Shqeir v. Equifax, Inc.

• Citation: 636 S.W.2d 944
• Decision Date: 23 August 1982
• Docket Number: No. 63161,63161
• Parties: Mousa H. SHQEIR and Rita Shqeir, Appellants, v. EQUIFAX, INC. and American Family Insurance Company, Respondents.
• Court: United States State Supreme Court of Missouri

Page 944

636 S.W.2d 944

Mousa H. SHQEIR and Rita Shqeir, Appellants, v. EQUIFAX, INC. and American Family Insurance Company, Respondents.

No. 63161.

Supreme Court of Missouri, En Banc.

Aug. 23, 1982.

Donald W. Giffin, Charles M. Thomas, Kansas City, for appellants.

Charles E. Patterson, Stephen W. Grow, Kansas City, for respondents.

RENDLEN, Judge.

Plaintiffs, Mousa and Rita Shqeir, brought suit against American Family Insurance Company and Equifax, Inc. for failure to inform them of the actual reason for nonrenewal of two insurance policies on plaintiffs' automobiles, in violation of § 379.118, RSMo 1978. ¹ The Shqeirs settled with Equifax but proceeded to trial against American Family. At the conclusion of the plaintiffs' evidence, the trial court directed a verdict in favor of the defendant. The Western District affirmed on the ground that no right of action accrued to the insured for the insurer's alleged noncompliance with § 379.118, but the cause was transferred to this Court on the dissenting opinion of Pritchard, J. Rule 83.01. We review as though on original appeal, Art. V, § 10, Mo.Const., and utilize portions of the Court of Appeals' opinion without quotation marks.

The Shqeirs obtained a homeowners' policy from American Family in July 1974, insuring the contents of their rented apartment at 4025 Harrison Street in Kansas City, Missouri. On June 5, 1975, they obtained two policies of automobile insurance from the same company. Later that month, the Shqeirs moved to a house on Forrest Street and permitted their homeowners' policy with American Family to lapse, relying on the seller's insurance. In December, 1975 they purchased a homeowners' policy from American Family covering their new home, and this policy was in force at the time of trial.

In September, 1975, American Family received a report from Equifax, Inc., which apparently provided investigating services to American Family, stating the Shqeirs had caused damages of $1,000 to the Harrison Street apartment and had been "taken to court" as a result. The Shqeirs were unaware of the report until they received a letter from American Family on April 20 1976, stating that one of their automobile insurance policies would not be renewed. The letter stated in pertinent part:

... To our regret, we have concluded that we must ask you to secure insurance coverage through some other source. Coverage under the policy identified above will continue until 12:01 A.M., Standard Time at the address shown in the policy on June 5, 1976, at which time and date all coverages shall cease.

We feel you are entitled to know the reason for our decision. In the completion of our underwriting of this policy, it came to our attention that you were taken to court for damage to the property at 4025 Harrison. We feel we must terminate this policy because of this action.

This action was influenced by information in a consumer report, made at our request by Equifax, Inc., P. O. Box 829, Kansas City, Missouri, 64141, a reputable source of information for business decisions.

This does not imply you are uninsurable. You may be eligible for coverage in our companion company, American Standard Insurance Company. If he has not already done so, your American Family Agent will be pleased to explain the personalized rating plan which tailors American Standard premiums to your individual requirements.

You are undoubtedly eligible for coverage under the Missouri Joint Underwriting Association:

Missouri Joint Underwriting Association,

1015 Locust Street

St. Louis, Missouri 63101

Phone: (314) 421-1245

In the days that followed, plaintiffs and their attorney contacted American Family's offices several times, attempting to convince them the Equifax report was false. American Family refused to reconsider its decision but advised the Shqeirs' attorney by letter that if Equifax could be persuaded to alter its report, American Family would reevaluate the information. Upon contacting Equifax, the Shqeirs were informed that their file had been turned over to American Family, and Equifax could not be of assistance. On May 6, 1976, American Family again wrote the Shqeirs, stating that on June 6, their second automobile insurance policy would be discontinued. This letter referenced the reasons stated in the April 26 letter and again suggested application to American Standard.

After lapse of the policies, plaintiffs filed a three-count petition attacking American Family and Equifax. The claim against Equifax, based on the federal Fair Credit Reporting Act, was settled and dismissed prior to trial. The Shqeirs also dismissed all claims against American Family, except the claim that American Family violated § 379.118 by failing to give written notice "setting forth clearly and specifically the actual reason" for nonrenewal of the automobile policies. Based on this alleged violation, plaintiffs sought $1.00 nominal damages for each nonrenewal and $500,000 punitive damages.

At trial, evidence was adduced from which it could be inferred that the true motivation for nonrenewal of the Shqeirs' automobile insurance policies was a plan by the insurer to restrict access to American Family and force at least some of its clients into a sister company, American Standard, with higher premiums for allegedly higher risks. Evidence was also introduced from which it could be inferred that the automobile policies were discontinued because of the neighborhood in which the Shqeirs lived. There was no evidence or allegation of actual damages suffered by plaintiffs. Indeed, at the time of trial, the Shqeirs had not completed an application to any other insurer to replace the American Family policies, and consequently, there was no claim that American Family's action prevented the Shqeirs from securing replacement insurance. The trial court directed a verdict for American Family on the ground plaintiffs failed to make a submissible case.

In this appeal, the dispositive question is whether the Legislature intended to create a private cause of action for violation of § 379.118. We conclude it did not and affirm.

Section 379.118 provides that if an insurer proposes to refuse to renew a policy of automobile insurance, it shall notify the insured 30 days or more prior to the effective date of the proposed action, and state, among other things, "the insurer's actual reason for proposing to take such action, the statement of reason to be sufficiently clear and specific so that a person of average intelligence can identify the basis for the insurer's decision without further inquiry." While § 374.280 authorizes the Director of the Division of Insurance to impose a penalty and suspend or revoke an insurer's license upon any willful violation of § 379.118, ² the Legislature simply did not expressly create a private cause of action for violation of this statutory section. The creation of a private right of action by implication is not favored, and the trend is away from judicial inferences that a statute's violation is personally actionable. This trend found expression in Christy v. Petrus, 365 Mo. 1187, 295 S.W.2d 122 (1956), in which the Court was confronted with the question of whether the Workman's Compensation law created a private cause of action. Aware that violation of the statute considered in Christy was declared a misdemeanor, the Court stated the rule to be:

We think it may be correctly stated that a statute which creates a criminal offense and provides a penalty for its violation, will not be construed as creating a new civil cause of action independently of the common law, unless such appears by express terms or by clear implication to have been the legislative intent....

295 S.W.2d at 126(6).

In distinguishing the decision of Cheek v. Prudential Insurance Co., 192 S.W. 387 (Mo.1916), the Court said:

While the case of Cheek v. Prudential Ins. Co., supra, may appear to approve a somewhat different rule, we think it must be assumed, irrespective of what may have been said in that opinion, that the court, in recognizing the historical reasons for the enactment of the 'service letter' statute and in considering the specific language used therein, must have found a legislative intent to create a civil cause of action in the employee.

295 S.W.2d at 126.

The Court in Christy further stated that the Legislature certainly could have established a cause of action in private parties injured by violations of the statute there involved, and listed a number of other statutes specifically providing for recovery of damages and penalties for their violation. 295 S.W.2d at 127. In that list, the Court included statutes which carried criminal sanctions for violation as well as those which provided only a penalty to be recovered by the government, and concluded that because the Legislature provided for individual recovery in many other statutory settings, failure to so provide in the statute under consideration evidenced legislative intent not to create a private right of action.

Christy was followed by Bailey v. Canadian Shield General Insurance Co., 380 S.W.2d 378 (Mo.1964), in which the court referred with approval to the following passage from Lowndes, Civil Liability Created by Criminal Legislation, 16 Minn.Law Review 361, 363:

'* * * When a statute expressly creates a criminal liability, the court which reads a civil obligation into the enactment is embarking upon a perilous speculation * * *.

* * * Verbally, the court justifies its action by 'finding' that the legislature intended to create a civil duty although it did not explicity (sic) state this intention. Such an intention is usually imputed to the legislature where the court decides that the statute was passed for the protection of a class of which the plaintiff is a member. The obvious difficulty with this theory, however, is that even conceding a legislative intention to protect this class it has not evidenced any intention of achieving this...