Insurance Law Update
January 2016
Brown & James Selected as 2016 U.S. News & World Report and Best Lawyers Best Law Firm 
Once again, Brown & James has been selected as a Best Law Firm by U.S News & World Report and Best Lawyers. The firm was ranked nationally for its appellate practice. The firm was also recognized for its work in insurance law, personal injury litigation defense, product liability litigation defense, legal malpractice law defense, medical malpractice law defense, commercial litigation, and construction law. 
In This Issue
Case Law Updates
The Southern District Takes a U-Turn on UIM Setoff Provision 
The decision of the Southern District of the Missouri Court of Appeals in Beshears v. Shelter Mut. Ins. Co., 468 S.W.2d 408 (Mo. App. S.D. 2015), is now final, the post-opinion review process having run its course. At year-end 2015, the decision bears revisiting as an exemplar of the current state of Missouri underinsured motorist law and the willingness of Missouri courts to find ambiguities in UIM coverage parts. The Beshears decision is significant because the Southern District reversed itself on the enforceability of UIM setoff provisions, overruling two prior Southern District decisions in Shelter's favor that had upheld setoff provisions as enforceable limitations on coverage. In Beshears, the Southern District, on ambiguity grounds, refused to enforce Shelter's setoff provision based on the interplay of the policy's declarations, which contained a $100,000 limit, and the UIM insuring agreement because, as the Southern District observed, Shelter would never have a duty to pay the entire sum stated in the declarations. The Southern District explained that its decision was dictated by the Missouri Supreme Court's opinion in Manner v. Schiermeier, 393 S.W.3d 58 (Mo. banc 2013), in which the Supreme Court refused to enforce a UIM setoff provision because the provision would have reduced the insured's coverage below the promised limits on the declarations page. In so ruling, the Southern District concluded that the Supreme Court had implicitly overturned its prior decisions in 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), in which the Southern District had enforced similar setoff provisions. The Southern District's decision leaves unresolved whether there is any policy language offsetting payments against the limits stated in the declarations page that would survive judicial scrutiny. The decision also highlights the role that declarations pages play in ambiguity determinations in Missouri. In 2016, the Missouri Supreme Court will have the opportunity to address the proper role that declarations pages should play in insurance policies. We will report in our future newsletters if the Supreme Court decides to take up this issue. The saga of UIM coverage in Missouri continues.
Extra Expense Provision Covers the Cost of Relocation and Repair of Specialty Equipment
Although the insurer paid its entire limit for Building and Personal Property Coverage to the insured after the total destruction of its medical building in the 2011 Joplin tornado, the insurer was required to pay for the repair of the insured's MRI scanner, the replacement of other specialty medical equipment, and the relocation cost of that equipment under the policy's Extra Expense coverage provision. In Midwest Regional Allergy v. Cincinnati Ins. Co., 795 F.3d 853 (8th Cir. 2015), the United States Court of Appeals for the Eighth Circuit held that an ordinary person of average understanding would believe that the insured's costs in repairing its MRI machine and in purchasing and installing replacement specialty medical equipment for use at the insured's temporary location would be covered under the policy's Extra Expense coverage, which the Eighth Circuit characterized as a separate, stand-alone coverage part. The Eighth Circuit, in so ruling, explained that an insured would reasonably expect these elements of damage to be covered by the insured's first-party property insurance because they fall within the policy's described Extra Expense coverage.
Fact Question Barred Summary Judgment on Statute of Limitations Grounds in Chemical Exposure Case
In Giles v. Carmi Flavor and Fragrance Co., No. WD77952 (Mo. App. W.D. Sept. 22, 2015), the Missouri Court of Appeals reversed the trial court's summary judgment in a chemical exposure case for the defendant based on Missouri's five-year statute of limitations even though the plaintiff knew he had a medical condition that might be related to his employment almost ten years before he filed suit. The Court of Appeals held the application of the statute of limitations presented a fact question as to whether the plaintiff's damages were ascertainable before the five-year statute ran despite the fact that he had developed symptoms that his physicians thought might be work-related because the physicians wrongfully diagnosed his condition as asthma and medical science at the time was limited on the connection between the plaintiff's symptoms and his chemical exposure. Thus, since the plaintiff's medical condition was not diagnosed as bronchiolitis obliterans until 2011 and the plaintiff filed suit in 2013, the Court concluded there was a fact question for the trier of fact to determine when the plaintiff could have reasonably ascertained that he had a physical condition linked to his exposure to the chemical involved.
Coming in 2016
The Missouri Supreme Court's Long-Awaited Decisions on Co-Employee Liability Are Anticipated in Early 2016
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 heard oral argument in two co-employee liability cases on February 24, 2015. In one of the pending cases, Peters v. Terrio, No. SC94442 (Mo. banc), Teresa M. Young of our Appellate Practice Group argued the case on the defendant co-employee's behalf. On the same date, the Court heard oral arguments in Parr v. Breeden, No. SC94393 (Mo. banc), a companion case.

Courthouse observers anticipate the Missouri Supreme Court's decisions in the Peters and Parr cases in early 2016. These two decisions should settle once and for all Missouri co-employee liability law for all cases subject to the 2005 amendments to the Missouri Workers' Compensation Act. As soon as the Missouri Supreme Court rules, we will report to you. We also intend to hold a webinar immediately following the Court's decision to apprise our clients on this significant area of Missouri law.
Recent Case Results
In the October 2015 newsletter's Trial Results section, the summary for Phil Willman's trial result should have included the contributions of Brown & James attorney Angela Pozzo. She served as second chair at the trial. Congratulations again to Phil and Angela on their defense verdict.
Corey Kraushaar obtained a favorable result in the Western District of the Missouri Court of Appeals. In a case of first impression, the Court of Appeals affirmed the trial court's judgment for his client, a first-party property insurer, under the policy's intentional act exclusion in a case in which the insured attempted suicide by setting his garage on fire. The Court of Appeals held the evidence demonstrated that the insured understood he was setting a fire and had carried out the act with plan and intent. The Court of Appeals also held the insured had materially breached the policy's cooperation clause when he failed to submit to an examination under oath.
Matt Haas obtained partial summary judgment for his insurer client on the insured's vexatious-refusal-to-pay claim. Matt convinced the trial court to remove the insured's vexatious claim from the case because the insurer had denied the claim on grounds that the insured had intentionally burned his home and made misrepresentations in the presentation of the loss.
Irene Marusic, in an appellate victory, persuaded the appellate court to affirm a defense verdict that she obtained for her insurance client in an uninsured motorist trial. The court affirmed the jury's verdict for Irene's client, holding the trial court did not err in refusing to permit the plaintiff to argue or submit the issue of comparative fault to the jury because there was no evidence of comparative fault at trial.
In a summary judgment win for a local municipality, Timothy Wolf and Andrew Kaiser persuaded the trial court to conclude that the municipality's purchase of liability insurance did not waive sovereign immunity because the policy granted the municipality the option of raising sovereign immunity as a defense.
In the News
Brown & James Attorney Speaking Engagements/Presentations 

On October 23, 2015, Joseph Swift co-presented "Strategies for the Cross-Examination of a Safety Director" to transportation claim professionals at Cottingham & Butler. The presentation featured different styles of cross-examinations that were presented to focus groups to measure the effectiveness of each distinct style.

On October 22, 2015, Brad Hansmann presented before the Springfield Claims Association. Brad's topic addressed the case of Akers v. Auto-Owners Insurance Company, in which the District Court awarded Auto-Owners its attorney fees and costs on a reverse bad faith theory based on the insured's misconduct.
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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