Charles v. Consumers Ins.
| Decision Date | 26 June 2012 |
| Docket Number | WD 73363.,Nos. WD 73315,s. WD 73315 |
| Citation | 371 S.W.3d 892 |
| Parties | Bradford CHARLES, Respondent, v. CONSUMERS INSURANCE, Appellant. |
| Court | Missouri Court of Appeals |
OPINION TEXT STARTS HERE
Application for Transfer
Denied Aug. 14, 2012.
John L. Mullen, Timothy P. Price, and Nikki Cannezzaro, Kansas City, MO, for Appellant.
Paul Hasty, Jr., Overland Park, KS, for Respondent.
Before Division One: VICTOR C. HOWARD, Presiding Judge, and ALOK AHUJA and KAREN KING MITCHELL, Judges.
This is an underinsured motorist case. The issue is whether the plaintiff's underinsured motor vehicle (“UIM”) insurer has a right to intervene in plaintiff's liability action against the underinsured motorist when the UIM insurer first denied that underinsured motorist coverage applied, but later determined that such coverage may apply, conceding such at the time of the relevant intervention ruling and prior to trial in the liability action against the underinsured motorist. We hold that, under these facts, the UIM insurer does have a right to intervene to contest the underinsured motorist's liability and/or damages. Therefore, we reverse.
Appellant Consumers Insurance Company (“Consumers”) entered into an insurance contract (“UIM Policy”) with Respondent Bradford Charles. On March 31, 2010, Charles's attorney informed Consumers via letter that, on September 26, 2009, Charles had been injured in a motor vehicle accident. The letter stated that a car driven by Christina Ranum (“the tortfeasor”) collided with Charles while Charles was riding a motorcycle. The letter further stated:
We've determined that the motorist that was at fault was insured under a policy issued by Travelers with liability limits of $50,000.00. That is not sufficient to compensate Mr. Charles for his injuries. Therefore, an underinsured motorist claim is presented to Consumers Insurance Company under the policy issued to Brad Charles.
Initially, Consumers denied that there was UIM coverage under the UIM Policy, 2 but later determined there may, in fact, be applicable UIM coverage under the UIM Policy.
On April 30, 2010, Charles filed a petition against Ranum, seeking damages arising from the accident. Ranum filed an answer, admitting that the accident occurred but denying that she was negligent and denying the nature and extent of Charles's alleged damages. On June 2, 2010, Charles entered into a partial settlement with Ranum whereby Charles agreed to limit his recovery to Ranum's policy limits without conceding that his damages were limited to that amount. The parties understood that the litigation against Ranum would continue despite the settlement. At an eventual damages hearing, Ranum did not appear to contest either damages or liability.
Immediately after Charles and Ranum entered into the partial settlement agreement, Consumers moved to intervene in Charles's liability action against Ranum for the purpose of contesting Ranum's liability and/or Charles's damages. The motion asserted that Charles had a UIM policy of insurance with Consumers that was in effect on the date of the accident and that (1) the policy may afford UIM coverage to Charles for the subject motor vehicle accident in that Ranum may qualify as an underinsured motorist; and (2) Consumers may be bound by a determination of liability or damages against Ranum. Charles did not object to the motion to intervene, and, accordingly, the circuit court initially granted the motion. Consumers confirmed in a subsequent letter to Charles that it had determined, contrary to its previous letter, that underinsured motorist coverage may apply under the UIM Policy.
Approximately three months later, after Consumers had initiated discovery, Charles filed a motion for summary judgment, requesting that the circuit court dismiss Consumers from the lawsuit. Charles argued that, since Consumers had initially denied coverage, it forfeited any right that it had to defend against Charles's allegations against Ranum.
On November 9, 2010, the circuit court held a hearing on Charles's motion and then granted it. The court found that Consumers had initially denied coverage but then had “changed its position.” The court found that, in denying coverage, Consumers had forfeited its right to intervene.
The circuit court then conducted a hearing (Ranum did not appear to contest Charles's case) in which Charles presented evidence regarding the accident and his damages. Following this hearing, the court entered judgment, finding that “[Charles] is entitled to judgment against [Ranum] in the sum of $350,000.00, and judgment is hereby entered in favor of [Charles] and against [Ranum] in that amount.”
Consumers filed a motion for a new trial, alleging that it did not receive notice of the hearing. The circuit court overruled the motion. Consumers timely appeals.
Although the circuit court granted Charles “summary judgment” against Consumers, we will treat the court's action as a reconsideration and denial of Consumers's motion to intervene. Charles has neither asserted a claim against Consumers, nor is he defending against a claim asserted by Consumers; he is, therefore, not entitled to a “judgment” (summary or otherwise) against Consumers. See Rule 74.04(a), (b) (). What is really at issue is Consumers's right to intervene in Charles's lawsuit against Ranum.3
“The denial of a motion to intervene as of right under Rule 52.12(a) must be affirmed unless it is against the weight of the evidence, it is unsupported by sufficient evidence, or it either misinterprets the law or misapplies the law.” Moxness v. Hart, 131 S.W.3d 441, 444 (Mo.App. W.D.2004). However, “where intervention is sought as of right and the movant brings himself within the terms of [Rule 52.12(a)], the trial court has no discretion in the matter,” and it must grant the motion. Frost v. White, 778 S.W.2d 670, 672 (Mo.App. W.D.1989).
In its first point on appeal, Consumers argues that the circuit court erred in entering summary judgment against it (denying its right to intervene) in that an initial denial of coverage in an underinsured motorist case does not automatically defeat a UIM insurance company's right to intervene in its insured's lawsuit against an underinsured motorist.4 We agree.
In addressing the issue of Consumers's right to intervene, it is important to point out the distinction between first party claims and third party liability claims, as this distinction is critical to our analysis. When a policyholder asserts a claim against his own insurance company for underinsured or uninsured motorist benefits, he is making a first party claim. In contrast, when a policyholder is sued by a third party and seeks a defense or coverage in the event of a judgment against him, he is asserting a third party liability claim against his liability insurer.
In the third party liability claim context, the insurance carrier has no right to intervene in litigation between its policyholder and the third party; the carrier can participate in the litigation only pursuant to its contractual obligation to defend the policyholder. Ballmer v. Ballmer, 923 S.W.2d 365, 368 (Mo.App. W.D.1996). This is true because the insurance carrier has no direct interest in a lawsuit for damages filed against its policyholder by a third party. Id. In such cases, if the insurerhas a right to participate in the litigation, it is a contractual right, not a right based on Rule 52.12(a). Whitehead v. Lakeside Hosp. Ass'n, 844 S.W.2d 475, 479–81 (Mo.App. W.D.1992). Thus, if the carrier wrongfully denies coverage, it has breached its contractual obligation, and, in turn, the policyholder is relieved of his obligations under the contract. Id. at 481. Therefore, the carrier can no longer participate in the litigation absent the policyholder's consent. Id.Rule 52.12, setting out the requirements for intervention of right, is not available to restore an insurance carrier to control of the defense of a third party liability claim when the carrier forfeited control by denying coverage. Id. Nor can the insurer's breach and the insured's settlement in reliance thereon, create an interest where one does not otherwise exist. Id.
In contrast, Missouri appellate opinions have consistently held that an uninsured or underinsured motorist carrier has an absolute right to intervene in a lawsuit brought by its policyholder against an uninsured or underinsured motorist. Nervig v. Workman, 285 S.W.3d 335, 340–41 (Mo.App. S.D.2009). In the uninsured-underinsured motorist context, when the insurer seeks intervention, it steps into the shoes of the alleged tortfeasor and assumes an adversarial position to that of the insured. Kinney v. Schneider Nat'l Carriers, Inc., 200 S.W.3d 607, 613 (Mo.App. W.D.2006).
Upon timely application anyone shall be permitted to intervene in an action ... when the applicant claims an interest relating to the property or transaction that is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.
Rule 52.12(a) (emphasis added).
Thus, a party seeking intervention under this rule must show “1) an interest relating to the property or transaction which is the subject of the action; 2) that the applicant's ability to protect such interest is impaired or impeded; and 3) that the existing parties are inadequately representing the applicant's interest.” Stafford v. Kite, 26 S.W.3d 277, 279 (Mo.App. W.D.2000).
Generally, when an insured files suit against an uninsured motorist or an underinsured motorist, there is no...
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