Borges v. Missouri Pub. Entity Risk Mgmt. Fund 

• Court: Missouri Court of Appeals
• Writing for the Court: KAREN KING MITCHELL
• Citation: Borges v. Missouri Pub. Entity Risk Mgmt. Fund , 358 S.W.3d 177 (Mo. App. 2012)
• Decision Date: 31 January 2012
• Docket Number: No. WD 73446.,WD 73446.
• Parties: Alex BORGES, Jr., et al., Appellants, v. MISSOURI PUBLIC ENTITY RISK MANAGEMENT FUND (MOPERM), Respondent.

358 S.W.3d 177

Alex BORGES, Jr., et al., Appellants,

v.MISSOURI PUBLIC ENTITY RISK MANAGEMENT FUND (MOPERM), Respondent.

No. WD 73446.

Missouri Court of Appeals, Western District.

Jan. 31, 2012.

Robert Herman, St. Louis, MO, for Appellants.

Marshall V. Wilson and Michael G. Berry, Jefferson City, MO, for Respondent.

Before Division Three: KAREN KING MITCHELL, Presiding Judge, and JAMES M. SMART, JR., and GARY D. WITT, Judges.

KAREN KING MITCHELL, Presiding Judge.

This is a standing case. The appellants filed a declaratory judgment action in which they alleged that the Missouri Public Entity Risk Management Fund (“the Fund”) failed to follow proper rulemaking procedures when it established exclusions, which, if effective, would provide no coverage for the petitioners' alleged claims against two of the Fund's participants. The circuit court entered summary judgment in favor of the Fund, finding that the petitioners lacked standing under section 536.053, which was the statute that the appellants claimed conferred standing on them. We affirm the circuit court's finding that the petitioners failed to meet their burden of establishing standing but find that the circuit court should have resolved the issues presented via dismissal without prejudice. Accordingly, we affirm but enter such judgment as ought to be given.

Facts and Procedural Background¹

The Fund provides coverage to participating public entities (“fund participants”) and is responsible for paying or settling claims for which coverage has been obtained. § 537.705.1(1).² The Fund issued a memorandum of coverage to fund participants. The memorandum of coverage contains certain exclusions. Relevant to this appeal, the memorandum of coverage excludes punitive damages, criminal acts, and other violations of federal, state, or local laws (“the exclusions”).

Appellant Alex Borges sued City of Gerald, Missouri (“Gerald”), and Appellant Jennifer Johnson sued City of Velda, Missouri (“Velda”) (collectively, Gerald and Velda will be referred to as “the cities”) in the U.S. District Court for the Eastern District of Missouri, Eastern Division. Borges and Johnson alleged federal constitutional tort claims pursuant to 42 U.S.C. § 1983. The cities were fund participants at the time they allegedly injured Borges and Johnson. The Fund sent the cities reservation of rights letters, stating that the exclusions may apply to the claims made by Borges and Johnson.

Subsequently, Borges and Johnson filed a petition for declaratory judgment in state court, naming the Fund as the defendant, but not naming either city. The petition alleged, among other things, that (1) the Fund, by including the exclusions in the memorandum of coverage, established “rules and regulations” that would exclude from coverage Borges's claim against Gerald and Johnson's claim against Velda; (2) the Fund was required to engage in rulemaking procedures before establishing the exclusions; and (3) the exclusions were void due to the Fund's failure to engage in rulemaking procedures.

The Fund filed a motion for summary judgment, arguing that the petitioners lacked standing under sections 536.050 and 536.053 ³ in that Petitioners were not aggrieved by the promulgation of a rule because the Fund had not promulgated a rule. In addition, the Fund argued that Petitioners failed to demonstrate standing under the Declaratory Judgment Act, section 527.010 et seq., in that they failed to establish that they had present legal rights against the Fund and, thus, failed to demonstrate the existence of a justiciable controversy and the existence of a question ripe for judicial resolution. Petitioners filed a response to the motion for summary judgment, arguing that they had standing under section 536.053 in that they were parties aggrieved by a rule made by the Fund. The circuit court entered summary judgment, finding Borges and Johnson “lack standing under the provisions of § 536.053 RSMo in that there is no promulgated rule at issue.” Borges and Johnson appeal.

Standard of Review

Our review of the circuit court's grant of a motion for summary judgment is essentially de novo, and we will use the same criteria that apply to the circuit court's review of the motion. ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). “The purpose of summary judgment under Missouri's fact-pleading regime is to identify cases (1) in which there is no genuine dispute as to the facts and (2) the facts as admitted show a legal right to judgment for the movant.” Id. at 380.

In this case, the circuit court granted summary judgment on the basis of Petitioners' lack of standing. Standing is a question of law that we review de novo. State ex rel. St. Louis Retail Group v. Kraiberg, 343 S.W.3d 712, 715 (Mo.App. E.D.2011). We consider the petition along with any other non-contested facts to determine whether the petition should be dismissed due to Petitioners' lack of standing. Id.

Legal Analysis

I. Whether Borges and Johnson had standing

Borges and Johnson argue that the circuit court erred in granting summary judgment in that they had standing to maintain a declaratory judgment action under section 536.150. We disagree.

a. Standing based on Chapter 536

We first note that Borges and Johnson have abandoned the standing argument they made below—that section 536.053 conferred upon them standing to challenge a rule promulgated by a state agency. Instead, they argue that section 536.150 conferred standing on them.

Section 536.150 provides:

When any administrative officer or body ... shall have rendered a decision which is not subject to administrative review, determining the legal rights, duties or privileges of any person ... and there is no other provision for judicial inquiry into or review of such decision, such decision may be reviewed by suit for injunction, certiorari, mandamus, prohibition or other appropriate action, and in any such review proceeding the court may determine the facts relevant to the question whether such person at the time of such decision was subject to such legal duty, or had such right, or was entitled to such privilege, and may hear such evidence on such question as may be properly adduced, and the court may determine whether such decision, in view of the facts as they appear to the court, is unconstitutional, unlawful, unreasonable, arbitrary, or capricious or involves an abuse of discretion.

Section 536.150 governs review of adjudications of non-contested cases. Columbia Sussex Corp. v. Mo. Gaming Comm'n, 197 S.W.3d 137, 141 (Mo.App. W.D.2006); Missourians for Separation of Church & State v. Robertson, 592 S.W.2d 825, 841 (Mo.App. W.D.1979). Borges and Johnson argue that the Fund's “decision” to deny coverage to the cities was an adjudication of their rights. ⁴

As the parties seeking relief, Borges and Johnson had the burden to establish that they had standing to maintain their lawsuit. Manzara v. State, 343 S.W.3d 656, 659 (Mo. banc 2011). In order to establish standing based on section 536.150, Borges and Johnson would need to show a judicially recognized interest in the disputed agency “decision,” see Columbia Sussex Corp., 197 S.W.3d at 140–41, which they have not done. Since the interest element is also part of the standing analysis required under the general declaratory judgment statute, we will address it below.

b. Standing based on Section 527.010 et seq.

Though they do not include the argument in their point on appeal, Borges and Johnson take the position in the argument portion of their brief that they have standing under the general declaratory judgment act, section 527.010 et seq. We will address the merits of this argument, even though the appellants abandoned it by not including it in the point on appeal. See Rule 84.04(e).

There are four requirements for a declaratory judgment petition. In addition to demonstrating that a justiciable controversy exists, it is required that there is a legally protected interest directly at issue, that the question presented is ripe for judicial determination, and that the petitioner does not have an adequate remedy at law.

A justiciable controversy exists where the plaintiff has a legally protectable interest at stake, a substantial controversy exists between parties with genuinely adverse interests, and that controversy is ripe for judicial determination.

Roach Law Firm v. Beilenson, 224 S.W.3d 57, 60 (Mo.App. E.D.2007) (internal citations omitted). “ ‘When seeking declaratory ... relief, the criterion for standing is whether the plaintiff has a legally protectable interest at stake....’ ‘A legally protectable interest exists if the plaintiff is directly and adversely affected by the action in question.’ ” Mo. Ass'n of Nurse Anesthetists, Inc. v. State Bd. of Registration for the Healing Arts, 343 S.W.3d 348, 354 (Mo. banc 2011) (quoting Battlefield Fire Prot. Dist. v. City of Springfield, 941 S.W.2d 491, 492 (Mo. banc 1997) and State ex rel. Kansas City Power & Light Co. v. McBeth, 322 S.W.3d 525, 530 (Mo. banc 2010) respectively).

Here, Borges and Johnson assert no basis to establish that they have a present interest in any coverage the Fund may or may not provide to the cities. Missouri courts have held that third parties have no interest in a coverage question between an insured and an insurer, at least when, as here, the third party's claim against the insured has not been reduced to a judgment. ⁵ Carden v. Mo. Intergovernmental Risk Mgmt. Assoc., 258 S.W.3d 547, 558 (Mo.App. S.D.2008); Amer. Econ. Ins. Co. v. Ledbetter, 903 S.W.2d 272, 275–76 (Mo.App. S.D.1995); St. Paul Fire & Marine Ins. Co. v. Med. Protective Co., 675 S.W.2d 665, 667 (Mo.App. E.D.1984). Nor have Borges and Johnson asserted that they otherwise have a legally protected interest that will be directly and adversely affected by the action in question so as possibly to create an exception to this general rule.⁶ Therefore, in the absence of a...