Community Title Co. v. Safeco Ins. Co. of America, 56060

• Decision Date: 10 July 1990
• Docket Number: No. 56060,56060
• Citation: 795 S.W.2d 453
• Parties: COMMUNITY TITLE COMPANY, et al., Plaintiffs-Appellants, v. SAFECO INSURANCE COMPANY OF AMERICA, et al., Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 453

795 S.W.2d 453

COMMUNITY TITLE COMPANY, et al., Plaintiffs-Appellants, v. SAFECO INSURANCE COMPANY OF AMERICA, et al., Defendants-Respondents.

No. 56060.

Missouri Court of Appeals,

Eastern District,

Division Four.

July 10, 1990.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Aug. 22, 1990.

Application to Transfer Denied Oct. 16, 1990.

James William Herron, Joseph J. Trad, St. Louis, for plaintiffs-appellants.

Joseph L. Leritz, Sharon Wilkes, Don R. Sherman, St. Louis, for defendants-respondents.

STEPHAN, Judge.

Community Title Company and James P. Davis appeal from two orders granting summary judgment for respondents Safeco Insurance Company of America ("Safeco"), General Insurance Company of America ("General"), First National Insurance Company of America ("First National"), and Robert Feuerbacher, an insurance broker. Appellants had initiated this action as a result of the refusal by Safeco, General, and First National ("insurers") to pay appellants' claim for losses caused by a fire which destroyed a building in Kansas City, Missouri, owned by James P. Davis on which Community Title held a mortgage. We affirm in part and reverse and remand in part.

The parties do not dispute certain facts. Additional facts are related elsewhere as necessary. Appellants bought the Kansas City property on February 19, 1981. On the land appellants purchased were situated two buildings known as the National Fidelity Life Buildings, one on 1002 Walnut; the other, at 1004-1006 Walnut. Appellants contacted respondent Feuerbacher to obtain insurance on the property. Feuerbacher was authorized by Safeco to sell fire and casualty insurance in its behalf. The policy appellants actually received varied from the coverage they had initially sought. The insurance application dated January 31, 1981, listed the two distinct parcels of property as a single location. The initial insurance binder issued by Feuerbacher on February 1, 1981, reflected all risk coverage in the amount of $800,000.00 only on the property located at 1002 Walnut. Two insurance policies were subsequently issued. Policy CP8802023, issued May 8, 1981, with a policy period from March 23, 1981, to March 23, 1982, provided for property and liability coverage on property listed as 1000-1002 Walnut, Kansas City. The property coverage reflected a $1,000,000 limit of liability on the building and $140,000 for loss of rents. The liability coverage set out the policy's limits for bodily injury and property damage, premises medical payments, and personal injury liability. Policy CP8802030 was issued April 28, 1981, with a policy period from March 23, 1981, to March 23, 1984, on the property listed as 1004-06 Walnut. The property coverage schedule reflected a limit of $45,000 on the building, with no loss of rents coverage shown.

On April 3, 1982, a fire started in the restaurant tenancy located in the building at 1006 Walnut and destroyed the entire building. Velco, Ltd. was the restaurant tenant whose alleged negligence caused the fire. Appellants submitted their claim to insurers for fire damage to the premises and lost rent. By letter dated October 27, 1982, insurers denied coverage on the ground that appellants had concealed the restaurant tenancy which increased the insurers' hazard without notice and, thus, had breached the terms of the insurance policy.

In November 1986 appellants sued respondents. Count one of appellants' third amended petition directed only against Feuerbacher alleged breach of his fiduciary duty as a broker. Counts two, three and four against only insurers raised claims for breach of oral contract, promissory estoppel, and breach of the insurance contract with vexatious refusal to pay. Appellants contemporaneously filed an action in federal court against Christopher Veltmann, the restaurant tenant. While that petition is not before us, the record refers to it as one sounding in tort.

On June 20, 1988, appellants settled their separately filed claim in federal court against Christopher Veltmann and Velco, Ltd. for the fire loss for $90,000 and executed a general release of all claims. Shortly thereafter, in October 1988, respondents argued and submitted their two motions for summary judgment in the present case. The trial court sustained the two motions on December 9, 1988, without making any specific findings of fact or conclusions of law. We presume the orders were made on the grounds specified in the motion. Elsie v. Firemaster Apparatus, 759 S.W.2d 305, 306 (Mo.App.1988).

Appellants' first point contends that the general release they executed in favor of Christopher Veltmann and Velco, Ltd. in the federal action does not entitle respondents to summary judgment on all counts contained in appellants' third amended petition against respondents.

The "Release of All Claims" executed by appellants provides in pertinent part:

FOR AND IN CONSIDERATION of the payment to me/us at this time of the sum of Ninety Thousand and 00/100--Dollars ($90,000.00), the receipt of which is hereby acknowledged, I/we, being of lawful age, do hereby release, acquit and forever discharge Christopher Veltmann and Velco, Ltd., and his/her/their heirs, administrators, executors, agents, servants, employees, successors and assigns, and all other persons, corporations and organizations of and from any and all actions, causes of action, claims, demands, damages, costs, loss of services, expenses and compensation, on account of or in any way growing out of any and all known and unknown personal injuries and property damage resulting or to result from an incident that occurred on or about the 3rd day of April, 1982, at or near at or near (sic) 1006 Walnut, Kansas City, MO. (Emphasis added.)

Appellants maintain that the release applies to respondents only if it can be adduced that appellants intended to release respondents. Appellants argue that the intention of the parties presents a fact question properly left for the jury's determination and not a matter for summary judgment. Respondents state that the release expressly provides for the release of all persons or corporations from all liability which in any way arises out of the April 3, 1982, fire. They contend the language of the release clearly operates to discharge them from any liability arising out of the fire.

Thus, the issue before us is whether the release encompasses respondents. In reaching our decision we are guided by State ex rel. Normandy Orthopedics, Inc. v. Crandall, 581 S.W.2d 829, 833 (Mo. banc 1979), quoting Williams v. Riley, 243 S.W.2d 122, 124 (Mo.App.1951), which stated the following As with any other contract, the lodestar of construction should be "that the intention of the parties shall govern," ... and as to releases in particular, "[A]ny question regarding the scope and extent of a release is to be determined according to what may fairly be said to have been within the contemplation of the parties at the time the release was given, which, in turn, is to be resolved in the light of all the surrounding facts and circumstances under which the parties acted."

Another precept in the construction of releases is the rule that "when a release contains both general and specific language, the general language 'will be presumed to have been used in subordination to [the specific], and will be construed and limited accordingly.' " Hawes v. O.K. Vacuum & Janitor Supply Co., 762 S.W.2d 865, 867-68 (Mo.App.1989), quoting Holly Investment Co. v. Land Clearance for Redevelopment Authority of Kansas City, 646 S.W.2d 126, 129 (Mo.App.1983).

Applying the foregoing rules, we hold the trial court erred in finding as a matter of law that respondents are encompassed within the release. Although the release does use the general language "all other persons, corporations and organizations," the specific matter referred to is all actions "growing out of any and all known and unknown personal injuries and property damage resulting ... from an incident that occurred on or about the 3rd day of April, 1982", i.e. the fire at appellants' property. No other matters are covered or mentioned in the release; therefore, none can be said to have been within the contemplation of appellants and Christopher Veltmann at the time the release was signed. The release, by its very terms, is limited to the release of Christopher Veltmann and others for their tortious conduct resulting in personal injuries and property damage from the fire, and does not extend to respondents for their alleged breach of the insurance policy contract covering appellants' property. Accord, Holly Investment Co. v. Land Clearance for Redevelopment Authority of Kansas City, 646 S.W.2d 126, 129 (Mo.App.1983).

Holly Investment Co., 646 S.W.2d 126, presented a scenario similar to the case at bar. In Holly Investment Co., plaintiff, the owner of certain rental properties, had sought a loan from the city redevelopment authority (LCRA). A condition of the loan was proof of fire and extended insurance coverage. An insurance agent procured an insurance policy for owner. A fire subsequently occurred on owner's property. The insurance company refused payment and owner sued insurance company in federal court. During the pendency of that litigation, it was determined the insurance policy provided only builder's risk coverage; the owner and insurance company entered into a settlement and the owner executed a general release in favor of the insurance company. The owner then filed its action against LCRA alleging that LCRA had negligently secured the wrong coverage from the insurance company on the owner's behalf. LCRA asserted, as do respondents' here, that it was a party in contemplation as a releasee under the terms of the release executed in federal court between the owner and the insurance company. 646 S.W.2d at 128-29. Similarly to the general release before us now, the release in Holly Investment Co. contained the broad phraseology "and...