Sexton v. Omaha Property and Cas. Ins. Co.

• Citation: 231 S.W.3d 844
• Decision Date: 31 August 2007
• Docket Number: No. 27828.,27828.
• Parties: Jordon SEXTON, Plaintiff-Respondent, v. OMAHA PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Missouri (US)

231 S.W.3d 844

Jordon SEXTON, Plaintiff-Respondent, v. OMAHA PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Appellant.

No. 27828.

Missouri Court of Appeals, Southern District, Division Two.

August 31, 2007.

Gary E. Wiseman, St. Louis, MO, for defendant-appellant.

Randall Ray Cowherd, Springfield, MO, for plaintiff-respondent.

JEFFREY W. BATES, Chief Judge.

Omaha Property and Casualty Insurance Company (Omaha) appeals from a summary judgment in favor of Jordon Sexton (Sexton) in his equitable garnishment action against the insurer. The judgment awarded Sexton the $300,000 limit of a homeowner's policy issued by Omaha, plus post-judgment interest on the underlying judgment in Sexton's personal injury action. On appeal, Omaha argues the trial court erred as a matter of law because: (1) the underlying action arose out of the use of a motor vehicle and was, therefore, excluded from coverage under the homeowner's policy; and (2) the award of post-judgment interest applies only to the policy limit and not to the entire judgment. Finding no error, we affirm.

I. Standard of Review

The material facts presented for the trial court's consideration in Sexton's motion for summary judgment were undisputed, and both Omaha and Sexton agree that this appeal presents an issue of law for our determination. We utilize a de novo standard of review and accord no deference to the decision below. Poage v. State Farm Fire & Cas. Co., 203 S.W.3d 781, 783 (Mo. App.2006); Bland v. IMCO Recycling, Inc., 122 S.W.3d 98, 102 (Mo.App.2003). Our job is to decide whether Sexton was entitled to judgment as a matter of law. Rule 74.04(c)(6); ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 380 (Mo. banc 1993) (the key to summary judgment is the undisputed right to judgment as a matter of law).¹ We review the propriety of the trial court's grant of summary judgment in Sexton's favor based on the record submitted to the trial court. ITT, 854 S.W.2d at 376; Bumm v. Olde Ivy Development, LLC, 142 S.W.3d 895, 897 (Mo.App.2004).

II. Factual and Procedural Background

On September 23, 2001, Sexton was injured in a motor vehicle accident that occurred on Route W in Christian County, Missouri. The accident occurred when Sexton swerved to avoid beer cans thrown onto the roadway by Clint Restemayer (Restemayer), the front-seat passenger in a Jeep traveling ahead of Sexton and operated by Toby Blansit (Blansit). Sexton's vehicle left the roadway and overturned several times, causing him to sustain severe injuries.

In April 2003, Sexton filed suit against Blansit and Restemayer. In Count III of Sexton's First Amended Petition, he alleged that Blansit was negligent for acting in concert with Restemayer, for assisting or encouraging his actions and for failing to prevent his actions. Omaha had issued a homeowner's policy (the Policy) to Blansit's mother and stepfather. The Policy provided liability coverage with a limit of $300,000 per occurrence and was in effect at the time of the September 2001 accident. Blansit was then 17 years old and resided with his mother and stepfather. Omaha deemed Blansit to be an "insured" under the Policy for purposes of the underlying personal injury suit. On April 29, 2003, Sexton notified Omaha of his lawsuit against Blansit.

Initially, Blansit was provided a defense in Sexton's lawsuit by counsel retained by another insurance company, American Standard Insurance Company of Wisconsin (American). American retained David Sullivan (Sullivan), who communicated with Omaha on several occasions. For example, Sullivan advised Omaha in September 2003 that the depositions of Blansit and Restemayer were scheduled for that month. Omaha did not participate in either deposition. In early November 2003, Sullivan forwarded Sexton's First Amended Petition to Omaha and demanded that Omaha assume the defense thereof and provide coverage under the Policy. On November 13, 2003, Sullivan faxed a letter to Omaha advising that American had tendered its policy limits to Sexton and that American would be withdrawing from Blansit's defense. Sullivan again demanded that Omaha reply to prior demands to assume the defense and provide coverage.

By letter dated November 13, 2003, Omaha denied coverage to Blansit for Sexton's claim on the ground that the Policy's exclusion for "motor vehicle liability" was applicable. The Policy's definition of "motor vehicle liability" included liability for bodily injury or property damage arising out of the "[m]aintenance, occupancy, operation, use, loading or unloading of such vehicle or craft by any person ...." In Omaha's letter denying coverage, the insurer stated that "[a]ll of the allegations against Mr. Blansit necessarily involve the use and operation of the motor vehicle."²

On January 2, 2004, upon Sullivan's advice, Blansit negotiated a settlement agreement pursuant to § 537.065 to protect himself from personal exposure.³ The settlement agreement restricted recovery in the lawsuit against him to the coverage and benefits available under the Policy. Thereafter, Sexton proceeded with the trial of his claims against Blansit and Restemayer.

On January 6, 2004, the trial court found all issues in favor of Sexton on his claim against Blansit.⁴ Because Sexton had alleged in his petition that Blansit was negligent in participating, encouraging, assisting and failing to prevent the conduct of Restemayer, the trial court necessarily resolved that issue in Sexton's favor. Sexton also presented evidence that he sustained the following injuries: (1) closed head trauma; (2) an acute post-traumatic hemorrhage contusion in the right frontal lobe of the brain; (3) bilateral jaw fractures; (4) multiple and severe lumbar fractures; (5) reduced vision in his right eye due to retinal injury and subsequent optic atrophy; (6) a bladder injury; and (7) intellectual and psychological injuries, including depression. Due to these injuries, Sexton was left with permanent disabilities, and he incurred approximately $415,000 in medical expenses. The court awarded Sexton $4,000,000 in damages. Blansit did not appeal from the judgment entered against him.

On May 12, 2004, Sexton filed an equitable garnishment action against Omaha, seeking payment of the underlying judgment up to the Policy limit, plus interest and costs. In Omaha's answer, it alleged that there was no coverage for Blansit due to the Policy exclusion of liability coverage for damages resulting from "motor vehicle liability[.]"

On March 3, 2006, Sexton moved for summary judgment on his equitable garnishment action, arguing the motor vehicle liability exclusion did not apply because his principal allegations of negligence against Blansit "did not assert negligence in the operation of the vehicle, which merely acted as the site at which the negligent conduct of aiding, encouraging and failing to prevent the throwing of debris at [Sexton's] vehicle occurred." Omaha failed to respond to Sexton's motion, and judgment was entered against it on April 18, 2006. Three days later, Omaha moved to set aside the entry of judgment and requested leave to file its response out of time. The trial court sustained the motion. In Omaha's response, it contended that the only act performed by Blansit was the operation of a motor vehicle in front of the vehicle operated by Sexton, and as such, the motor vehicle exclusion applied to preclude coverage under the Policy. Omaha asked that Sexton's motion for summary judgment be denied and that judgment be entered in favor of Omaha.

On May 12, 2006, the trial court granted Sexton's motion for summary judgment and entered judgment in his favor for the Policy limit of $300,000, plus interest at the rate of 9% on Sexton's $4,000,000 judgment against Blansit. This appeal followed.

III. Discussion and Decision

On appeal, Omaha presents two points for our decision. Omaha contends the trial court erred as a matter of law because: (1) the underlying action arose out of the use of a motor vehicle and was, therefore, excluded from coverage under the Policy; and (2) Sexton was only entitled to post-judgment interest on the $300,000 policy limit and not the entire $4,000,000 judgment against Blansit. We will address each point in turn.

Point I

In Omaha's first point, it contends the trial court erred in granting Sexton's motion for summary judgment on his equitable garnishment claim because the Policy exclusion for the "use and operation of a motor vehicle" applies to exclude coverage. "When an insurance company relies on a policy exclusion to assert noncoverage, it has the burden of proving that such an exclusion is applicable, and we will construe the exclusion clause strictly against the insurer." Killian v. State Farm Fire & Cas. Co., 903 S.W.2d 215, 217 (Mo.App. 1995); Bowan ex rel. Bowan v. Gen. Sec. Indem. Co. of Arizona, 174 S.W.3d 1, 5 (Mo.App.2005); see Shahan v. Shahan, 988 S.W.2d 529, 539 (Mo. banc 1999) ("exclusions are construed narrowly, in favor of coverage"); Gibbs v. Nat'l Gen. Ins. Co., 938 S.W.2d 600, 605 (Mo.App.1997) (coverage clauses are read broadly, while exclusions read narrowly, to afford the greatest possible coverage). Specifically, Omaha argues the undisputed material facts demonstrate that the allegations pled by Sexton against Blansit in the underlying cause of action arose out of Blansit's use and operation of a motor vehicle. We disagree.

Our disposition of this point is controlled by Steelman v. Holford, 765 S.W.2d 372 (Mo.App.1989), which also involved the question whether an exclusion for the "use of a motor vehicle" under a homeowner's policy applied to exclude coverage. There, Steelman was injured by a gunshot in the leg while driving his tractor trailer truck. He was driving in the vicinity of a jeep driven by Holford, who was riding with a passenger, Friedly. Id. at 373-74. Both Holford and Friedly admitted to randomly discharging a firearm while riding in the jeep, and...