Lampert v. State Farm Fire and Cas. Co.

Decision Date30 July 2002
Docket NumberNo. ED 80350.,ED 80350.
Citation85 S.W.3d 90
PartiesJack LAMPERT, Respondent, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellant.
CourtMissouri Court of Appeals

Sam P. Rynearson, Susan M. Herold, St. Louis, MO, for Appellant.

Norton Y. Beilenson, Clayton, MO, for Respondent.

GARY M. GAERTNER, SR., Presiding Judge.

State Farm Fire and Casualty Company ("State Farm") appeals from the judgment of the Circuit Court of the City of St. Louis granting a motion for summary judgment in favor of respondent, Jack Lampert ("insured"). The trial court held that State Farm was liable to insured for failing to defend insured in an underlying suit. We affirm.

Insured and his wife (collectively "Lamperts") were the owners of the residential property located on Overbrook Drive in Ladue, Missouri, from 1984 to April 17, 1992. They purchased the property in 1984 from Dayton and Dorothy Mudd ("Mudds"). Lamperts experienced flooding and sewer back-ups and water seepage in the basement. On June 17, 1988, Lamperts filed suit against Mudds alleging that the property had numerous defects, including sewer back-ups, a propensity to flood, and water seepage in the basement. On February 27, 1992, Lamperts entered into a sales contract with Kenneth and Barbara Fischer ("Fischers") for the sale of the property. On April 17, 1992, the sale closed.

On September 13, 1996, Fischers filed suit against insured and others for fraud and negligence. State Farm defended the lawsuit subject to a reservation of rights clause described in a letter to Lamperts mailed November 15, 1996. The suit was later dismissed without prejudice. On April 2, 1997, State Farm mailed Lamperts a letter notifying them that the suit had been dismissed and that it might be refiled, and asking Lamperts to contact State Farm if they should be served with a new lawsuit.

On November 18, 1997, Fischers reified their suit against Lamperts and others. The counts against Lamperts were for fraud (count I), breach of fiduciary duty (count II), and negligent misrepresentation (count III). They alleged that the property had numerous defects, including sewer back-ups, water seepage in the basement, and flooding. Among other things, they alleged that the defects and conditions were not revealed to them, or were misrepresented to them not to exist or to be of lesser significance than they really were, causing the property to have less value than represented. Fischers further allege that insured acted "with bad faith, intentionally, with malice and/or with reckless disregard to the Fischers' rights," that "the Fischers were deceived and induced into signing the Sale Contract, and suffered pecuniary losses." Fischers alleged that they moved into their residence in November of 1992, and that within thirty days the basement flooded, that they discovered that the residence grounds would be flooded after any significant rain, and that they discovered other defects that were substantial or latent or both.

State Farm initially provided a defense to this second suit, then refused to defend the suit notwithstanding several demands from insured that it do so. Insured subsequently retained attorney, David G. Ott ("Ott") to defend him. Insured paid Ott $41,465.50 as and for attorney fees, reimbursed Ott for expenses of $1,443.78, and paid direct expenses of $8,204.10. The case went to trial and a judgment was entered against insured in the net amount of $13,100.00. The verdict and judgment were predicated on a jury finding that insured had committed a fraud.

State Farm had in effect a Homeowners Policy of Insurance ("Homeowners policy") with Lamperts, Policy number 25-C8-1053-2, effective August 7, 1991 and expiring April 18, 1992. Homeowners policy provides coverage as follows:

[I]f a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage to which this coverage applies, caused by an occurrence, we will: 1. pay up to our limit of liability for the damages for which the insured is legally liable; and 2. provide a defense at our expense by counsel of our choice.

Occurrence is defined in the policy as an accident which results in bodily injury or property damage during the policy period. Bodily injury is defined as "physical injury, sickness, or disease to a person." The definition excludes communicable diseases, as well as "emotional distress, mental anguish, humiliation, mental distress, mental injury, or any similar injury unless it arises out of actual physical injury to some person." Property damage is defined as "physical damage to or destruction of tangible property, including loss of use of this property."

State Farm also had a Personal Liability Umbrella Policy ("PLUP") with insured, policy number 25-E7-3184-1, effective September 25, 1991 and expiring September 25, 1992, at which time it was renewed, expiring November 14, 1992. The PLUP provided coverage if the insured is legally obligated to pay damages for a "loss." "Loss" is defined as "an accident that results in personal injury or property damage during the policy period. This includes injurious exposure to conditions." Personal injury is defined in pertinent part as "bodily harm, sickness, disease, shock, mental anguish or mental injury." Property damage is defined as "physical injury to or destruction of tangible property." It includes the loss of use caused by the injury or destruction. PLUP also provides for defense of suits against the insured when the claim or suit is covered by PLUP but not covered by any other policy available to insured.

Both the Homeowners policy and the PLUP excluded coverage for bodily injury, personal injury or property damage that is either expected or intended by insured or to any person or property which is the result of willful and malicious acts of the insured.

Insured filed suit against State Farm seeking a declaration that State Farm had a duty to defend him in the Fischers' lawsuit and to indemnify him for the judgment rendered against him, and further seeking vexatious refusal damages. The parties filed cross-motions for summary judgment. The trial court granted insured's motion as to the issue of State Farm's duty to defend the Fischer's lawsuit, and awarded insured the sum of $51, 117.38 as the costs incurred in defense of the suit and denied the motion in all other respects. The trial court granted State Farm's motion as to the issue of State Farm's duty to indemnify the loss incurred as a result of the judgment rendered against insured in the underlying suit, and as to the issue of State Farm's liability for additional penalties for vexatious refusal damages. State Farm appeals.

Our review of a grant of summary judgment is essentially de novo. Wood v. Safeco Ins. Co. of America, 980 S.W.2d 43, 46 (Mo.App. E.D.1998). Movant for a summary judgment has the burden to show a right to judgment flowing from material facts about which there is no genuine dispute. Id. Whether or not summary judgment was proper is a question of law, and appellate courts need not defer to the trial court's order granting summary judgment. Id. Appellate courts view the record in the light most favorable to the party against whom judgment was entered, and take facts set forth in affidavits and otherwise in support of the motion as true unless they are contradicted by...

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