Pitt v. Leonberger

• Decision Date: 07 February 2017
• Docket Number: ED 103723
• Citation: 528 S.W.3d 1
• Parties: Matthew Walter PITT and Kimberly Jean Yancey–Pitt, Plaintiffs/ Garnishors/Respondents, v. Willie LEONBERGER, Defendant/Judgment Debtor/ Respondent, and Missouri United School Insurance Council, Defendant/Garnishee/Appellant.
• Court: Missouri Court of Appeals

528 S.W.3d 1

Matthew Walter PITT and Kimberly Jean Yancey–Pitt, Plaintiffs/ Garnishors/Respondents,

v. Willie LEONBERGER, Defendant/Judgment Debtor/ Respondent,andMissouri United School Insurance Council, Defendant/Garnishee/Appellant.

ED 103723

Missouri Court of Appeals, Eastern District, DIVISION TWO.

Filed: February 7, 2017

Motion for Rehearing and/or Transfer to Supreme Court Denied March 14, 2017

Motion for transfer to Supreme Court Denied October 5, 2017

Joshua P. Myers, 999 Executive Parkway, Suite 205, St. Louis, MO 63141, for Plaintiffs/Garnishors/Respondents.

Edward D. Robertson III, James P. Frickleton, 11150 Overbrook Road, Suite 200, Leawood, KS 66211, for Defendant/Judgment Debtor/Respondent.

Thomas B. Weaver, Daniel E. Sakaguchi, 7700 Forsyth Blvd., Suite 1800, St. Louis, MO 63105, for Defendant/Garnishee/Appellant.

SHERRI B. SULLIVAN, P.J.

Introduction

Missouri United School Insurance Council (MUSIC) appeals from three trial court judgments. First, MUSIC appeals from the trial court's January 6, 2015 Order Granting Garnishors' (Matthew Walter Pitt and Kimberly Jean Yancey–Pitt, collectively the Pitts) Motion for Partial Summary Judgment and Denying MUSIC's Motion for Summary Judgment on the issue of coverage for the Pitts' negligent wrongful death judgment against school bus driver Willie Leonberger (Leonberger) for negligently causing the death of the Pitts' son, Hunter Pitt, by failing to instruct Hunter Pitt how to safely disembark the school bus Leonberger was driving and then negligently running him over (Points I–IV). Second, MUSIC appeals from the trial court's May 12, 2015 Order and Judgment finding MUSIC liable for the entire negligent wrongful death judgment, including the 5.25% post-judgment interest awarded on the $11,494,637.38 wrongful death judgment in favor of the Pitts against Leonberger on December 21, 2012 by the wrongful death court and 9% prejudgment interest issued by the garnishment court on the original judgment plus post-judgment interest accumulated to date from the time the original judgment became final and payable on January 21, 2013, but unpaid by MUSIC, which exceeds the $2,500,000 contractual liability limit of coverage for accidents (Point V). In its May 12, 2015 Order and Judgment, the garnishment court also issued a Pay–In–Order directing MUSIC to pay the total amount into the court's registry, which it refused to do, leading to the next judgment. Third, MUSIC appeals from the trial court's July 27, 2015 Final Judgment in Garnishment against MUSIC awarding prejudgment interest and including the accumulated amount of post-judgment interest imposed by the wrongful death court on the Pitts' original negligent wrongful death judgment of $11,494,637.38 against Leonberger on December 21, 2012 for a total of $15,618,946.12 (Points VI and VII). We affirm in part, modify in part, and remand for further proceedings.

Factual and Procedural Background

Leonberger drove a school bus for the North Callaway R–1 School District (District). On January 18, 2011, Leonberger was driving the bus when he accidentally struck and killed six-year-old student Hunter Pitt after he disembarked the bus. Hunter Pitt and his older sister, Dakota Yancey, were two of the students on Leonberger's daily bus route. After exiting the bus in the afternoon, Hunter Pitt would usually cross the street first and his sister would follow. On January 18, 2011, after Hunter Pitt and Dakota Yancey had exited the bus, Leonberger saw that Dakota had crossed and assumed Hunter had also crossed. Hunter Pitt had not yet crossed and when the bus pulled forward it struck him. Hunter Pitt died from his injuries. Leonberger was unaware the bus had struck Hunter Pitt until another student told him to stop.

At the time, Leonberger was insured by the District under a general liability and automobile liability insurance policy issued by MUSIC, a business entity that insures school districts and their employees. The "2011 MUSIC Plan Document" (the Policy) provided coverage which was occurrence-based and the Policy defined "occurrence" to mean "accident," but did not define "accident." The Policy had limits of $2,500,000, and MUSIC had contracted with insurer United Educators (UE) to provide all coverage in excess of $500,000. Leonberger, a district school bus driver, was a "Covered Party" under the Policy. Coverage A of the Policy provided: "We will pay on behalf of a Covered Party all Damages up to the Limit of Liability as a result of an Occurrence in the Coverage Territory."

On January 19, 2011, MUSIC was informed of the accident and immediately accepted coverage for the loss. Claims adjuster Debra Walker (Walker) told Leonberger he was covered under the Policy, MUSIC would hire a lawyer for him, and MUSIC would take care of it. MUSIC completed its investigation on January 26, 2011, concluding: "Coverage is applicable...No exclusions apply... investigation revealed 90 to 100% fault on the bus driver. Lost sight of claimant and rolled forward over him."

On February 3, 2011, MUSIC notified UE of the accident, which assigned claims attorney Rhonda Hurwitz (Hurwitz) to the file. Nearly three months later, MUSIC learned a local prosecutor was considering charging Leonberger with second-degree involuntary manslaughter for Hunter Pitt's death, premised upon grossly negligent conduct related to Leonberger's driving. When it learned of this, internal documents revealed MUSIC believed Hunter Pitt's death was a "horrible accident" and a "mistake," but "not criminal." Nonetheless, MUSIC concluded it would "be in our interests to defend" and "control ... the criminal matter ... since the outcome could impact [the civil] claim."

On March 30, 2011, MUSIC further noted: "We recently learned that the prosecuting attorney is looking at the case for pressing charges against the bus driver. Clearly [Leonberger] made a mistake, but it certainly is not criminal." MUSIC later noted: "hopefully any jury will see this as it is, a horrible accident and not criminal."

Walker discussed the possibility of a charge with her supervisor, Anita Khiene (Khiene), noting, "I talked with [Khiene] about the same, she said it would be in our interest to defend him should that occur and I agree."

MUSIC learned the Pitts had retained counsel on April 4, 2011. MUSIC retained counsel Gerard Noce (Noce) to represent Leonberger and UE requested a separate attorney, Robert Numrich (Numrich), represent the District for any civil litigation brought by the Pitts.

On May 20, 2011, a local prosecutor charged Leonberger with second-degree involuntary manslaughter under Section 565.024.3.¹ MUSIC hired criminal attorney Rusty Antel (Antel) to represent Leonberger in the criminal proceeding. MUSIC stated it thought it was prudent to exercise control over the criminal matter since the outcome could impact the claim. After the charge, MUSIC's supervising adjuster Chris Brading (Brading) directed Walker to try and get a demand from the Pitts' counsel because she thought it would be better to settle the case prior to the outcome of the criminal charge.

In the criminal proceeding, Antel, the attorney MUSIC hired to represent Leonberger, advised Leonberger to plead guilty. MUSIC learned Leonberger would do so in October of 2011. Prior to the plea, Leonberger requested MUSIC settle all claims against him within the policy limits if the opportunity arose. At no time prior to the plea did MUSIC tell Leonberger that following Antel's advice would affect his coverage. On November 21, 2011, Leonberger pled guilty to the charge of second-degree involuntary manslaughter upon Antel's advice.

On November 28, 2011, Hurwitz stated "the felony plea appears to wipe out MUSIC coverage for [Leonberger] under exclusion 19(o)." Exclusion 19(o) reads:

This Coverage Agreement does not apply to and we are not liable for:

Any fraudulent, dishonest, malicious, criminal or intentional wrongful act or omission by a Covered Party.

MUSIC responded: "I had expressed some concern over the ‘criminal act’ exclusion when we conferenced last week. I thought we could leverage it with [the Pitts] as indicated in the call. I thought it may help us get around [the Pitts' attorney] if [Leonberger] ends up with no coverage."

UE requested a draft reservation of rights letter. MUSIC noted in an internal document that:

Our [i]ntention all along was to get this to mediation. Now however, it appears UE may want to issue a reservation of rights due to the alleged criminal act of [Leonberger]. He may have been charged due to pressure by the family in this matter, but he was not convicted. This 79–year-old man pled out to keep from going to prison for involuntary manslaughter. The fact of the matter is, he was still in the course and scope of his duties as a district employee when this unfortunate accident occurred.

On December 20, 2011, the Pitts demanded MUSIC's policy limits. MUSIC said it wanted to mediate but the Pitts refused.

On January 18, 2012, the Callaway County Circuit Court sentenced Leonberger to four years, suspended execution of sentence subject to five years of unsupervised probation and community service. At the sentencing hearing, the circuit court stated: "[a]nd everybody agrees on one thing, this was an accident." After the plea, MUSIC continued to note that "coverage is applicable...[n]o exclusions apply."

On January 20, 2012, Walker noted "we are going to discuss strategy going forward as [the Pitts] absolutely decline mediation. [Numrich] has relayed to [the Pitts' attorney] that MUSIC is not going to tender their limits." On February 14, 2012, the Pitts filed their wrongful death suit against Leonberger, the District, the District transportation manager and superintendent, alleging two separate claims against Leonberger for negligence and negligence per se. The negligence count asserted 16 separate acts of negligence against Leonberger with regard to both his driving and his failure to train Hunter Pitt on how to exit...