Broadway Ford Truck Sales, Inc. v. Depositors Insurance Co.

Decision Date28 July 2021
Docket Number4:20-CV-00999-JAR
CourtU.S. District Court — Eastern District of Missouri


This matter is before the Court on Defendant Depositors Insurance Co.'s (Depositors) Motion for Partial Summary Judgment. (Doc. 26). The motion is fully briefed and ready for disposition. For the reasons discussed below, the motion will be granted in part and denied in part.


Depositors issued Plaintiff Broadway Ford Truck Sales, Inc. (Broadway Ford) a Commercial Property Policy effective August 1, 2017 (the “Policy”). (Doc 28-1; Doc. 46 at ¶ 1). On September 2, 2017, a fire caused substantial damage to Broadway Ford's business premises. (Doc. 46 at ¶ 2). After Broadway Ford made a claim under the Policy, the parties achieved a partial compromise and accordingly executed a Limited Settlement Agreement and Release of Disputed Property Claims on March 29, 2019 (the “Settlement Agreement”). (Id. at ¶ 4; Doc. 31-1). The Settlement Agreement released Broadway Ford's claims for Building and Business Personal Property coverage but explicitly notes that “claims for Business Income and Extra Expense [ ] are not included or made a part of this [Settlement] Agreement and remain open.” (Doc. 31-1 at § 2).

On July 30, 2020, Broadway Ford filed a two-count complaint in this Court. (Doc. 1). In Count I, Broadway Ford alleges that Depositors breached its contractual obligations by failing to timely assess the damages recoverable under the Policy causing Broadway Ford to incur additional lost Business Income and Extra Expense. (Id. at ¶¶ 15-23). In Count II, Broadway Ford seeks damages for vexatious refusal pursuant to MO. REV. STAT. § 375.296 on the grounds that Depositors “refused and failed to pay the subject claim without conducting a reasonable and adequate investigation.” (Id. at ¶ 27). Depositors seeks summary judgment as to Count II, arguing that the Settlement Agreement operates as a release of the vexatious refusal claim. (Doc. 27 at 3).[1]


Under Fed.R.Civ.P. 56, a movant is entitled to summary judgment if they can “show[] that there is no genuine dispute as to any material fact” and they are “entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Meier v. City of St. Louis, 934 F.3d 824, 827-278 (8th Cir. 2019). In determining whether summary judgment is appropriate, the evidence must be viewed in the light most favorable to the nonmoving party. Osborn v. E.F. Hutton & Co., 853 F.2d 616, 619 (8th Cir. 1988). The nonmovant, however, ‘must do more than simply show that there is some metaphysical doubt as to the material facts,' and must come forward with ‘specific facts showing that there is a genuine issue for trial.' Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp, 475 U.S. 574, 587-87 (1986)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

A. Interpreting the Settlement Agreement

Under Missouri law, the “interpretation of a release or settlement agreement is governed by the same principles applicable to any other contractual agreement, and the primary rule of construction is that the intention of the parties shall govern.” Andes v. Albano, 853 S.W.2d 936, 941 (Mo. banc 1993) (citations omitted); see also Smith v. Keystone Mut. Ins. Co., 579 S.W.3d 275, 280 (Mo.Ct.App. 2019).[2] Plain language “forecloses speculation about intent of the parties.” Holmes v. Multimedia KSDK, Inc., 395 S.W.3d 557, 560 (Mo.Ct.App. 2013) (citation omitted). Alternatively, a release or settlement agreement may be ambiguous, meaning “its terms are susceptible to more than one meaning so that reasonable [persons] may fairly and honestly differ in their construction of the terms.” Eisenberg v. Redd, 38 S.W.3d 409, 411 (Mo. banc 2001) (citation omitted). When a release is ambiguous, parol evidence becomes admissible and “resolution of the ambiguity is a question of fact for the jury.” Allison v. Flexway Trucking, Inc., 28 F.3d 64, 67 (8th Cir. 1994).

In determining whether the Settlement Agreement is ambiguous, this Court considers “the whole instrument and the natural and ordinary meaning of the language.” Press Mach. Corp. v. Smith R.P.M. Corp., 727 F.2d 781, 784 (8th Cir. 1984); see also Purcell Tire & Rubber Co., Inc. v. Executive Beechcraft, Inc., 59 S.W.3d 505, 510 (Mo. banc 2001) (noting that whether contract is ambiguous depends on context). Whether a release is ambiguous is a question of law, and summary judgment is only appropriate when the release is unambiguous on its face. Anderson v. Curators of Univ. of Missouri, 103 S.W.3d 394, 399 (Mo.Ct.App. 2003) (citations omitted).

Each party argues that the Settlement Agreement's plain language unambiguously supports their position. According to Depositors, the Settlement Agreement explicitly carves out all potential claims except those for Business Income and Extra Expense. Broadway Ford responds that the Settlement Agreement only releases claims concerning Building and Business Personal Property coverage and makes no mention of vexatious refusal. Broadway Ford alternatively argues that this Court should deny summary judgment because there is ambiguity as to whether the Settlement Agreement releases any vexatious refusal claim.

The Settlement Agreement begins with recitals identifying three categories of damages claimed by Broadway Ford under the Policy: (1) Building; (2) Business Personal Property; (3) Business Income and Extra Expense.[3] (Doc. 31-1 at 1). The recitals further state that Broadway Ford and Depositors “now desire to compromise and resolve their disputes in connection with [Broadway Ford's] claims for damage to [its] building and business personal property” but that the “claims for Business Income and Extra Expense . . . will remain open and will not be included in this [Settlement] Agreement.” (Id.). The recitals clearly set out that the purpose of the Settlement Agreement is to settle Broadway Ford's Building and Business Personal Property claims. This Court recognizes that recitals “are not strictly part of the contract because they do not impose contractual duties on the parties, ” but notes that the Settlement Agreement later references the recitals (Doc. 31-1 at § 3) as accurately describing the disputed matter. Captiva Lake Invs., LLC v. Ameristructure, Inc., 436 S.W.3d 619, 625 (Mo.Ct.App. 2014) (citation omitted).

While various sections of the Settlement Agreement discuss its overall purpose, Section 2 (“Insured's Release & Indemnification”) identifies the particular claims released by Broadway Ford. This section is critical to resolution of the instant motion because it specifically describes the released claims. Focusing on the language in this section is consistent with Missouri law, which provides that [w]hen faced with conflicting or ambiguous specific and general provisions in a contract, a court should enforce the more specific of the terms.” Dubinsky v. Mermart, LLC, 595 F.3d 812, 816 (8th Cir. 2010) (citation omitted); see also FiveStar Quality Care-MO, L.L.C. v. Lawson, 283 S.W.3d 811, 815 (Mo.Ct.App. 2009) (“When a provision of a contract deals with a specific situation, it will prevail over a more general provision if there is ambiguity or inconsistency between them.”). At the same time, this Court does not interpret the section in a vacuum, but instead in the context of the entire release. See Yerington v. La-Z Boy, Inc., 124 S.W.3d 517, 520 (Mo.Ct.App. 2004) (citation omitted). The release portion of Section 2 states:

[Broadway Ford] releases and forever discharges [Depositors], including but not limited to its past, present and future officers, directors, employees, attorneys, agents, parent, sister, or subsidiary corporations, successors, affiliates and assigns from any and all claims, demands[, ] obligations, or causes of action of any nature whatsoever, whether based on contract indemnity, breach of contract, tort (including breach of the implied covenant of good faith and fair dealing), bad faith, any other theory of recovery and whether for compensatory or punitive damages, for damages to [Broadway Ford's] building and business personal property under the Building and Business Personal Property Coverage under the Policy arising out of [Broadway Ford's] property damages claims and the losses as a result of the [fire] and related thereto or any obligations of the Parties - with the exception of [Broadway Ford's] claims for Business Income and Extra Expense which are not included or made part of this [Settlement] Agreement and remain open. (Doc. 31-1 at § 2).

This language is clear, unambiguous, and consistent with the entire Settlement Agreement: Broadway Ford released “any and all claims . . . of any nature whatsoever” under the Building and Business Personal Property coverage while the “Business Income and Extra Expense [ ] are not included or made part of” the Settlement Agreement and “remain open.” (Id.). These were two commercial entities seeking to resolve certain disputed claims (Building and Business Personal Property) while carefully stating that the Business Income and Extra Expense issues had not been settled. See Purcell Tire & Rubber Co., 59 S.W.3d at 510 (“Language that is ambiguous to an unsophisticated party may not be ambiguous to a sophisticated commercial entity.”). Reasonable people could not “fairly and honestly differ in the reading” of these terms. Bydalek v. Brines, 29 S.W.3d 848, 854 (Mo.Ct.App. 2000) (citation omitted). Accordingly, it is this Court's role to determine as a matter of law whether the unambiguous release requires...

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