Nodaway Valley Bank v. E.L. Crawford Const.

• Decision Date: 24 February 2004
• Docket Number: No. WD 62319.,WD 62319.
• Citation: 126 S.W.3d 820
• Parties: NODAWAY VALLEY BANK, Appellant, v. E.L. CRAWFORD CONSTRUCTION, INC., et al., Respondents.
• Court: Missouri Court of Appeals

126 S.W.3d 820

NODAWAY VALLEY BANK, Appellant, v. E.L. CRAWFORD CONSTRUCTION, INC., et al., Respondents.

No. WD 62319.

Missouri Court of Appeals, Western District.

February 24, 2004.

Vincent F. O'Flaherty, Kansas City, MO, for appellant.

John L. Mullen, Kansas City, MO, for respondent, E.L. Crawford Construction, Inc.

Michael B. White, Kansas City, MO, for respondent, Contractors Crane & Erection Company.

Before BRECKENRIDGE, P.J., SPINDEN and HOWARD, JJ.

PATRICIA BRECKENRIDGE, Judge.

Nodaway Valley Bank appeals the granting of summary judgment in favor of E.L. Crawford Construction, Inc., and Contractors Crane & Erection Company on Bank's claims of breach of contract, negligence, and indemnity. Bank also appeals the denial of its motion for partial summary judgment against Crawford on Bank's indemnity claim. On appeal, Bank argues that the indemnification clause contained in the construction contract required Crawford and Crane to indemnify Bank for losses it sustained during a fire. Because Bank's petition is actually a subrogation action brought on behalf of its insurer, and the contract contains a waiver of subrogation clause that is not superseded by the indemnification clause, this court finds that Bank is precluded from recovering from Crawford and Crane. The judgment of the trial court is affirmed.

Factual and Procedural Background

When reviewing summary judgments, this court reviews the record, and any reasonable inferences from the record, "in the light most favorable to the party against whom judgment was entered." ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). In December 1999, Crawford entered into a written agreement with Bank to provide general contracting services in the construction of an addition and renovation to Bank's building in Maryville. Bank agreed to pay Crawford $2,854,133 for these services. Crawford then hired Crane as one of its subcontractors. Crane agreed to perform all of the steel erection work on the project for $111,635.

In December 2000, a fire started at the Bank's building when one of Crane's employees used a cutting torch in the area that was being remodeled. Sparks or flames from the cutting torch set fire to tarps hanging where there was an exposed wall. The tarps were owned and installed by Crawford. The fire caused Bank to incur property damage in the amount of $438,832.44. Bank's property insurer, BancInsure Insurance Company, paid this amount to Bank to cover the loss.

In May 2002, Bank filed a petition asserting claims for breach of contract, negligence, and indemnity against Crawford, and negligence against Crane. Crawford and Crane subsequently filed motions for summary judgment. In its suggestions in support of the summary judgment motion, Crawford asserted that Bank's claims were barred because the contract contained a waiver of subrogation clause. Crawford noted that in Bank's interrogatory answers, Bank stated that BancInsure was claiming a right of subrogation for the total amount of property damage Bank claimed in its petition, which was $438,832.44. Crawford further noted that the "General Conditions of the Construction Contract," one of the four documents that comprised its contract with Bank, contained a waiver of subrogation clause in which Bank and Crawford agreed to waive all rights against each other and any of their subcontractors for damage caused by fire or other causes of loss to the extent the loss was covered by property insurance that the contract required Bank to obtain. Crawford contended that the waiver of subrogation clause was valid and enforceable under Missouri law and, since Bank's total amount of property damage was covered by BancInsure, the clause barred Bank's action against Crawford as a matter of law. In its suggestions in support of its motion for summary judgment, Crane incorporated Crawford's suggestions.

In its suggestions in opposition to Crawford's and Crane's motions for summary judgment, Bank denied that BancInsure claimed a right of subrogation in the action, noting that BancInsure was not a named plaintiff or party to the action. Bank argued that, in any event, the indemnification clause in the "Modifications to Agreement Form," another of the contract documents, superseded the waiver of subrogation clause. Bank contended that in the indemnification clause, Crawford agreed to indemnify Bank for all costs and expenses, including attorney's fees, arising out of damage to property caused by any act or omission of Crawford or the subcontractors. Bank argued that Crane also agreed to abide by the indemnification clause because the Modifications required Crawford to include a clause in the subcontracts providing that the subcontractors were bound by the terms of the agreement between Bank and Crawford. Bank relied on these arguments to make its own motion for summary judgment on its indemnity claim against Crawford.

On December 9, 2002, the trial court entered its judgment granting Crawford's and Crane's summary judgment motions and denying Bank's summary judgment motion. Bank filed this appeal.

Standard of Review

Appellate review of a summary judgment is essentially de novo. ITT, 854 S.W.2d at 376. This court's criteria for ascertaining the propriety of summary judgment are the same as those that a trial court uses initially. Id. This court does not defer to the trial court's order granting summary judgment because the trial court's initial judgment is based on the record submitted and amounts to a decision on a question of law. Id. The moving party has the burden of establishing a right to judgment as a matter of law and that no genuine issue of material fact exists. Id. at 378.

Bank appeals both the granting of Crawford's and Crane's motions and the denial of its own motion. "Generally, the denial of a motion for summary judgment is not a final judgment that may be reviewed on appeal." Herring v. Prudential Prop. & Cas. Ins. Co., 96 S.W.3d 893, 894 (Mo.App.2002). If the merits of the denied motion, however, "are inextricably intertwined with the issues in an appealable summary judgment in favor of another party, then that denial may be reviewable." Id. In this case, the issue in Bank's summary judgment motion—whether the indemnification clause supersedes the waiver of subrogation clause to permit Bank's claims—is inextricably intertwined with the issue in Crawford's and Crane's motions—whether the waiver of subrogation clause bars Bank's claims despite the indemnification clause. Thus, this court will reach the merits of the denial of Bank's motion.

To establish a right to summary judgment, Bank, as the claimant, had to show that there was no genuine dispute as to the material facts on which it would have had the burden of persuasion at trial. ITT, 854 S.W.2d at 381. Also, because Crawford, the defending party on the claim on which Bank sought summary judgment, raised affirmative defenses, Bank also had to show "that the affirmative defense fails as a matter of law" by establishing that "any one of the facts necessary to support the defense is absent." Id.

For movants such as Crawford and Crane who are the defending parties in a lawsuit, the prima facie showing for entitlement to summary judgment is "necessarily different." Id. Movants who are the defending parties in a lawsuit may establish a right to judgment as a matter of law by showing:

(1) facts that negate any one of the claimant's elements facts, (2) that the non-movant, after an adequate period of discovery, has not been able to produce, and will not be able to produce, evidence sufficient to allow the trier of fact to find the existence of any one of the claimant's elements, or (3) that there is no genuine dispute as to the existence of each of the facts necessary to support the movant's properly-pleaded affirmative defense.

Id.

Once the movant makes a prima facie showing that there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law, the nonmovant "`may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this Rule 74.04, shall set forth specific facts showing that there is a genuine issue for trial.'" Id. (quoting Rule 74.04(e) (1993) [emphasis added]).¹ In its response, the non-movant must admit or deny the movant's factual statements, set out each additional material fact that remains in dispute, and "support each factual statement asserted in the response with specific references to where each such fact appears in the pleadings, discovery or affidavits." Rule 74.04(c)(2).

Waiver of Subrogation Clause Precludes Bank's Action

In its first point, Bank argues that Crawford and Crane were not entitled to summary judgment because the trial court erroneously concluded that a waiver of subrogation clause contained in one of the contract documents barred Bank's claims. Bank first argues that the waiver of subrogation clause does not apply to its claims against Crawford and Crane because this is not a subrogation action. Bank notes that its insurance company, BancInsure, is not a named party to its action, nor is Bank's policy with BancInsure part of the court record.

That BancInsure is not a party to the action is consistent with Missouri law governing the right to subrogation. See Hagar v. Wright Tire & Appliance, Inc., 33 S.W.3d 605, 610 (Mo.App.2000). "In subrogation, the insured retains legal title to the claim." Keisker v. Farmer, 90 S.W.3d 71, 74 (Mo. banc 2002). When the insurer pays the insured, "the insurer has a right to subrogation." Id. "The exclusive right to pursue the tortfeasor remains with the insured," however, and the insured "holds the proceeds for the insurer." Id. In this case, BancInsure paid Bank under the policy and could assert a right to subrogation of any damages recovered. Legal title to the cause of action against Crawford and Crane, however,...