Scottsdale Ins. Co. v. Addison Ins. Co.
| Decision Date | 09 December 2014 |
| Docket Number | No. SC 93792,SC 93792 |
| Citation | 448 S.W.3d 818 |
| Parties | Scottsdale Insurance Company and Wells Trucking, Inc., Appellants, v. Addison Insurance Company and United Fire & Casualty Company, Respondents. |
| Court | Missouri Supreme Court |
Scottsdale and Wells trucking were represented by Kenneth M. Lander of Kortenhof McGlynn & Burns LLC in St. Louis, and Alan B. Yuter of Selman Breitman LLP in Los Angeles.
Addison Insurance and United Fire were represented by John G. Schultz, Jill Smith and Suzanne R. Bruss of Franke Schultz & Mullen PC in Kansas City, and John W. Grimm and John C. Steffans of The Limbaugh Firm in Cape Girardeau.
The Missouri Association of Trial Attorneys, which filed a brief as a friend of the Court, was represented by Tim Dollar and Tom Hershewe of Dollar, Burns & Becker LC in Kansas City, and Kirk R. Presley and Sean Brown of Presley and Presley LLC in Kansas City.
Wells Trucking, Inc., and its excess insurer, Scottsdale Insurance Company, filed suit against Wells Trucking's primary insurer, United Fire & Casualty Company and its wholly owned subsidiary, Addison Insurance Company, (collectively United Fire), asserting United Fire acted in bad faith in refusing to settle within its policy limits a wrongful death action against Wells Trucking. Scottsdale pleaded alternative theories allowing it to raise the bad faith refusal to settle claim, including: (1) assignment from Wells Trucking; (2) conventional subrogation; (3) equitable subrogation; and (4) a duty of good faith owed directly to Scottsdale. The trial court sustained United Fire's motion for summary judgment on Wells Trucking's and Scottsdale's claims, finding that an excess insurer cannot recover from a primary insurer under a claim of bad faith refusal to settle and that bad faith refusal to settle could not be proven because United Fire settled the claim against Wells Trucking and paid its policy limits and Wells Trucking did not suffer an excess judgment. On appeal, this Court finds that an insurer's ultimate settlement for its policy limits does not negate the insurer's earlier bad faith refusal to settle and that an excess judgment is not essential to a bad faith refusal to settle action. Therefore, because United Fire failed to negate essential elements of a bad faith refusal to settle action, it was not entitled to judgment against Wells Trucking. United Fire was also not entitled to judgment against Scottsdale because Scottsdale could pursue Wells Trucking's claim for bad faith refusal to settle under the theories of assignment, conventional subrogation, and equitable subrogation. The judgment is reversed, and the case is remanded.
In August 2007, a Wells Trucking employee was operating a truck pulling a flatbed trailer when he was involved in an automobile accident that resulted in the death of another motorist. An accident reconstruction report prepared by the Missouri State Highway Patrol identified multiple factors that contributed to the accident, including the employee's speed, the employee's failure to drive in the proper lane, and the decedent's failure to yield to the employee's right of way.
At the time of the accident, Wells Trucking had a primary insurance policy with United Fire that had a liability limit of $1 million. Wells Trucking also had an excess insurance policy with Scottsdale with a liability limit of $2 million. The Scottsdale policy specified that it would not apply unless and until the underlying United Fire policy was exhausted. The Scottsdale policy also provided that if Wells Trucking had any rights to recover any payment Scottsdale made under the policy, those rights would be transferred to Scottsdale.
The decedent was survived by his wife and two children. After the accident, the decedent's family and United Fire entered into negotiations to settle any claims the decedent's family might have against Wells Trucking and the employee involved in the accident. The decedent's family eventually filed a wrongful death lawsuit against Wells Trucking and the employee, but settlement negotiations continued. In October 2009, United Fire, Scottsdale, and the decedent's family participated in mediation, which resulted in United Fire and Scottsdale each tendering $1 million to settle the case for a total of $2 million. Wells Trucking then assigned to Scottsdale its rights to pursue a bad faith refusal to settle claim against United Fire and agreed to pursue a bad faith failure to settle claim for the benefit of Scottsdale.
Wells Trucking and Scottsdale filed suit against United Fire for bad faith refusal to settle. Scottsdale raised five alterative theories by which it could bring a bad faith refusal to settle claim: its assignment from Wells Trucking; conventional subrogation;1 equitable subrogation; breach of United Fire's direct duty of good faith to Scottsdale; and as a third-party beneficiary of the United Fire policy. Wells Trucking and Scottsdale also asserted that United Fire committed a prima facie tort and requested a declaratory judgment.
In support of their claims that United Fire refused in bad faith to settle the wrongful death action, Wells Trucking and Scottsdale alleged the following:
On August 30, 2012, United Fire filed a motion for summary judgment on all counts in Wells Trucking and Scottsdale's petition. In its suggestions in support of summary judgment, United Fire asserted that Scottsdale, as an excess carrier, could not bring a bad faith refusal to settle claim on its own or through Wells Trucking. It further asserted that Scottsdale and Wells Trucking could not establish all the elements of a bad faith refusal to settle claim because United Fire did settle the wrongful death claim within its policy limits and because Wells Trucking never suffered an excess judgment.
The deadline for filing a response to the summary judgment motion under Rule 74.04(c)(2) was October 1, 2012.2 Wells Trucking and Scottsdale did not file a response by the deadline or seek leave from the court to file a response beyond the deadline. Instead, Wells Trucking and Scottsdale twice obtained consent from United Fire to extend the deadline for filing a response and filed with the trial court memorandums reflecting United Fire's consent to the extensions. The first memorandum was filed on October 2, and the second was filed on October 5. Wells Trucking and Scottsdale filed their...
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