Shelter Mut. Ins. Co. v. Vulgamott, WD 61110.

CourtCourt of Appeal of Missouri (US)
Citation96 S.W.3d 96
Docket NumberNo. WD 61110.,WD 61110.
PartiesSHELTER MUTUAL INSURANCE COMPANY, Respondent, v. Chad A. VULGAMOTT, Appellant, and Hubert Borgelt, Jeane Borgelt, and Brent A. Perry, Defendants.
Decision Date21 January 2003

Andrew J. Gelbach, Warrensburg, MO, for appellant.

Scott L. Templeton, Kirksville, MO, for respondent.

Before JOSEPH M. ELLIS, Chief Judge, HAROLD L. LOWENSTEIN, Judge and VICTOR C. HOWARD, Judge.

JOSEPH M. ELLIS, Chief Judge.

On May 25, 1994, Appellant Chad Vulgamott was riding as a passenger in an automobile owned by his employers, Hubert and Jeane Borgelt d/b/a Nu Home Sales, and driven by his co-employee, Brent Perry. That vehicle was insured by a policy issued by Shelter Insurance to the Borgelts. While Appellant was riding in the vehicle, it was involved in a collision with a vehicle driven by Toni Detwiler.

On December 5, 1996, Appellant filed suit against Perry and Detwiler in the Circuit Court of Livingston County for injuries allegedly sustained in the May 25, 1994 accident.

On January 15, 1997, Leslie Clay, an inhouse attorney with Shelter Insurance, sent Perry a letter, which stated:

Reference is made to a suit filed against you by Chad Vulgamott. We have hired the firm of Thomas, Burns, and Holliday ... to defend you.

* * *

I call your attention to the fact that you are being defended under a policy of insurance issued to Hubert Borgelt, your employer. Our investigation shows you were driving the insured vehicle while engaged in your employment with Mr. Borgelt at the time of the accident. Exclusion E excludes bodily injury to any employee of the insured arising out of and in the course of employment by the insured, and Exclusion F excludes bodily injury to any fellow employee of the insured injured in the course of his employment if such injury arises out of the use of an automobile in the business of his employer. These two exclusions would apply so as to preclude coverage. However, because the State of Missouri requires minimum liability limits of $25,000.00 per person and $50,000.00 per occurrence, and the law is questionable whether the exclusion would apply as to those amounts, we will supply you with $25,000.00 in coverage for the claim of Chad Vulgamott. We are defending you without any reservation of our rights as to that amount. We are doing this for this claim only. Any amount of coverage in excess of $25,000.00 do not apply to this claim.

Because you have only $25,000.00 in coverage from Shelter Insurance Companies on this particular claim, I bring your attention to the fact that the damages sought against you may exceed those policy limits. Should a judgment be rendered against you in excess of policy limits, you would be responsible for the excess. You have the right to hire your own attorney at your expense to defend you as to the excess if you wish.

On November 24, 1997, Shelter Insurance filed a petition for declaratory judgment in the Circuit Court of Livingston County against Perry, Appellant, and Hubert and Jeane Borgelt.1 Shelter Insurance sought a declaration that its policy did not cover Perry's operation of the vehicle on May 25, 1994, based upon the exclusions in its policy precluding coverage for employees of the Borgelts.

On December 23, 1997, Appellant filed a motion to dismiss Shelter's petition. Appellant contended that declaratory relief was inappropriate because there was no legally justiciable and ripe controversy. Appellant also argued that Shelter had other adequate remedies available because it could attempt to raise policy exclusions in a garnishment action or direct action against it following a judgment in Appellant's civil case. On July 6, 1998, Appellant's motion was denied by the trial court.

On February 10, 1999, Shelter filed a Motion for Summary Judgment asking the trial court to find that its policy provided no coverage for Perry's operation of the truck based upon the fellow employee and co-employee exclusions and that it had not waived its right to rely upon those exclusions and was not estopped from relying upon those exclusions beyond $25,000.00.

On March 11, 1999, Appellant filed his Answer to Plaintiff's Petition for Declaratory Judgment. That same day, Appellant also filed his "Preliminary Response to Plaintiff, Shelter Insurance Company's, Motion for Summary Judgment."

After hearing argument and taking Shelter's motion under advisement, on August 10, 1999, the trial court entered its order of partial summary judgment. The trial court found that the exclusions relied upon by Shelter were unambiguous and precluded coverage for injuries sustained by Perry and Appellant as employees of Hubert and Jeane Borgelt d/b/a Nu-Home Sales. The trial court further found that Shelter "has not waived and is not estopped from raising the policy exclusions beyond $25,000.00 for liability coverage on a per person basis." The trial court therefore declared that Shelter's policy did not provide coverage for the accident occurring on May 25, 1994, beyond the sum of $2000.00 per person liability coverage. The trial court did not determine whether Shelter had any obligation to provide coverage up to $25,000.00.

On August 16, 1999, Appellant filed his notice of appeal from the summary judgment order. On January 14, 2000, this Court dismissed the appeal based upon the fact that it was not taken from a final and appealable judgment.

On September 17, 2001, Shelter filed a motion to dismiss without prejudice all remaining claims not resolved by the trial court's partial summary judgment. On February 25, 2002, the trial court entered its judgment dismissing without prejudice all claims left unresolved by the August 10, 1999 summary judgment order. Appellant appeals from that judgment.

We first address Appellant's fourth claim, as it involves issues related to subject matter jurisdiction. In that point, Appellant claims that the trial court erred in failing to grant his motion to dismiss Shelter's declaratory judgment action because Shelter's petition failed to state a claim for which declaratory relief could be granted. Appellant contends that its motion should have been granted because the petition failed to establish that there was an actual controversy between the parties. Appellant further argues that Shelter had an adequate remedy available in that it would be able to raise any policy exclusion defenses in any garnishment action filed by Appellant after obtaining a judgment against Mr. Perry in the underlying tort action.

"Under § 527.010 of the Declaratory Judgment Act, circuit courts have the `power to declare rights, status, and other legal relations whether or not further relief is or could be claimed.'" People ex rel. Small v. Harrah's N. Kansas City Corp., 24 S.W.3d 60, 64 (Mo.App. W.D. 2000). In order to maintain a declaratory judgment action, a petitioner must establish the following: (1) that "a justiciable controversy exists which presents a real, substantial, presently-existing controversy as to which specific relief is sought;" (2) that the petitioner has "a legally protected interest consisting of a pecuniary or personal interest directly at issue and subject to immediate or prospective consequential relief;" (3) that the question presented is ripe for adjudication; and (4) that he or she does not have another adequate available remedy. Northgate Apartments, L.P. v. City of North Kansas City, 45 S.W.3d 475, 479 (Mo.App. W.D.2001). "The trial court has a considerable measure of discretion in determining whether or not a declaratory judgment action should be entertained." Millers Mut. Ins. Ass'n v. Babbitt, 790 S.W.2d 944, 946 (Mo.App. W. D.1990).

In determining whether to grant a motion to dismiss for failure to state a claim upon which relief may be granted, the trial court does not address the merits of claim and merely determines whether under the averments of the petition, the party seeking relief is entitled to a declaration of rights at all. Wright v. Department of Corr., 48 S.W.3d 662, 666 (Mo. App. W.D.2001). On appeal from the trial court's decision, "[w]e review the allegations set forth in the petition to determine whether principles of substantive law are invoked, which, if proved, would entitle [the] petitioner to declaratory relief." Wheeler v. Sweezer, 65 S.W.3d 565, 568 (Mo.App. W.D.2002). "`If under the facts pleaded a plaintiff is entitled to declaration of rights at all, the petition is sufficient for that purpose even though it advances a mistaken contention of law.'" Sandy v. Schriro, 39 S.W.3d 853, 856 (Mo.App. W.D. 2001) (quoting City of Hannibal v. Marion County, 745 S.W.2d 842, 845 (Mo.App. E.D.1988)).

We first address Appellant's claim that Shelter Mutual's petition failed to sufficiently plead a justiciable controversy. If a petition for declaratory relief contains facts supporting its allegations and those facts demonstrate a justiciable controversy, the petition is sufficient and cannot be dismissed for failure to state a claim. Wheeler, 65 S.W.3d at 568. "`A ripe controversy exists if the parties' dispute is developed sufficiently to allow the court to make an accurate determination of the facts, to resolve a conflict that is presently existing, and to grant specific relief of a conclusive character.'" Home Builders Ass'n of Greater St. Louis, Inc. v. City of Wildwood, 32 S.W.3d 612, 615 (Mo.App. E.D.2000) (quoting Missouri Health Care Ass'n v. Attorney General, 953 S.W.2d 617, 621 (Mo. banc 1997)).

In this case, Shelter Mutual sought a declaration of its contractual rights and duties under its policy with the Borgelts. Section 527.0202 provides that "[a]ny person interested under a ... written contract ... or whose rights, status or other legal relations are affected by a ... contract ... may have determined any question of construction or validity arising under the ... contract ... and obtain a...

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