Wells v. Missouri Property Ins. Placement Facility

• Decision Date: 30 June 1983
• Docket Number: No. 63984,63984
• Citation: 653 S.W.2d 207
• Court: Missouri Supreme Court
• Parties: Willia WELLS, Margarete Yung, Doris & Willard Maytubby, Willie Ruth Hunter, et al., Appellants, v. The MISSOURI PROPERTY INSURANCE PLACEMENT FACILITY, d/b/a Missouri Fair Plan, Respondent.

Page 207

653 S.W.2d 207

Willia WELLS, Margarete Yung, Doris & Willard Maytubby, Willie Ruth Hunter, et al., Appellants, v. The MISSOURI PROPERTY INSURANCE PLACEMENT FACILITY, d/b/a

Missouri Fair Plan, Respondent.

No. 63984.

Supreme Court of Missouri,

En Banc.

June 30, 1983.

Stuart R. Berkowitz, Clayton, for appellants.

Glenn E. McCann, Edward L. Smith, Kansas City, Joseph L. Leritz, St. Louis, for respondent.

WELLIVER, Judge.

The issue in this case is the effect of the valued insurance policy statutes, §§ 379.140-.145, .160, RSMo 1978, ¹ and § 379.150 on claims filed on policies issued under the Missouri FAIR Plan. ²

I

Appellants brought this action in the form of a two-count class action. In Count I appellants Willia Wells, Margarete Yung, and Doris and Willard Maytubby alleged that they each owned real property, and appellant Willie Ruth Hunter alleged that she owned personal property, that had been insured by respondent against fire loss. The property of each sustained partial loss due to fire. ³ They claimed that in determining the amount to be paid on their fire insurance claims respondent improperly deducted depreciation from the cost of repair of the property. Such a deduction, it was alleged, violated § 379.150, which provides:

Whenever there is a partial destruction or damage to property covered by insurance, it shall be the duty of the party writing the policies to pay the assured a sum of money equal to the damage done on the property, or repair the same to the extent of such damage, not exceeding the amount written in the policy, so that said property shall be in as good condition as before the fire, at the option of the insured.

They sought recovery of the deducted amount on the ground that they were entitled to receive the cost of repair and that by deducting depreciation from that amount respondent, in violation of the valued policy statutes, "in essence ... denied the subject property was worth the full amount for which it was insured." See § 379.140. They also sought certification of a class of plaintiffs from whose claims for partial loss respondent had deducted depreciation. For the class they sought actual damages in the amount of such depreciation and punitive damages of $15 million.

In Count II appellant James Smith alleged that he had owned real and personal property insured by respondent against fire loss and that the property had been totally destroyed by fire. The real property was insured for $10,000 and the personal property for an aggregate sum of $4,000. Smith claimed that the "cost of repairing [his] property greatly exceeded the amount of $10,000.00 for which it was insured and little or no depreciation had occurred in the three months between the time the policy had been issued and the time of the fire." He alleged that as a result he was entitled under § 379.140 to receive $10,000. ⁴ Section 379.140 provides:

In all suits brought upon policies of insurance against loss or damage by fire hereafter issued or renewed, the defendant shall not be permitted to deny that the property insured thereby was worth at the time of the issuing of the policy the full amount insured therein on said property; and in case of total loss of the property insured, the measure of damage shall be the amount for which the same was insured, less whatever depreciation in value, below the amount for which the property is insured, the property may have sustained between the time of issuing the policy and the time of the loss, and the burden of proving such depreciation shall be upon the defendant; and in case of partial loss, the measure of damage shall be that portion of the value of the whole property insured, ascertained in the manner prescribed in this chapter, which the part injured or destroyed bears to the whole property insured.

Smith claimed that respondent erroneously deducted depreciation "in excess of that which may have occurred between the time the policy was issued and the time of the loss," and he sought actual damages for the difference between the face value of the policy insuring the real property and the amount he was actually paid. He also sought certification of a class of plaintiffs from whose claims for total loss respondent had deducted excess depreciation. For the class he sought actual damages in the amount of such excess depreciation and punitive damages of $15 million.

The trial court sustained respondent's motion to dismiss for failure to state a claim upon which relief could be granted, see Rule 55.27(a)(6), and appellants appealed. The Missouri Court of Appeals, Eastern District, adopted an opinion affirming the dismissal of Count I but reversing the dismissal of Count II. We ordered the case transferred, Rule 83.03, and we review as if on original appeal, Rule 83.09. We affirm the judgment of the trial court in all respects. ⁵

II

Under the valued policy statutes an insurer is estopped to deny that the value of insured property at the time the policy was written was equal to the amount of insurance for which the policy was written. See §§ 379.140-. 145, .160. Sections 379.140 and 379.145 apply only to real property, and § 379.160 applies to both real and personal property. Duckworth v. United States Fidelity & Guaranty Co., 452 S.W.2d 280, 282-85 (Mo.App.1970). Section 379.140, quoted above, establishes as the measure of damages for a total loss of real property ⁶ the face value of the policy less the amount the property depreciates between the time the policy is issued and the time of the casualty. The insurer bears the burden of proving such depreciation, and absent such proof the amount of the policy conclusively establishes the value of the property. See State ex rel. North British & Mercantile Insurance Co. v. Cox, 307 Mo. 194, 201, 270 S.W. 113, 115 (banc 1925); Meyer v. MFA Mutual Insurance Co., 543 S.W.2d 822, 827 (Mo.App.1976).

Section 379.140 also establishes a measure of damages for the partial loss of real property, but our courts have largely ignored that provision and have instead relied on § 379.150, quoted above, for the measure of damages in the case of a partial loss without regard to whether the property is real or personal. Section 379.150 allows the insured to receive "a sum of money equal to the damage done on the property" or to have the insurer repair the property "to the extent of such damage." There is no express indication of how "the damage done on the property" is to be calculated, but our courts have long held that under that section and its predecessors damages are to be measured by the difference between the reasonable values of the property immediately before and immediately after the casualty. E.g., Non-Royalty Shoe Co. v. Phoenix Assurance Co., 277 Mo. 399, 416-19, 210 S.W. 37, 40-41 (1918); Franklin v. Farmers Mutual Insurance Co., 627 S.W.2d 110, 113 (Mo.App.1982); Boren v. Fidelity & Casualty Co., 370 S.W.2d 706, 709 (Mo.App.1963); Brown v. Pennsylvania Fire Insurance Co., 263 S.W.2d 893, 899 (Mo.App.1954); Johnstone v. Home Insurance Co., 34 S.W.2d 1029, 1033 (Mo.App.1931); Security Printing Co. v. Connecticut Fire Insurance Co., 209 Mo.App. 422, 448, 240 S.W. 263, 271 (1922); Scism v. Home Insurance Co., 224 S.W. 48, 49 (Mo.App.1920); Tinsley v. Aetna Insurance Co., 199 Mo.App. 693, 708, 205 S.W. 78, 81 (1918). In cases of partial loss, the burden is on the insured to prove the value of the property both before and after the casualty. Franklin, 627 S.W.2d at 113; Brown, 263 S.W.2d at 900. See Bolton v. Missouri-Kansas-Texas Railroad, 373 S.W.2d 169, 173-74 (Mo.App.1963); Johnstone, 34 S.W.2d at 1033-34.

These statutes clearly affect private insurance contracts that result from direct negotiations between the insurance company and the consumer. Whether these statutes affect insurance coverage procured through the Missouri FAIR Plan, however, is an altogether different matter. In order to make that determination it is necessary to examine the history of, and the policies that underlie, the FAIR Plan. Our "primary responsibility," Goldberg v. Administrative Hearing Commission, 609 S.W.2d 140, 144 (Mo. banc 1980), is "to determine and give effect to the intent of the legislature," State v. White, 622 S.W.2d 939, 944 (Mo. banc 1981), cert. denied, 456 U.S. 963, 102 S.Ct. 2040, 72 L.Ed.2d 487 (1982). In ascertaining legislative intent we are obliged to "consider the purpose or goal of the statute and any relevant conditions existing at the time it was enacted." Id.

State FAIR Plans are a by-product of the urban social upheaval of the late 1960's. In that period

the urban population level reached the saturation point and we began to hear about complex difficulties facing our metropolitan areas. Problems began to multiply; among the most serious concerns were an increasing unemployment rate, inadequate housing, poverty-stricken inhabitants, and, in many instances, discrimination against basic human rights and privileges.... To a large extent, these areas became isolated from the rest of the community.... A decaying city resists capital investment which in turn prohibits urban rehabilitation....

In the light of these unfavorable developments, property and liability insurers, in the wake of increasing losses, began to curtail urban writings....

... [A]s a partial result of insurance unavailability, some business concerns were forced to close, depriving the community not only of the loss of their services, but also, a corresponding and severe loss of job opportunities. Because of a decreasing tax base, city leaders were unable to acquire necessary funds to renew blighted urban areas or to undertake serious efforts to solve the problems. Tensions began to build, slowly at first, but at a steady and dangerous pace.

Jordan, FAIR Plans--Revisited, 1970 A.B.A. Sec. Ins., Neg. & Comp.L.Proc. 154, 154-55.

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