McConnell v. W. Bend Mut. Ins. Co.

• Decision Date: 19 May 2020
• Docket Number: C/w WD 82872,WD 82865
• Citation: 606 S.W.3d 181
• Court: Missouri Court of Appeals
• Parties: David MCCONNELL and CS&L Investments, Inc., Appellants, v. WEST BEND MUTUAL INSURANCE COMPANY, Respondent.

606 S.W.3d 181

David MCCONNELL and CS&L Investments, Inc., Appellants,

v.WEST BEND MUTUAL INSURANCE COMPANY, Respondent.

WD 82865

C/w WD 82872

Missouri Court of Appeals, Western District.

OPINION FILED: May 19, 2020

Motion for Rehearing and/or Transfer to Supreme Court Denied June 18, 2020

Application for Transfer Denied September 29, 2020

Jason Moore, Kansas City, MO, Attorney for Appellant David McConnell.

Tim Dollar and Tom Hershewe, Kansas City, MO, Attorneys for Appellant CS&L Investments, Inc.

Elaine M. Moss and Kelly M. Brunie, St. Louis, MO, Attorneys for Respondent West Bend Mutual Insurance Company.

Before Division Four: Karen King Mitchell, Chief Judge, and Thomas H. Newton and Lisa White Hardwick, Judges

Karen King Mitchell, Chief Judge

David McConnell and CS&L Investments, Inc., appeal the dismissal, with prejudice, of their petition and cross-claims, respectively, against West Bend Mutual Insurance Company. Both McConnell and CS&L sought to obtain insurance payments under a commercial lines insurance policy between West Bend and Vangard Security Services, Inc., following an arbitration award entered against CS&L in favor of McConnell for injuries McConnell suffered while on CS&L's property. West Bend sought dismissal of both petitions for failure to state a claim insofar as CS&L was not insured by West Bend's policy. The trial court granted West Bend's motion and dismissed, with prejudice, the petition and cross-claims against West Bend. McConnell and CS&L bring three points on appeal, all arguing that dismissal was inappropriate because the petition and cross-claims alleged ultimate facts which, if believed, sufficiently stated claims against West Bend. Finding no error, we affirm.

Background

The petitions allege that McConnell was a patron of a business owned by CS&L when he was injured by another patron who had previously been ejected from the business by security. At the time, Vangard Security Services, Inc., provided security for CS&L's business under an oral contract. CS&L was insured through a commercial general liability policy issued by Covington Specialty Insurance Group. Vangard was insured through a commercial lines policy issued by West Bend.

McConnell sued both CS&L and Vangard for his injuries. Both CS&L and Vangard tendered their defense to West Bend. West Bend is currently providing defense to Vangard in the underlying litigation. West Bend refused, however, to provide a defense to CS&L on the ground that CS&L was not "an insured" under the West Bend policy. CS&L also tendered its defense to Covington, but Covington refused to defend on the basis of a policy exclusion.

Because neither Covington nor West Bend agreed to defend CS&L, CS&L entered into an agreement with McConnell under § 537.065.¹ CS&L gave notice of the agreement to West Bend, after which, West Bend offered to unconditionally defend CS&L. CS&L declined the offer because of the § 537.065 agreement. Under the § 537.065 agreement, McConnell and CS&L submitted McConnell's claims to binding arbitration. Following an evidentiary hearing, the arbitrator issued an award in favor of McConnell and against CS&L in the amount of $3,000,000. McConnell then filed an application, under § 435.400, in the circuit court of Cass County to confirm the arbitration award as a final judgment. The circuit court granted McConnell's application and entered a judgment confirming the arbitration award against CS&L on October 17, 2018.

McConnell thereafter filed an equitable garnishment claim for insurance proceeds under § 379.200 against CS&L, Covington, and West Bend.² CS&L filed a cross-claim against both West Bend and Covington (as well as another insurer) for bad faith and breach of the duty to defend, and CS&L filed a third-party petition against Vangard for indemnification.

West Bend sought to dismiss both McConnell's petition and CS&L's cross-claims for failure to state a claim on the ground that CS&L was not "an insured" under West Bend's policy; therefore, neither McConnell's equitable garnishment action nor CS&L's claims for bad faith and breach of the duty to defend could succeed. McConnell and CS&L filed a joint motion in opposition to West Bend's motions to dismiss, arguing that, "[a]t this stage, McConnell and CS&L need only allege that CS&L is covered as an insured under the policy," and that both McConnell's petition and CS&L's cross-claims had done so. In their motion, McConnell and CS&L acknowledged that neither had alleged that CS&L was a named insured under West Bend's policy but argued that that fact did not preclude them from seeking relief against West Bend. McConnell and CS&L alleged that "[a]n insurance company will often agree to defend and indemnify people besides the person who signed or purchased the insurance or besides people who are listed as the named insured," and that "[t]he policy or agreement will often identify other non-signatories by class and agree to protect them." They then relied on the following allegations from the petition and cross-claims:

1) West Bend waived its right to contest whether or not CS&L is an insured under the policy by offering a defense to CS&L 2) Vangard and CS&L entered into an oral insured contract in which Vangard agreed to indemnify CS&L and that's covered under Coverage A of the policy; and 3) West Bend's Coverage D ( [West] Bend's Detective/Security Guard Endorsement) section provides coverage.

West Bend countered that the allegations all amounted to mere legal conclusions that were insufficient to support the claims. The trial court entered judgments dismissing, with prejudice, both McConnell's and CS&L's claims against West Bend. McConnell and CS&L filed a motion seeking clarification of the dismissals, wherein they sought either an opportunity to amend or for the court to amend the judgments under Rule 74.01(b) to indicate there was no just reason for delay so that McConnell and CS&L could immediately appeal the dismissals, despite the fact that the underlying case remained ongoing with other defendants. The trial court entered amended judgments, indicating there was no just reason for delay. McConnell and CS&L appeal.

Jurisdiction

"Although neither party raised an issue concerning our appellate jurisdiction, ‘the Court has an obligation, acting sua sponte if necessary, to determine its authority to hear the appeals that come before it.’ " Maly Commercial Realty, Inc. v. Maher , 582 S.W.3d 905, 910 (Mo. App. W.D. 2019) (quoting Glasgow Sch. Dist. v. Howard Cty. Coroner , 572 S.W.3d 543, 547 (Mo. App. W.D. 2019) ). If we lack appellate jurisdiction, the appeal must be dismissed. Glasgow Sch. Dist. , 572 S.W.3d at 548. As noted in our recent decision in Butala v. Curators of Univ. of Mo. , WD 82810, 2020 WL 1433401, at *2 (Mo. App. W.D. Mar. 24, 2020), "the Missouri Supreme Court in Wilson v. City of St. Louis , 600 S.W.3d 763 (Mo. banc 2020), clarified the analysis of what rulings of trial courts constitute ‘judgments’ and, of those rulings, which are ‘final’ for purposes of appeal."

"The right to appeal is purely statutory and, where a statute does not give a right to appeal, no right exists." Wilson , 600 S.W.3d at 767 (quoting First Nat'l Bank of Dieterich v. Pointe Royale Prop. Owners’ Ass'n, Inc. , 515 S.W.3d 219, 221 (Mo. banc 2017) ). "Although many statutes govern ‘the right to appeal, the only statute even potentially applicable to the present case is section 512.020(5),’ which provides that ‘final judgments’ are appealable." Id. (quoting First Nat'l Bank of Dieterich , 515 S.W.3d at 221 ).

"For purposes of section 512.020(5), a ‘final judgment’ must satisfy two criteria: (1) ‘it must be a judgment (i.e. , it must fully resolve at least one claim in a lawsuit and establish all the rights and liabilities of the parties with respect to that claim)’; and (2) ‘it must be "final," either because it disposes of all claims (or the last claim) in a lawsuit, or because it has been certified for immediate appeal pursuant to Rule 74.01(b).’ " Butala , 2020 WL 1433401 at *2 (quoting Wilson , 600 S.W.3d at 770–71 ). "A judgment is eligible to be certified under Rule 74.01(b) only if it disposes of a ‘judicial unit’ of claims, meaning it: (a) disposes of all claims by or against at least one party, or (b) it disposes of one or more claims that are sufficiently distinct from the claims that remain pending in the circuit court." Wilson , 600 S.W.3d at 771. "Determining whether these criteria are met is a question of law and depends on ‘the content, substance, and effect of the order,’ not the circuit court's designation." Id. (quoting Gibson v. Brewer , 952 S.W.2d 239, 244 (Mo. banc 1997) ).

Here, McConnell and CS&L appeal from the court's order granting West Bend's motion to dismiss their claims against it. Though the trial court, pursuant to McConnell and CS&L's request, amended the order to denominate it a judgment and indicate that there was "no just reason for delay," both McConnell and CS&L still have the same nominal claims pending against other parties below. At first blush, our decision in Butala appears to require we dismiss this case for lack of a final judgment, given that McConnell still has equitable garnishment claims pending against CS&L and Covington, and CS&L has claims for bad faith and breach of the duty to defend pending against Covington and another insurer. See Butala , 2020 WL 1433401 at *1 (dismissing the appeal for lack of a final judgment where the same claim that was dismissed as to the respondents remained pending against other defendants in the trial court). But, upon closer inspection, we find Butala distinguishable.

The claim at issue in Butala was a Missouri Merchandising Practices Act claim, alleging "misleading advertisements about joint surgery" made by the individual physicians working for the Mizzou BioJoint Center and the Curators of the University of Missouri as the governing body of the University of Missouri with whom the Mizzou BioJoint Center was...