Messner v. American Union Ins. Co.

• Decision Date: 19 November 2003
• Docket Number: No. 25348.,25348.
• Citation: 119 S.W.3d 642
• Parties: Siegfried C. MESSNER, Appellant-Plaintiff, v. AMERICAN UNION INSURANCE COMPANY, Respondent-Defendant.
• Court: Missouri Court of Appeals

119 S.W.3d 642

Siegfried C. MESSNER, Appellant-Plaintiff, v. AMERICAN UNION INSURANCE COMPANY, Respondent-Defendant.

No. 25348.

Missouri Court of Appeals, Southern District, Division Two.

November 19, 2003.

James P. Leonard, McSweeney, Slater & Merz, St. Louis, for appellant.

Danna McKitrick, Daniel G. Tobben, and Kevin B. Behrndt, St. Louis, for respondent.

KENNETH W. SHRUM, Judge.

This is a suit by Siegfried C. Messner ("Plaintiff") against his automobile insurer, American Union Insurance Company ("Defendant"). Plaintiff seeks damages based on the "underinsured" coverage of his policy and Defendant's vexatious refusal to pay. Plaintiff appeals from a judgment on the pleadings favorable to Defendant entered pursuant to Rule 55.27(b).¹

Plaintiff argues the trial court committed reversible error when it ruled (1) Plaintiff's claim was time-barred, and (2) a judgment for Defendant was mandated by "circular" language in a release given by Plaintiff to the third-party tortfeasor who caused Plaintiff's injuries. We agree. The judgment is reversed and the case is remanded.

STANDARD OF REVIEW

When a party moves for a judgment on the pleadings per Rule 55.27(b), a court will treat the allegations of the petition as true for purposes of the motion. Main v. Skaggs Community Hosp., 812 S.W.2d 185, 186 [1] (Mo.App.1991). A trial court can properly sustain a motion for judgment on the pleadings only if the facts pleaded by the petitioner, together with the benefit of all reasonable inferences drawn therefrom, show that petitioner could not prevail under any legal theory. A.R.H. v. W.H.S., 876 S.W.2d 687, 688[1] (Mo.App.1994).

FACTS

On June 22, 1997, Plaintiff sustained injuries when the vehicle he was driving (which was insured by Defendant) collided with a vehicle driven by Anthony Dean ("Tortfeasor"). Tortfeasor's policy had a bodily injury limit of $100,000 for each person. At the time, Defendant's policy afforded Plaintiff underinsured coverage in the amount of $100,000 for bodily injury for each person and $300,000 for each occurrence.

In late 1997, Tortfeasor's insurer offered Plaintiff $100,000 (Tortfeasor's policy limits) to settle Plaintiff's claim. Thereon, Plaintiff contacted Defendant regarding possible recovery based on the underinsured provision of the policy with Defendant. Defendant responded that it would not pay anything per the underinsured provision of its contract because "the limits of the tortfeasor ($100,000) were the same as Plaintiff's limits of liability insurance."² After this response, Plaintiff settled his claim with Tortfeasor for $100,000 on December 4, 1997.

On July 22, 2002, Plaintiff brought this suit against Defendant seeking damages for bodily injury sustained in his June 22, 1997, accident with Tortfeasor. In a separate count, Plaintiff sought damages for Defendant's vexatious refusal to pay the underinsured benefit due him under his policy with Defendant.

Defendant's answer admitted, inter alia, that its policy provided $100,000 underinsured motorist coverage for Plaintiff, and Plaintiff sustained "significant injuries" in the accident with Tortfeasor. However, Defendant accompanied its answer with a motion for a judgment on the pleadings. This motion had two prongs, namely, that Plaintiff's suit was time-barred and that the release given by Plaintiff to Tortfeasor barred Plaintiff's claim as a matter of law. The trial judge agreed with both propositions and entered judgment for Defendant. This appeal by Plaintiff followed.

Point I: Statute of Limitations Issue

In part, the trial court entered judgment for Defendant because Plaintiff sued Defendant more than five years after the accident occurred between Plaintiff and Tortfeasor. Relying heavily upon Baumgartel v. Am. Family Mut. Ins. Co., 29 S.W.3d 416 (Mo.App.2000), the court found "that plaintiff, by his own failure to file an action against the tortfeasor within five years, has destroyed the defendant's right to recover from the tortfeasor under defendant's subrogation rights." Further, the court also found that "plaintiff in this case cannot as a matter of law prove or establish that he is legally entitled to recover from the tortfeasor...." (Emphasis supplied.) The court determined that Baumgartel is "controlling authority, and plaintiff's destruction of defendant's right of subrogation recovery bars recovery by the plaintiff."

In his brief on appeal, Plaintiff argues that the trial court erred in entering judgment for Defendant. He insists that the Baumgartel court was "simply wrong" in its decision, and the many cases which analyze time-bar statutes in uninsured/underinsured cases are irreconcilable. Plaintiff asserts that we should resolve the dispute here by following the decisions of the Supreme Court of Missouri in cases such as Oates v. Safeco Ins. Co. of Am., 583 S.W.2d 713 (Mo.banc 1979), and Cobb v. State Sec. Ins. Co., 576 S.W.2d 726 (Mo.banc 1979). The validity of this argument requires a careful analysis of cases cited by both parties in their respective briefs.

We begin with Oates. There, the plaintiff, Oates, was injured in a car accident with a third-party tortfeasor, Coad. Oates sued Coad, but dismissed his case while Coad's counterclaim was pending. During the same period, Oates sued his automobile insurer, Safeco, seeking recovery on his uninsured motorist provision. In the Oates/Coad litigation, judgment was entered for Coad on his counterclaim. 583 S.W.2d at 715. Thereon, Safeco relied on res judicata principles to assert that the judgment favorable to Coad precluded Oates' recovery against Safeco. Safeco also defended on the ground that Oates was not "legally entitled to recover" against Coad after the termination of the Oates/Coad suit, and therefore, he was precluded from proceeding against Safeco.³ Id. at 715. Safeco argued this result attended due to the compulsory counterclaim rule, i.e., Oates waived his claim once he dismissed his suit and allowed Coad to proceed to judgment on his counterclaim. After the trial court dismissed Oates' suit against Safeco, Oates appealed. Id.

On appeal, the Missouri Supreme Court cited with approval cases that had interpreted the phrase "legally entitled to recover" to mean that a plaintiff must be able to show the tortfeasor was at fault. Id. at 715-16. The Oates court continued:

"Under these decisions, the insured is `legally entitled to recover' if his action [against the tortfeasor] is not barred by a substantive limitation at the time the action is brought against the uninsured motorist carrier and he can show (1) causal negligence or fault on the part of the uninsured motorist, (2) the absence of contributory negligence where submitted, and (3) resulting damage to himself."

Id. at 716[2] (emphasis supplied) (citations omitted).

In essence, Oates stands for the proposition that, unless a substantive time limitation is implicated (such as in a wrongful death suit), the ten-year statute of limitations for contracts applies to a suit on the insurance policy and not the five-year statute of limitations for a tort action. Applying that principle, the Oates court declared that the "compulsory counterclaim creates a procedural bar only [;]" consequently, "allowing the tort statute of limitations to lapse before suit was brought under the uninsured motorist contract did not prevent [Oates] from establishing he was `legally entitled to recover' in the contract action." Id. at 718 (emphasis supplied).

In reaching its decision, the Oates court relied upon Edwards v. State Farm Ins. Co., 574 S.W.2d 505 (Mo.App.1978). In that case, Edwards was injured when her automobile was struck from behind by a vehicle driven by Gardner. More than five years after the accident, Edwards sued her insurance company seeking to recover personal injury damages based on an uninsured motorist policy provision. The trial court ruled that Edwards' suit was time-barred, i.e., barred by the tort five-year statute of limitations (§ 516.120). Id. at 506. On appeal, the western district held that the applicable time limitation was ten years as provided in section 516.110. Id. at 508[3]. The court so held because Edwards' cause of action was based on the insurance contract. Id. at 506-08[1]. The Edwards court recognized that the effect of its ruling, and Edwards' delay in filing the suit, was to destroy the insurer's subrogation rights, but the court declared this was irrelevant to the insured's right to recover based on the contract. Id. at 508. The court ruled that "legally entitled to recover" meant establishment of the tortfeasor's fault which is not affected by the time bar of the tort five-year statute of limitations. Id.

Next, we consider the case upon which the trial court relied most heavily when it ruled adversely to Plaintiff, i.e., Baumgartel. Preliminarily, we reject Plaintiff's argument that Baumgartel was wrongly decided. We are persuaded, however, that both parties here are confused by cases such as Baumgartel.⁴ We are equally persuaded that Baumgartel does not support the trial court's decision because it is factually inapposite. This follows because in Baumgartel the underlying cause of action was for wrongful death, not personal injury.

Specifically, Brian Baumgartel was killed in a vehicular accident and his widow first settled with the tortfeasor. Later, after the three-year wrongful death limitation period had run, the widow sued her insurer seeking to recover on the uninsured and underinsured provisions of her policy. The appellate court held that the widow's failure to file a wrongful death suit against the tortfeasor barred recovery against her insurer. Id. at 420. The court reasoned that this failure precluded the widow from showing she was "legally entitled to recover" from the tortfeasor. Id.

In so deciding, the Baumgartel court relied, in part, on Crenshaw v. Great Central Ins. Co., 527 S.W.2d 1 (Mo.App.1975). In Crenshaw, the plaintiffs were...