Berkley Assurance Co. v. BMG Serv. Grp.
| Decision Date | 21 September 2020 |
| Docket Number | Case No. 4:18-cv-02082-SEP |
| Parties | BERKLEY ASSURANCE COMPANY, Plaintiff, v. BMG SERVICE GROUP, LLC, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Plaintiff Berkley Assurance Company ("Berkley") and Defendants Jon E. Fuhrer Company ("Fuhrer") and Lucia Hevierova's ("Hevierova") (collectively, "MSJ Movants") Motion for Summary Judgment as to Defendant Boulevard RE Holdings, LLC ("Boulevard RE"), Doc. [79]. The motion is fully briefed. Docs. [80], [87], [90].
Three other fully briefed motions are also before the Court: Boulevard RE's Motion for Leave to File Counterclaim, Docs. [89], [95], [97], Third Party Defendant Mixon Insurance Agency's ("Mixon") Motion to Amend Case Management Order and Motion to Sever and/or For Separate Trials, Docs. [94], [96], and Mixon's Motion to Consolidate, Docs. [105], [106], [107], [108], [110].
For the reasons set forth below, the Motion for Summary Judgment is granted; the Motion for Leave to File a Counterclaim is denied; the Motion to Amend, Sever, and/or For Separate Trials is granted in part and denied in part; and the Motion to Consolidate is granted.
Boulevard RE owns the property located at 2543 N. Grand Avenue in St. Louis, Missouri (the "Property"). Doc. [81] ¶ 1; Doc. [1-5]. On June 23, 2017, Boulevard RE entered into a contract for deed with BMG Service Group, LLC ("BMG"), which operated a bar and grill and the Property, pursuant to which Boulevard RE agreed to sell the Property to BMG. Doc. [81] ¶¶ 2, 11; Doc. [1-5]. The contract for deed provided that BMG would make monthly payments toward the purchase price of $1,275,000, and Boulevard RE would retain legal title to the Property until the balance of the purchase price was paid, which was set to occur in June 2047. Doc. [81] ¶ 3; Doc. [1-5] at 1-2. The contract required that BMG procure and maintain, at its own expense, fire insurance in the amount of the purchase price, with the policy to be issued in Boulevard RE's name. Doc. [81] ¶ 9; Doc. [1-5] at 3. It was later discovered that BMG failed to obtain a policy of fire insurance issued in Boulevard RE's name. Doc. [81] ¶ 10; Doc. [1-2].
Prior to entering into the contract for deed, on May 16, 2017, a commercial insurance application was sent to Verus Underwriting ("Verus"), an agency with underwriting authority for Berkley, on behalf of Mixon, BMG's agent. Doc. [88] at 6-7 ¶¶ 1-2; Doc. [1-2] at 9; Doc. [93-4]. The application indicated that the Property, Liquor Liability, and Commercial General Liability sections were attached to the application. Doc. [88] at 7 ¶ 3; Doc. [93-4]. There is a dispute among the parties as to whether Boulevard RE was to be listed as an additional insured for the entire policy or only for the Liquor Liability and Commercial General Liability sections. Doc. [93] at 11 ¶ 3; Doc. [93-4].1 An ACORD 140 "Property Section" was sent with the May 16th application, listing Fuhrer and Hevierova as loss payees. Doc. [88] at 7 ¶ 4; Doc. [88-2].
The next day, on May 17th, Verus replied that the building insurance limits needed to be increased for the application to be considered. Doc. [88] at 7 ¶ 5; Doc. [88-3]. Later that day, Verus received an email request to increase the building insurance limits as specified by Verus.Doc. [88] at 7 ¶ 6; Doc. [88-3]. The following day, on May 18th, Verus replied to the request to increase the building insurance limits, writing, "Please forward ACORD 140 for firm quote." Doc. [88] at 8 ¶ 7; Doc. [88-4]. Later that day, a new ACORD 140 "Property Section" was sent to Verus, reflecting the requested increased building insurance limits, this time listing no loss payees and listing only Fuhrer as a mortgagee. Doc. [88] at 8 ¶ 8; Doc. [88-5]. That document did not indicate that Boulevard RE or Hevierova had any interest in the Property. Doc. [88-5]. The same day, Verus emailed a quote for the policy in question, indicating that it was subject to receipt and review of a signed and dated ACORD application, and making no mention of additional insureds, mortgagees, or loss payees. Doc. [88] at 8 ¶¶ 9-11; Doc. [88-6]. Berkley issued the fire insurance policy (the "Policy") pursuant to this amended application and quote. Doc. [81] ¶ 18; Doc. [81-1] ¶ 8.2
On June 30, 2017, Mixon sent BMG a detailed quote for the Policy. Doc. [81] ¶ 19; Doc. [81-2] at 3-13. The quote identified BMG as named insured and Fuhrer as mortgagee. Doc. [81-2] at 3-13. The same day, a request to bind insurance coverage was emailed to Verus, noting that the request was subject to any changes noted in that message. Doc. [88] at 8-9 ¶¶ 11-12; Doc. [93-5]. The request stated that it was subject to the provided quotation and "inclusive of any changes noted below." Doc. [88] at 9 ¶ 13; Doc. [88-7]. The request included a new signed and dated ACORD 125 "Commercial Insurance Application," which listed Boulevard RE as an additional insured, as well as other documents created the prior month. Doc. [93] at 13 ¶ 14; Docs. [88-5], [88-9], [88-10]. Among these documents created in May was an ACORD 140 form dated May 18, 2017, which stated "see attached accord [sic] form 45" as a "Mortgagee"under the "Additional Interests" section. Doc. [88] at 9 ¶ 15; Doc. [88-9]. The attached ACORD 45 showed Boulevard RE as a loss payee and mortgagee and indicated that Boulevard RE was the "landlord." Doc. [88] at 9 ¶ 16; Doc. [88-10]. The June 30, 2017, ACORD 125, which listed Boulevard RE as an additional insured, was the only signed and dated ACORD document received by Verus pertaining to the Policy. Doc. [88] at 10 ¶ 17; Doc. [88-8].
On July 3, 2017, Verus responded to the email request to bind insurance. Verus noted that it would need several more documents in order to bind the Policy. Doc. [88] at 10 ¶ 18. Verus's response also attached a binder and policy. Doc. [93] at 14-15 ¶ 18. The Policy listed Fuhrer as holding the only additional interest. Id.; Doc. [81] ¶ 14; Doc. [81-1]. While Hevierova is also a mortgagee, she was not listed as such on the Policy. Doc. [81] ¶¶ 16-17. The binder noted, among other things, that "[t]he coverages, terms and conditions may be different from those requested on your application," and that the recipient should "[c]arefully read all terms and conditions." Doc. [93] at 14-15, ¶ 18; Docs. [93-6] and [93-7]. In response to that email, Verus received a response attaching a signed ACORD 125, Doc. [88] at 10 ¶ 19; Doc. [88-12], and on July 5, 2017, Verus noted internally that the signed document had been received and recorded. Doc. [88] at 10 ¶ 20; Doc. [88-13].
On June 30, 2018, the Property was destroyed by fire. Doc. [81] ¶ 21; Doc. [1-7]. The Property would not have been destroyed by fire if the automatic sprinkler in the structure had been operative, which it was not. Doc. [81] ¶¶ 22-24; Doc. [1-7].3
The Policy's Fire Protective Safeguard Endorsement required the named insured to maintain the automatic sprinkler system as a condition of insurance. Doc. [81] ¶ 29; Doc. [1-2] at 56. The Policy excludes coverage for loss by fire if the automatic sprinkler system is inoperative. Doc. [81] ¶ 26; Doc. [1-2] at 56-57. The Policy, including the declarations page, does not mention or define the term "additional insured." Doc. [88] ¶ 21; Doc. [1-2]. "You," as that term is used in the Policy, refers to the named insured. Doc. [81] ¶ 28; Doc. [1-2] at 12.
On November 6, 2019, MSJ Movants filed their motion for summary judgment. Doc. [79]. Boulevard RE filed its brief in opposition on December 6, 2019. Doc. [87]. Six days later, on December 12, Boulevard RE filed its motion for leave to file a counterclaim against Berkley. Doc. [89]. If granted leave, Boulevard RE will counterclaim one count of reformation, alleging that there was an agreement between BMG and Berkley that Boulevard RE was to be both an additional insured and a mortgagee on the insurance policy in question, and there was a mutual mistake in reducing their agreement to writing. Doc. [89-1].
Boulevard RE has filed a Third-Party Petition in this case claiming that Boulevard RE instructed Mixon, through BMG, to identify Boulevard RE as a mortgagee on any policy issued to BMG insuring the Property, and Mixon failed to do so. Doc. [61]. On December 19, 2019, Mixon moved the Court to amend the Case Management Order to afford it time to conduct discovery, as well as to sever and/or for a separate trial on the third-party claim. Doc. [94].
This case was re-assigned to the undersigned on January 22, 2020. Doc. [99]. The Court held a hearing in this case on April 2, 2020, which representatives of all parties attended. Doc. [103]. On May 15, 2020, Mixon removed to federal court Hevierova's complaint against Mixon, which was filed originally in Missouri state court on March 5, 2020. Notice of Removal at ¶ 1,Hevierova v. Mixon Insurance Agency, Inc., No. 4:20-cv-00650-JAR (May 15, 2020). Hevierova alleges that she, like Boulevard RE, should have been identified as a mortgagee on any policy issued to BMG insuring the Property, and that Mixon failed to do so.
MSJ Movants argue that Boulevard RE is not an insured under the policy, and therefore it is not entitled to proceeds from the Policy. Doc. [80] at 4-6. Indeed, it is undisputed that Berkley never issued a policy providing casualty insurance coverage for the Property identifying Boulevard RE as the named insured, and Boulevard RE has not, and cannot, show that it was a party to the Policy. Id. at 5. MSJ Movants argue that, while Boulevard RE is the owner of the Property and would have been able to procure a fire insurance policy covering its interest in the Property, it did not do so. Id. at 6.
MSJ Movants further argue that Boulevard RE is not entitled to recover as a mortgagee because it does not hold a mortgage on the Property...
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