Farm Bureau Town and Country Ins. Co. of Missouri v. Crain

• Decision Date: 08 June 1987
• Docket Number: No. 14632,14632
• Parties: FARM BUREAU TOWN AND COUNTRY INSURANCE COMPANY OF MISSOURI, Plaintiff-Appellant, v. Larry CRAIN and Bonnie Crain, Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 866

731 S.W.2d 866

FARM BUREAU TOWN AND COUNTRY INSURANCE COMPANY OF MISSOURI, Plaintiff-Appellant, v. Larry CRAIN and Bonnie Crain, Defendants-Respondents.

No. 14632.

Missouri Court of Appeals,

Southern District,

Division Two.

June 8, 1987.

Jerry L. Reynolds, Larry B. Moore, Jerry L. Reynolds and Associates, P.C., Springfield, for plaintiff-appellant.

David A. Childers, John E. Price, Woolsey, Fisher, Whiteaker & McDonald, Springfield, for defendants-respondents.

HOGAN, Judge.

Appellant Farm Bureau Town and Country Insurance Company (hereinafter Farm Bureau) appeals from an order and judgment entered against it in which the trial court: a) ruled against the plaintiff on its petition for a declaratory judgment; b) struck the defense of arson (and other defenses) from plaintiff's second amended answer to defendants' counterclaim, and c) entered judgment in favor of the defendants and against plaintiff in the amount of $52,500 plus interest at the rate of 9 percent per annum from the date of judgment. The case has come to us on an almost incredibly diffuse record, and upon an appellant's brief which is not very helpful. Some preliminary recitation of the factual and procedural background of the appeal is necessary to an understanding of the opinion.

In 1978, defendants Larry and Bonnie Crain purchased a residence in Dallas County near Buffalo. This residence burned on July 24, 1980. Farm Bureau paid the fire loss claim and the defendants built another residence on the same lot. Farm Bureau issued a homeowner's insurance policy to the defendants covering the second dwelling against loss by fire in the amount of $35,000 and unscheduled personal property against loss by fire in the amount of $17,500. The policy also provided for a "living expense" allowance in the amount of $3,500. In the early morning of April 10, 1982, the second residence was destroyed by fire.

Defendant Larry Crain was at home alone at the time of the fire on April 10, 1982. His wife and their children were in Kansas City. In one of the first of many interviews with the insurer's representatives Crain gave as his opinion that neither the weather nor any electrical malfunction caused the fire, but did express the opinion that some personal enemy might have set fire to his residence maliciously.

Farm Bureau immediately began an investigation. The local adjuster, Mike Sanwald, was unable to determine the cause of the fire and Robert Morrison, the insurer's fire investigator, was called in. Morrison inspected the site of the Crain residence on April 20, 1982. Morrison, who had considerable experience as a fire investigator--he had been State Fire Marshal--reached the conclusion that the fire had been set. A report made by the State Fire Marshal (which is not before us) also indicated the fire was possibly of incendiary origin.

Farm Bureau interviewed both defendants several times. On May 25, an attorney retained by Farm Bureau took the statement of defendants under oath. In the course of this interview defendant Larry Crain refused to answer several questions, asserting they were not pertinent to the fire loss. Further, according to Farm Bureau's representative, Crain demanded that Farm Bureau either deny his claim or pay it. On June 11, 1982, Farm Bureau denied the claim because Crain had refused to submit to an examination under oath and answer questions, as required by the policy.

On July 20, 1982, a little more than a month after the denial letter was sent to Mr. Crain, Farm Bureau filed an action for a declaratory judgment in the Circuit Court of Dallas County, alleging that defendants' policy required them to submit to examination under oath by any person named by Farm Bureau; that defendant Larry Crain had refused to submit to sworn examination as required by the policy and Farm Bureau had, as a consequence, been unable to complete its investigation, to its prejudice. Prayer of the petition was for an order determining the rights and obligations of the parties and for an order declaring that Farm Bureau was not obligated to entertain the Crains' claim.

In due course, the defendants filed an answer, averring among other things that "any actual controversy of [a] justiciable nature which exists may not be determined by a judgment in this action without [another] suit." Defendants also denied that Farm Bureau had been prejudiced by "any refusal or delay" on defendants' part. Defendants also filed a counterclaim, essentially declaring upon the policy. Defendants specifically alleged compliance with all terms and conditions of the policy. It was also averred that Farm Bureau's refusal to pay was vexatious, and defendants prayed damages for vexatious delay and for attorneys' fees. The plaintiff filed answer ¹ to the counterclaim, incorporating the averments of its petition and alleging that defendants were "not entitled to recover herein for the reason that the alleged losses occurred as a result of deliberate acts performed by them or on their behalf."

The defendants filed a motion for summary judgment, and this motion was subsequently amended. In the amended motion, defendants alleged, among other things, that as a matter of law, plaintiff's petition for a declaratory judgment was not a substitute for existing remedies, and was an improper action where an adequate remedy already exists; that defendants, by counterclaim, had asserted their claim to payment under the policy; that plaintiff had asserted two defenses under the policy, specifically that the defendants had procured the burning of their property and had failed to submit to an examination under oath. The defendants further alleged that "as a matter of law" defendants' failure to submit to a sworn statement under oath was not an affirmative defense to the counterclaim; that as a matter of law, plaintiff had failed to assert its pleaded defense of intentional burning in its denial letter and in its petition for declaratory judgment and was therefore estopped from asserting the defense of arson. Prayer of the motion was for summary judgment upon the petition for declaratory judgment and for judgment for defendants on defendants' counterclaim. The trial court sustained the defendants' motion for summary judgment upon plaintiff's petition for declaratory judgment and ordered the defense of arson stricken from plaintiff's answer to the counterclaim. This order was entered December 3, 1984.

Farm Bureau then filed an alternative motion requesting that the trial court designate its order a final judgment for purposes of appeal pursuant to Rule 81.06, or for leave to file an amended answer. The trial court refused to designate its order a final order for purposes of appeal, but granted leave to amend. Plaintiff filed a "first amended answer" to the counterclaim. After the defendants had filed a motion for a more definite statement, plaintiff was given leave to file a second amended answer to the counterclaim.

The contents of this second amended answer must be noted. Farm Bureau again asserted that its insureds were not entitled to recover "for the reason the alleged losses occurred as a result of deliberate acts performed by them or on their behalf." In paragraphs 12, 13, 14 and 15, Farm Bureau pleaded sundry acts--some of which had previously been defensively pleaded as a failure to comply with the conditions of the policy--as "concealment, fraud and/or false swearing."

Thereafter, the defendants filed a pleading denominated a "motion to strike or in the alternative for summary judgment." In this pleading, the defendants averred that: a) the trial court had on at least two prior occasions admonished plaintiff to plead new and additional facts justifying avoidance of waiver of the defenses which had been raised subsequent to its initial denial of June 11, 1982, and subsequent to its action instituted against the insureds on or about July 20, 1982; b) plaintiff had failed to allege new material justifying the avoidance of the doctrines of waiver and estoppel with respect to its belated attempt to raise additional defenses that were not included in its initial denial or in its initial lawsuit; c) that as a result, paragraphs 10, 12, 13, 14, 15 and 16 of plaintiff's second amended answer were immaterial to the issues of the case and the defenses pleaded had been waived, and d) that the defendants "incorporate by reference the previous suggestions filed with this Court on or about February 22, 1985 and February 27, 1985 in support of its motion to strike."

This motion was sustained March 6, 1985, as to paragraphs 10, 12, 13, 14, 15 and 16 of plaintiff's second amended answer, thus effectively removing all issues from the case except the claim for vexatious refusal to pay. The defendants voluntarily dismissed their claim for penalties for vexatious refusal to pay. On December 11, 1985, the trial court had finally entered the following order, omitting formal recitations: 1) The refusal of Larry Crain to answer questions submitted in his sworn examination under oath on May 25, 1982, constituted a failure to comply with a condition precedent to recovery by defendants on the policy of insurance and did not constitute a forfeiture; 2) That Farm Bureau, by denying defendants' claim on the ground that the defendants had refused to answer questions under oath, and by requesting exoneration on that ground in its declaratory judgment action was precluded from asserting the defense of arson, and 3) That the request for a declaratory judgment did not present a justiciable action; would not dispose of all issues in the lawsuit, and was denied. The court also entered judgment for the defendants on their counterclaim in the amount of $52,500 with interest thereon at the rate of 9 percent per annum from and after July 20, 1983.

We have set out the procedural history of the case at tedious length to illustrate that we cannot really know what the trial court intended nor the grounds upon...