Truck Ins. Exchange v. Prairie Framing, LLC
| Decision Date | 31 May 2005 |
| Docket Number | No. WD 61786.,WD 61786. |
| Citation | 162 S.W.3d 64 |
| Parties | TRUCK INSURANCE EXCHANGE, Appellant, v. PRAIRIE FRAMING, LLC, Robert T. Winger, Katherine Rolfe, Eric Rolfe and Paul Rolfe, Respondents. |
| Court | Missouri Supreme Court |
Douglas R. Richmond, Patrick J. Kenny and Carlton D. Callenbach, Kansas City, MO, for Appellant.
Brian J. Madden and Todd M. McGuire, Kansas City, MO, for respondents Rolfe.
Douglas M. Weems and Virginia Stevens Crimmins, Kansas City, MO, for Respondent Prairie Framing, LLC.
Before HOWARD, P.J., and LOWENSTEIN and SMART, JJ.
Eugene Rolfe died in his vehicle when it caught fire after being struck from behind by a truck driven by Robert Winger. Mr. Rolfe's family brought a wrongful death action against Winger, his employer Prairie Framing, LLC, and various other defendants. Truck Insurance Exchange (TIE) petitioned for a declaratory judgment that it owed no duty to defend and indemnify Prairie Framing or its employees under its commercial general liability (CGL) policy with Prairie Framing. Prairie Framing, Winger, and the Rolfes (Defendants) counter-claimed for declaratory judgment, alleging that TIE acted in bad faith in refusing to settle with the Rolfes for the policy limits.
After TIE refused to unequivocally defend Prairie Framing, Prairie Framing assumed full control of its own defense. Prairie Framing then entered into a section 537.0651 Agreement with the Rolfes, consented to the Rolfes' filing of a Second Amended Petition, and stipulated to its liability for negligent supervision. While the declaratory judgment action remained pending, the Rolfes tried the issue of damages in their wrongful death action against Winger and Prairie Framing to the court. The trial court entered a $5,775,000 judgment for the Rolfes, which, after settlement credits, amounted to a $4 million judgment against Prairie Framing.
The parties then filed cross-motions for summary judgment in the declaratory judgment action, and the trial court entered summary judgment for Defendants. The court held, as a matter of law, that TIE violated its duty to defend and indemnify Prairie Framing and that TIE acted in bad faith in not settling the Rolfes' claims against Prairie Framing. Thus, the court ordered TIE to pay the entire $4 million judgment against Prairie Framing, in addition to Prairie Framing's attorney's fees and expenses for defense of the underlying claim.
TIE alleges six points of error in its appeal from the summary judgment. Its first three points address the trial court's holding that it had a duty to defend and indemnify Prairie Framing. Point IV addresses the trial court's holding that TIE violated its duty to settle in good faith. Point V attacks the reasonableness of the $4 million judgment against Prairie Framing. And, finally, Point VI involves the effect on post-judgment interest should this court reverse on any of the previous points. After our consideration of each of TIE's claims on appeal, we affirm the trial court's summary judgment in part and reverse in part.
Because the parties' arguments relate in large part to procedural timing, the extensive factual and procedural details leading to this appeal are chronologically depicted below.
FEBRUARY 17, 1999 — THE COLLISION:
On February 17, 1999, Winger, a foreman employed by Prairie Framing, and his crew were performing framing work on a new home when it began snowing. Unable to work in the snow, Winger and his crew went to Michael's Lakewood Pub, LLC, (the Pub) at about 11:30 a.m. for some beers. Winger's supervisor, Carl Davenport and his crew joined them shortly thereafter. The group took turns buying rounds of pitchers of beer for each other all afternoon. Michael Hiesberger, an owner/member of Prairie Framing, arrived at the Pub sometime between 4:30 and 5:00 p.m. Winger left the Pub around 5:30 p.m. Davenport and Hiesberger stayed there. When Hiesberger asked Winger "if he was okay," Winger replied that there was no reason to worry because he was driving his wife's Ford F150 truck, not the company van.
After leaving the Pub, Winger rear-ended a 1998 Jeep Cherokee driven by Eugene Rolfe, which had stopped at a stoplight. As a result of the collision, the Cherokee burst into flames. Mr. Rolfe was unable to escape and died in the fire. When the collision occurred, Winger was transporting tools for Prairie Framing, which was part of his responsibilities as foreman. Winger's blood alcohol content was .204%.
AUGUST 19, 1999 — THE ROLFES' WRONGFUL DEATH PETITION:
Eugene Rolfe's wife and sons — Katherine, Eric, and Paul (the Rolfes) — filed a wrongful death action in the Circuit Court of Jackson County, Missouri. They named Daimler-Chrysler,2 Robert Winger, and Prairie Framing, LLC, as defendants. They alleged Winger was liable under negligence and negligence per se theories. They also alleged Prairie Framing was liable under theories of (1) respondeat superior; (2) negligent retention; and (3) negligent supervision.
APRIL 1, 2000 — TIE'S RESERVATION OF RIGHTS LETTER:
At the time of the accident, Prairie Framing had a $1 million CGL insurance policy with TIE. TIE initially assigned attorney Lance LeFevre to defend Prairie Framing in the Rolfes' litigation. Seven months later, TIE notified Prairie Framing by letter that "[a]dditional facts and information have been developed which necessitates this notice, that certain issues contained in the litigation are now subject to defense under a full Reservation of Rights." After outlining the policy coverage and the "liquor liability" and "auto" exclusion sections in the policy, TIE's letter informed Prairie Framing:
Indications of fact as well as allegations being presented reflect events that may fall outside the scope of the Businessowners Liability Coverage Form issued to Prairie Farming [sic] LLC; specifically whether Robert Winger was within the scope and course of his employment at the time of the occurrence involved; whether the operation of a motor vehicle involved in the loss falls under the [policy's "auto"] exclusion cited [therein].
The letter further advised Prairie Framing of its right to "retain personal counsel to associate with the assigned defense firm."
APRIL 3, 2000 — COUNSEL ADVISES TIE OF THE LIKELIHOOD OF JUDGMENT IN EXCESS OF POLICY LIMITS:
Lance W. LeFevre wrote an extended letter to TIE summarizing the deposition testimony given by Hiesberger, Davenport, and other Prairie Framing employees. Mr. LeFevre ultimately advised TIE:
The bottom line is that, in my opinion, it is extremely unlikely that Judge Dean could be persuaded to grant summary judgment to Prairie Framing on this evidence and I think that it is more likely than not that the case against Prairie Framing would ultimately be found to be at least submissible to the jury. If it is determined to be a jury issue ... I doubt that Prairie Framing would get much sympathy from a jury in view of the direct involvement of management personnel in the facts. From an exposure perspective, this is a very dangerous case. Liability is aggravated both from the facts involving the intoxicated driver and from the manner in which the decedent died. I would suggest to you that no one in this locale would be surprised by a verdict in an amount multiple of the $1,000,000 limit of your policy.
AUGUST 16, 2000 — THE ROLFES' FIRST AMENDED PETITION:
In May of 2000, after invalidation of a portion of Missouri's Dram Shop Act,3 the Rolfes moved to add Michael's Lakewood Pub, LLC, as a defendant. With no opposition, the trial court granted their motion, and on August 16, 2000, the Rolfes filed their First Amended Petition. Except for the addition of the pub as a defendant and the separate claims brought against the pub, the petition remained substantially the same as their original petition.
AUGUST 29, 2000 — PRAIRIE FRAMING DEMANDS TIE SETTLE FOR THE POLICY LIMITS:
Joseph Lewis, who had taken over Prairie Framing's defense from Mr. LeFevre, wrote TIE. Lewis enclosed the answer to the Rolfes' First Amended Petition he had prepared and filed on Prairie Framing's behalf that same day. As with the answer to the original petition, this answer denied the allegation that Winger was acting within the scope of his employment at the time of the accident. Mr. Lewis further advised TIE, "Mike Heisberger [sic] ... has requested that I inform you ... that Prairie Framing demands that this case be settled within the limits of the insurance policy issued to Prairie Framing."
NOVEMBER 22, 2000 — TIE'S DECLARATORY JUDGMENT PETITION:
On November 22, 2000, TIE filed a petition for declaratory judgment, asking the court to declare that TIE "owes no duty to defend or indemnify defendants Prairie or Winger, or any other insured under the policy of insurance at issue, for the claims in the [Rolfes'] Lawsuit." TIE claimed that its policy with Prairie "does not cover and contains exclusions from coverage for the [Rolfes'] claims made in the Lawsuit." In support of its claims of non-coverage, TIE referenced its April 1, 2000 reservation of rights letter and quoted from coverage and exclusion provisions of its policy with Prairie Framing. TIE then alleged that the Rolfes' claims made in their lawsuit against Winger and Prairie Framing:
[did] not fall within the aforementioned coverage and/or are excluded by the aforementioned policy language in that:
a. With respect to Robert T. Winger, Winger is not an insured under the policy as he was not within the scope of his employment by Prairie and he was not performing duties related to the conduct of Prairie's business.
b. None of the damages which are claimed to have resulted from the actions of Prairie or Winger were caused by an occurrence.
c. The...
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