Gorman v. Farm Bureau Town & Country Ins. Co. of Missouri

Decision Date20 October 1998
Docket NumberNo. WD,WD
Citation977 S.W.2d 519
PartiesMarion J. GORMAN, et ux., Respondents, v. FARM BUREAU TOWN & COUNTRY INSURANCE COMPANY OF MISSOURI, Appellant. 55392.
CourtMissouri Court of Appeals

Phillip S. Smith, Kansas City, for Appellant.

Gerald L. Thompson, Kansas City, for Respondents.

Before SPINDEN, P.J., and ULRICH and EDWIN H. SMITH, JJ.

EDWIN H. SMITH, Judge.

Farm Bureau Town & Country Insurance Company of Missouri appeals the summary judgment of the circuit court for Marion and Doris Gorman, respondents, for $35,000 on their claim for payment of policy limits in that amount under a policy of insurance purchased from the appellant by them on March 14, 1992, for a loss of property by fire that occurred on September 24, 1995. The property which was destroyed was a house purchased on March 4, 1986, by a business partnership consisting of the respondents and Jay Appelson. Thereafter, on August 31, 1995, the respondents quitclaimed their interest in the property to Appelson in exchange for a promissory note for $7,400, secured by a deed of trust on the property. Summary judgment was granted to the respondents on the basis that, although at the time of their loss they no longer had an ownership interest in the insured property, they had an insurable interest and were entitled to policy limits pursuant to the "valued policy statute," § 379.140, 1 which estops an insurer from denying that the value of the property at the time of loss was less than the coverage purchased.

In its sole point on appeal, the appellant claims that the trial court erred in denying its motion for summary judgment and in sustaining the respondents' motion for summary judgment for $35,000. The appellant claims that the trial court erred because, on the undisputed facts of the case, the respondents were entitled, as a matter of law, under the policy of insurance, to judgment for only $7,400, representing their mortgage interest in the property at the time of their loss, in that the loss payment provisions of the policy expressly limited their coverage and recovery to their insurable interest, which in the case of mortgagees, such as the respondents, was the amount of their mortgage.

We reverse and remand.

Facts

On March 4, 1986, the partnership between the respondents and Appelson purchased a house in Kansas City, Missouri. On March 14, 1992, the respondents purchased a policy of insurance from the appellant, policy number M 98 789, in the amount of $35,000, insuring the house against loss by fire.

On August 31, 1995, the respondents quitclaimed their one-half interest in the property to Appelson in exchange for a promissory note in the amount of $7,400, secured by a deed of trust on the house. The respondents never informed the appellant of the sale of their interest in the property or arranged to transfer the insurance coverage to Appelson. The respondents remained the owners of the insurance policy up to and including the time of loss. Appelson never purchased his own policy of insurance on the property in question. The respondents contended at trial that at the time they sold their interest in the property to Appelson, they entered into an oral agreement with him to maintain the policy of insurance on the property for $35,000 until such time as he could obtain his own coverage. On September 24, 1995, after the respondents had quitclaimed their interest in the property to Appelson, the insured house was totally destroyed by fire. The damage to the house was in excess of the $35,000 policy limits.

On or about November 29, 1995, the respondents made a demand on the appellant pursuant to the insurance policy for payment of the policy limits. The appellant thereafter tendered to the respondents a check in the amount of $7,400 representing their mortgage interest, which they refused. On February 29, 1996, the respondents filed a two-count petition in the Circuit Court of Jackson County seeking: (1) payment of policy limits under the insurance policy; and (2) damages pursuant to § 375.420 for vexatious refusal to pay.

On August 8, 1996, the respondents moved for summary judgment as to count one of their petition, relying on the valued policy statute, § 379.140, which motion was denied by the trial court on September 12, 1996. On October 18, 1996, the respondents filed a second motion for summary judgment based on their claim that, because they had entered into an oral agreement with Appelson to maintain the existing insurance coverage on the house for $35,000 until he was able to obtain his own coverage, they had an insurable interest in the property for $35,000. This motion was denied by the trial court on December 9, 1996. On December 2, 1997, the appellant moved for summary judgment. The trial court denied the appellant's motion on December 17, 1997. On January 15, 1998, the trial court reconsidered and sustained the respondents' second motion for summary judgment, finding that on the date of the fire that destroyed the insured property, the respondents had an insurable interest therein, although less than $35,000, but were entitled to policy limits, applying the valued policy statute.

This appeal follows.

Standard of Review

When considering appeals from summary judgments, the Court will review the record in the light most favorable to the party against whom judgment was entered. Facts set forth by affidavit or otherwise in support of a party's motion are taken as true unless contradicted by the non-moving party's response to the summary judgment motion. We accord the non-movant the benefit of all reasonable inferences from the record.

Our review is essentially de novo. The criteria on appeal for testing the propriety of summary judgment are no different from those which should be employed by the trial court to determine the propriety of sustaining the motion initially. The propriety of summary judgment is purely an issue of law. As the trial court's judgment is founded on the record submitted and the law, an appellate court need not defer to the trial court's order granting summary judgment.

ITT Commercial Finance v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993) (citations omitted). Summary judgment will be upheld on appeal if: (1) there is no genuine dispute of material fact, and (2) the movant is entitled to judgment as a matter of law. Id. at 377.

I.

In its sole point on appeal, the appellant claims that the trial court erred in denying its motion for summary judgment and in sustaining the respondents' motion for summary judgment for $35,000. Logically, we must first address its claim that the trial court erred in granting the respondents' motion. As to the grant of the respondents' motion, the appellant claims that the trial court erred because, on the undisputed facts of the case, the respondents failed to show that, under the policy of insurance, they were entitled, as a matter of law, to judgment of $35,000, in that the amount of the respondents' coverage and recovery under the contract of insurance was in dispute. In this respect, the appellant contends that in its response to the respondents' motion it raised the issue of whether their recovery was limited by the express terms of the contract to their mortgage interest at the time of loss of $7,400, or their ownership interest of $35,000 at the time the policy of insurance was purchased.

For their part, the respondents contend on two bases that there was no dispute as to the coverage provided them by the policy. First, they contend that, as a matter of law, the appellant could not rely on the express language of the policy limiting their recovery to their insurable interest at the time of loss because the valued policy statute, § 379.140, estopped it from denying them the loss coverage of $35,000 they purchased, even though their ownership interest in the subject property that existed at the time of purchase had changed to a mortgage interest at the time of loss. They further contend that, even if § 379.140 did not work to effectively void this express limitation of the policy, they were still entitled to payment of loss benefits of $35,000 because, under the undisputed facts, their recoverable insurable interest was not limited to their mortgage interest. In this respect, they argue that they had an insurable interest of $35,000 at the time of loss because they would suffer a pecuniary loss in that amount if they breached an alleged oral agreement with their former partner, Appelson, to maintain the $35,000 in insurance coverage on the property after quitclaiming their interest in the property to him. As to these contentions, the appellant asserts that the valued policy statute did not apply where the insurable interest had been materially altered from the time the policy was purchased until the time of loss, and as a result, the express provisions of the policy limiting the respondents' coverage and recovery to their mortgage interest and no other interest were enforceable.

To be entitled to summary judgment under Rule 74.04, the respondents, as the movants, must have established that (1) there was no genuine dispute as to the material facts on which they relied to recover and had the burden of persuasion at trial, and that (2) on these undisputed facts, they were entitled to judgment as a matter of law. Rule 74.04; ITT Commercial Finance, 854 S.W.2d at 381. And, as claimants, the respondents must have demonstrated that each and every proof element of their claim for benefits under the contract for insurance was established with undisputed evidence. ITT Commercial Finance, 854 S.W.2d at 381.

To recover under the policy of insurance for loss by fire, the respondents were required to prove that: (1) the "[appellant] issued its policy to [the respondents] on [the house] covering loss due to [fire]"; (2) "such property was damaged by [fire]"; and, (3) "the policy was in force on the date of such loss." MAI 31.09 [19...

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