Cologna v. Farmers and Merchants Ins. Co., s. 16153

• Citation: 785 S.W.2d 691
• Decision Date: 02 February 1990
• Docket Number: Nos. 16153,16154,s. 16153
• Parties: Paulette COLOGNA, Plaintiff-Respondent, v. FARMERS AND MERCHANTS INSURANCE COMPANY, Defendant-Appellant. Paulette COLOGNA, Plaintiff-Appellant, v. FARMERS AND MERCHANTS INSURANCE COMPANY, Defendant-Respondent.
• Court: Court of Appeal of Missouri (US)

Page 691

785 S.W.2d 691

Paulette COLOGNA, Plaintiff-Respondent, v. FARMERS AND MERCHANTS INSURANCE COMPANY, Defendant-Appellant.

Paulette COLOGNA, Plaintiff-Appellant, v. FARMERS AND MERCHANTS INSURANCE COMPANY, Defendant-Respondent.

Nos. 16153, 16154.

Missouri Court of Appeals,

Southern District,

Division Two.

Feb. 2, 1990.

Motion for Rehearing or Transfer

Denied Feb. 22, 1990.

Application to Transfer Denied April 17, 1990.

Stephen H. Snead, Mann, Walter, Burkart, Weathers & Walter, Springfield, for defendant-appellant-respondent Farmers.

C. Ronald Baird, John R. Lightner, Dorr, Baird and Lightner, Springfield, for plaintiff-respondent-appellant Cologna.

HOGAN, Judge.

In this statutory garnishment action brought pursuant to § 379.200, RSMo 1986, ¹ plaintiff Paulette Cologna (hereinafter plaintiff or Paulette) has had summary judgment against defendant Farmers and Merchants Insurance Company (hereinafter Farmers). The trial court denied Paulette's motion for attorney's fees, expenses and other sanctions. Appeal No. 16153 is Farmers' appeal from the order granting summary judgment; Appeal No. 16154 is Paulette's appeal from the trial court's ruling denying an award of fees, costs and other sanctions pursuant to § 514.205, Rule 55.03 and Rule 84.19. The appeals were consolidated for hearing and disposition. We shall consider Farmers' appeal first. It has a convoluted history, some of which must be recited.

Eugene F. Cologna, Jr. (hereinafter Gene), was married to Rita K. Cologna (hereinafter Rita) in 1965. They were divorced in 1979. Gene thereafter married Paulette. Effective August 4, 1982, Farmers issued a Homeowner's policy to Rita, covering the period from that date to August 4, 1983. Section II of the policy provided that if suit were brought against Rita for damages because of bodily injury, Farmers would: (1) pay up to its limit of liability ($100,000) for the damages for which Rita was legally liable, and (2) provide Rita a defense at Farmers' expense by counsel of Farmers' choice. Section II of the policy specifically excluded bodily injury "which is expected or intended by the insured." On March 26, 1983, Gene went to Rita's residence. While he was there, a shotgun, held by Rita, discharged. Gene was killed.

Plaintiff Paulette thereafter commenced a wrongful death action against Rita in the Circuit Court of Webster County. We have not been favored with a copy of the petition filed in that case, but by letter dated June 29, 1983, Farmers advised Rita it had received a copy of the suit papers, and continued:

"Your policy ... states, 'If a claim is made or a suit is brought against any insured for damages because of bodily injury or property damage to which this coverage applies, we will:

(b) provide a defense at our expense by counsel of our choice. We may make any investigation and settle any claim or suit that we decide is appropriate. Our obligation to defend any claim or suit ends when the amount we pay for damages resulting from the occurrence equals our limit of liability.'

The suit which has been brought against you, we feel fails to state sufficient information for us to make a decision as to the coverage under your policy.

We are entering an appearance and defense of the suit under the condition that the defense and investigation thereof, by the company, shall not be construed to change, waive, invalidate or forfeit any of the terms and conditions of the policy or any of the company's rights thereunder. No act of the company, done by way of investigation or defense shall be construed as an admission of liability under this policy...." (Emphasis added.)

Farmers also advised Rita that it had retained counsel to make a defense.

The wrongful death action was thereafter voluntarily dismissed without prejudice and refiled in Stone County. On March 6, 1985, Farmers directed a letter to Rita which again acknowledged receipt of the suit papers and continued:

"Your policy ... states, 'If a claim is made or a suit is brought against any insured for damages because of bodily injury or property damage to which this coverage applies, we will:

b. provide a defense at our expense by counsel of our choice. We may make any investigation and settle any claim or suit that we decide is appropriate. Our obligation to defend any claim or suit ends when the amount we pay for damages resulting from the occurrence equals our limit of liability.' The policy goes on further under Section II-Exclusions, '1. Coverage E--Personal Liability and Coverage F--Medical Payments to Others do not apply to bodily injury or property damage: a. which is expected or intended by the insured;'

The suit which has been brought against you, we feel states in terms which may be applicable to paragraph (a) of the Exclusions which states that Coverage E--Personal Liability ... [does] not apply to bodily injury or property damage: a. which is expected or intended by the insured.

We are entering an appearance on the defense of the suit under the condition that the defense and the investigation thereof, by the company, shall not be construed to change, waive, invalidate or forfeit any of the terms and conditions of the policy or any of the company's rights thereunder. No act of the company, done by way of investigation or defense shall be construed as an admission of liability on this policy."

Farmers again advised Rita that it had retained counsel to defend the wrongful death action.

On June 14, 1985, Paulette and Rita entered into a written agreement as follows:

"AGREEMENT

THIS AGREEMENT, entered into this 14 day of June, 1985, by and between PAULETTE COLOGNA, hereinafter referred to as 'First Party,' and RITA COLOGNA, hereinafter referred to as 'Second Party',

WITNESSETH:

WHEREAS, Eugene F. Cologna, Jr. was involved in a shooting on March 26, 1983 by [Rita] and died as a direct result of the gunshot wound; and

WHEREAS, [Paulette] was Eugene F. Cologna, Jr.'s spouse on March 26, 1983; and

WHEREAS, [Paulette] has filed suit against [Rita] for the wrongful death of her husband in order to recover damages she sustained as a result of Eugene F. Cologna, Jr.'s death; and

WHEREAS, [Paulette] asserts that [Rita] is liable to [Paulette] for her damages as a result of the negligent operation of the gun by [Rita] while it was in her possession; and

WHEREAS, Silvey Companies, by and through Farmers and Merchants Insurance Company, issued a homeowner's insurance policy, Policy No. 7 68 89 87, effective 8/4/82 through 8/4/83, with the named insured being [Rita]; and

WHEREAS, said homeowner's insurance policy may provide coverage for liability which [Rita] might incur because of Eugene F. Cologna, Jr.'s death; and

WHEREAS, [Rita] does not have any other insurance providing coverage for liability which she might incur because of Eugene F. Cologna, Jr.'s death; and

WHEREAS, it is the desire of [Rita] not to expend any money in attorney's fees or otherwise in the defense of the lawsuit brought by [Paulette], nor to permit the insurance company heretofore described to defend said lawsuit on behalf of [Rita], unless and until said company admits that the policy of insurance provides coverage if [Rita] is found liable for the death of Eugene F. Cologna, Jr.; and

WHEREAS, it is the desire of the parties that any judgment [Paulette] obtains against [Rita] be satisfied solely from the proceeds of the aforesaid insurance policy, or any other insurance policy affording coverage to [Rita]; and

WHEREAS, the parties are aware of the rights provided them by Section 537.065 R.S.Mo., 1978. ²

NOW, THEREFORE, in consideration of the mutual promises contained herein and in consideration of the specified sum of One Hundred Dollars paid by [Rita] to [Paulette], the receipt and sufficiency of which is hereby acknowledged, it is agreed, pursuant to Section 537.065 R.S.Mo., 1978, as follows:

1. [Paulette] agrees, in the event she obtains a judgment against [Rita], that neither [Paulette] nor any person, firm or corporation claiming by or through her, shall levy execution or garnishment or otherwise provided by law, except as against any insurer which insures the legal liability of [Rita].

2. [Rita] Agrees:

(a) To speak truthfully when giving testimony concerning the facts and circumstances surrounding the death of Eugene F. Cologna, Jr., and any investigation conducted thereafter;

(b) To refuse to permit any insurance company to defend the lawsuit filed by [Paulette] unless the company first admits that the applicable insurance policy provides coverage for any liability on the part of [Rita] for the death of Eugene F. Cologna, Jr.; and

(c) To allow [Paulette] to take a default judgment against her if no insurance company defends the lawsuit in conformity with the terms outlined in Section (b) above.

3. The parties to this Agreement hereby agree that this Agreement may be recorded in the office of the Recorder of Deeds for any county in which [Rita] resides or may reside in the future.

IN WITNESS WHEREOF, the parties have hereunto executed this Agreement the day and year first above written."

This agreement was signed and acknowledged by both parties.

On July 1, 1985, Rita advised counsel for Farmers that she had entered into the contract we have set out and a copy of the contract was attached. Rita further advised Farmers' counsel that:

"... I hereby request that you, on behalf of ... Farmers and Merchants Insurance Company, admit there is coverage for the occurrence which is the subject of the lawsuit, and that you continue your appearance on my behalf to defend my interests in this lawsuit.

You are further notified that if you do not admit the existence of coverage, then you will not be permitted to participate in the defense of this lawsuit in my behalf. A reservation of rights agreement or letter is not acceptable and will not be accepted. Any previous such agreement or letter which you claim entitles you to represent my interests in...