Nervig v. Workman

• Decision Date: 06 February 2009
• Docket Number: No. SD 28848.,SD 28848.
• Citation: 285 S.W.3d 335
• Parties: Sharon NERVIG and Stephen Nervig, Plaintiffs-Respondents, v. Cody WORKMAN, Defendant, Progressive Direct Insurance Company, Intervenor-Appellant.
• Court: Missouri Court of Appeals

285 S.W.3d 335

Sharon NERVIG and Stephen Nervig, Plaintiffs-Respondents, v. Cody WORKMAN, Defendant Progressive Direct Insurance Company, Intervenor-Appellant.

No. SD 28848.

Missouri Court of Appeals, Southern District, Division One.

February 6, 2009.

Petition for Rehearing or Transfer Denied March 2, 2009.

Nikki Cannezzaro, Kansas City, MO, for Appellant.

James E. Corbett, Jr., Springfield, MO, for Respondent.

JEFFREY W. BATES, Judge.

Progressive Direct Insurance Company (Progressive) filed a Rule 74.05(d) motion to set aside a default judgment that was entered in favor of plaintiffs Sharon and Stephen Nervig and against defendant Cody Workman (Workman).¹ The trial court denied relief, and this appeal followed.

An appellate court reviews the ruling on a motion to set aside a default judgment for abuse of discretion. Brungard v. Risky's Inc., 240 S.W.3d 685, 687-88 (Mo. banc 2007). This Court will not find an abuse of discretion unless the record convincingly so demonstrates. Heritage Warranty Ins., RRG, Inc. v. Swiney, 244 S.W.3d 290, 291 (Mo.App.2008); Heintz Elec. Co. v. Tri Lakes Interiors, Inc., 185 S.W.3d 787, 791 (Mo.App.2006). Judicial discretion is abused only when that ruling was clearly against the logic of the circumstances then before the trial court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration. State ex rel. Wyeth v. Grady, 262 S.W.3d 216, 219 (Mo. banc 2008). If reasonable minds could differ on the propriety of the ruling, no abuse of discretion has occurred. Heritage Warranty Ins., 244 S.W.3d at 291-92.

This case arose out of an automobile collision that occurred on August 2, 2005. Sharon was driving west on U.S. Highway 60 when her vehicle was struck in the rear by Workman's vehicle.² On November 30, 2005, the Nervigs filed a petition against Workman in the Circuit Court of Greene County, Missouri. Count I asserted Sharon's claim for personal injuries. She alleged that the aforementioned collision had resulted from Workman's negligence in various respects, including the operation of his vehicle under the influence of alcohol. Count I further alleged that Sharon sustained serious and permanent injuries to her neck and back in the collision. Count II asserted Stephen's derivative claim for loss of consortium. Workman was personally served on February 8, 2006. He did not file an answer or otherwise defend against the Nervigs' lawsuit.

At the time the collision occurred, Workman was uninsured. Progressive insured the Nervigs, and their auto policy included uninsured motorist (UM) coverage. The Nervigs filed a claim for UM benefits after the collision. On March 9, 2006, this claim was assigned by Progressive to its employee, Barry Byrne (Byrne). Between March 16 and May 30, Byrne contacted the Nervigs' attorney on three occasions. Each time, Byrne was told that a settlement demand package was being prepared. On June 9, 2006, Byrne was informed that the Nervigs had filed a lawsuit against Workman. Three weeks later, Byrne received Sharon's medical records and bills. On September 15, 2006, the Nervigs' counsel sent Byrne a letter advising him of the date when Workman had been personally served.

On October 4, 2006, the Nervigs' counsel sent Byrne another letter informing him of the style of the case against Workman, the name of the court in which the lawsuit had been filed, the case number, and the date Workman had been personally served. The letter specifically informed Byrne that: (1) Workman had never filed an answer or otherwise defended himself in the case; (2) no attorney had filed an entry of appearance for Workman; and (3) the Nervigs were planning to take a default judgment against Workman. Byrne received this letter on October 6, 2006. He discussed the letter with his supervisor, Matthew Ogle (Ogle). Neither was an attorney. Ogle told Byrne that the lawsuit against Workman did not affect Progressive because the insurer was not a party to the lawsuit and did not insure Workman. Progressive later conceded its employees' understanding of the effect of the lawsuit on Progressive was wrong.

On October 31, 2006, the Nervigs filed a motion requesting the entry of a default judgment against Workman. An evidentiary hearing for that purpose was conducted on November 15, 2006. The Nervigs had not specifically informed Progressive of the hearing date, but that information was readily available by simply consulting the docket sheet. Workman did not attend. After hearing testimony from Sharon, the trial court entered a default judgment against Workman and in favor of the Nervigs. Sharon was awarded $300,000 for her personal injuries, and Stephen was awarded $10,000 for loss of consortium.

On November 27, 2006, the Nervigs' counsel informed Byrne that a default judgment had been taken against Workman. On December 19, 2006, the Nervigs' counsel sent Byrne a letter enclosing a copy of the default judgment and requesting the issuance of a check for $150,000 in UM benefits to the Nervigs.

On February 5, 2007, Progressive filed a motion to intervene and set aside the default judgment. Citing settled principles of Missouri case law, Progressive contended that it was entitled to intervene as a matter of right because it would be estopped from relitigating the issues of liability and damages if it failed to do so. Progressive also alleged that, pursuant to Rule 74.05(d), the default judgment against Workman should be set aside because Progressive could establish good cause to do so, and there existed a meritorious defense to the Nervigs' claims. To support the motion to set aside the judgment, Progressive attached affidavits from Byrne and Ogle. According to these affidavits, Byrne and Ogle believed that Progressive would not be affected by a default judgment against Workman because he was not insured by Progressive, and it was not a named party to the lawsuit.

In May 2007, the trial court sustained Progressive's motion to intervene. In June 2007, Progressive filed suggestions in which it argued that the following facts established good cause to set aside the default judgment against Workman:

1. Progressive worked with the Nervigs' counsel to evaluate the claim.

2. The Nervigs did not promptly inform Progressive that suit had been filed against Workman, service had been obtained, and he was in default.

3. The Nervigs did not alert Progressive that it could potentially be responsible for the default judgment.

4. Progressive's employees believed intervention was unnecessary because the insurer was not a party to the suit and did not insure Workman.

5. Progressive's employees are not lawyers and were under the mistaken belief that the lawsuit would not affect Progressive.

6. Progressive's conduct was not designed to impede the judicial process.

7. Progressive filed its motion to intervene and set aside the default judgment as soon as it was put on notice of its potential exposure.

In November 2007, the trial court entered a judgment denying Progressive's motion to set aside the default judgment against Workman. This appeal followed.

Motion to Dismiss Appeal

As noted above, the default judgment against Workman was entered on November 15, 2006. Because no post-trial motions were filed, that judgment became final 30 days later. See Rule 81.05(a)(1). Progressive's motions to intervene and set the judgment aside were not filed until February 5, 2007.

After Progressive's notice of appeal was filed, the Nervigs filed a motion to dismiss the appeal for lack of jurisdiction. The Nervigs argue that the finality of the default judgment rendered Progressive's motion to intervene untimely and deprived the trial court of jurisdiction to permit intervention or rule on the motion to set the default judgment aside. According to the Nervigs, the lack of jurisdiction below also precludes appellate review.³

The Nervigs first argue Progressive was not entitled to intervene as a matter of right because it was not aggrieved by the judgment. This Court disagrees. In relevant part, Rule 52.12(a)(2) authorizes intervention as a matter of right "when the 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." It is well-settled law in Missouri that, if a UM insurer has adequate notice of the claim and an opportunity to intervene in the action against the uninsured motorist, the insurer is estopped from relitigating the issues of liability and damages once they have been decided in the underlying lawsuit. See Baker v. Lee, 252 S.W.3d 267, 269-70 (Mo.App.2008). For this reason, a UM insurer has an absolute right to intervene in an action in which its policyholder is alleged to have been injured by an uninsured motorist's negligence. See, e.g., Oates v. Safeco Ins. Co. of America, 583 S.W.2d 713, 719-20 (Mo. banc 1979); State ex rel. Farmers Ins. Co., Inc. v. Murphy, 518 S.W.2d 655, 663 (Mo. banc 1975); Wells v. Hartford Accident & Indemnity Co., 459 S.W.2d 253, 259 (Mo. banc 1970); Baker, 252 S.W.3d at 269-70; Frost v. White, 778 S.W.2d 670, 672 (Mo.App.1989); Beard v. Jackson, 502 S.W.2d 416, 418-19 (Mo.App. 1973); State ex rel. State Farm Mutual Automobile Insurance Co. v. Craig, 364 S.W.2d 343, 348-49 (Mo.App.1963). Progressive was bound by the trial court's determination of liability and damages because the insurer had adequate notice of the pending action against Workman, an absolute right to intervene upon request and ample opportunity to do so prior to the entry of the default judgment. Therefore, Progressive is aggrieved by the judgment because that adjudication directly affects the insurer's pecuniary interest. See Duncan v. Duncan, 751 S.W.2d 763, 766...