Fremont Indem. Co. v. Lawton-Byrne-Bruner Ins. Agency Co.
| Decision Date | 29 October 1985 |
| Docket Number | Nos. 49299,LAWTON-BYRNE-BRUNER,49254,s. 49299 |
| Citation | 701 S.W.2d 737 |
| Parties | FREMONT INDEMNITY COMPANY, Plaintiff/Cross-Respondent, v.INS. AGENCY CO., Defendant/Third Party Plaintiff/Respondent/Cross-Appellant, v. ILLINOIS UNION INSURANCE CO., Third-Party Defendant/Appellant. |
| Court | Missouri Court of Appeals |
Mark T. Keaney, Lewis & Rice, Edward S. Meyer & Laura B. Allen, Evans & Dixon, St. Louis, for appellants.
F. Douglas O'Leary, Moser, Marsalek, Carpenter, Cleary, Jaeckel & Keaney, St. Louis, for respondent.
Fremont Indemnity Company ("Fremont"), respondent, brought this action for a declaratory judgment contending that its insurance policy afforded no coverage for Lawton-Byrne-Bruner Insurance Agency Company ("LBB"), respondent/cross-appellant, in an action against LBB by St. Louis-Little Rock Hospitals, Inc. 1 LBB then filed a third party petition against Illinois Union Insurance Company ("Illinois Union"), appellant, alleging that in the event Fremont prevailed, the policy of Illinois Union should provide the coverage. The trial court entered judgment in favor of Fremont and LBB and against Illinois Union. We reverse.
LBB is a Missouri corporation engaged in the business of selling or brokering insurance. From September 1, 1981 to September 1, 1982, Illinois Union provided LBB with errors and omissions insurance. From September 1, 1982 to September 1, 1983, Fremont provided LBB's errors and omissions coverage. Both Illinois Union and Fremont's policies were "claims-made" policies.
The present case has its origin in the lawsuit brought against LBB by St. Louis-Little Rock Hospitals ("the Hospital") on September 20, 1982. LBB had acted as the Hospital's insurance broker for over thirty years and provided it with insurance through the St. Paul Insurance Company since 1972. In its suit, the Hospital alleged that LBB failed to obtain cost efficient insurance for it for several prior years.
The dispute between LBB and the Hospital arose from the Hospital's request for bids for renewal of insurance coverage which was expiring on April 1, 1982. LBB, along with four other competitors, submitted bids. LBB submitted its bid in two parts because the Hospital was actually composed of two distinct facilities, one in Little Rock, the other in St. Louis. LBB was the successful bidder for the Little Rock facility.
LBB's renewal bid was $65,000.00 less than the previous year's premium according to the testimony of Miss Jill Horan, Coordinator of Quality Assurance/Risk Management of the Hospital and the individual responsible for receiving bids. Miss Horan testified that Dave Potthoff, the LBB vice president responsible for the Hospital's account, explained to her that a rule change made by the St. Paul Insurance Company allowed a restructuring which resulted in substantial cost savings. When Mr. Potthoff asked Miss Horan why LBB's bid was not accepted, she said that the Hospital's board of directors decided to switch brokers for reasons unknown to her.
Miss Horan also testified that she had discussed LBB's reduction with a hospital administrator from another hospital at a hospital association meeting. At trial, Miss Horan could not recall this person's identity. Nevertheless, this hospital administrator told her that "they have had that type of coverage structuring several years prior." Thus, Miss Horan suspected that LBB may have overcharged the Hospital in prior years for insurance coverage. Based on Miss Horan's knowledge, the Hospital contemplated filing suit against LBB. This was despite the fact that Miss Horan did not know whether the Hospital's coverage was the same as the other hospital to which she was comparing premiums.
Later, the Hospital directed Miss Horan to write the Missouri Division of Insurance about the possible premium overcharges. On April 2, 1982, Miss Horan sent a letter to the Division setting forth her concern that the Hospital had been overcharged and inquiring about the possibility of recourse. On April 20, 1982, the Division of Insurance forwarded a copy of the Hospital's letter to LBB and requested LBB to respond.
Thereafter, Robert Robson, LBB Vice President for Market Development, and Mr. Potthoff investigated the complaints in Miss Horan's letter. On May 13, 1982, Mr. Robson sent the Division LBB's response with his conclusion that the Hospital's complaint was without merit. On May 28, 1982, the Division of Insurance wrote the Hospital and forwarded LBB's response. In its letter, the Division stated the following:
Please find enclosed a copy of a reply we received from Lawton, Byrne, & Bruner in answer to your complaint.
I neither agree nor disagree with the statements by R.A. Robson of Lawton, Byrne & Bruner but, based upon the information given us, we are unable to pursue the matter. Every consumer/insured has the right to evaluate their programs and to shop around in the insurance market. Mr. Robson has indicated that the program available to you through St. Paul only became available as of July, 1981.
You must keep in mind that market fluctuations also have a bearing on the premium companies charge. In our inflationary times, we have found the trend is to decrease premiums which might be the case here.
The Division of Insurance is not permitted by statute to make determinations in this type of case. Our function is to make sure that the companies are not acting arbitrarily.
However, your position may be correct and if you feel that you wish to pursue the matter, I can only recommend that you continue through a private legal counsel.
The Division of Insurance did not forward a copy of this letter to LBB. However, Mr. Robson testified that after he had sent LBB's response letter of May 13, 1982, he received a telephone call from the Division of Insurance in which he was advised that LBB's response seemed satisfactory and that there was nothing further for LBB to do.
Following the above-described exchange of letters, there was no further communication between LBB, the Hospital, and the Division of Insurance concerning the matters raised in Miss Horan's letter of April 2, 1982. Although Mr. Potthoff continued to have discussions with Miss Horan during this period concerning the insurance the Hospital continued to carry through LBB, at no time did Miss Horan or anyone else from the Hospital inform LBB about the Hospital's consultation with a lawyer or its contemplation of litigation.
On September 1, 1982, Illinois Union ceased to provide errors and omissions coverage for LBB which was thereafter covered by insurance provided by Fremont.
On September 20, 1982, the Hospital filed its cause of action against LBB. On September 22, 1982, David Anderson, LBB's Senior Vice President, heard a rumor that the Hospital was suing LBB. Because of this rumor, Mr. Anderson sent to Fremont, LBB's then errors and omissions carrier, copies of Miss Horan's letter to the Division of Insurance and LBB's response. On October 6, 1982, Fremont formally declined coverage and suggested that LBB notify Illinois Union, LBB's prior carrier. Illinois Union was so notified and on November 10, 1982, it also formally declined coverage. Prior to this event, Fremont agreed to defend LBB in the Hospital's action although under a full and complete reservation of rights.
This declaratory judgment action followed. Fremont sought a declaration that its policy provided no coverage for LBB for the suit filed against it by the Hospital. LBB then filed a third party action against Illinois Union contending, in the event Fremont prevailed, Illinois Union's policy provided coverage. On September 7, 1984, the trial court ruled in favor of LBB and Fremont. In its findings of fact and conclusions of law, the trial court found (1) that the Hospital's April 2, 1982 letter was a claim within the meaning of Illinois Union's policy during its coverage period; (2) that Illinois Union suffered no prejudice as a result of any late notice it received of the Hospital's claim; and (3) that Fremont's policy was not applicable in the present case.
This appeal by Illinois Union follows. Illinois Union contends the trial court erred in its determination that Illinois Union's policy provided LBB coverage in the action brought by the Hospital. LBB also appeals the trial court's determination on the contingency that we reverse the trial court's judgment against Illinois Union.
We first address Illinois Union's appeal. In this declaratory judgment action, we will sustain the trial court's decree unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Abco Tank and Manufacturing Company v. Federal Insurance Company, 550 S.W.2d 193, 197 (Mo. banc 1977). The dispositive question presented is whether the trial court's conclusion of law that Miss Horan's April 2, 1982 letter to the Missouri Division of Insurance constituted a "claim" as defined in Illinois Union's insurance policy is correct. We hold it was not.
We quote Miss Horan's letter in its entirety:
Dear Sir,
I have included a brief synopsis of events which pertain to the insurance provided us by our broker, Lawton-Byrne-Bruner. Should this situation fall within your jurisdiction, I would appreciate your intervention.
We have used the insurance brokerage service of Lawton-Byrne-Bruner for over ten (10) years and relied upon their professional recommendations to provide us with the best coverage at the least cost.
This year we obtained bids from five (5) sources including Lawton-Byrne-Bruner. Their quote for Property, Comprehensive, Umbrella, and Worker's Compensation coverage was approximately $65,000 less this year than last. The magnitude of the savings led me to pursue the coverage further. I have since found out that these savings were...
To continue reading
Request your trial
-
Civic Associates v. Security Ins. Co.
...a policy of insurance we need only afford plain and unambiguous language its plain meaning. Fremont Indemnity Co. v. Lawton-Byrne-Bruner Ins. Agency, Inc., 701 S.W.2d 737, 741 (Mo. App.1985). Only in cases where the policy language is subject to different interpretation must we construe the......
-
Chemtreat, Inc. v. Certain Underwriters at Lloyd's of London
...claim against him where client evinced willingness to continue using attorney's services); Fremont Indem. Co. v. Lawton-Byrne-Bruner Ins. Agency Co. , 701 S.W.2d 737, 742—43 (Mo. Ct. App. 1985) (finding broker had no reasonable basis to expect claim against her under professional liability ......
-
Lexington Ins. Co. v. Integrity Land Title Co.
...client and had been informed by client that she might pursue claim). On the other hand, in Fremont Indem. Co. v. Lawton–Byrne–Bruner Ins. Agency Co., 701 S.W.2d 737, 741 (Mo.Ct.App.1985), the court found that insured's letter of inquiry to state agency expressing concern that it had been ov......
-
Lexington Ins. Co. v. Integrity Land Title Co.
...interpretation of the terms “likely” and “might.” In support of its position, Fidelity cites Fremont Indemnity Co. v. Lawton–Byrne–Bruner Insurance Agency Co., 701 S.W.2d 737, 741 (Mo.Ct.App.1985). In Fremont, the Missouri Court of Appeals held that a similar exclusion did not apply, even t......
-
CHAPTER 10 Directors and Officers Liability and Professional Liability Insurance
...L.L.C., 2015 Ind. App. LEXIS 680 (Ind. App. Oct. 15, 2015). Missouri: Fremont Indemnity Co. v. Lawton-Byrne-Bruner Insurance Agency Co., 701 S.W.2d 737 (Mo. App. 1985). New York: Sirius XM Radio, Inc. v. XL Speciality Insurance Co., 117 A.D.3d 652, 987 N.Y.S.2d 324 (N.Y. App. Div. 2014); CP......
-
Chapter 9
...L.L.C., 2015 Ind. App. LEXIS 680 (Ind. App. Oct. 15, 2015). Missouri: Fremont Indemnity Co. v. Lawton-Byrne-Bruner Insurance Agency Co., 701 S.W.2d 737 (Mo. App. 1985). New York: Sirius XM Radio, Inc. v. XL Speciality Insurance Co., 117 A.D.3d 652, 987 N.Y.S.2d 324 (N.Y. App. Div. 2014); CP......
-
Too much risk: the impact of class action lawsuits on claims made insurance policies: H & R Block, Inc. v. American International Specialty Lines Insurance Co.
...1991); 4) Int'l Ins. Co. v. Peabody Int'l Corp., 747 F. Supp. 477 (N.D. Ill. 1990); 5) Fremont Indem. Co. v. Lawton-Byrne-Bruner Ins., 701 S.W.2d 737 (Mo. App. E.D. 1985); and 6) Home Ins. Co. v. A.J. Warehouse, Inc., 210 So.2d 544 (La. Ct. App. (81.) Id. at 78. (82.) Wittner, Poger, Rosenb......
-
Reporting Malpractice Claims
...NOTES _____________________ Footnotes: 1. See, Wolfram, Modern Legal Ethics 209, Practitioner's Ed. (St. Paul: West Publ. Co., 1986). 2. 701 S.W.2d 737 (Mo.App. 1985). 3. See, LaFon v. City National Bank, 444 N.E.2d 448, 3 OhioApp.3d (1981). 4. See, Phoenix Insurance Co. v. Sukut, 136 Cal.A......