Shiddell v. Bar Plan Mut.

• Decision Date: 31 July 2012
• Docket Number: No. WD 74462.,WD 74462.
• Citation: 385 S.W.3d 478
• Parties: John SHIDDELL, et al., Appellant, v. The BAR PLAN MUTUAL, et al., Respondent.
• Court: Missouri Court of Appeals

385 S.W.3d 478

John SHIDDELL, et al., Appellant,

v.The BAR PLAN MUTUAL, et al., Respondent.

No. WD 74462.

Missouri Court of Appeals, Western District.

July 31, 2012.

Scott A. McCreight, for Appellants.

Brent W. Baldwin, for Respondents.

Before Division Two: JOSEPH M. ELLIS, Presiding Judge, ALOK AHUJA, Judge and MARK D. PFEIFFER, Judge.

JOSEPH M. ELLIS, Judge.

John E. Shiddell, John G. Shiddell, Rosalie Shiddell, and Anchor Insurance Agency Inc. (“Appellants”) appeal from a judgment entered in the Circuit Court of Jackson County granting summary judgment in favor of The Bar Plan Mutual Insurance Company (“The Bar Plan”) in an equitable garnishment action filed by Appellants. Pursuant to a § 537.065 ¹ settlement agreement, Appellants had obtained a $4,500,000.00 judgment against The Bar Plan's insured, Dysart Taylor Lay Cotter & McMonigle, P.C. (“Dysart Taylor”), in an action for malicious prosecution, and Appellants challenged The Bar Plan's denial of coverage to Dysart Taylor for that judgment based upon a policy exclusion. For the following reasons, the judgment is affirmed.

The Shiddells are the owners of the Anchor Insurance Company. In 1998, one of their customers, Alpha Omega Express, Inc., asked John G. Shiddell to add a company for which it performed contract work, Airborne Express, Inc., to Alpha Omega's business automobile policy with Cameron Mutual Insurance Company. Shiddell conveyed that request to Cameron Mutual which agreed and issued the appropriate certificates of insurance.

On April 4, 2002, David Dodson filed suit against Alpha Omega and Airborne Express claiming that one of their drivers had negligently caused an automobile accident that had left him paralyzed. Cameron Mutual hired Dysart Taylor to examine whether there was a way to avoid coverage for the accident. Kent Bevan, the attorney working on the case, examined the suit and the policy and determined that there was coverage.

Without any knowledge of any facts to support the claim, in an effort to get Appellant's E & O insurance carrier to contribute to pay a portion of Dodson's claim, Bevan filed suit against Appellants, on behalf of Cameron Mutual, alleging that they had forged the document adding Airborne Express as an additional insured to the Cameron Mutual policy after the Dodson accident. After litigating the case for about two years, long after Bevan was made aware that the claim was baseless, when the E & O carrier refused an offer of mediation, Bevan dismissed the action against Appellants.

After the case was dismissed, Appellants filed a malicious prosecution action against Dysart Taylor and Bevan.² Dysart Taylor and Bevan sought coverage under a legal malpractice insurance policy they had with The Bar Plan. The Bar Plan offered to defend the case under a reservation of rights but noted that the policy excluded coverage for malicious and intentionally wrongful acts. The relevant exclusion in Dysart Taylor's malpractice insurance policy states that the policy does not provide coverage for any claim based upon or arising out of:

Any dishonest, deliberately fraudulent, criminal, malicious or deliberately wrongful acts or omissions by an Insured; however, the Company will provide a defense for any claim alleging such acts or omissions by an Insured acting in a professional capacity providing Legal Services ... but the Company will not pay any sums the Insured shall become legally obligated to pay as Damages for any such Claim. This exclusion is waived with respect to each Insured who did not know of, or participate or acquiesce in, the act or omission ... However, under no circumstances will the Company provide a defense for any criminal prosecution.

When Dysart Taylor and Bevan demanded that The Bar Plan assume their defense unconditionally, The Bar Plan declined, and Dysart Taylor and Bevan assumed their own defense. Shortly thereafter, Dysart Taylor and Bevan entered into a § 537.065 settlement agreement with Appellants. Pursuant to that agreement, Dysart Taylor agreed to confess liability and stipulate damages of $4,500,000.00 in exchange for the dismissal of Bevan from the case and an agreement by Appellants to limit execution of the judgment to proceeds that could be obtained from Dysart Taylor's malpractice insurance policy with The Bar Plan.

Following an evidentiary hearing, the trial court approved the settlement agreement and entered judgment in favor of Appellants and against Dysart Taylor. The judgment stated:

On the malicious prosecution claims of plaintiffs against defendant Dysart Taylor Lay Cotter & McMonigle, PC, judgment is entered in favor of the plaintiffs and against Dysart Taylor. The Court finds that an ordinarily careful lawyer in the position of Dysart Taylor, after making a reasonable inquiry, would not have believed the facts alleged against the plaintiffs or that the underlying judicial proceeding against the plaintiffs was valid. The Court further finds that the conduct of Dysart Taylor was not dishonest, deliberately fraudulent, criminal, deliberately wrongful, or motivated by actual malice. Rather, the conduct of Dysart Taylor was motivated by legal malice. In other words, Dysart Taylor initiated and continued civil proceedings against the plaintiffs primarily for a purpose other than that of securing the proper adjudication of the claims on which they were based.

The court then awarded the plaintiffs a total of $4,500,000.00 on that claim.

After that judgment became final, Appellants filed their petition against The Bar Plan in the Circuit Court of Jackson County seeking equitable garnishment of the policy limits of Dysart Taylor's legal malpractice policy. Shortly after filing its answer to the petition, The Bar Plan filed its motion for summary judgment, contending that the judgment against Dysart Taylor was not covered under the plain language of the policy and that it was entitled to judgment as a matter of law. In response, Appellants argued that the term “malicious” was ambiguous and, interpreted in the manner most favorable to Appellants, would not preclude coverage of the judgment against Dysart Taylor because the judgment was based upon a finding of legal malice and not actual malice. They further claimed that the term ‘deliberately wrongful act’ was ambiguous and would not apply to the judgment against Dysart Taylor if interpreted liberally in their favor. Appellants also claimed that Dysart Taylor was an “innocent insured” under the policy and that the exclusion, therefore, did not apply to bar coverage.

After taking the matter under advisement, the trial court eventually entered summary judgment in favor of The Bar Plan. The trial court noted:

In this case, the parties do not dispute that ‘legal malice’ is the appropriate element applicable to lawyers and law firms, and recognized in Missouri for lawyers being sued for malicious prosecution. Where a policy is written for lawyers, and the element of malice applicable to lawyers is legal malice, it follows that the term ‘malicious' as found in the ‘Exclusions' section of the policy be defined as legal malice.

The trial court further found:

By consenting to a judgment for malicious prosecution, an intentional tort, Dysart's conduct is also a deliberately wrongful act. The underlying judgment states that “Dysart ... initiated ... civil proceedings against plaintiffs primarily for a purpose other than that of securing the proper adjudication of the claims on which they are based.” Purposeful conduct is intentional conduct which is deliberate conduct.

The court rejected Appellants' argument that Dysart Taylor was entitled to rely on the innocent insured waiver exception in the policy. Appellants bring two points on appeal from that judgment.

Because the trial court makes its decision to grant summary judgment based upon the record submitted and the law, this Court need not defer to the trial court's determination and reviews the grant of summary judgment de novo. Crow v. Kansas City Power & Light Co., 174 S.W.3d 523, 533 (Mo.App. W.D.2005). In so doing, we apply the same criteria as the trial court to determine whether summary judgment was properly entered. Bauer v. Farmers Ins. Co., 270 S.W.3d 491, 494 (Mo.App. W.D.2008). Summary judgment is only proper if the moving party establishes that there is no genuine issue as to the material facts and that the movant is entitled to judgment as a matter of law. Id. “[A] ‘genuine issue’ exists where the record contains competent materials that evidence two plausible, but contradictory, accounts of the essential facts.” ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 382 (Mo. banc 1993). “The record below is reviewed in the light most favorable to the party against whom summary judgment was entered, and that party is entitled to the benefit of all reasonable inferences from the record.” Hammack v. Coffelt Land Title, Inc., 284 S.W.3d 175, 177–78 (Mo.App. W.D.2009) (internal quotation omitted). “However, facts contained in affidavits or otherwise in support of the party's motion are accepted as true unless contradicted by the non-moving party's response to the summary judgment motion.” Id. at 178 (internal quotation omitted).

In their first point, Appellants contend that the circuit court erred in entering summary judgment in favor of The Bar Plan because the terms “malicious” and “deliberately wrongful” contained in Dysart Taylor's insurance policy were ambiguous and could be interpreted in a manner that would afford coverage. “In general, an insurance policy is a contract to afford protection to an insured and will be interpreted, if reasonably possible, to provide coverage.” Haulers Ins. Co. v. Pounds, 272 S.W.3d 902, 905 (Mo.App. S.D.2008) (internal quotation omitted). “Where an insurer seeks to deny coverage based on a policy exclusion, the burden of establishing that the exclusion applies lies with the insurer.” Id.

“The interpretation of an...