Lodigensky v. American States Preferred Ins. Co., WD
| Decision Date | 28 March 1995 |
| Docket Number | No. WD,WD |
| Citation | 898 S.W.2d 661 |
| Parties | Sarah LODIGENSKY, Respondent, v. AMERICAN STATES PREFERRED INSURANCE CO., Respondent, Richard J. Baldwin, Kevin Byrom, Defendants, Metropolitan Property and Casualty Ins. Co., Appellant. 49478. |
| Court | Missouri Court of Appeals |
Paul Hasty, Jr., Wallace, Saunders, Austin, Brown and Enochs, Chartered, Kansas City, for appellant.
James C. Morrow, David M. Mayer, Myerson, Monsees & Morrow, P.C., Kansas City, for respondent.
Before FENNER, C.J., and HANNA and LAURA DENVIR STITH, JJ.
The issue in this case is whether Metropolitan Property and Casualty Insurance Company ("Metropolitan"), which has refused to defend or to provide coverage to defendant Kevin Byrom in this personal injury action, is nonetheless entitled to intervene for the limited purpose of requesting a stay of this action until the questions of whether Metropolitan owes Mr. Byrom a duty to defend and to provide coverage in this suit are determined in Metropolitan's separately filed declaratory judgment action. We hold that the trial court properly denied intervention.
This case arose out of a February 29, 1992, car accident in which Sarah Lodigensky was injured while riding as a passenger in a vehicle driven by Mr. Byrom. Mr. Byrom's car collided with a car driven by Richard J. Baldwin, causing injury to Ms. Lodigensky.
Ms. Lodigensky is insured by American States Preferred Insurance Company ("American States"). On July 27, 1992, she brought the instant action against American States, alleging that both Mr. Baldwin and Mr. Byrom were responsible for her injuries, that they were uninsured, and that American States thus was liable to her under the uninsured motorist provisions of her policy with it.
On December 7, 1993, American States filed a third-party petition against Mr. Baldwin and Mr. Byrom, requesting indemnification for any judgment which might result against it. A few months later, Ms. Lodigensky amended her petition to add a claim for damages against Mr. Baldwin and Mr. Byrom.
On April 4, 1994, just six weeks before trial was originally scheduled, 1 American States sought to depose a representative of Metropolitan regarding whether it provided liability insurance coverage for Mr. Byrom's wife, Karen Byrom. If such coverage existed, American States wanted to discover whether that coverage extended to Mr. Byrom. If it did, American States would defend on the basis that Mr. Byrom was not uninsured and thus it was not liable to Ms. Lodigensky under the uninsured motorist provision of its policy for any injuries caused by him.
Metropolitan claims that the Byroms have never requested it to defend the Lodigensky/American States lawsuit. It claims that the only party which has asserted that it owes coverage and a duty to defend the Byroms is American States and that American States has done so only as a part of its defense to Ms. Lodigensky's uninsured motorist claim against American States. On the other hand, American States claims, in its brief, that Metropolitan has refused to defend the instant suit.
Neither party offers a record citation for its position. The Byroms are not represented on this appeal and may disagree with Metropolitan that they have not made a proper demand for a defense or that it is too late for them to do so. Because we cannot determine from the record whether or not Metropolitan has refused to provide a defense to Mr. Byrom in the instant suit, we treat that issue as one of fact yet to be resolved.
Despite its claims that the Byroms have made no demand for coverage and have not asked it to provide a defense in the instant suit, Metropolitan filed a Petition for Declaratory Judgment in the Circuit Court of Jackson County in late April, just a few weeks after its representative was deposed. It sought a declaration that its policy did not provide coverage to or require it to defend Mr. Byrom for the claims brought against him in this suit. The declaratory judgment action is still pending.
One week after it filed the declaratory judgment action, Metropolitan sought to intervene in this action as of right under Rule 52.12(a) and further sought permissive intervention under Rule 52.12(b). Along with its notice of intervention, Metropolitan filed an application for a stay of the trial of this action pending resolution of its declaratory judgment action. In opposition, American States argued that intervention and an order to seek such a stay was not permitted under Missouri law, that Metropolitan had not established the elements of intervention as of right or of permissive intervention, and that to allow such intervention would be against public policy.
The trial court denied the motion to intervene. This appeal followed. 2
Metropolitan claims on appeal that it was entitled to intervene as a matter of right in this lawsuit. Intervention as of right is governed by Rule 52.12(a), which states in relevant part that intervention will be allowed if [T]he applicant claims an interest relating to the property or transaction that is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.
As Metropolitan notes, Rule 52.12(a) permits intervention as of right only if the applicant establishes: (1) an interest in the subject of the action; (2) that the applicant's ability to protect that interest is impaired; and (3) that the applicant's interests are not adequately represented by the existing parties. Id. If an applicant meets this burden of proof, the right to intervene is absolute. Whitehead v. Lakeside Hosp. Ass'n, 844 S.W.2d 475, 478-79 (Mo.App.1992).
Metropolitan claims that it has established each of the three elements required to permit intervention as of right in this lawsuit. Metropolitan claims that it has an interest in the subject of this lawsuit because the issue of coverage will be litigated in determining whether American States is liable to Ms. Lodigensky. Metropolitan claims that its ability to protect this interest will be impaired if it cannot intervene because it may be collaterally estopped by a determination of coverage herein. Finally, Metropolitan claims that none of the current parties to this suit will adequately protect its interests because "[a]ll current parties to the action are united in their desire that Mr. Byrom fall within the terms of the [Metropolitan insurance] policy."
Metropolitan's arguments as to why it has established the three elements necessary to show intervention as of right are based on the erroneous assumption that Metropolitan will or may be bound by a determination of coverage in this case. Metropolitan cites to no cases so holding, however. The cases Metropolitan discusses in its brief do state that if Metropolitan refused to defend Mr. Byrom in the instant lawsuit, then it would be bound by the determination herein as to the liability of Mr. Byrom for Ms. Lodigensky's injuries and as to any damages she sustained thereby. This is because, as a matter of public policy, if an insurer, such as Metropolitan, has refused to defend an alleged insured, such as Mr. Byrom, or has offered to defend him only under a reservation of rights, the insurer normally forfeits its right to litigate the issue of its insured's liability. 3
However, if, as Metropolitan suggests, it has never been asked to provide a defense in this lawsuit, then the policy reasons for binding it to the liability and damage determinations below do not apply, and there is no basis for holding that it would be bound by any determination of these issues below.
Even if Mr. Byrom has timely requested Metropolitan to provide a defense in this lawsuit (or even if he could still timely do so under his policy), Metropolitan still has not identified any basis on which to find that it must be permitted to intervene because its obligation to defend or provide coverage will be finally determined in the trial below. Initially, we note that American States says its defense below is based on the terms of its own policy with Ms. Lodigensky, not on the terms of Metropolitan's policy with the Byroms, and that the latter issue will not even be addressed below. If this is true, then Metropolitan's fears of being bound by a determination below as to the coverage provided by its policy are unjustified.
Should the coverage of the Metropolitan policy become an issue below, however, Metropolitan still has not explained why it would be bound by the determination of that issue in this suit, to which it is not a party and in which it has been denied intervention. Even Respondent American States conceded at oral argument that Metropolitan would not be so bound.
This concession makes sense, for it is evident that the rationale for holding that an insurer who has refused to provide a defense is bound by the determination of liability and damages in the personal injury lawsuit simply does not apply so as to bind the insurer on the issue of coverage. 4 This is because the duty to provide coverage arises, if at all, only once an adverse judgment has been entered against the insured. Thus, no breach of that duty has yet occurred as to the Byroms, for, so far as the record shows, no judgment has been entered against Mr. Byrom.
It may be for this reason that an insurer who has refused to defend nonetheless historically has been permitted to try the coverage issue separately in a declaratory judgement action. An insurer certainly has never been permitted to try the coverage issue in the...
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