Rinehart v. Shelter General Ins. Co.

• Decision Date: 17 June 2008
• Docket Number: No. WD 66779.,WD 66779.
• Citation: 261 S.W.3d 583
• Parties: Michael RINEHART, Respondent, v. SHELTER GENERAL INSURANCE COMPANY, Appellant.
• Court: Missouri Court of Appeals

261 S.W.3d 583

Michael RINEHART, Respondent, v. SHELTER GENERAL INSURANCE COMPANY, Appellant.

No. WD 66779.

Missouri Court of Appeals, Western District.

June 17, 2008.

Motion for Rehearing and/or Transfer to Supreme Court Denied July 29, 2008.

Application for Transfer Denied September 30, 2008.

Susan F. Robertson, Columbia, MO, for appellant.

Louis C. Accurso, Kansas City, MO, Edward D. Robertwon, Jr., Mary D. Winter, Anthony L. Dewitt, Jefferson City, MO, for respondent.

Div. IV: HOWARD, C.J., HARDWICK and WELSH, JJ.

LISA WHITE HARDWICK, Judge.

Following a jury verdict, Michael Rinehart ("Rinehart") was awarded actual and punitive damages on a claim against Shelter General Insurance Company ("Shelter") for bad faith refusal to settle insurance claims arising from an automobile accident. Shelter raises seven points on appeal, alleging evidentiary error, instructional error, and insufficient evidence to support the judgment. For reasons explained herein, we affirm.

FACTUAL AND PROCEDURAL HISTORY

Viewed in a light most favorable to the judgment, the evidence at trial was as follows.

On August 16, 1998, Rinehart was driving while intoxicated when he caused a collision that resulted in serious injury to the driver and a passenger of a second vehicle, Renee Ingram ("Ingram") and Kelly Krohn ("Krohn"). Rinehart's passenger and long-time friend, Charles Adkins ("Adkins"), was also seriously injured in the accident.

The vehicle Rinehart was driving at the time of the accident was insured by Shelter with liability limits of $50,000 per person and $100,000 per occurrence. Rinehart was an insured driver on the policy. Shelter assigned a claims adjuster, Charles Nitz, to handle the Rinehart file on August 31, 1998.

Terry Evans, an attorney for Ingram and Krohn, sent written settlement demands to Shelter in January and February of 1999. The letters demanded $50,000 for each claimant. Nitz responded with a letter stating that Shelter was willing to pay the policy limit of $100,000, but Ingram and Krohn would have to agree with Adkins on how to divide the total amount. Evans replied in writing that Shelter's proposal was unacceptable because Adkins was "acting in concert" with Rinehart at the time of accident and, therefore, should not be considered an "equal player in the division of the $100,000." Nitz responded that Shelter's proposal remained the same.

Nitz had communicated with Adkins on three occasions in 1998. Adkins, who had been friends with Rinehart for twenty years, did not retain counsel and did not make an official demand on Shelter. In late May or early June 1999, Nitz told Adkins there was "nothing more he could do for [him]." Based on that conversation, Adkins understood that he would not receive any payment from Shelter. Adkins never made a claim against Rinehart for the accident.

On June 17, 1999, Evans again sent written demands to Shelter for payment of the $50,000 per person policy limit to Ingram and Krohn. The demand letters stated that the offer would expire on August 16, 1999, and all offers to settle would then be forever withdrawn. The letters further stated that Ingram and Krohn would interpret a rejection of their offer as a bad faith refusal by Shelter to settle the insurance claims.

Shelter did not inform Rinehart about the June 17 demand letters. However, on July 6, 1999, Shelter sent Rinehart a letter stating that it intended to settle with Ingram and Krohn for two-thirds of the policy limits unless Rinehart objected within twenty days. Rinehart did not object.

On August 3, 1999, Shelter sent a letter to Evans offering to settle with Ingram and Krohn for two-thirds of the policy limits if the claimants were willing to waive any underinsured motorist claims and hospital liens. Evans did not accept the offer, and no settlement was reached by the August 16, 1999 deadline.

Ingram and Krohn thereafter filed a personal injury lawsuit against Rinehart. Upon judgment entry, Ingram was awarded $2,961,192.55 in damages, plus prejudgment interest of $630,735.60; Krohn was awarded $876,468.57 in damages, plus prejudgment interest of $186,690.24. To avoid a garnishment of the judgment, Rinehart entered into a written agreement with Ingram and Krohn, whereby he consented to pursue a lawsuit against Shelter for bad faith refusal to settle the insurance claims. Rinehart further agreed that any proceeds from the lawsuit, as well as any of his annual earned income in excess of $50,000, would be used to satisfy the personal injury judgment against him.

On September 24, 2003, Rinehart filed suit alleging that he incurred financial loss, damage to his credit, attorneys' fees, and emotional distress as a result of Shelter's bad faith refusal to settle the insurance claims with Ingram and Krohn. Following a jury verdict in Rinehart's favor, the court entered judgment awarding him $6,285,001.83 in compensatory damages and $3,000,000 in punitive damages. Shelter appeals.

ADMISSION OF EVIDENCE

Shelter brings three points contending the circuit court erred in overruling objections to certain evidence introduced at trial by Rinehart. Since the trial court is vested with broad discretion in determining the admissibility of evidence, we will not disturb its rulings absent a clear abuse of discretion. State v. Davis, 226 S.W.3d 167, 169 (Mo.App.2007). Such abuse occurs when the trial court's ruling is clearly against the logic of the circumstances and so arbitrary and unreasonable that it shocks the sense of justice and indicates a lack of careful consideration. Id. Even if evidence was improperly admitted, we will not reverse unless the error was prejudicial and materially affected the merits of the action. Romeo v. Jones, 144 S.W.3d 324, 332 (Mo.App.2004). Accordingly, Shelter has the burden of showing both abuse of discretion and prejudice. Id.

In Point I, Shelter argues the circuit court abused its discretion in allowing Rinehart to testify about his agreement with Ingram and Krohn to pursue the bad faith claim against Shelter. Rinehart testified that the agreement was the only option he had to pay the personal injury judgment and provide for his own family. The court overruled Shelter's objections to this testimony. Shelter asserts Rinehart's testimony was unfairly prejudicial in that it injected issues of poverty and invoked sympathy for Rinehart, Ingram, and Krohn, and it encouraged the jury to return a verdict to benefit Ingram and Krohn, who were not parties to the lawsuit.

As an initial matter, we discern no prejudice from the challenged testimony because the jury received other evidence of Rinehart's agreement to pursue the bad faith claims. A complaining party is not entitled to assert prejudice if the challenged evidence is cumulative to other related admitted evidence. Biller by Summers v. Big John Tree Transplanter Mfg. & Truck Sales, Inc., 795 S.W.2d 630, 635 (Mo.App.1990).

During Rinehart's testimony, the circuit court admitted into evidence his actual written agreement with Ingram and Krohn. The court overruled Shelter's objections to the written agreement, and Shelter has not challenged the admissibility of the document on appeal. Thus, we must assume the jury properly heard evidence concerning the terms of the agreement, which provided Rinehart with a means of satisfying the personal injury judgment and protecting some of his personal assets. The agreement specifically required Rinehart to pay the proceeds of the bad faith lawsuit to Ingram and Krohn. It also stated that Rinehart would pay Ingram and Krohn all of his earned income in excess of $50,000 annually. Even without Rinehart's testimony, the mere existence of the agreement allowed the jury to infer that Rinehart did not have sufficient personal assets to pay the multi-million dollar personal injury judgment and that Ingram and Krohn would eventually benefit from the bad faith lawsuit. Accordingly, Rinehart's testimony was largely cumulative of information directly implicated by the agreement.

It further appears that Shelter opened the door to Rinehart's testimony about the agreement by questioning Attorney Terry Evans as to whether a garnishment action was completed after Ingram and Krohn obtained the personal injury judgment. Through this line of questioning, Shelter attempted to show that Ingram and Krohn had not made serious attempts to collect the judgment from Rinehart. In light of Shelter's inference that the claimants did not expect Rinehart to pay the judgment with his personal assets, Rinehart was entitled to explain the reasons he entered the agreement and his payment obligations thereunder.

Shelter argues that Rinehart's testimony runs afoul of the general prohibition on injecting a litigant's financial condition to influence the jury. Firestone v. Crown Ctr. Redevelopment Corp., 693 S.W.2d 99, 105 (Mo. banc 1985). We note, however, that evidence relating to the financial status of the party may be relevant to the issues at trial, in which case it may be properly presented. Id.

Rinehart's explanatory comments regarding the agreement were relevant to prove his emotional distress as a part of the damages on his bad faith claim. His petition alleged that he "suffered mental agony, distress, anxiety, and worry as a result of being faced with a substantial judgment against him." Rinehart's testimony—about the financial pressure he felt from the judgment, the need to pay Ingram and Krohn, and the need to provide for his family—was necessary to explain the factors causing him emotional distress as a direct result of Shelter's failure to pay the claims of the accident victims. Accordingly, the testimony was admissible in the context of his bad faith claim, and we find no abuse of the circuit court's discretion. Point I is denied.

In Point II, Shelter asserts the circuit court erred in admitting evidence regarding Anthony Fields, another Shelter insured who was involved in a car accident unrelated to Rinehart's...