Allstate Fire & Cas. Ins. Co. v. Stratman
| Decision Date | 08 December 2020 |
| Docket Number | WD 83564 |
| Citation | 620 S.W.3d 228 |
| Parties | ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, Respondent, v. Philip STRATMAN, Appellant. |
| Court | Missouri Court of Appeals |
Michael E. McCausland, Kansas City, MO, Counsel for Respondent.
Stephen G Sanders, Kansas City, MO, Counsel for Appellant.
Before Division Four: Cynthia L. Martin, Chief Judge, Presiding, Gary D. Witt, Judge, Anthony Rex Gabbert, Judge
Philip Stratman appeals the judgment of the Jackson County Circuit Court finding that Kansas law applied to the substantive issues in his cross claim against Allstate Fire & Casualty Insurance Company ("Allstate") and in granting judgment on the pleadings and summary judgment in favor of Allstate. Stratman complains in six points on appeal that Missouri law applies to the dispute and, regardless of which state's law applies, the trial court erred in its judgment. The judgment is reversed and the cause is remanded.
On February 13, 2014, Philip Stratman was involved in a car accident in Jackson County, Missouri that resulted in paralysis to Steven Holdeman. At the time of the accident, Stratman was insured by a policy issued by Allstate with coverage limits of $100,000 for each person and $300,000 for each occurrence. Stratman alleges that Steven Holdeman and his wife Sarah Holdeman ("the Holdemans") offered to settle their claims against Stratman for the applicable coverage limits of his Allstate policy, but Allstate rejected their offer. Allstate admits that the Holdemans offered to settle their claims within the amount of Stratman's insurance coverage, but it denies that it rejected that offer.
On October 21, 2014, the Holdemans filed a lawsuit against Stratman1 in the Jackson County Circuit Court. On December 13, 2016, a judgment was entered against Stratman in the amount of $34,311,833.22,2 plus post-judgment interest.3 On March 27, 2017, the Holdemans sought to collect the proceeds of Stratman's Allstate policy by filing an action in the Jackson County Circuit Court pursuant to Missouri's equitable garnishment statute, section 379.200, RSMo, naming both Stratman and Allstate as defendants.
On June 22, 2018, Stratman filed a cross claim against Allstate alleging that it committed the tort of bad faith refusal to settle and breached numerous fiduciary duties it owed him in its response to the Holdemans’ insurance claim and lawsuit against him. Stratman alleges that Allstate caused him to suffer a judgment far in excess of his insurance coverage. He further claims that Allstate's conduct caused him to suffer damage to his credit, stress, emotional distress, attorney fees, and a fear of bankruptcy.
During the course of the litigation, Allstate settled with the Holdemans and satisfied the tort judgment against Stratman.
On July 18, 2018, the Holdemans dismissed all their claims with prejudice. This left Stratman's cross claim as the only remaining cause of action. On October 1, 2018, the Holdemans filed a satisfaction of the December 13, 2016 judgments and forever discharged Stratman from any and all liability.
On May 1, 2019, Allstate filed a motion to apply Kansas law to Stratman's cross claim. It cited this provision in the insurance policy:
(Emphasis in original policy). Stratman opposed the motion, arguing that the "What Law Will Apply" provision does not apply to his tort claims and would be unenforceable and against Missouri's public policy if it were to apply. He further argued that Missouri's choice of law principles dictate that Missouri law govern his claims.
On July 10, 2019, the trial court entered an order holding that Kansas law would apply to all substantive issues in the case. On July 22, 2019, Allstate filed a motion for judgment on the pleadings and a motion for summary judgment. It argued that Kansas does not recognize tortious causes of action for insurance claims. It concluded that Stratman could only collect the amount of the judgment against him as breach of contract damages. Since that judgment had been satisfied, Allstate argued that Stratman no longer had a cause of action against Allstate under Kansas law.
On August 1, 2019, Stratman filed a motion asking the trial court to reconsider its order to apply Kansas law. He also filed a response to Allstate's motion for judgment on the pleadings. On August 21, 2019, Stratman filed suggestions in opposition to Allstate's motion for summary judgment, arguing that facts material to whether Kansas or Missouri law applies remain in dispute and that Allstate is not entitled to judgment as a matter of law under either Missouri or Kansas law.
On February 4, 2020, the trial court entered a Judgment denying Stratman's motion to reconsider the order to apply Kansas law, granting Allstate's motion for judgment on the pleadings, and granting Allstate's motion for summary judgment. This appeal follows.
The trial court in this case determined that Kansas law governed the substantive issues. This choice-of-law determination does not affect our standard of review. Kissinger v. Am. Fam. Mut. Ins. Co. , 563 S.W.3d 765, 775 (Mo. App. W.D. 2018). "Regardless of which state's law governs the substantive issues involved in this case, ... procedural questions are determined by the state law where the action is brought." Id. (internal quotation marks omitted). "The standard of review is a procedural matter for which this court will apply Missouri law." Id. (internal quotation marks omitted).
"We review a trial court's ruling determining which state's law applies to an insurance policy de novo. " Doe Run Resources Corp. v. Certain Underwriters at Lloyd's London , 400 S.W.3d 463, 472 (Mo. App. E.D. 2013). "Whether to grant summary judgment is an issue of law that this Court determines de novo. " Seeck v. Geico Gen. Ins. Co. , 212 S.W.3d 129, 132 (Mo. banc 2007). "A court's grant of judgment on the pleadings is reviewed de novo. " Bell v. Phillips , 465 S.W.3d 544, 547 (Mo. App. W.D. 2015) (internal quotation marks omitted).
Stratman asserts six points on appeal, each of which depends on our resolution of Stratman's first point on appeal. In his first point on appeal, Stratman argues that the trial court erred in granting Allstate's motion to apply Kansas law to his cross claim. He states that Missouri's choice of law principles dictate Missouri law applies to the bad faith cause of action pursuant to the second paragraph of the insurance policy's choice of law provision. Alternatively, Stratman maintains that the insurance policy's choice of law provision is unenforceable because public policy requires the application of Missouri law to his bad faith claim because the economic harm and place where he was injured, the place where the conduct causing his injury occurred, his residence, and the place where his relationship with Allstate is centered are all in Missouri.
"In construing the terms of an insurance policy, this Court applies the meaning which would be attached by an ordinary person of average understanding if purchasing insurance and resolves ambiguities in favor of the insured." Seeck , 212 S.W.3d at 132 (internal quotation marks omitted). "An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy." Id. (internal quotation marks omitted). "Language is ambiguous if it is reasonably open to different constructions." Id. (internal quotation marks omitted). "Absent an ambiguity, an insurance policy must be enforced according to its terms." Id. "If, however, policy language is ambiguous, it must be construed against the insurer." Id. (internal quotation marks omitted). "Generally speaking, whether a forum selection clause that by its terms applies to contract actions also reaches non-contract claims depends on whether resolution of the claims relates to interpretation of the contract." Major v. McCallister , 302 S.W.3d 227, 231–32 (Mo. App. S.D. 2009).
Resolution of Stratman's first point on appeal first requires us to construe his insurance policy with Allstate. That policy includes a choice of law provision which provides in relevant part:
(Emphasis in original policy). Allstate argues that the first paragraph applies to...
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