Inman v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 29 June 2011
• Docket Number: Nos. SD 30633,SD 30823.,s. SD 30633
• Citation: 347 S.W.3d 569
• Court: Missouri Court of Appeals
• Parties: Jason A. INMAN and Jennifer Inman, Appellants,v.ST. PAUL FIRE & MARINE INSURANCE COMPANY and City of Monett, Respondents.

347 S.W.3d 569

Jason A. INMAN and Jennifer Inman, Appellants,

v.ST. PAUL FIRE & MARINE INSURANCE COMPANY and City of Monett, Respondents.

Nos. SD 30633

SD 30823.

Missouri Court of Appeals, Southern District, Division Two.

June 29, 2011.Motion for Rehearing or Rehearing En Banc and

Transfer to Supreme Court Denied

July 21, 2011.

Application for Transfer Denied

Oct. 4, 2011.

Cordelia F. Herrin, Cassville, MO, for Appellants.Stanley N. Wilkins, Kansas City, MO, for Respondent St. Paul Fire & Marine Ins. Co.Karl W. Blanchard, Jr., Joplin, MO, for Respondent City of Monett.WILLIAM W. FRANCIS, JR., Judge.

Jason and Jennifer Inman (“the Inmans”) ¹ appeal the judgment of the trial court sustaining St. Paul Fire & Marine Insurance Company's (“St. Paul”) motion for summary judgment. We affirm the judgment of the trial court.

Facts and Procedural History

Because this case is the culmination of two separate lawsuits, an explanation of the underlying lawsuit is necessary in understanding the claims now before this Court. In reviewing the facts, we have utilized the statements of uncontroverted facts filed by each party with their respective motions for summary judgment.²

On November 24, 2003, the residents of Valley View Estates (“Valley View”), an annexed neighborhood in Monett, Missouri, filed a petition with the City of Monett (the “City”) for a neighborhood improvement district (“NID”), pursuant to sections 67.453–67.475.³ The residents of Valley View petitioned for improvements to resolve a recurring flooding problem in the neighborhood. The petition included paving streets and adding two-foot curbs, gutters, storm drains, and street lights. The Valley View neighborhood made up the entire NID and consisted of approximately three blocks of forty-eight homes and lots.

On February 20, 2004, the Inmans purchased a home in Valley View. On March 3, 2004, the City clerk mailed the Inmans a notice of a hearing set for March 15, 2004, at which time objections to the opposed NID project would be heard. At the conclusion of the public hearing, the City counsel passed Ordinance No. 7394 approving the NID for Valley View, and the improvements which were proposed. The City began the NID improvements on May 24, 2004.

On August 27, 2004, the City intentionally entered upon the Inmans' property to take a portion of the property for reconstructing a drainage ditch for the public purpose of controlling storm water drainage. The Inmans did not suffer any direct, forcible personal injuries at the hands of the City on that day. When the Inmans came home from work that day, they found the City had dug some soil from the ditch in their backyard.

A “100–year” rainfall occurred on August 28, 2004, and flowed over the top of the streets surrounding the Inmans' home. The rain flooded the Inmans' property and the surrounding properties. As a result, the City concluded putting concrete blocks only on the sides of the ditch as planned would not effectively prevent flooding; the ditch's floor had to be concreted to properly control massive amounts of storm water.

The next work done on the Inmans' property was September 1, 2004. Jason arrived home and saw that the City had begun pouring concrete to form the floor of the expanded storm drain. Jason ordered the City to stop pouring concrete on the floor of the ditch and the City complied.

Subsequently, an attorney representing the Inmans began negotiations with the City for payment of the public-use taking of the Inmans' land needed to allow the City to complete the storm drain improvements, pursuant to the NID. No settlement was reached. The City proceeded through a condemnation action to obtain that portion of the Inman property used for the storm water drain. On October 20, 2004, the City passed Ordinance No. 7479 relating to the Inman property, which declared said construction and maintenance of a drainage easement is “necessary and for a public purpose....”

On December 6, 2004, the City filed a condemnation lawsuit. On January 5, 2005, the Inmans filed a motion to dismiss that lawsuit.

On March 27, 2005, the Inmans and the City reached an agreement entitled, “Memorandum of Understanding” (“Memorandum”), which stated: (1) the construction of a water drainage system at or near the Inman property was necessary and was for the public purpose; (2) the Inmans consented to the City completing the concreting of the drainage ditch; (3) the Inmans reserved the right to pursue any action they might have against the City out of or relating to the partial or total taking of the property for the water drainage system; (4) the Inmans agreed they would not consider any further actions by the City as constituting trespass; and (5) the Inmans reserved their right to sue the City for the two days of trespass they believed the City had committed on August 27, 2004 and September 1, 2004.

On July 12, 2005, the City passed Ordinance No. 7576 declaring that the Valley View NID improvement projects had been completed. On July 15, 2005, the City filed a motion to dismiss the condemnation suit, without prejudice. On July 15, 2005, the Inmans also filed their “counterclaims” which included claims for “Trespass/Inverse Condemnation” and “Suit for Compensatory Damages.” On September 12, 2005, without ruling on the condemnation value, or on the Inmans' counterclaims, the trial court dismissed the entire condemnation lawsuit without prejudice.

On September 9, 2005, the Inmans filed a new petition in Lawrence County alleging identical claims to their counterclaims filed in the condemnation suit. The petition included the specific allegation that the taking of the Inman property was for public use. The City filed an answer on November 17, 2005, admitting that the taking of the Inman property was for public use and purpose.

On October 6, 2005, the City contacted St. Paul and provided the Inmans' original petition seeking damages for trespass/inverse condemnation and compensatory damages. This was the only petition provided to St. Paul before a November 1, 2006 trial. Kelly Rahmeier (“Rahmeier”), the adjuster for St. Paul handling the claim against the City, reviewed the entire insurance policy (“the policy”) held by the City. On October 18, 2005, via email, Rahmeier notified the City's attorney, John Woodard (“Woodard”), that the language of the public-use-of-property exclusions in both the General Liability and Management Liability sections of the policy package applied to the Inmans' lawsuit. Woodard believed Rahmeier was fair and reasonable in her denial of the insurance coverage. In his conversations with Rahmeier, Woodard never mentioned anything about the NID ordinance, which was passed to make improvements to the existing storm drains in Valley View; the Memorandum that resolved the condemnation lawsuit; the counterclaims filed by the Inmans in the condemnation lawsuit; or the Inmans' consent—in the Memorandum—to the completion of the entire brick-walled, concrete-floor ditch. Rahmeier specifically asked Woodard if there was a signed settlement agreement, and he denied one existed. St. Paul did not receive notice of the Memorandum until November 15, 2007, when discovery was ordered to be produced in this equitable garnishment case. On October 31, 2005, Rahmeier sent St. Paul's official denial letter to the City denying coverage and defense due to the public-use-of-property exclusions and the injury or damage exclusions in the policy.

St. Paul heard nothing further from the City until ten months later when Rahmeier received an August 11, 2006 letter from Woodard asking St. Paul to review its coverage decision. That letter also mentioned the Inmans were likely to amend their original petition, and the City promised it would immediately forward any amended petition to St. Paul. The correspondence also informed St. Paul this matter would go to trial under the original petition sometime between August 11, 2006 and November 1, 2006, but did not identify a specific trial date.

On October 9, 2006, St. Paul responded to the City that absent any new information, its denial of the claims would remain the same. Woodard admitted he spoke with the Inmans' counsel about the fact there was no coverage unless the public-use allegations were removed from the claims. Woodard also admitted he was trying to bring the claims under the coverage of the policy so that St. Paul would be forced to provide a defense and the City would not have to pay to defend against the Inmans' lawsuit.

On October 25, 2006, the City entered into a section 537.065 agreement entitled “Compromise Agreement” with the Inmans in which the parties agreed, among other things, that the Inmans would not execute any judgment received by them against the City, the City would not appeal any judgment against it, and the City would not seek to continue the trial date past November 1, 2006.

On October 27, 2006, the Inmans mailed to the City a motion for leave to file a first amended petition, along with a copy of the first amended petition. Woodard knew about the first amended petition on October 29, 2006. The City had St. Paul's fax number and email address, as well as Rahmeier's direct phone number. The next day, Woodard sent a letter, via certified mail, to Rahmeier explaining for the first time that the trial was scheduled for November 1, 2006, the Inmans had filed a motion for leave to amend the petition, and that he believed the Inmans' motion for leave would likely be granted because the Inmans were not changing their theories of recovery. The Inmans' motion for leave to file the first amended petition was filed that same day. Rahmeier received this letter from Woodard, at the earliest, on the evening of November 1, 2006, after the trial was already completed.

On November 1, 2006, without the knowledge of St. Paul or Rahmeier, the City and the Inmans appeared in the Circuit Court of Stone County for hearing on the Inmans' motion for leave to file the...