sole cause of the accident.

Go-Kart Seller Prevails in Wrongful Death Action

Justin A. Hardin represented a company that allegedly sold a defective go-kart. The families of two decedents filed wrongful death actions after their decedents were killed in a go-kart accident on the same date in which the go-kart was purchased. The families demanded more than $5 million and claimed aggravating circumstances. Justin obtained summary judgment for the alleged seller before trial; judgment was affirmed on appeal. The case was covered in WestLaw Journal Automotive.


In the News
Coming up
John P. Rahoy is speaking on "Cyber Issues In Class Action Claims: You Can't Stop The Waves, But You Can Learn To Surf," at The Federation of Defense & Corporate Counsel (FDCC) 2015 Winter Meeting, March 4-7.  

Elaine M. Moss is moderating "It is Bound to Happen: Managing Losses for the Inevitable Data Breach" at the 2015 ALFA International Client Seminar, March 5-8. Elaine also served as the Media & Presentation Director for the 2015 seminar. 

Philip L. Willman will attend the 2nd Annual Risk Management Conference sponsored by the St. Louis Association of Healthcare Risk Managers on March 4. As the DRI Board Liaison for the DRI Medical Liability and Healthcare Law Committee, Phil will also be attending the ProAssurance Defense Counsel Meeting, March 11, and then the DRI Medical Liability and Healthcare Law Seminar and Meeting, March 12-13.

Kurt A. Schmid will moderate the 2015 ALFA Transportation Practice Group Seminar session, "One Way or the Other, We Are Watching You: Successes and Pitfalls of Surveillance and Social Media Investigations," April 29 - May 1.

Jon B. Morrow and Robert L. Brady participated in the Insurance Committee on Arson Control (ICAC) Annual Seminar on February 23-25.

Robert L. Brady spoke at the Springfield Claims Association meeting on February 26 on "Obtaining and Using Cell Tower Records."

Robert S. RosenthalT. Michael WardTeresa M. Young and Todd L. Lubben served as panelists/presenters at the Legal Ethics and Malpractice seminar presented by Brown & James, the Bar Association of Metropolitan St. Louis (BAMSL) and ALPS Corporation on February 26.
In our recent news flash sent out on 2014 firm achievements, the item on successful medical malpractice jury trials omitted BJPC Principal Angela E. Pozzo among the principals named in those case wins.
Contact us with any questions:

T. Michael Ward
Managing Principal
Russell F. Watters
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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