Hunter v. Moore

• Citation: 486 S.W.3d 919
• Decision Date: 19 April 2016
• Docket Number: No. SC 95083,SC 95083
• Parties: Brittany Hunter, Respondent, v. Charles Moore, Sr., Appellant.
• Court: United States State Supreme Court of Missouri

486 S.W.3d 919

Brittany Hunter, Respondent,
v.
Charles Moore, Sr., Appellant.

No. SC 95083

Supreme Court of Missouri, en banc .

Opinion issued April 19, 2016

Moore was represented by Susan Ford Robertson and J. Zachary Bickel of The Robertson Law Group LLC in Kansas City, (816) 221–7010, and Cheryl A. Callis and Kenneth M. Lander of Kortenhof McGlynn & Burns LLC in St. Louis, (314) 621–5757.

Hunter was represented by Michael W. Manners of Langdon & Emison in Lexington, (660) 259–6175; Joseph F. Yeckel of the Law Office of Joseph F. Yeckel in St. Louis, (314) 727–2430; and Matthew P. O'Grady of the O'Grady Law Firm LLC in St. Louis, (314) 621–7989.

Mary R. Russell, Judge

Brittany Hunter (Plaintiff) brought negligence claims arising out of her stay at a motel against the motel's manager, Charles Moore Sr. (Defendant) and his employer. The parties entered a settlement

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agreement under section 537.065.¹ Because the parties disputed some of the terms of the agreement, Plaintiff filed a separate action, which is the subject of this appeal, against Defendant seeking specific performance and reformation of their executed agreement. Specifically, Plaintiff asked the court to add to their written instrument two terms that she claims the parties agreed to but mistakenly failed to reduce to writing: (1) that Defendant's insurer, American Family Mutual Insurance Company (Insurer) is to be precluded from controlling the defense of Plaintiff's negligence claims against Defendant, and (2) that Defendant is to cooperate with Plaintiff in the underlying action by agreeing to an uncontested hearing on liability and damages. This opinion will at times refer to these terms collectively as “the disputed terms.”

Based on evidence adduced at a bench trial, the trial court entered judgment reforming the written agreement to require Defendant to preclude Insurer from controlling the defense of the underlying action and to cooperate with Plaintiff in the underlying action, “either by agreeing to a consent judgment or having an uncontested hearing on liability and damages.” (emphasis added). On appeal, Defendant argues that there was no substantial evidence to support reformation.

Although there was substantial evidence to support the trial court's judgment reforming the written instrument to include the disputed terms, both parties agree that it was never their intention for Defendant to enter a consent judgment. This Court may enter the judgment as the trial court ought to have entered. Rule 84.14. Accordingly, the portion of the judgment requiring Defendant to cooperate in the underlying action “either by agreeing to a consent judgment or having an uncontested hearing on liability and damages” is modified to require only that Defendant cooperate by “having an uncontested hearing on liability and damages.” The judgment as modified is affirmed.

I. Facts

This case arises out of an underlying negligence action filed by Plaintiff, by and through her next friend and mother, against Defendant and his employer, Delta Motel (Delta), to recover for injuries Plaintiff sustained while staying at the motel. Delta maintained a liability insurance policy through Insurer, under which both Defendant and Delta were insureds. Defendant and Delta demanded that Insurer defend and indemnify them against Plaintiff's claims. Insurer notified Defendant that it would defend him in the underlying action under a reservation of rights and filed a declaratory judgment action against both Defendant and Delta seeking a judgment that it had no duty to defend or indemnify its insureds under the policy.

Defendant hired a separate attorney (“Defendant's attorney”) to represent him in the declaratory judgment action. Through this attorney, Defendant rejected Insurer's defense under a reservation of rights. Defendant warned that if Insurer did not withdraw its reservations of rights and dismiss him from the declaratory judgment action, he would consider entering into a settlement agreement with Plaintiff pursuant to section 537.065.² In

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response, Insurer offered Defendant a full defense and indemnification and promised to dismiss Defendant from the declaratory judgment action. Despite these assurances, Insurer did not dismiss Defendant and moved for summary judgment against both Defendant and Delta in the declaratory judgment action.

After learning that Insurer had not dismissed Defendant from the declaratory judgment action and had, instead, moved for summary judgment against him, attorneys for Plaintiff and Defendant explored the possibility of their clients entering a settlement agreement pursuant to section 537.065. After negotiations via email and telephone, Plaintiff and Defendant reached a settlement agreement and signed a written instrument purporting to contain the terms of their agreement. The written instrument requires Plaintiff to limit her recovery against Defendant in the negligence action to proceeds from the insurance policy and to an agreed-upon portion of any judgment against the Insurer arising out of its failure to defend and indemnify Defendant.³ Defendant agreed to assign to Plaintiff a portion of any proceeds Defendant might recover in an action against Insurer and to cooperate with Plaintiff and her attorney in the pursuit of such claims. The written instrument was silent as to whether or how Defendant was to cooperate with Plaintiff in her underlying negligence action.

On the same day Defendant signed the written instrument, Defendant's attorney sent Insurer a letter on Defendant's behalf declaring that Insurer had breached the contract of insurance by moving for summary judgment against Defendant in the declaratory judgment action after promising to fully defend and indemnify him. Defendant's attorney stated that, as a result of Insurer's breach, his client had entered into a “537 agreement with plaintiff in the underlying action” and instructed the attorney hired by Insurer to represent Defendant in the underlying negligence action to withdraw as counsel in that case.

Shortly after receiving the letter notifying it of the parties' settlement agreement, Insurer dismissed Defendant from the declaratory judgment action without prejudice. Insurer's attorney did not withdraw as counsel for Defendant in the underlying negligence action. When Plaintiff's attorney asked Defendant's attorney what was taking place, the latter indicated that he no longer represented Defendant and that he was surprised that Insurer's attorney had not withdrawn his representation in the

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negligence action. Plaintiff's attorney then contacted Insurer's attorney to see why he had not withdrawn as Defendant's counsel. Insurer's attorney responded that he intended to continue his representation of Defendant in the underlying negligence action.

Plaintiff filed the subject action against Defendant seeking specific enforcement of the settlement agreement and reformation of the written instrument to reflect the true intentions of the parties. The trial court heard evidence regarding whether the agreement was enforceable and whether it required Defendant to cooperate with Plaintiff in the underlying negligence action. Plaintiff's attorney testified that the parties intended that Defendant would cooperate with Plaintiff in the underlying action by having an uncontested hearing on liability and damages at a bench trial and by precluding Insurer from controlling the defense in that proceeding. Defendant's attorney testified that he and Plaintiff's attorney negotiated the terms of the agreement via telephone and email, but that he could not recall the specifics of the parties' intentions and that he did not believe that he intended the disputed terms to be part of the agreement. Plaintiff's attorney acknowledged that these terms were not set forth explicitly in the written instrument, but he testified that he had intended to reduce them to writing and that he perhaps “didn't connect the dots” as well as he should have.

As additional evidence of the parties' intent that Plaintiff would have an uncontested hearing on liability and damages in her negligence action against Defendant and that Insurer would not be allowed to control the defense, Plaintiff introduced the letter from Defendant's attorney to Insurer as well as emails between the parties' attorneys expressing their mutual surprise that Insurer's attorney did not withdraw his representation of Defendant after being notified that Defendant had entered into the settlement agreement with Plaintiff. Additionally, Plaintiff's attorney pointed to a section of the instrument stating that the parties “specifically considered” the decisions in Butters v. City of Independence, 513 S.W.2d 418 (Mo.1974), and State ex rel. Rimco, Inc. v. Dowd, 858 S.W.2d 307 (Mo.App.1993), which both involved a settlement agreement pursuant to section 537.065 in which the insurer was not allowed to control the defense of its insured and the insured cooperated with the plaintiff in the underlying tort action.

The trial...