Emerson Elec. Co. v. Crawford & Co., s. 71596

• Decision Date: 09 December 1997
• Docket Number: Nos. 71596,71633,s. 71596
• Citation: 963 S.W.2d 268
• Parties: EMERSON ELECTRIC COMPANY, Plaintiff/ Respondent/Cross-Appellant, v. CRAWFORD & COMPANY, Defendant/Appellant/Cross-Respondent.
• Court: Missouri Court of Appeals

Page 268

963 S.W.2d 268

EMERSON ELECTRIC COMPANY, Plaintiff/ Respondent/Cross-Appellant, v. CRAWFORD & COMPANY, Defendant/Appellant/Cross-Respondent.

Nos. 71596, 71633.

Missouri Court of Appeals,

Eastern District,

Division One.

Dec. 9, 1997.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Feb. 9, 1998.

Application for Transfer Denied

March 24, 1998.

Holtkamp, Liese, Beckemeier & Childress, P.C., James P. Lemonds, Erich Vieth, St. Louis, for appellant.

Thompson Coburn, Dan H. Ball, Bruce D. Ryder, St. Louis, for respondent.

PUDLOWSKI, Judge

This jury-tried case arises out of an adjustment of an automobile liability claim occurring on 29 April 1989. Emerson Electric Company (Emerson) is a third party beneficiary of a Claims Service Contract between Crawford & Company (Crawford), a claim adjusting company, and Old Republic Insurance Company (Old Republic), Emerson's insurer. We affirm in part and reverse in part.

In 1988, Emerson entered into an insurance agreement with Old Republic wherein Old Republic insured Emerson for automobile liability. The policy carried a one million dollar deductible. Subsequently, Old Republic and Crawford entered into a "Claim Service Contract" providing that Crawford would investigate, adjust, settle or resist all claims for which Emerson was insured under its contract with Old Republic. Emerson paid Crawford for services rendered pursuant to the Claim Service Contract.

Crawford adjusters stated they owed certain responsibilities and obligations to Emerson. Some of their claim adjusting duties for Emerson included: reporting regularly and accurately; investigating, adjusting, settling and resisting claims in a competent manner; selecting experienced and competent defense counsel; monitoring and supervising defense counsel; providing effective defense to allegations of fault, medical and damages; providing reasonable, professional and timely settlement recommendations; providing competent defense at trial; and disposing of any claim for a reasonable sum. Crawford's adjusters are presumed to work together with defense counsel in order to defeat or lessen any claims brought against Emerson. Additionally, the adjusters are deemed to make an independent recommendation for settlement.

The Jenkins Accident

On 29 April 1989 in Covington, Louisiana, a car insured by Emerson rear-ended a boat trailer being pulled by a car with Mr. and Mrs. David Jenkins (Jenkins). Jenkins did not suffer immediate pain. His doctor prescribed physical therapy which Jenkins failed to attend due to financial difficulty. However, in May 1989 X-rays and an MRI revealed that the accident had caused a bulge in one of his spinal disks requiring surgery.

Jenkins' Claim

On 11 May 1989, Emerson assigned the Jenkins' claim to Crawford. Crawford denied liability and Jenkins filed suit. Crawford selected Dicky Patterson (Patterson), a solo practitioner, to handle the defense of the Jenkins' case in June 1989. Crawford was required to approve Patterson's expenditures and to review all legal fees. Ultimately, Emerson paid all Patterson's expenses.

Patterson failed to file a timely answer and to request a jury trial. Crawford asked Patterson for an evaluation of the liability and damages in June and July 1989. Patterson did not comply with this request until December 1990. During that time, Crawford had no information with which to evaluate the case nor did Crawford attempt to settle the claim. On 20 July 1989, Emerson received a report from Crawford estimating the value of the case at fifteen or twenty thousand dollars. In October 1990, Jenkins requested a settlement of $800,000. Emerson did not receive another report regarding the personal injury claim until 15 March 1991.

In the November 1990 pretrial conference, the trial judge suggested to the attorneys that the case was worth about $425,000. Emerson was never informed that when a Louisiana trial judge in a non-jury case recommends a settlement amount and the parties fail to settle, the resulting judgment for a plaintiff is usually higher than the judge's recommendation.

Settlement of Jenkins

Patterson's first settlement recommendation was sent to Crawford in December 1990. Patterson conveyed the $800,000 offer by Jenkins and included his personal recommendation to settle for as much as $245,000. The letter did not mention the judge's recommendation. At trial Patterson failed to present evidence supporting his damage calculations.

One Crawford adjuster agreed with Patterson's maximum $245,000 settlement offer. Crawford incorrectly stated this would be a jury trial and failed to mention the judge's recommendation. Another Crawford adjuster stated his dissatisfaction with the handling of the case and suggested further steps which may be taken prior to trial.

Emerson did not receive a report on the Jenkins' claim for a year and a half. In that time, the evaluation of the case had gone from approximately $20,000 to $250,000. At this time, Emerson requested its legal department to look at the Jenkins' claim. However, the legal department was not qualified to prepare an evaluation of the case. Again, Emerson looked to Crawford for advice. Crawford deferred to Patterson's judgment as it did not have enough information about the case. Emerson then contacted Patterson in April 1991. Patterson recommended offering between $100,000 and $140,000 to settle the case and was given the authority to do so.

Crawford began to have doubts regarding Patterson's handling of the case. Yet, no one told Emerson about these doubts. Crawford learned of the judge's recommendation in mid-April, but according to Patterson, there were areas in the case which could be attacked.

In May 1991, Emerson was informed for the first time that the Jenkins case would be a bench trial. It was at this time Emerson also learned of the judge's settlement recommendation. Emerson expressed frustration that Crawford did not know enough about the file to give an independent recommendation.

Jenkins trial and judgment

On 7 May 1991, during the Jenkins trial, only Jenkins presented witnesses. At no time did Crawford or Patterson recommend a settlement offer of more than $250,000. Crawford recommended Emerson should wait and stand firm with the $250,000 offer.

The trial judge entered a judgment for the plaintiffs in the amount of $576,922.22. Additionally, the court awarded prejudgment interest accruing from the date the lawsuit was filed. The total amount of the judgment was for approximately $775,000. The case then settled for $755,000 prior to appeal.

This appeal stems from Emerson's suit against Crawford. At trial, Emerson presented evidence from a New Orleans attorney who is familiar with Louisiana practice and procedure with respect to personal injury cases. He regularly negotiated with adjusters on automobile liability personal injury damage claims. He is familiar with the evaluation standard Louisiana courts give these cases. He testified as to proper handling of such a case and specified actions that were mishandled in the disposition of the Louisiana claim. He asserted that had certain procedures been done, the amount of damages awarded may have been lowered.

Based on the negotiations and procedures which occurred at trial, he concluded that the $250,000 settlement offer was unreasonably low. A jury found in favor of Emerson. From this verdict, Crawford appeals.

In its first four points on appeal, Crawford contends it was prejudiced by the introduction of the attorney's testimony. The qualification of a witness as an expert lays within the discretion of the trial court. Seabaugh v. Milde Farms, Inc., 816 S.W.2d 202, 208 (Mo. banc 1991). The issue in determining whether a witness is an expert is not a determination of whether there is another better qualified witness; rather, the question is whether this witness possesses a "peculiar knowledge, wisdom or skill regarding the subject of inquiry, acquired by study, investigation, observation, practice or experience." Id.; Section 490.065.1 RSMo (1994). An expert's opinion must aid the jurors in deciding an issue in the case since the expert's qualifications are superior to those of the ordinary juror. Sampson v. Missouri Pacific R. Co., 560 S.W.2d 573, 586 (Mo. banc 1978).

Substantial practical experience in the area in which the witness is testifying is a permissible source of expertise. Donjon v. Black & Decker (U.S.), Inc., 825 S.W.2d 31, 32 (Mo.App. E.D.1992). The extent of the witness' experience goes to the weight of the evidence and does not render the testimony incompetent. In the Interest of C.L.M., 625 S.W.2d 613, 615 (Mo. banc 1981).

Emerson demonstrated that the attorney is familiar with the practice of personal injury settlements in Louisiana. He has handled 2500-3000 automobile accident defense claims during his career as an attorney. He regularly works with adjusters to investigate, adjust, settle and resist claims. Additionally, he is familiar with the standards, customs, and practices used by defense lawyers and adjusters in handling claims in Louisiana. It may be surmised that these qualifications deemed him to have knowledge beyond that of an ordinary Missouri juror which may aid the jury in its decision making process. Emerson laid a foundation for his testimony. It was not unduly speculative. The trial court did not abuse its discretion in allowing his testimony.

Crawford also believes that the attorney speculated with respect to the settlement possibility of the underlying case. It is within the sound discretion of the trial court to admit opinion testimony based on, and supported by, sufficient facts. Seabaugh, 816 S.W.2d at 208. The attorney's opinions were based on facts known to him at or before the hearing which others in the field would reasonably rely upon in forming an opinion and therefore, are admissible. Section 490.065.3 RSMo (1994); see Wulfing v. Kansas City Southern Industries, Inc., 842...