Britt v. Otto

• Decision Date: 26 March 2019
• Docket Number: WD 81830
• Citation: 577 S.W.3d 133
• Parties: Jennifer A. BRITT, Respondent, v. Jeremy M. OTTO, Respondent, and American Family Mutual Insurance Company, S.I., Appellant.
• Court: Missouri Court of Appeals

577 S.W.3d 133

Jennifer A. BRITT, Respondent,

v. Jeremy M. OTTO, Respondent,and American Family Mutual Insurance Company, S.I., Appellant.

WD 81830

Missouri Court of Appeals, Western District.

OPINION FILED: March 26, 2019

Wm. Clayton Crawford, Kansas City, MO, for appellant.

Tim Dollar, Kansas City, MO, for respondent Jennifer A. Britt.

Rick D. Holtsclaw, Kansas City, MO for respondent Jeremy M. Otto.

Before Division One: Cynthia L. Martin, Presiding Judge, Thomas H. Newton, Judge and Gary D. Witt, Judge

Cynthia L. Martin, Judge

American Family Mutual Insurance Company, S.I. ("American Family") appeals the trial court's denial of its motion to intervene in an action filed by Jennifer A. Britt ("Britt") in the Jackson County Circuit Court. The action was filed to confirm an arbitration award Britt secured against Jeremy M. Otto ("Otto") after Britt was injured in a motor vehicle accident. American Family, which insured Otto, argues that it had a right to intervene in the action to confirm the arbitration award under section 537.065.2.¹ American Family alternatively argues that it had a right to intervene in the action as a matter of right or permissively under Rule 52.12.² Because the trial court did not err in denying American Family's motion to intervene, we affirm.

Factual and Procedural History³

On September 9, 2017, Britt was injured in an accident involving her vehicle and a vehicle driven by Otto. Otto was insured by an automobile policy issued by American Family ("Otto's policy"). Otto's policy provided bodily injury liability coverage limited to $100,000 per person. Otto's policy provided that "[American Family] will defend any suit or settle any claim for damages payable under this policy as [it] think[s] proper," but that "[AMERICAN FAMILY] WILL NOT DEFEND ANY SUIT AFTER [ITS] LIMIT OF LIABILITY HAS BEEN EXHAUSTED BY PAYMENT OF JUDGMENTS OR SETTLEMENTS." Otto's policy also provided that "[American Family] will pay, in addition to [its] limit of liability: ... expenses incurred by an insured person for first aid to others at the time of an auto accident involving [Otto's] insured car " ("first aid provision").

On October 4, 2017, Britt extended a time-limited demand to settle to American Family pursuant to section 537.058. Britt's settlement demand provided that "she [would] agree to unconditionally release Mr. Otto from all present and future liability under section 537.060 for her personal injury claims against him in exchange for all applicable policy limits and payments." On January 2, 2018, American Family sent a letter purporting to accept Britt's settlement demand "for all policy limits applicable to [its] insured, Jeremy Otto, which are $100,000.00." On January 5, 2018, Britt sent an email disagreeing that "all applicable policy limits" as referred to in her settlement demand was limited to $100,000. Britt asserted that in addition to the $100,000 bodily injury liability limit, she was entitled to receive expenses she incurred for her emergency first aid. On February 5, 2018, American Family sent a letter repeating that Otto's policy had a bodily injury liability limit of $100,000, and that it had accepted Britt's settlement demand by agreeing to pay this policy limit.

On February 28, 2018, American Family filed suit against Britt in the United States District Court for the Western District of Missouri ("federal court action"). American Family sought to enforce the settlement agreement with Britt, and asked the federal court to "[d]irect[ ] Britt to comply with all material terms of the parties' settlement, including a release of Jeremy Otto and [to] direct[ ] American Family to pay and Britt to accept payment of $100,000 on the terms described in Britt's October 4, 2017 offer as accepted by American Family." The federal court action did not name Otto as a party, and did not seek a declaratory judgment to resolve whether the first aid clause in Otto's policy afforded Britt additional coverage over and above the bodily injury liability limits.

On March 7, 2018, Otto sent an email to American Family expressing his belief that as a result of the federal court action, American Family was refusing to afford him a defense without a reservation of rights. Otto's email advised American Family that he and Britt had therefore entered into a section 537.065 agreement.⁴ The email stated:

Please consider this notice under section 537.065.2. Under th[e] [section 537.065] agreement, Mr. Otto has consented to, at the plaintiff's option, either a bench trial or an arbitration. I do not know, at this time, what the plaintiff will choose. I did talk to the plaintiff's attorney and he is willing to let American Family participate in either forum. So, if the plaintiff [chooses] arbitration, we want to invite American Family to participate. Please let me know if American Family wants to participate and I will work with the plaintiff to find a mutually agreeable date to accommodate American Family's schedule. We are also willing to consider American Family's suggestions for the arbitrator.

In the alternative, if American Family does not want to participate in the arbitration or bench trial then I am willing to present any reasonable argument or evidence that American Family wants me to make on behalf of their insured/my client. I will be happy to argue in either forum that Mr. Otto and Ms. Britt have a binding settlement. Although, as I have previously stated, I am not confidant that a court or arbitrator will find for Mr. Otto on that issue.

(Emphasis added.)

On March 8, 2018, Britt and Otto entered into an agreement to resolve all issues arising out of the September 9, 2017 motor vehicle accident by binding arbitration pursuant to the Federal Arbitration Act and Missouri's Uniform Arbitration Act ("arbitration agreement"). On March 13, 2018, Otto sent American Family a copy of the arbitration agreement. On March 16, 2018, American Family advised Otto in writing that it believed the arbitration agreement and the section 537.065 agreement were unauthorized because American Family had not declined coverage or refused to defend Otto. American Family also indicated that it would not participate in the arbitration because "if [it] agreed to participate, it would have to dismiss its earlier filed federal action to enforce settlement." American Family took the further position that section 537.065.2 "expressly requires that the insurer have the opportunity to intervene in a lawsuit between the parties," and that Britt and Otto were "apparently seek[ing] to avoid this by operation of the [a]rbitration [a]greement." (Emphasis in original.)

An arbitration hearing was conducted on March 22, 2018. The arbitrator issued an award on April 6, 2018 ("arbitration award"). The arbitration award included findings of fact and conclusions of law regarding Otto's liability for the accident, Britt's claim for damages, and the affirmative defense of settlement and release. The arbitration award concluded that Otto was the sole and only tortfeasor who caused the accident and that no evidence supported a finding of comparative fault. To determine whether Britt's claim was barred by the affirmative defense of release, the arbitrator found it necessary to determine the meaning of the first aid provision in Otto's policy because:

Britt asked for all the policy limits and payments. If American Family's "first-aid" provision applies, American Family could accept Britt's offer only by agreeing to pay the policy limits of $100,000 and her first-aid expenses. If, however, American Family is correct and the first-aid provision does not apply then American Family could accept Britt's offer by agreeing to pay the policy limits of $100,000.

After considering the language of the first aid provision and applicable case law, the arbitration award concluded that the first aid provision afforded coverage for Britt's emergency medical treatment. As a result, the arbitration award concluded that American Family's response to Britt's settlement demand, which limited payment of all applicable policy limits to the $100,000 bodily injury policy limit, was a counter-offer and not acceptance of Britt's demand. The arbitration award thus rejected the affirmative defense of settlement and release. The arbitration award then found that Britt had been damaged in the amount of $5,998,027, representing $146,549.70 in medical bills (including $35,583.84 for first aid emergency medical treatment); $18,102.99 in personal property damages; $33,375 in lost earnings; $1,800,000 for pain, suffering, and emotional trauma; and $4,000,000 in punitive damages.⁵

After the arbitration award was entered, Britt filed an application to confirm the arbitration award and to enter judgment against Otto accordingly in the Circuit Court of Jackson County, Missouri on April 13, 2018 ("action to confirm the arbitration award"). Otto sent a copy of the arbitration award to American Family by email on April 16, 2018, and demanded that American Family pay the award.

American Family filed a motion to intervene in the action to confirm the arbitration award on April 19, 2018 ("motion to intervene"). American Family also sought a stay of the proceedings pending resolution of the federal court action. In the motion to intervene, American Family alternatively argued: (i) that it was entitled to intervene as a matter of right because section 537.065.2 "confers an unconditional statutory right to intervene upon American Family;" (ii) that it was entitled to intervene as a matter of right under Rule 52.12(a) because American Family had an interest in the subject of the action, its ability to protect that interest was impeded, and neither Britt nor Otto adequately represented its interest; and (iii) that it should be permitted to intervene permissively pursuant to Rule 52.12(b) because its claims and defenses shared numerous common questions of law and fact with the action to confirm the arbitration award.

Following...