Insurance Law Update
October 2015
In This Issue
Case Law Updates
Any Policy Provision in UIM Coverage in Conflict with Declarations Page Is Ambiguous 
The Missouri Court of Appeals, in Simmons v. Farmers Ins. Co., Inc., No. ED102140 (Mo. App. E.D. Oct. 6, 2015), has taken an extreme view of insurance policy declarations pages by holding that a policyholder is entitled to the full limit of UIM coverage stated on the declarations because the interplay of the declarations with any provisions in the main body of the policy that purport to limit coverage renders the policy ambiguous. The Court in Simmons, in essence, held that unless there is some notation or explanation on the declarations page that the UIM coverage provides "gap" coverage and the policy's stated UIM limit on the declarations page is not what the insured will ever receive, the coverage will be deemed "excess coverage," and not "gap" coverage as intended and explained in the main body of the policy. The Court's decision broadly expands the notorious Miller and Fanning cases decided by the Western District of the Missouri Court of Appeals, which were arguably limited to their facts. The lesson to be drawn from the Court's decision in Simmons is that unless the declarations pages of insurance policies are rewritten the courts will find ambiguities based on perceived conflicts between the declarations and the main body of the policy, and, in the UIM coverage context, this conflict will render an insurer's UIM always excess coverage, and not "gap" coverage as intended. 
The Nightmare for Insurers Continues When Refusal to Withdraw Reservation of Rights Leads to Another Large Uncontested Judgement
In yet another pro-policyholder decision from the Western District of the Missouri Court of Appeals, an insurer has been held liable for up to $16 million in a subsequent coverage action following a lay-down bench trial and the entry of a final judgment and findings of fact and conclusions of law by the trial court in the underlying personal injury action. The Court, in Allen v. Bryers and Atain Specialty Ins. Co., No. WD77905 (Mo. App. W.D., Sept. 15, 2015), held that the insurer could not re-litigate in the subsequent coverage action any of the facts included in the trial court's judgment entered in the underlying bench trial. The insurer had defended its insured under a reservation-of-rights letter, citing an assault, battery, and intentional acts exclusion, following a claim that the insured's security manager had shot the plaintiff while trying to forcibly remove the plaintiff from his apartment. The insured rejected the insurer's reservation-of-rights defense and entered into a Section 537.065 agreement and then allowed an uncontested judgment to be entered against him. The judgment included findings of fact and conclusions of law written to support coverage. Specifically, the trial court found that the discharge of the gun was accidental and negligent and done in the course of employment for the insured, that the gun's discharge was not an assault, battery, or intentional act, and that the force used was not excessive or unreasonable. On the insurer's appeal from an adverse judgment in the coverage action, the Missouri Court of Appeals held the trial court's findings could not be collaterally attacked in the coverage action; therefore, the insurer was bound by those facts and its exclusion had no application. The Court justified its decision, in part, on the ground that the insurer did not move to intervene or seek a stay of the underlying action pending a decision on coverage. However, the Court's explanation was chimerical. Under current Missouri law, insurers have no standing to intervene in an underlying damage action. The court also implied that because the insurer had refused to defend its insured, the insurer deserved this outcome, but in reality, the insurer had agreed to defend, albeit under a reservation-of-rights. The Allen decision once again illustrates the risks that insurers face in Missouri with Section 537.065 agreements, reservation-of-rights defenses, and the pro-policyholder temperament of Missouri's judiciary, especially in the Western District of the Missouri Court of Appeals. 
Psychological Treatment Records Are Protected by the Physician-Patient Privilege
Once the plaintiff removed all allegations of physiological harm as a result of an accident from her claim, and maintained a claim for physical harm only, the plaintiff's psychological records became absolutely privileged and were not discoverable based on the physician-patient privilege. The Southern District of the Missouri Court of Appeals, in State ex rel. Phillips v. Hackett, No. SD33760 (Mo. App. S.D., Sept. 10, 2015), held that just because medical records may contain relevant information other than treatment related to the accident, they are not discoverable if the privilege applies. The Court's decision contains a very good discussion of the physician-patient privilege and makes for recommended reading. 
Recreational Use Act Provides Landowner Immunity from Suit in Double Death Case
The Missouri Supreme Court, in Anderson v. Union Elec. Co., No. SC94372 (Mo. banc, June 16, 2015), ruled that a landowner, Union Electric Company, could not be held liable for the deaths of two children who drowned in the Lake of the Ozarks because Union Electric was immune from liability under the Missouri Recreational Use Act, Mo. Rev. Stat. 537.345 (RUA). The Court explained that the Missouri General Assembly enacted the RUA to encourage the free use of land for recreational purposes and to preserve and promote the utilization of natural resources. Thus, under the RUA, since Union Electric did not charge a fee for the use of the Lake of the Ozarks, which it owns, Union Electric could have no tort liability under the RUA for the children's deaths. The fact that Union Electric charged the children's parents a "dock fee" to have a dock on the Lake did not make a difference. The Court explained that the "dock fee" did not amount to a "charge" to use the Lake that deprived Union Electric of its rights under the RUA. 
No Liability to Manufacturer in Product Liability Case Because Manufacture Met the Customer's Specifications
In a very well-written decision, the Eastern District of the Missouri Court of Appeals, in Hopfer v. Neenah Foundry Co., No. ED101754 (Mo. App. E.D., Sept. 22, 2015), upheld the "compliance with contract specifications" defense applicable in products liability cases and expounded upon the Court's earlier decision addressing this defense, Bloemer v. Art Welding Co., No. 884 S.W.2d 55 (Mo. App. E.D. 1994), in affirming the jury's verdict for the defendant manufacturer. In Hopfer, the Missouri Department of Transportation (MoDOT) had ordered from the defendant certain street drainage grates for use on public streets per its specifications and plans. There was no dispute that the defendant had manufactured the grates to MoDOT's specifications; however, the plaintiff argued the defense was no longer valid because the defense was not included by the Missouri General Assembly as an affirmative defense in its enactment of Missouri's basic product liability statute in 1987. The Eastern District rejected the plaintiff's argument and reaffirmed the defense. The Court explained that the "contract specifications" defense places a logical limit on strict liability by assuring that manufacturers are not absolutely liable for any and all injuries caused by their products. Also, the Court rejected the plaintiff's invitation to the Court to adopt the "prudent manufacturer" test to govern strict liability claims in Missouri. 
Court Reaffirms Rule that the Statute of Limitations Runs from When Damage Occurs
In Fleishour v. NRT Missouri, LLC, No. ED101507 (Mo. App. E.D., June 23, 2015), the Eastern District of the Missouri Court of Appeals, in holding the plaintiff's action time-barred, reaffirmed the longstanding Missouri rule that limitations periods begin to run when the damage resulting from an act is sustained or capable of ascertainment. In a negligence action against brokers and others involved in the sale of property based on their failure to advise the plaintiff of his rights to certain property, the Court of Appeals held that the limitations period on the plaintiff's claim began to run at the time the property's sale closed because that was when the plaintiff's alleged damages would have taken place or could have been ascertained. The Court so ruled even though the plaintiff was not actually aware of his rights until sometime later by subsequent proceedings. 
Official Immunity Doctrine Applies to Wrestling Coach
The Western District of the Missouri Court of Appeals, in Woods v. Ware, No.WD78040 (Mo. App. W.D., Sept. 29, 2015), applied the official immunity doctrine to a high school and middle school wrestling coach who was sued by a student and the student's parents for injuries that the student sustained during wrestling practice while participating in a drill with another student. The Court of Appeals held that official immunity protected the coach from liability for alleged acts of ordinary negligence committed during the performance of his official duties as well as during his coaching activities, which were discretionary in nature, despite the existence of school and state coaching bylaws that the coach allegedly violated. The Court, in so ruling, explained that these alleged violations did not make the coach's activities ministerial in nature such that he fell under an exception that would deprive him of the immunity granted to teachers, coaches, and other public employees. 
Recent Case Results
Phil Willman obtained a defense verdict in the retrial of a case that was also decided in his client's favor in 2011. The plaintiff's lawsuit alleged negligence in the diagnosis of an eye problem that ultimately led to a loss of eye sight. Counsel for plaintiff asked the St. Louis County jury for more than $2 million in damages. As in the original trial, the jury found that the routine eye exam provided to the plaintiff could not have discovered the condition that ultimately led to the impairment.
Brandon Copeland and Nathan Davis won summary judgement on a property damage in the Circuit Court of St. Louis City. The plaintiff alleged that our client/landlord was responsible for damage to his car when part of the roof of our client's building blew off and landed on the car. The plaintiff's car was a total loss. Brandon and Nathan argued the plaintiff's claim was barred by exculpatory clauses in our client's parking and lease agreements.
John Cooney brought in a defendant's jury verdict after a two-day jury trial in the Circuit Court of Jefferson County, Missouri. John defended a tree company against an adjoining landowner's trespass and conversion claims. The jury found that John's client did not trespass and only took trees that he had a right to cut per an easement. In a happy coincidence, John had the honor of trying the case with his lawyer father, who had been retained to represent the co-defendant landowner who had hired the tree company that John represented.
Patrick Bousquet and Brad Hansmann came in with a big appellate win when the Eastern District of the Missouri Court of Appeals affirmed the jury's 2014 defense verdict for Brad's client in a large three-week multi-million dollar product liability lawsuit involving a paralyzed plaintiff. Patrick was charged with the job of holding the verdict on appeal.
In the News
Brown & James Attorney Speaking Engagements/Presentations 

Coming up  

On October 22, 2015, Brad Hansmann will present at the Twin Oaks Country Club for the Springfield Claims Association. Brad's topic will address the case of Akers v. Auto Owners Insurance Company



Brandon Copeland spoke at the National Business Institute's "Advanced Trial Tactics" seminar on the topic of Effective Exhibits and Using Technology in the Courtroom, September 30, 2015. 


Joseph Swift spoke at the 2015 Arkansas Trucking Seminar, September 16-17, 2015. He was a co-presenter of the topic "Insightful Jury Selection in the Wake Ferguson, Missouri and Charleston, South Carolina." 


Kevin Adrian served as the program chair for the 2015 ALFA International Workers' Compensation Seminar in Denver, Colorado, September 16-18, 2015. At the seminar, Kevin was appointed as the new Chair of the practice group.  


Robert Brady spoke 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 Nation Seminar, September 13-16, 2015. 


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
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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