Dyer v. General American Life Ins. Co.

• Decision Date: 27 July 1976
• Docket Number: No. 37396,37396
• Citation: 541 S.W.2d 702
• Parties: Alvin DYER, Plaintiff-Appellant, v. GENERAL AMERICAN LIFE INSURANCE COMPANY, Defendant-Respondent. . Louis District, Division Two
• Court: Missouri Court of Appeals

Page 702

541 S.W.2d 702

Alvin DYER, Plaintiff-Appellant, v. GENERAL AMERICAN LIFE INSURANCE COMPANY, Defendant-Respondent.

No. 37396.

Missouri Court of Appeals, St. Louis District, Division Two.

July 27, 1976.

Motion for Rehearing and for Transfer to Supreme Court

Denied Sept. 30, 1976.

Elmer C. Oberhellmann, St. Louis, for plaintiff-appellant.

Joel Monson, Kortenhof & Ely, Frank Strzelec, St. Louis, for defendant-respondent.

DOWD, Judge.

Plaintiff, Alvin Dyer, sued General American Life Insurance Company under an individual accident insurance policy number K--93,803 A. This policy provided that an indemnity of $100.00 per month should be paid to the insured, Alvin Dyer, if accidental injuries should, within 20 days after the accident, 'wholly and continuously disable the Insured and prevent him from performing every duty pertaining to his occupation.' Such indemnity was to be paid as long as the insured was totally disabled, but not more than 24 months. After 24 months, the company agreed to pay the monthly indemnity 'only so long as the Insured shall be wholly and continuously disabled and prevented by such injuries from engaging in any substantially gainful occupation, business, or employment for which he is or may become qualified.'

The plaintiff voluntarily dismissed two of his claims against defendant and proceeded on his claims for: (1) punitive damages for the defendant's tortious breach of a duty of good faith in failing to pay plaintiff indemnities under policy number K--93,803 A; (2) punitive damages for the defendant's breach of insurance policy number K--93,803 A; and (3) accelerated disability benefits under the insurance policy. The trial court dismissed plaintiff's remaining claims, ruling that the claims failed to state a cause of action against defendant. Plaintiff has appealed.

We have summarized the facts stated in plaintiff's petition in the light most favorable to plaintiff, considering all facts well pleaded as admitted and giving plaintiff the benefit of all favorable inferences which could be drawn from such facts. Collins v. Vernon, 512 S.W.2d 470, 475 (Mo.App.1974).

On November 5, 1968, plaintiff's back was injured while in the course of his employment. At the time of plaintiff's injury, plaintiff was insured under several of defendant's policies, an individual accident insurance policy number K--93,803 A and a group policy, through plaintiff's employer McDonnell Douglas Corporation, providing life insurance (Policy G--5546), accidental death and dismemberment insurance (Policy ADD--1357), accidental accident and sickness insurance (Policy SAH--1296), and hospital expense insurance (Policy GH--1244). ¹ Such policies were incorporated in plaintiff's petition.

Subsequent to the accident which injured plaintiff's back, plaintiff developed 'degenerative disk disease of the low back, postsurgical with possible arachnoiditis.'

On March 4, 1969, plaintiff filed notice and proof of disability with defendant under one of plaintiff's insurance policies. Thereafter, plaintiff received a monthly indemnity for 24 consecutive months. ²

In February of 1973, plaintiff applied for payment of further monthly indemnities. In this same month, plaintiff was examined by a doctor of defendant's choosing. The doctor wrote defendant that, in his opinion, plaintiff's back disease rendered plaintiff unfit for work, totally and permanently disabled by social security standards. Plaintiff's petition appears to assert that plaintiff had been declared totally and permanently disabled by the Social Security Administration in March of 1973 and by the Veteran's Administration in April of 1973.

In March of 1973, defendant denied any obligation to plaintiff under policy number K--93,803 A. Plaintiff wrote to defendant on April 17, 1973 and protested the defendant's actions. On July 2, 1973 defendant wrote plaintiff and explained that plaintiff's claim under policy number K--93,803 A had been re-evaluated in view of communication with plaintiff's former employer. Defendant stated that it had learned that plaintiff had worked for a period of over 8 months subsequent to plaintiff's injury in 1968. Because defendant did not believe that the plaintiff had been 'wholly and continuously disabled' within the terms of the policy, the defendant explained that it would not pay disability benefits under policy number K--93,803 A. Our review of this action must determine whether plaintiff's petition stated a cause of action under the facts thus pleaded.

Plaintiff's first point on appeal is that his claim against defendant for tortious breach of defendant's duty of good faith does state a claim upon which relief can be granted. Whether an insurer is liable in tort for the insurer's bad faith refusal to pay disability benefits to an insured has never been decided in Missouri. Missouri law does recognize an insured's recovery in tort against his liability insurer for the insurance company's bad faith refusal to settle suits brought against the insured. The elements of the tort appear to be that: (1) the liability insurer has assumed control over negotiation, settlement, and legal proceedings brought against the insured; (2) the insured has demanded that the insurer settle the claim brought against the insured; (3) the insurer refuses to settle the claim within the liability limits of the policy; and (4) in so refusing, the insurer acts in bad faith, rather than negligently.

The damages recoverable in such an action equal the amount of money which the insured was forced to pay on the claim not settled by virtue of a judgment of liability in excess of the policy limits. Zumwalt v. Utilities Insurance Co., 360 Mo. 362, 228 S.W.2d 750 (1950); Landie v. Century Indemnity Co., 390 S.W.2d 558 (Mo.App.1965).

Such Missouri cases, involving third party insurance, are clearly distinguishable from the case at bar; but plaintiff asks us to take this opportunity to extend the tort of bad faith to situations involving an insurer's bad faith refusal to pay disability benefits to an insured. We find that the determination requested by the plaintiff is unnecessary to our holding and expressly decline to rule upon whether or not the tort of bad faith should be extended to first party insurance.

Plaintiff has failed to allege facts indicating bad faith on the part of defendant and, therefore, his claim would not state a cause of action for bad faith should such an action be recognized in first party insurance situations. The pleadings in this case included defendant's explanation to plaintiff presenting defendant's reason for denying disability payments under policy number K--93,803 A. Defendant wrote plaintiff that communication with plaintiff's former employer had revealed that plaintiff had worked on a full-time basis for a period of over 8 months in the same job classification and for the same pay subsequent to plaintiff's accident. Defendant explained that, for this reason, defendant believed that plaintiff had not been wholly and continuously disabled. As plaintiff maintains in his reply brief, whether postaccident employment terminates the...