Polytech, Inc. v. Sedgwick James of Missouri, Inc., s. 70243

• Decision Date: 26 November 1996
• Docket Number: Nos. 70243,70260,s. 70243
• Citation: 937 S.W.2d 309
• Parties: POLYTECH, INC., Plaintiff-Appellant, v. SEDGWICK JAMES OF MISSOURI, INC., Defendant-Cross-Appellant.
• Court: Missouri Court of Appeals

Page 309

937 S.W.2d 309

POLYTECH, INC., Plaintiff-Appellant, v. SEDGWICK JAMES OF MISSOURI, INC., Defendant-Cross-Appellant.

Nos. 70243, 70260.

Missouri Court of Appeals,

Eastern District,

Division Three.

Nov. 26, 1996.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Jan. 8, 1997.

Application to Transfer Denied

Feb. 25, 1997.

Louis J. Basso, Rabbitt, Pitzer & Snodgrass, P.C., St. Louis, for Appellant.

Thompson Coburn, Mary M. Bonacorsi, Jennifer J. Herner, St. Louis, for Defendant-Cross-Appellant.

HOFF, Judge.

Polytech, Inc. (Polytech) appeals the trial court's judgment on October 18, 1995 granting partial summary judgment in favor of Sedgwick James of Missouri, Inc. (Sedgwick) with respect to one of Polytech's claims. Sedgwick cross-appeals from the trial court's award of prejudgment interest pursuant to § 408.040.2 RSMo 1994 on a jury verdict with respect to the remainder of Polytech's claims. Sedgwick also cross-appeals from the trial court's decision to tax it with the costs of two depositions. We affirm.

Sedgwick is a licensed insurance broker. In 1987, it agreed to act as an insurance broker for Polytech. Sedgwick obtained insurance coverage for Polytech's plant, equipment, and business operations through Affiliated FM Insurance Company (Affiliated). Polytech's business interruption policy covered its estimated lost income and fixed expenses for a twelve-month period following the occurrence of any covered peril that prevented it from conducting business.

In June 1988, while renewing its business interruption coverage, Polytech prepared a business interruption worksheet setting forth its internal estimate of income and expenses for the next twelve months. The worksheet was prepared by Polytech using its own balance sheets and financial information. Polytech calculated that it required business interruption coverage in the amount of $633,600, an increase of approximately twenty-seven percent over the previous year's coverage of $501,630.

On July 21, 1988, Affiliated bound Polytech's business interruption coverage in the amount of $633,600, subject to the terms and conditions of its policy. Less than twenty-four hours later, a fire and explosion destroyed Polytech's manufacturing facilities and, as a result, Polytech could no longer continue its manufacturing operations. The fire and explosion triggered Polytech's rights to insurance under the terms of the policy.

After the fire, Polytech retained a public adjusting firm to prepare its claim for business interruption loss under the terms of the policy. New estimates of income and expense were prepared and were considerably higher than Polytech's estimates the previous month. Polytech never resumed operations and, consequently, no additional information about its financial operations became available following the fire.

On November 21, 1988, Polytech presented a proof of loss on its business interruptions claim to Affiliated. In that proof of loss, Polytech claimed it had incurred business interruption losses in excess of the coverage it had bound the day before the fire.

Polytech filed three lawsuits following Affiliated's denial of its business interruption claim. On March 12, 1990, Polytech filed suit against Affiliated in the United States District Court for the Eastern District of Missouri seeking to recover its alleged business interruption loss under the terms of the policy (Polytech I). Sedgwick was never made a party in that case.

On April 12, 1993, Polytech filed a lawsuit against Sedgwick, alleging Sedgwick failed to obtain the proper type and amount of coverage for its real and personal property (Polytech II). Polytech did not raise a claim for its business interruption loss.

On October 26, 1994, the jury in Polytech I returned a verdict in favor of Polytech finding that it had sustained business interruption losses in the amount of $1,200,000. Prior to judgment being rendered, Polytech and Affiliated settled and Polytech I was dismissed.

Shortly after the October 26, 1994 verdict, Polytech filed an amended petition in Polytech II to add a claim against Sedgwick for its failure to obtain adequate business interruption coverage. The trial court denied Polytech's motion to amend the petition.

On December 16, 1994, while Polytech II was still pending, Polytech filed this lawsuit against Sedgwick (Polytech III). The original petition in this lawsuit asserted the claim for underinsured business interruption losses which Polytech had unsuccessfully attempted to add to Polytech II. Polytech then added its claim for underinsured property losses to Polytech III and, on April 11, 1995, dismissed Polytech II.

On October 18, 1995, the trial court granted Sedgwick's motion for summary judgment on Polytech's claim for underinsured business interruption losses on the grounds that it was barred by the five year statute of limitation. § 516.120(1) RSMo 1994. The remaining issues were tried before a jury during the week of December 11, 1995. The jury returned a verdict in favor of Polytech in the amount of $675,500 and, on January 4, 1996, the trial court entered judgment on this amount. It also awarded prejudgment interest in the amount of $146,241.12 with interest thereon as provided by § 408.040.2. This amount was amended to $136,247.52 on March 15, 1996. Sedgwick was taxed with the cost of the proceeding, including the costs of two depositions.

Polytech contends the trial court erred in sustaining Sedgwick's summary judgment motion to dismiss its claim for business interruption losses because the motion failed to establish Polytech's claim was, as a matter of law, time barred. Section 516.100 RSMo 1994 provides, in relevant part:

[T]he cause of action shall not be deemed to accrue when the wrong is done or the technical breach of contract or duty occurs, but when the damage resulting therefrom is sustained and is capable of ascertainment.

The five-year statute of limitations, § 516.120(1), bars the instant action.

Polytech contends that its damages were not "capable of ascertainment" until October 24, 1994, when the jury returned the verdict in Polytech I finding that Polytech had sustained damages for business interruptions in the amount of $1,200,000, $566,400 more than its coverage through Affiliated provided. Before the jury returned the verdict, Polytech argues, it did not have a justiciable controversy against Sedgwick. We disagree and find that the critical date is December 13, 1988, when Affiliated denied Polytech's claim for any amount in excess of the amount of coverage provided by the policy.

Damages are "capable of ascertainment" within the meaning of § 516.100 when the aggrieved party first realizes that it will sustain damage. M & D Enterprises, Inc. v. Wolff, 923 S.W.2d 389, 394 (Mo.App.1996); Nuspl v. Missouri Medical Insurance Co., 842 S.W.2d 920, 922 (Mo.App.1992). The term is held to refer to the fact of damage, not the precise amount. Newton v. B.P.S. Guard Services, Inc., 833 S.W.2d 14, 16 (Mo.App.1992) . The statute of limitations is triggered where damage is capable of being ascertained, even when the full amount of the damage is not ascertainable. Id. The test is to "ascertain the time when plaintiff could have first maintained the action to a successful result." Janssen v. Guaranty Land Title Co., 571 S.W.2d 702, 705 (Mo.App.1978).

Here, Polytech sustained its business interruption loss on July 22, 1988, when the fire and explosion terminated its manufacturing operations. Polytech knew the amount of its business interruption coverage on July 21, 1988, the day before the fire. On that day, Affiliated bound Polytech's business interruption coverage in the amount of $633,600, subject to the terms and conditions of its policy. This amount was based upon the business interruption worksheet that Polytech prepared less than one month before the fire. Following the fire, Polytech retained a public adjusting firm to help prepare its claim for business interruption loss under the terms of the policy. Polytech subsequently submitted new documentation supporting a claim for business interruption losses in the amount of $1,727,417.

By November 21, 1988, Polytech knew that it was...