Missouri, Illinois, and Kansas 2022 Notable Insurance Law Decisions
ABSTRACT: Our Insurance Law Blog 2022 year-end review encapsulates significant jury verdicts and decisions affecting insurance cases across the nation. View the post for a non-exhaustive list of insurance cases with national and regional implications that deserve attention.
- M.O. v. Geico Gen. Ins. Co., 2023 Mo. LEXIS 4 (Mo. banc. 2023).
A couple’s back seat dalliance became the basis of an insurance claim that attracted national attention in 2022. The plaintiff alleged that she contracted HPV after engaging in sexual activity with defendant in his vehicle, which was insured by GEICO. After making an insurance claim, the plaintiff and defendant entered into a §537.065 agreement and arbitrated the matter, resulting in a $5.2 million arbitration award. GEICO was not notified of the §537.065 agreement or arbitration until after the arbitration occurred. When GEICO moved to intervene in the lawsuit prior to the circuit court’s entry of judgment, it was allowed to, but only after the circuit court’s entry of judgment affirming the arbitration award. GEICO’s post-judgment motions challenging the judgment and arbitration award were denied. After the Western District of Missouri affirmed the circuit court’s judgment, the Missouri Supreme Court ultimately vacated the circuit court’s judgment finding that the circuit court should have granted GEICO’s motion to intervene prior to entry of judgment, thereby allowing GEICO to challenge the arbitration award.
Estate of Max Overbey v. Universal Underwriters Ins. Co., 645 S.W.3d 641 (Mo. App. W.D. 2022).
This case is one of many lawsuits arising from a Kansas City, Missouri used car dealership’s “drive for life” program. The program advertised low monthly payments and the ability to exchange vehicles every six months. The plaintiffs in this case were made to sign a sales contract that obligated them to a high-interest loan in an amount significantly more than the actual value of the vehicle as well as subjecting them to various hidden fees. When the plaintiffs attempted to trade in their vehicle after six months, the dealership disavowed any knowledge of the “drive for life” program, leaving plaintiffs with a high interest car loan. A jury found in favor of plaintiffs and awarded actual and punitive damages.
The plaintiffs then brought an equitable garnishment action against the dealership’s insurer seeking indemnity for the entire amount of the judgment. The circuit court was not swayed by the insurer’s argument that the underlying act was not an “occurrence” under the policy because the policy definition of “occurrence” required the loss to be an accident resulting in an injury that was not intended or expected. However, the Appellate Court reversed the trial court’s judgment reasoning that an intentional act of fraud which caused damage that was foreseeable, meriting the award of punitive damages, could not also be an “accident,” and therefore, the loss was not an “occurrence” under the policy.
Great Lakes Ins. SE v. Andrews, 33 F.4th 1005 (8th Cir. 2022)
A patron of the “Tool Shed Lounge” bar was attacked by an employee of the bar in the parking lot and was struck repeatedly on his head and body. He brought suit against the bar and its owner, ultimately obtaining a judgment in his favor. The bar’s insurer brought a declaratory judgment action to determine if the bar’s insurance policy provided coverage for the damages resulting from the attack. The Eighth Circuit, applying Missouri law, affirmed the District Court’s determination that that the insurance policy’s assault, battery, or physical altercation exclusion was unambiguous and precluded coverage for the attack.
M.P. v. Trexis One Ins. Corp., 652 S.W.3d 685 (Mo. App. S.D. 2022).
An individual was riding a bicycle through an RV park when he was struck by a golf cart and injured. The injured individual made a claim under his uninsured motorist automobile policy. The policy stated that the insurance would apply if the injury arose out of the operator’s ownership, maintenance, or use of an uninsured motor vehicle. The policy, however, excludes from the definition of “uninsured motor vehicle” any vehicle or equipment “[d]esigned mainly for the use off public roads while not on public roads” (emphasis added). The parties agreed that the golf cart was a motor vehicle designed mainly for use off public roads, but disagreed whether the subject road where the accident occurred was a “public road.”
“Public road” was not defined under the subject policy, so the Court’s applied its plain and ordinary meaning to the term. The accident occurred in a parking lot adjacent to a road that was on private property. Additionally, the road, while accessible for restricted use by the public, was not used by the public freely and commonly, was not commonly used by the public as a shortcut to access a public road, and guests who entered the subject RV park were required to check in with the park’s office. Furthermore, a state-issued driver’s license was not required to operate a vehicle on the subject road and postal, delivery, and emergency vehicles did not freely drive on the road. The court, applying these facts, determined that the subject road was not a “public road” as used in the insurance policy and, therefore, because the accident did not occur on a public road, the golf cart did not qualify as a “uninsured motor vehicle,” and the policy did not provide coverage for the accident.
Sheckler v. Auto-Owners Ins. Co., 2022 IL 128012
This case arose from an apartment’s non-functioning gas stove. A technician was hired to inspect the stove and make repairs, but when the technician left to obtain parts for the stove, the tenants turned the stove on causing gas inside the apartment to ignite resulting in a fire. The Illinois Supreme Court determined that an insurer which provided liability and property damage coverage to the landlord did not owe a duty to defend the tenant against the technician’s contribution claim because the tenant was not an insured nor additional insured under the policy. The Supreme Court rejected the argument that the tenants were implied co-insureds under the policy, distinguishing its holding in Dix Mut. Ins. Co. v. LaFramboise, 149 Ill. 2d 314, 323, 173 Ill. Dec. 648, 597 N.E.2d 622 (1992), noting that the Dix case concerned a cause of action based on equitable principles, while the technician’s contribution claim did not.
Illinois Farmers Ins. Co. v. Godwin, 2022 IL App. (3d) 210001
A passenger was killed in a single-vehicle accident when the driver and passenger were returning to Illinois from a trip to New Mexico. The driver and the driver’s mother were named insureds on an insurance policy issued by Farmers. The driver’s father and mother were divorced and lived in different residences. At the time of the accident, the driver was operating his father’s vehicle, which was not listed on the Farmers policy.
Farmers filed a declaratory judgment action seeking a determination that it had no duty to defend and/or indemnify the driver for the accident claiming that an exclusion applied which excluded coverage for bodily injury arising out of the use of any vehicle other than an insured car that is available for regular use by the insured or a family member.
The Appellate Court determined that the father was not a “household driver,” even though the driver resided with his father roughly 50% of the time. The policy specifically listed the driver and driver’s mother as insureds while listing the driver’s mother’s address as the insureds’ residence. The Appellate Court further determined that the driver’s use of his father’s vehicle was not “regular,” because it was contingent upon driver being at his father’s house, driver making a reasonable request to use the vehicle, and upon father’s granting of permission to use it. Therefore, the vehicle driven during the accident did not fit within the exclusion under the insurance policy, and the Appellate Court determined there was liability coverage under the Farmers policy.
Nationwide Prop. & Cas. Ins. Co. v. State Farm Fire & Cas. Co., 2022 Ill. App. (1st) 210267
This dispute between insurance companies arose from an accident that resulted in the death of a 13-year-old. The 13-year-old was fatally struck by a dump truck while riding his bike. The dump truck was being operated by an employee of a Davis Concrete as he was returning to a road construction project. Davis Concrete had a commercial general liability policy issued by Nationwide. Davis Concrete subcontracted some of its work to RJ&R Trucking and Excavating, who was insured by an automobile, commercial general liability, and umbrella policies.
The wrongful death suit was settled for $3.5 million, of which Nationwide paid $400,000. Nationwide then brought a declaratory judgment action against State Farm seeking a determination that the State Farm commercial general liability policy’s automobile exclusion was inapplicable and seeking indemnity for the $400,000 that it paid towards the settlement. The Appellate Court determined that because the underlying Complaint contained allegations of negligence that were independent of the operation of the dump truck (claiming negligence due to not having a flagman present to direct traffic), that the auto exclusion was not applicable. Nationwide was, thus, entitled to indemnification for the full $400,000 that it paid towards the settlement.
Unique Ins. Co. v. Tate, 2022 IL App. (1st) 210491
An individual was involved in an accident with an ambulance owned and operated by the City of Chicago Fire Department. He sued the fire department, but the fire department was granted summary judgment because it was immune from liability for negligent operation of a motor vehicle under the Local Governmental & Governmental Employees Tort Immunity Act, 745 ILCS 10/5-106. After summary judgment was granted, the individual made a claim with his insurer seeking indemnity under his policy’s uninsured motorist coverage arguing that because the fire department was immune from liability, a denial of his uninsured motorist claim would violate public policy by depriving him and other drivers of their right to recovery.
The Appellate Court found that under the plain terms of the policy, the ambulance did not fit within the definition of an “uninsured motor vehicle,” the definition of which explicitly excludes any vehicle or equipment owned or operated by a self-insurer or owned by any governmental unit or agency. The ambulance was owned by the self-insured fire department, which is also a governmental agency and, therefore, not an uninsured vehicle. The Appellate Court also found the injured party’s public policy arguments unpersuasive.
Granados v. Wilson, 62 Kan.App.2d 10, 505 P.3d 794 (2022)
After a fatal accident in Kansas City, Kansas, the tortfeasor notified his insurer of the accident, but denied causing the accident. The claims adjuster determined the tortfeasor was at fault, but did not contact the wife of the decedent, did not interview any of the 12 listed witnesses on the police report, did not inspect the vehicles, and did not contact the wife’s insurer. The tortfeasor’s insurer first learned of a claim from the decedent’s wife when she filed a wrongful death lawsuit in Wyandotte District Court.
The tortfeasor’s insurer offered to settle the lawsuit for the policy limits of $25,000. The wife’s attorney sent a letter to the tortfeasor’s insurer rejecting the offer and scolding the insurance company from not having offered the policy limits “a long time ago.” The attorney argued that the insurer had a duty to promptly initiate settlement and made a demand to settle the case for just under $3 million. During a bench trial, the District Court found damages in the amount of $4,603,777.52, the amount of which was later appealed and ultimately negotiated and stipulated between the parties as $3,353,777.52 in damages.
The wife brought suit against the tortfeasor’s insurer for the full amount of the judgment. After a bench trial, the Court entered judgment in the wife’s favor. The insurer appealed and the Appellate Court determined that, while the claims adjuster’s investigation did not meet industry standards, failing to do so did not necessarily expose the insurer to damages in excess of its policy limits. For an insurer to be liable for a judgment in excess of its policy limits, there must be a causal connection between an insurer’s breach of duty to its insured and the excess judgment. Here, the Appellate Court found no such causal connection and the insurer was only liable for the judgment in the amount of its policy limits.