Hagars, v. Wright Tire & Appliance
| Decision Date | 07 November 2000 |
| Citation | 33 S.W.3d 605 |
| Court | Missouri Court of Appeals |
| Parties | (Mo.App. W.D. 2000) . Wendi Hagar, Karla Hagar, Hali Hagar and Staci Ross, by Their Next Friend Carl Hagar, and Carl Hagar and Koni Hagar Individually and as Husband and Wife, Respondents, v. Wright Tire & Appliance, Incorporated, A Missouri Corporation, D/B/A Wright Audio, Video & Appliance, et al., Appellant. Case Number: WD58084 Missouri Court of Appeals Western District Handdown Date: |
Appeal From: Circuit Court of Macon County, Hon. Ronald Belt, Judge
Counsel for Appellant: Duane Edward Schreimann
Counsel for Respondent: David Allen Masters
Opinion Summary:
Carl and Koni Hagar and their children were injured when a gas stove purchased from Wright Tire & Appliance caught fire, destroying the Hagars' home and its contents and causing them personal injuries. They recovered a $51,700 portion of their property damage from their property insurer, Shelter Mutual Insurance Company, and then sued Wright Tire and certain of its employees for the remainder of their personal injuries and property damages. While that suit was pending, Shelter asked Wright Tire's insurer to reimburse it for the money it had paid the Hagars on their property damage claim, and the insurer did so without waiting for the underlying suit against its insured (Wright Tire) to be resolved. Once that suit was finally resolved, result-ing in a $244,111.69 verdict in favor of the Hagars, Wright Tire requested that it receive a credit on the judgment for the amount its insurer had already paid Shelter, but the trial court refused to allow the credit. Wright Tire appeals, arguing it is entitled to a credit because it satisfied Shelter's subrogation interest in the judgment and because if it does not receive a credit, the Hagars may get a double recovery.
Affirmed.
Division Two holds: We affirm the trial court's denial of a credit. Only the Hagars had the right to bring suit against Wright Tire. Shelter held only a subrogation interest, and that interest only entitled it to reimbursement of amounts it paid the Hagars out of any judgment the Hagars obtained from Wright Tire. Shelter was never entitled to a credit on the judgment, and it never held legal title to any part of the Hagars' property damage claim, as the Hagars never assigned their claim to Shelter. Shelter therefore had no right to try to settle that claim with Wright Tire's insurer unbeknownst to the Hagars, and without their consent, as occurred here. The fact that Shelter did so could not give Wright Tire's insurer any rights against the Hagars. The burdens caused by Wright Tire's insurer's decision to settle a claim brought by Shelter which Shelter had no right to bring should remain on that insurer. Those burdens should not be shifted to the Hagars, who were specifically and purposely excluded from those settlement negotiations.
Opinion Vote: AFFIRMED. Lowenstein, PJ., and Newton, concur
Carl and Koni Hagar and their children were injured when a gas stove purchased from Wright Tire & Appliance caught fire, destroying the Hagars' home and its contents and causing them personal injuries. They recovered a $51,700 portion of their property damage from their property insurer, Shelter Mutual Insurance Company, and then sued Wright Tire and certain of its employees for their personal injuries and property damages. While that suit was pending, Shelter asked Wright Tire's insurer to reimburse it for the money it had paid the Hagars on their property damage claim, and the insurer did so without waiting for the underlying suit against its insured (Wright Tire) to be resolved. Once that suit was finally resolved, result-ing in a $244,111.69 verdict in favor of the Hagars, Wright Tire requested that it receive a credit on the judgment for the amount its insurer had already paid Shelter, but the trial court refused to allow the credit.
Wright Tire appeals, arguing it is entitled to a credit because it satisfied Shelter's subrogation interest in the judgment and because if it does not receive a credit, the Hagars may get a double recovery. We affirm the trial court's denial of a credit. Only the Hagars had the right to bring suit against Wright Tire. Shelter held only a subrogation interest, and that interest only entitled it to reimbursement of amounts it paid the Hagars out of any judgment the Hagars obtained from Wright Tire. Shelter was never entitled to a credit on the judgment, and it never held legal title to any part of the Hagars' property damage claim. Shelter therefore had no right to try to settle that claim with Wright Tire's insurer behind the backs of the Hagars, and without their consent, as occurred here. The fact that Shelter did so could not give Wright Tire's insurer any rights against the Hagars. The burdens caused by Wright Tire's insurer's decision to settle a claim brought by Shelter which Shelter had no right to bring should remain on that insurer. Those burdens should not be shifted to the Hagars, who were specifically and purposely excluded from those settlement negotiations.
Carl and Koni Hagar purchased a gas-stove appliance from Appellant Wright Tire & Appliance, Inc. Wright Tire & Appliance agreed to deliver the gas stove and install it in the Hagars' home as part of the sale. The installation included connecting the stove to the LP gas source.
On August 16, 1994, two Wright Tire & Appliance employees, Appellants Shannon McQuarry and Nikolaus Nieponski, delivered the stove to the Hagars' residence and installed it. Shortly thereafter, a fire started. This fire destroyed the Hagars' home and its contents, including property belonging to Respondents Carl and Koni Hagar and their children, Staci Ross, Wendi Hagar, Karla Hagar, and Hali Hagar (hereinafter referred to collectively as "the Hagars"), and caused personal injury to the Hagars. They thereafter filed suit against Wright Tire & Appliance, Shannon McQuarry, and Nikolaus Nieponski (hereinafter referred to collectively as "Wright Tire"), alleging that their negligence caused the fire.
Prior to the August 16, 1994, fire, Mr. and Ms. Hagar had purchased property insurance on their home and its contents from Shelter Mutual Insurance Company. Following the fire, the Hagars filed a claim with Shelter for property damage. Shelter and the Hagars negotiated on issues regarding the damages, and ultimately Shelter paid the Hagars $51,700 in settlement of their claim for property loss resulting from the fire. In exchange for the payment by Shelter, the Hagars released Shelter from any future claims based on their fire loss.
In addition to providing coverage for property loss, page 16 of the insurance contract contained a subrogation clause that stated as follows:
OUR RIGHT TO RECOVER PAYMENT. After making payment under this policy, we will have the right to recover to the extent of our payment from anyone held responsible. This right will not apply . . . if you have waived it in writing prior to loss. The Insured will do whatever is required to transfer this right to us.
(emphasis in original). This clause in the contract between the Hagars and Shelter gave the Hagars the right to pursue recovery from a third party, but gave Shelter the right to recover from the Hagars to the extent of its payment to them "from anyone held responsible" for the Hagars' property losses.
After receiving the $51,700 payment from Shelter for certain of their property damages, the Hagars filed suit against Wright Tire for their entire property loss and for their personal injuries resulting from the fire. On June 20, 1995, Shelter also wrote to counsel for the Hagars, stating:
(emphasis added).
Although the emphasized portion of this letter suggests that the Hagars had sued only for that portion of their losses which exceeded the $51,700 paid them by Shelter, their suit in fact sought recovery of all of their property damages as well as all of their personal injury damages. This is the proper procedure under Missouri law, which has adopted the collateral source rule, under which suit may be brought against the wrongdoer for plaintiffs' entire damages without deduction for the amounts plaintiffs have received from a collateral source, such as property insurance. Washington by Washington v. Barnes Hospital, 897 S.W.2d 611, 619 (Mo. banc 1995); Duckett v. Troester, 996 S.W.2d 641, 647-48 (Mo. App. W.D. 1999). The policy behind the rule is that a tortfeasor should not receive any of the benefit arising from the property owner's foresight in paying for insurance coverage. Id.
A few days after receiving Shelter's letter, David Masters, the Hagars' attorney, thus responded:
(emphasis added).
In reply to Hagars' letter, on June 27, 1995, Shelter wrote a letter to the Hagars' attorney informing him that it did not intend to seek any part of the Hagars' recovery in their suit against Wright Tire, but that it expected to be reimbursed by Wright Tire's insurer, Continental, for the value of its subrogation interest once the Hagars and Wright Tire settled their suit, stating:
Our intentions are only to advise you of our subrogation rights against Continental Western Insurance Company for the amount...
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