Knight v. Knight, WD 82860

CourtCourt of Appeal of Missouri (US)
Writing for the CourtAlok Ahuja, Judge
Citation609 S.W.3d 813
Parties Collin KNIGHT, a Minor, BY AND THROUGH His Next Friend, Paul KNIGHT, Respondent, v. Nelson KNIGHT and Violet Knight, Respondents, State Farm Fire and Casualty Company, Appellant.
Docket NumberWD 82860
Decision Date14 July 2020

609 S.W.3d 813

Collin KNIGHT, a Minor, BY AND THROUGH His Next Friend, Paul KNIGHT, Respondent,
v.
Nelson KNIGHT and Violet Knight, Respondents,

State Farm Fire and Casualty Company, Appellant.

WD 82860

Missouri Court of Appeals, Western District.

Filed: July 14, 2020
Application for Transfer to Supreme Court Denied September 1, 2020
Application for Transfer Denied November 24, 2020


Warren E. Harris, Springfield; Jeremiah W. Nixon, Michael J. Kuhn, St. Louis, for appellant Thad R. Mulholland, Columbia, for respondent Paul Knight.

Michael E. Campbell, Columbia; Shelly A. Kintzel, Jefferson City for respondent.

Timothy C. Sansone, St. Louis, Amicus Curiae.

Before Division Three: Lisa White Hardwick, P.J., and Alok Ahuja and Thomas N. Chapman, JJ.

Alok Ahuja, Judge

State Farm Fire and Casualty Company insured husband and wife Nelson and Violet Knight under a personal liability umbrella policy. The Knights were sued by their grandson, Collin Knight, for injuries which Collin suffered in a watercraft accident while under the Knights’ supervision.1

609 S.W.3d 816

State Farm refused to defend the Knights, and disclaimed coverage for the accident, in reliance on a policy exclusion. The Knights then entered into a settlement agreement with Collin under § 537.065.2 In the agreement, Collin agreed to seek recovery solely from the Knights’ insurance. The agreement also specified that, at Collin's option, his claims against the Knights would be resolved by binding arbitration.

An arbitration was conducted at which (as required by the § 537.065 agreement) the Knights did not object to any of Collin's evidence, cross-examine his witnesses, or present evidence of their own. The arbitrator awarded Collin $6 million in damages against Nelson Knight; the arbitrator also found that Collin had failed to prove his negligence claims against Violet Knight. After the arbitration proceedings had concluded, the Knights notified State Farm of the § 537.065 agreement, and State Farm was granted leave to intervene in Collin's lawsuit. The circuit court later confirmed the arbitration award against Nelson Knight, over State Farm's objection.

State Farm appeals. It argues that, under the current version of § 537.065, it was entitled to a jury trial at which it could dispute Nelson Knight's liability for Collin's injuries, and the extent of Collin's damages. State Farm contends that, by confirming the arbitration award, the circuit court denied State Farm its constitutional rights to due process, to a jury trial, and to access the courts. State Farm also argues that the arbitration award should not have been confirmed because it was procured through "undue means" within the meaning of § 435.405.1(1), and because there was no existing controversy between the Knights and Collin at the time of the arbitration.

We affirm.

Factual Background

Collin was injured on August 1, 2015 in an accident on Thomas Hill Lake in Randolph County, while he was operating a Jet Ski personal watercraft. Collin was a minor at the time. The Knights had taken Collin to the lake to spend time with them and with other relatives. While out on the lake, the Knights gave Collin permission to operate one of two Jet Skis to which the group had access. Before Collin entered the water to ride the Jet Ski, another member of the group, who was visibly intoxicated, was operating the other Jet Ski recklessly and erratically in the same area. While Collin was operating his own Jet Ski, his intoxicated relative struck Collin's Jet Ski from the rear. Collin was seriously injured in the accident.

Acting through his conservator, Collin filed suit against the Knights and others for his injuries in the Circuit Court of Boone County. His initial and first amended petitions asserted claims against the Knights and five other named defendants. Collin later dismissed his claims against the other five defendants. Collin's second amended petition, filed on August 7, 2018, asserted claims only against the Knights. The petition alleged that the Knights were negligent in supervising Collin, when they gave him permission to operate a Jet Ski after observing another person's reckless and erratic operation of another Jet Ski in the same area.

On August 28, 2018, the Knights submitted the Second Amended Petition to State Farm, who insured the Knights at the

609 S.W.3d 817

relevant time under a personal liability umbrella policy. On September 19, 2018, State Farm sent the Knights a letter in which it declined to defend or indemnify them under the policy. (State Farm had previously refused to provide a defense or indemnity to the Knights in connection with Collin's original and first amended petitions.) In its letter, State Farm quoted Exclusion 8 of the Knight's policy, which provided in relevant part:

There is no coverage under this policy for any:

....

8. loss arising out of:

....

b. the supervision of, or the failure to supervise, any person by any insured , with regard to the ownership, maintenance or use ...

....

of any automobile , recreational motor vehicle , watercraft, aircraft or any other motorized vehicle, unless required underlying insurance applies to the loss and provides coverage that pays for the loss in the amount shown as Minimum Underlying Limits on the declarations page.

The policy separately provided that "watercraft liability" insurance was only "required underlying insurance" "with respect to watercraft which are owned by or available for the regular and frequent use of any insured ."

Following State Farm's refusal to defend or indemnify the Knights, Collin and the Knights entered into a "Settlement Agreement and Agreement to Limit Recovery to Certain Assets" in November 2018. The agreement did not itself resolve Collin's claims against the Knights. Instead, the parties agreed that, at Collin's discretion, his claims would be resolved by binding arbitration. The Knights agreed that, in the arbitration, they would not object to Collin's evidence, cross-examine his witnesses, or offer any evidence of their own. The Knights also agreed not to file any motions during the arbitration, not to oppose confirmation of any arbitration award in the circuit court or to seek to have the award vacated, and not to appeal any order or judgment entered by the circuit court. In return, Collin agreed to seek satisfaction of any arbitration award or judgment solely from State Farm or any other insurer which insured the Knights’ liability, and from any recovery the Knights later obtained against State Farm or any other insurer for their failure to defend and indemnify the Knights against Collin's claims. The parties agreed that the Knights would pursue a claim for bad faith (and any other contractual or tort claims they might have) against State Farm based upon the insurer's failure to defend and indemnify the Knights, and would give Collin 75% of any amount that they recovered from State Farm in that action. The parties also agreed that the Knights would notify State Farm of the agreement "no sooner than thirty days before judgment is entered in the Lawsuit."

On January 10, 2019, the parties proceeded to arbitration before Arbitrator Wally Bley. Both parties appeared with counsel. Collin called six witnesses and entered seventeen exhibits into evidence. Consistent with the settlement agreement, the Knights did not cross-examine any of Collin's witnesses, object to any of his evidence, or offer any evidence or argument of their own. On January 14, 2019, the Arbitrator issued his arbitration award, finding that Nelson Knight was negligent and awarding Collin $6 million in compensatory damages. The Arbitrator separately found that the evidence was "insufficient" to show "active negligence" by Violet Knight, and therefore found her not to be liable for Collin's injuries.

609 S.W.3d 818

On January 23, 2019, the Knights notified State Farm by certified letter of the § 537.065 agreement. On February 21, 2019, State Farm filed a motion in the circuit court to intervene in the pending lawsuit pursuant to § 537.065.2. The next day, Collin filed a motion seeking to have the circuit court confirm the arbitration award.

The circuit court sustained State Farm's motion to intervene on February 25, 2019. On March 1, 2019, State Farm filed an answer to Collin's Second Amended Petition, as well as a motion to vacate the arbitration award and other procedural motions. On April 22, 2019, the circuit court entered its judgment confirming the arbitration award.3

State Farm appeals.

Discussion

On appeal, State Farm asserts four separate Points. In its first two Points, it argues that confirmation of the arbitration award (which establishes Nelson Knight's liability and the amount of Collin Knight's damages) denies State Farm its constitutional rights to due process, to a jury trial, and to access the courts. In its final two Points, State Farm argues that the arbitration award should not have been confirmed, because it was procured through "undue means" within the meaning of § 435.405.1(1), and because there was no existing controversy between the Knights and Collin at the time of the arbitration.

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1 practice notes
  • Barnett v. Columbia Maint. Co., No. ED 109008
    • United States
    • Court of Appeal of Missouri (US)
    • June 29, 2021
    ...insurance carriers lack any direct interest in tort litigation against their insureds." Knight by and Through Knight v. Knight , 609 S.W.3d 813, 819 (Mo. App. W.D. 2020). However, we reaffirm our explanation from our recent Loveland decision, wherein we stated:... to the extent Knight ......
1 cases
  • Barnett v. Columbia Maint. Co., No. ED 109008
    • United States
    • Court of Appeal of Missouri (US)
    • June 29, 2021
    ...insurance carriers lack any direct interest in tort litigation against their insureds." Knight by and Through Knight v. Knight , 609 S.W.3d 813, 819 (Mo. App. W.D. 2020). However, we reaffirm our explanation from our recent Loveland decision, wherein we stated:... to the extent Knight ......

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