Dodson Int'l Parts Inc. v. Nat'l Union Fire Ins. Co. of Pittsburg Pa.
| Decision Date | 30 November 2010 |
| Docket Number | No. WD 71893.,WD 71893. |
| Citation | 332 S.W.3d 139 |
| Court | Missouri Court of Appeals |
| Parties | DODSON INTERNATIONAL PARTS, INC., Respondent,v.NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG PENNSYLVANIA, et al., Appellant. |
OPINION TEXT STARTS HERE
Supreme Court Denied Feb. 1, 2011.
Application for Transfer Denied
March 29, 2011.
Kirk R. Presley and Kana R. Lydick, Kansas City, MO, for respondent.John W. Cowden, David M. Eisenberg and Jarod G. Goff, Kansas City, MO, for appellant.Before Division Three: ALOK AHUJA, Presiding Judge, VICTOR C. HOWARD, Judge and CYNTHIA L. MARTIN, Judge.CYNTHIA L. MARTIN, Judge.
National Union Fire Insurance Company (“National Union”) appeals from a judgment in a declaratory judgment action filed by Dodson International Parts, Inc. (“Dodson”), which found that an insurance policy issued by National Union to Dodson was ambiguous and thus provided coverage for a third party claim asserted against Dodson, and which found that National Union's denial of coverage was without just cause or excuse. We affirm.
Dodson is in the aircraft salvage business. National Union issued a commercial general liability coverage aviation policy (“Policy”) to Dodson 1 for the period August 28, 1997, to August 28, 1998. National Union used a standard commercial general liability (“CGL”) form to issue the Policy. The Declarations Page indicates the only coverage purchased by Dodson was for Products/Completed Operations at an aggregate limit of $5,000,000.2
On April 10, 1998, Dodson was hired by Ameristar Jet Charter, Inc. (“Ameristar”) to recover a Falcon 20 Jet (“Aircraft”) that had made an emergency landing on a levee near Kansas City Downtown Airport. Dodson retrieved the Aircraft from the levee and transported it to the Executive Beechcraft hangar at the Airport.
On April 16, 1998, Dodson was advised that there was damage to the fuselage of the Aircraft unrelated to the Aircraft's emergency landing. The damage involved distortion of the fuselage. Ameristar and Sierra American Corporation (“Sierra”) 3 claimed that the Aircraft had been totaled by virtue of the fuselage distortion, where the relatively minor damage caused by the emergency landing could otherwise have been easily repaired. Ameristar and Sierra claimed Dodson caused the fuselage distortion while disassembling and transporting the Aircraft. Dodson claimed the fuselage distortion occurred after the Aircraft was delivered to the hangar.
On June 19, 1998, Dodson was sued in the Circuit Court of Jackson County, in Ameristar Jet Charter, Inc. v. Dodson International Parts, Inc., Case No. 98 CV 14586 (the “Ameristar Lawsuit”) for the damage to the Aircraft and for Ameristar's loss of use of the Aircraft.
In response to the Ameristar Lawsuit, Dodson submitted a claim to National Union. Robert McNabb (“McNabb”), a claims manager for National Union's agent, AIG Aviation (“AIG”), handled Dodson's claim. McNabb reviewed the petition filed in the Ameristar Lawsuit. McNabb then obtained a statement from Robert Dodson, Jr. (“Mr. Dodson”), the President of Dodson, on March 19, 1999. During the recorded statement, McNabb noted that the Policy provided “coverage for products and completed operations” up to $5,000,000. McNabb then said:
I realize you don't have an attorney's view, but take my word for it this statement [referring to the petition filed in the Ameristar Lawsuit] alleged that the damage to the aircraft by Dodson was done while the aircraft was in Dodson's care, custody, and control. In other words, during the retrieval process. Either true or false—that is what the plaintiff alleged. Is that your understanding?
Mr. Dodson agreed that the plaintiffs in the Ameristar Lawsuit were “trying to claim” that the damage to the Aircraft occurred while it was in Dodson's care, custody, and control. McNabb conducted no other investigation of Dodson's claim. McNabb recommended that the claim be denied.
On March 26, 1999, National Union sent Dodson a denial of coverage letter. National Union primarily relied on the care, custody, or control exclusion contained in the Policy, which excluded coverage for property damage to “personal property in the care, custody, or control of the Insured.” National Union also refused to defend the Ameristar Lawsuit. Dodson requested that National Union reconsider its denial of coverage in June 1999. In July 1999, National Union reiterated its decision to deny coverage.
The Ameristar Lawsuit proceeded to trial. On May 31, 2002, the jury returned a verdict in favor of Ameristar on Ameristar's claim against Dodson for negligence in its handling of the Aircraft. The jury apportioned fault 70% to Dodson and 30% to Ameristar. The trial court entered judgment in favor of Ameristar and against Dodson in the amount of $1,435,000.
On appeal, the Supreme Court reversed and remanded the case for a new trial on the issue of damages. Ameristar Jet Charter, Inc. v. Dodson Int'l Parts, Inc., 155 S.W.3d 50, 60 (Mo. banc 2005). Dodson and Ameristar reached a settlement agreement in the amount of $1,300,000 in approximately October 2008.
In July 2002, while the judgment in the Ameristar Lawsuit was on appeal, Dodson once again requested that National Union reconsider its denial of coverage. Dodson claimed that the damage to the Aircraft did not occur when the Aircraft was within Dodson's care, custody, or control, but instead occurred after the Aircraft had been delivered to the Executive Beechcraft hangar. Dodson contended in the Ameristar Lawsuit that the distortion of the fuselage occurred when straps securing the Aircraft to the transport vehicle were improvidently released after the Aircraft was delivered to the hangar. Dodson claimed that once the straps were released, the structural support for the fuselage was compromised.
In response to Dodson's renewed request for coverage, National Union sought a coverage opinion from Kansas attorney Scott Gunderson (“Gunderson”). In an opinion letter dated October 9, 2002, Gunderson concluded that he was comfortable with denial of the claim. Though Gunderson reminded that the burden is on the insurer to prove that an exclusionary cause applies, he counseled against National Union filing a declaratory judgment action to determine coverage. Gunderson explained that his “general rule-of thumb relative to declaratory judgment actions is, unless you are confident you will get summary judgment, don't file it.” On January 6, 2003, Gunderson sent Dodson a letter on National Union's behalf which again denied coverage based on the care, custody, or control exclusion.
On April 1, 2004, Dodson filed a declaratory judgment action against National Union 4 seeking a determination that the Policy provided coverage for the Ameristar Lawsuit and seeking attorney's fees for National Union's denial of coverage without just cause or excuse pursuant to Kan. Stat. Ann. Section 40–256 (2000).5 On June 30, 2006, National Union filed a motion for summary judgment alleging that Dodson's lawsuit was barred by the doctrine of collateral estoppel because the jury's verdict in the Ameristar Lawsuit confirmed that the damage to the Aircraft occurred while the Aircraft was in Dodson's care, custody, or control. National Union further claimed that the uncontroverted evidence otherwise established that the damage to the Aircraft occurred while the Aircraft was in Dodson's care, custody, or control. On July 20, 2006, Dodson filed a motion for partial summary judgment claiming that the care, custody, or control provision in the Policy is ambiguous. Dodson also claimed that it should be awarded its attorney's fees in the declaratory judgment action because National Union's denial of coverage was without just cause or excuse under section 40–256.
On March 1, 2007, the Honorable John M. Torrence entered an order and judgment granting Dodson's motion for partial summary judgment in part and denying National Union's motion for summary judgment.6 Judge Torrence held that the care, custody, or control exclusion in the Policy is ambiguous, requiring its construction in favor of Dodson. Judge Torrence held that “in construing the insurance contract most favorably to the insured, the Court determines that the provision does not exclude coverage for the damage sustained by the aircraft.” Judge Torrence denied Dodson's request for attorney's fees under section 40–256.
Dodson's lawsuit proceeded to a bench trial before the Honorable Peggy Stevens McGraw on September 9, 2009. On October 28, 2009, Judge McGraw entered a judgment. On November 20, 2009, Judge McGraw entered an amended judgment after a hearing to take evidence on Dodson's attorney's fees awardable under section 40–256. On December 9, 2009, Judge McGraw entered a second amended judgment in favor of Dodson (“Judgment”).
The Judgment acknowledged Judge Torrence's order finding the care, custody, or control exclusion to be ambiguous. The trial court concluded, therefore, that the care, custody, or control provision “does not exclude coverage for the damage sustained by the aircraft during Plaintiff's salvage operation.” The trial court further concluded that National Union denied coverage without just cause or excuse under section 40–256. In this context, the trial court found that “the care, custody, or control exclusion in the Policy cannot be applied unless the damage to the aircraft actually occurred while the aircraft was in Dodson's care, custody, or control.” The trial court found that “the evidence presented in the underlying action strongly supported that the damage to the aircraft did not occur until after the plane had been delivered to Executive Beechcraft.” The trial court thus concluded that “any claim for damage to the aircraft that arose while at Executive Beechcraft, after Dodson relinquished possession of the aircraft, would not be subject to the care, custody, or control exclusion.”
The Judgment awarded...
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