Insurance Law Update
August 2015
In This Issue
Case Law Updates
Court Takes U-Turn on UIM Set-Off Provision
The Southern District of the Missouri Court of Appeals in Beshears v. Shelter Mut. Ins. Co., No. SD32903 (Mo. App. S.D. July 16, 2015), has reversed itself and held that the set-off-against-limits provision in the Shelter underinsured motorist coverage form is ambiguous. The Court, in so ruling, explained that the interplay between the policy's declarations page, which contained a $100,000 UIM limit, and the policy's set-off provision rendered the policy ambiguous because Shelter would never pay the entire $100,000 sum stated in the declarations in the event of a loss. Following the Missouri Supreme Court's decision in Manner v. Schiermeier, 393 S.W.3d 58 (Mo. banc 2013), the Southern District further explained that the Supreme Court in Manner had implicitly overruled two prior Southern District decisions -- Shelter Mut. Ins. Co. v. Straw, 334 S.W.3d 592 (Mo. App. S.D. 2011), and Lynch v. Shelter Mut. Ins. Co., 325 S.W.3d 531 (Mo. App. S.D. 2010) -- that had reached the opposite conclusion. The Southern District left unresolved whether there could be any language that an insurer could incorporate in an underinsured motorist coverage form that would provide an offset against limits that would pass judicial scrutiny. The saga of underinsured motorist coverage in Missouri continues.  
Value of Medical Bills in UIM Case May Be the Amount Paid to Satisfy the Financial Obligation Due the Health Care Provider
The United States Court of Appeals for the Eighth Circuit resolved an open question of Missouri law governing the evidence that may be admitted to show the value of medical treatment. In Behlmann v. Century Surety Co., No. 14-2786 (8th Cir. July 24, 2015), the Eighth Circuit held that Mo. Rev. Stat. 490.715.5 and the Missouri Supreme Court's decision in Deck v. Teasley, 322 S.W.3d 536 (Mo. banc 2010), govern the admission of evidence concerning the value of medical treatment in UIM cases. In response to the statute's language that the value of medical treatment may be "the dollar amount necessary to satisfy the financial obligation to the health care provider," claimants have argued, and some trial courts have held, that the statute does not apply to contract claims such as UM and UIM cases. The Eighth Circuit soundly rejected these arguments and held that the statute applies in all cases where liability for medical expenses resulting from the tortfeasor's negligence is at issue.  
Independent Contractor Defense Upheld To Protect Landowner
In Woodall v. Christian Hospital NE-NW, No. ED101777 (Mo. App. E.D. July 21, 2015), the Missouri Court of Appeals held that the independent contractor defense barred a premises liability claim against the defendant landowner brought by the independent contractor's employee who fell and was injured while present on the landowner's property. The Court explained the landowner owed the contractor's employee no duty as a matter of law because the landowner had relinquished possession and control over its premises to the contractor. The Court's decision makes for recommended reading as a good discussion of the independent contractor defense. The Court's decision also highlighted the defense's limits. The Court held the plaintiff could still proceed against the landowner on a general negligence theory because the plaintiff's injury allegedly arose out of the landowner's negligent conduct rather than a condition of the property alone.  
Matching Siding Required in First-Party Insurance Claim
When an insurer under a first-party insurance policy has agreed to provide replacement cost coverage for building damage with "equivalent construction," the insurer must re-side the entire building if that is the only way to "match" the area damaged and repaired with the building's existing siding. In Alessi v. Mid-Century Ins. Co., No. ED10221 (Mo. App. E.D. June 23, 2015), the Missouri Court of Appeals considered for the first time a first-party insurance claim in which the insured sustained damage to the siding on one side of her building and the new replacement siding did not match the older siding. The Court, in ruling for the policyholder, held the insurer would be required to replace all of the building's siding, unless new the siding could be matched with older undamaged siding, because the insurer had agreed to replace the damage with equivalent construction and material, which the Court held had to be "equal in value" and "virtually identical" to the existing material.
Additional Insured Endorsements Must Be Interpreted Broadly
The Missouri Court of Appeals' decision in Peterson v. Discover Prop. & Cas. Co., Nos. WD76852 and WD76858 (Mo. App. W.D. Jan. 13, 2015), became final on May 26, 2015, when the Missouri Supreme Court denied post-opinion review. The Court's decision in Peterson bears revisiting because the decision greatly expands the potential liability of carriers providing additional insured coverage in construction cases where the additional insured's acts or omissions operated in tandem with those of the named insured in causing the loss. The case is significant because the Court held the additional insured was entitled to coverage even though the jury found the named insured free of fault and the policy contained language barring coverage for the additional insured if the additional insured's independent acts or omissions were the cause of the damage. This case merits attention by any carriers providing blanket additional insured coverage by endorsement.
Drunk Driver Entitled to Set-Off for Tavern Owner's Dram Shop Payment
In Payne v. Markeson, No. WD77553 (Mo. App. W.D. May 5, 2015), the Missouri Court of Appeals held a defendant drunk driver was entitled to set off the amount of money the plaintiff received in settlement of her statutory dram shop claim brought against the tavern that served the defendant driver intoxicating beverages. The set-off effectively reduced the verdict against the drunk driver to zero.
Police Officer Entitled to Qualified Immunity
The Missouri Supreme Court in Copeland v. Wicks, No. SC94804 (Mo. banc July 21, 2015), upheld the protections afforded police officers in the performance of their discretionary duties under the qualified immunity doctrine. The plaintiff brought a malicious prosecution claim against a police officer under Section 1983 based on the police officer's conduct in issuing a probable cause statement against the plaintiff for child abuse. The Court held the plaintiff's claim failed because there was no evidence that the officer's actions violated a clearly established law. The Court further explained that an officer is entitled to qualified immunity if there was probable cause to arrest a suspect for violating any applicable statute, even if not the one contemplated at the moment of the arrest. Restated, the Court held it is enough for the officer to show that there was "merely arguable probable cause," which the Court defined as "a mistaken, but objectively reasonable belief, that the suspect committed a criminal offense."
Supreme Court Clarifies Statue of Limitations for Contract Actions
In Rolwing v. Nestle Holdings, Inc., No.SC93756 (Mo. banc June 10, 2015), the Missouri Supreme Court reaffirmed that Missouri's five-year statute of limitation governs contract actions, regardless of the fact that the plaintiff seeks monetary relief. The Supreme Court, in so ruling, explained that Missouri's ten-year statute applies only when the claim involves a written promise to pay money and that promise is the basis for the cause of action. In all other breach of contract actions, the Court held that Missouri's five-year statute applies.
Defendant Wrongfully Denied Arbitration in Class Action Lawsuit
The Missouri Court of Appeals reversed a trial court's decision denying H & R Block arbitration in a class action lawsuit charging H & R Block with misrepresenting the nature of a $2 fee that it charged its customers. The Court, in Lopez v. H & R Block, Inc., No. WD76724 (Mo. App. W.D. May 6, 2014), held the trial court erred in denying H & R Block's motion to compel arbitration on the ground that the cost of the arbitration might exceed the value of the plaintiffs' claim. The Court explained that the Federal Arbitration Act preempted arguments based on the public policy concern that consumers with small-value claims would be deprived of a meaningful remedy because they present an impermissible obstacle to the FAA's objective of enforcing arbitration agreements according to their terms. The Court's analysis under the FAA, however, did not conclude the case. The Court remanded the case to the trial court to consider the plaintiffs' other claims of unconscionability based on ordinary state-law principles.
Court Defines Liquidated Damages Clause and Orders Attorney Fee Award
In Star Development Corp. v. Urgent Care Assocs., Inc., No. WD76619 (Mo. App. W.D. April 29, 2014), the Missouri Court of Appeals affirmed the trial court's award based upon a liquidated damages provision, holding the provision was compensatory in nature rather than punitive. The Court explained that the less stringent test for upholding a compensatory damages provision applied. The Court then reversed the trial court's decision not to award attorney fees despite the contract's attorney fee provision and ordered the trial court on remand to award attorney fees to the prevailing party. This case merits reading concerning the enforceability of clauses providing for liquidated damage and attorney fees. Also see Desu v. Lewis, No. ED99846 (Mo. App. E.D. April 1, 2014), where the Missouri Court of Appeals reversed the trial court's refusal to award attorney fees and ordered the trial court to award attorney fees to the prevailing party that were provided for in the parties' contract.
Arbitration Delegation Provision in Rental Contract Upheld
The Missouri Court of Appeals in
Johnson v. Rent-A-Center, No. WD76863 (Mo. App. W.D. Nov. 4, 2014), enforced an arbitration agreement containing a "delegation provision" that authorized the arbitrator to decide threshold issues concerning arbitrability and the scope of the arbitration agreement. The Court explained that so long as the delegation provision is clear and unequivocal, the arbitrator may decide such threshold questions.
Recent Case Results
Defense Verdict in Medical Malpractice Case  
David Ellington and Halle Dimar obtained a defense verdict in a medical malpractice case in Marion County, Missouri. David and Halle represented a multi-specialty clinic in a case involving a bowel perforation following a vaginal hysterectomy. The plaintiff argued the surgery was unnecessary, that she was not a candidate for a vaginal hysterectomy due to her prior surgical history, and that the perforation was not timely diagnosed and treated. The plaintiff's expert witnesses included the surgeon who repaired the bowel injury, the critical care physician who accepted transfer of the patient to another hospital, and an OB/GYN expert who testified principally for defendants. The plaintiff incurred medical bills in excess of $800,000 and lost wages from her inability to return to work as a home health aide. The plaintiff sought $5.5 million in damages. After two hours of deliberations, the jury returned a defense verdict.
Defense Verdict for Cab Company in Brain Injury Case
Brad Hansmann received a defendant's verdict for his cab company client in a personal injury action brought against the cab company whose driver ran off the road in a one-car collision and the plaintiff passenger claimed a brain injury. After a two-week trial, the jury returned an 11-1 verdict for Brad's client. Although the plaintiff's lawyers brought in medical experts from around the country, including the well-traveled Dr.  Benson, who testified the plaintiff was totally disabled from the brain injury, the jury did not buy the injury claim because there was little to no damage to the car and the plaintiff's symptoms did not immediately arise after the accident. At trial, plaintiff's counsel asked for $4 million in damages based on over $100,000 in medical specials and evidence of total disability supported with substantial life care plans and vocational rehab experts. John Greffet assisted Brad in the case's defense.
Restaurant Prevails in Slip-and-Fall Case 
Joseph Swift successfully defended a restaurant client in a premises liability case in which the plaintiff had sustained substantial injuries as a result of the fall that required the replacement of her artificial knee. The plaintiff denied the presence of a wet floor sign in an area where the floor had recently been mopped; however, an independent witness testified that the sign was in place at the time of the plaintiff's fall.
Summary Judgment for Insurer in UIM Stacking Case
In a summary judgment win for an insurer in an underinsured motorist stacking case in federal court, Lucas Ude persuaded the court to conclude as a matter of law that no stacking was permissible under the policy. This is a rare win in Missouri for an insurer in a UIM stacking case.   
Defense Verdict for Municipality in a Sanitary Sewer Back-Up Case
Matthew Koehler successfully defended a municipality in a case involving inverse condemnation claims by two sets of plaintiffs for a sanitary sewer backup in their homes.
The backup was a result of storm water entering the sanitary sewer system due to flash flooding from an extremely large rain storm in September 2006. Each set of plaintiffs experienced approximately five feet of sewer backup. In addition, one set of plaintiffs submitted a second inverse condemnation claim due to a second backup resulting from a very large rain storm in April 2014. The total damages claimed for all three claims was $328,000. The jury returned a verdict for Matthew's client on all three claims.
Class Action Lawsuit Decertified
Tim Wolf, Bob Carter, and David McCourt won a significant class action victory in the Circuit Court of Jackson County in a blast fax case that had been pending for over four years when the trial court entered an order sustaining their motion to decertify the class. The plaintiffs' settlement demand had been in excess of $5 million with potential damages totaling over $10 million. The trial court's decertification order, for all intents and purposes, decided the case in our client's favor. 
Defense Verdict in Slip-and-Fall Case
John Cooney obtained a defendant's verdict in a Pike County jury trial. The plaintiff sued his son for personal injuries that he sustained when he fell down stairs allegedly as a result of his son's negligence. The jury returned a unanimous verdict for John's client.  
Defense Verdict in Dock Electrocution Case
Jackie Kinder received a jury verdict for her defendant landowner at the Lake of the Ozarks. The landowner's dock became electrified when a defective electrical wire in the dock's lights energized the dock and surrounding water. A neighbor who came over to use the dock and swim while Jackie's client was out of town was electrocuted. Jackie's client had no notice of the defect. The jury, after a several-day trial, returned a defense verdict for Jackie's client. 
Eighth Circuit Appellate Victory Concerning the Reasonable Value of Medical Specials
Patrick Bousquet and Brad Hansmann obtained a big win before the United States Court of Appeals for the Eighth Circuit in a UIM matter. Brad had tried the UIM case a year ago in a week-long trial and won. The case involved a demand for the policy's $1 million policy limits. On appeal, the principal question was whether the district court erred in permitting Brad to argue under Mo. Rev. Stat. 490.715.5 and Deck v. Teasley, 322 S.W.3d 536 (Mo. banc 2010), that the reasonable value of the plaintiff's medical bills was the amount that was paid to satisfy them rather than the total amount billed. The plaintiff argued these authorities were inapplicable because the claim was a contract action. The Eighth Circuit disagreed and applied the Deck decision in Brad and Patrick's favor. This case has decided this issue for cases pending in federal court and will have persuasive effect on state court cases as well.
In the News
Brown & James Attorney Speaking Engagements/Presentations 

Coming up  

Robert Brady will speak on "Gone in 60 Seconds: The Age of Electronic Thievery," regarding the detection of fraudulent auto theft claims, at the International Association of Special Investigation Units National Seminar, September 13-16, 2015.



Todd Lubben moderated and Teresa Young served as a panelist for "Untangling the Ivy from Claims-Made Policies," at ALFA's Professional Liability Seminar on August 7, 2015. 


Steven Schwartz presented on a panel regarding marijuana in the workplace and
Denise Baker-Seal served as a liaison for the Women's Initiative event, both at ALFA International's 2015 Labor & Employment Practice Group Seminar.  


If you are interested in having a Brown & James attorney present or speak on an industry/legal-related topic for your company, please contact your Brown & James lawyer for more information.

Contact us with any questions:

T. Michael Ward
Managing Principal
Russell F. Watters
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