Estes v. Bd. of Trs. of the Mo. Pub. Entity Risk Mgmt. Fund

• Decision Date: 16 March 2021
• Docket Number: WD 83764
• Citation: 623 S.W.3d 678
• Parties: Brenda ESTES, AS Guardian and NEXT FRIEND FOR Jane DOE, Appellant, v. The BOARD OF TRUSTEES OF the MISSOURI PUBLIC ENTITY RISK MANAGEMENT FUND in Their Official Capacities, et al., Respondents.
• Court: Missouri Court of Appeals

623 S.W.3d 678

Brenda ESTES, AS Guardian and NEXT FRIEND FOR Jane DOE, Appellant,

v.The BOARD OF TRUSTEES OF the MISSOURI PUBLIC ENTITY RISK MANAGEMENT FUND in Their Official Capacities, et al., Respondents.

WD 83764

Missouri Court of Appeals, Western District.

OPINION FILED: March 16, 2021

Motion for Rehearing and/or Transfer to Supreme Court Denied April 27, 2021

Application for Transfer Denied June 29, 2021

Kirk R. Presley, Kansas City, MO, for appellant.

Michael G. Berry, Jefferson City, MO, for respondents.

Before Division Four: Cynthia L. Martin, Chief Judge, Presiding, Lisa White Hardwick, Judge and Mark D. Pfeiffer, Judge

Cynthia L. Martin, Judge

This case involves several issues of first impression relating to whether the Missouri Public Entity Risk Management Fund ("MOPERM") and its board of trustees can be sued in tort. Brenda Estes ("Estes"), as next friend for Jane Doe ("Doe"), appeals from the trial court's grant of summary judgment in favor of MOPERM and the individual members of its board of trustees in their official capacities. The trial court found that MOPERM has sovereign immunity from claims of bad faith failure to settle within policy limits and breach of fiduciary duty asserted by Estes following an assignment of rights from MOPERM's insured, Alberta Hughes ("Hughes"). Because MOPERM does not have sovereign immunity, and because no other basis in the record supports the grant of summary judgment as a matter of law, we reverse the trial court's grant of summary judgment and remand this matter for further proceedings consistent with this opinion.

Factual and Procedural Background¹

Doe is a developmentally disabled woman who requires daily caretaking services. At all times relevant to this case, Doe was receiving services from Progressive Community Services ("PCS"), and specifically from PCS's employee, Hughes. PCS was organized under sections 205.968 through 205.973.²

MOPERM is a body corporate and politic created by the General Assembly.³ It is authorized to provide insurance coverage to "public entities" as that term is defined in section 537.700.2(3). As a "public entity" under section 537.700.2(3), PCS elected to obtain insurance coverage from MOPERM, and was issued a memorandum of coverage for the period from January 1, 2012 to January 1, 2013. The memorandum of coverage also provided coverage to PCS's officers and employees as authorized by statute.⁴ Section 537.705.1(2).

In November 2013, Estes, as legal guardian and next friend for Doe, brought a negligence action against Hughes after Hughes's husband raped and impregnated Doe while under Hughes's care ("Underlying Lawsuit"). MOPERM accepted Hughes's defense in the Underlying Lawsuit, subject only to a reservation of rights for any obligation to cover an award of punitive damages.

MOPERM's board of trustees possessed the exclusive right and sole authority to negotiate the settlement of Estes's claims against Hughes in the Underlying Lawsuit. Section 537.705.3. Efforts to settle the Underlying Lawsuit before trial were unsuccessful. The maximum amount MOPERM is permitted to pay for the payment and settlement of claims arising out of a single occurrence is $2,000,000, subject to indexed adjustments. Sections 537.756.1 and .2. Estes purportedly offered to settle her claims against Hughes in exchange for payment at or below this statutory limit. Before trial, MOPERM's board of trustees never offered more than $150,000 to settle Estes's claims against Hughes.

The Underlying Lawsuit proceeded to trial. A jury entered a verdict in favor of Estes and against Hughes on June 4, 2015, in the amount of $3,000,000 in compensatory damages (which was reduced by 30 percent for fault allocated to Doe's grandmother), and $6,000,000 in punitive damages. The trial court entered judgment accordingly in the Underlying Lawsuit on June 30, 2015.

Hughes appealed. On December 20, 2016, the trial court's judgment in the Underlying Lawsuit was affirmed by this Court. Doe by and through Doe v. Hughes , WD 79064, 2016 WL 7364704 (Mo. App. W.D. Dec. 20, 2016). Hughes's application for transfer to the Missouri Supreme Court was granted on April 4, 2017. Doe by and through Doe v. Hughes , SC96211.⁵ When the Supreme Court granted transfer, at the request of the parties, it also entered an order staying the proceedings and remanding the matter back to the trial court to enable settlement negotiations.

On March 30, 2017, and thus just prior to the grant of transfer by the Supreme Court, Hughes assigned to Estes, as next friend for Doe, all of Hughes's rights, actions, and causes of action against MOPERM and its board of trustees arising out of the handling of the claims asserted in the Underlying Lawsuit.

On May 15, 2017, by agreement of the parties, the trial court in the Underlying Lawsuit entered an amended judgment vacating the jury's verdict and the trial court's original judgment dated June 30, 2015. The amended judgment entered judgment in favor of Estes and against Hughes in the amount of $8,000,000 in compensatory damages, with no fault apportioned to Doe's grandmother. The amended judgment also awarded Estes pre-judgment interest and post-judgment interest. MOPERM and the board of trustees’ answer to the first amended petition filed by Estes in the instant case affirmatively states in paragraph 25 that the amended judgment in the Underlying Lawsuit "was entered with the consent of MOPERM," and that "MOPERM consented to the assignment" of Hughes's rights and claims against MOPERM to Estes, as next friend for Doe. On June 5, 2017, the appeal pending in the Missouri Supreme Court, but stayed by the Court's order, was voluntarily dismissed. Doe by and through Doe v. Hughes , SC96211.

After entry of the amended judgment in the Underlying Lawsuit, MOPERM paid Estes, as next friend for Doe, $2,000,000 in partial satisfaction of the judgment entered against Hughes.

On May 9, 2018, Estes, as next friend for Doe, and based on the assignment of rights and claims received from Hughes, filed suit in the Circuit Court of Buchanan County, Missouri against MOPERM and the individual members of MOPERM's board of trustees in their official capacities. Estes's first amended petition alleged a claim of bad faith failure to settle within policy limits and a claim of breach of fiduciary duty arising out of MOPERM's handling of the claims asserted against Hughes in the Underlying Lawsuit.

MOPERM and the board of trustees filed a motion for summary judgment. MOPERM and the board of trustees asserted that the uncontroverted material facts established, as a matter of law, that Estes's claims were barred by sovereign immunity; that Estes's bad faith failure to settle claim was precluded because MOPERM does not owe a duty of good faith to its insureds as it is not a liability insurer and merely administers a self-insurance pool; and that Estes's claims were precluded because MOPERM's enabling legislation prohibits the use of MOPERM funds to pay such claims, and prohibits MOPERM from paying in excess of $2,000,000 for all claims arising out of a single occurrence.

On March 31, 2020, the trial court entered its final judgment and order ("Judgment") granting summary judgment in favor of MOPERM and its board of trustees. The Judgment concluded that "the Court finds no genuine issue of material fact and SUSTAINS the motion. The Court rules that MOPERM has sovereign immunity for all claims asserted in both counts of Plaintiff's First Amended Petition."

Estes appeals.

Standard of Review

"We review the grant of summary judgment de novo. " In re Annaliese Brightwell Trust , 605 S.W.3d 143, 145 (Mo. App. W.D. 2020). "Summary judgment shall be entered if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Messina v. Shelter Ins. Co. , 585 S.W.3d 839, 842 (Mo. App. W.D. 2019) (citation and quotation omitted). "The Court reviews the record in the light most favorable to the party against whom judgment was entered, and gives the non-movant the benefit of all reasonable inferences from the record." Truman Med. Ctr., Inc. v. Progressive Cas. Ins. Co. , 597 S.W.3d 362, 365-66 (Mo. App. W.D. 2020) (citation and quotation omitted). Here, Estes does not contend that controverted facts precluded the entry of summary judgment. Instead, Estes contends that based on the uncontroverted facts, summary judgment should not have been granted as a matter of law.

MOPERM and the board of trustees’ motion for summary judgment urged four distinct bases for granting summary judgment in their favor. The trial court's Judgment expressly relied on only one urged basis--that sovereign immunity barred Estes's claims against MOPERM and its board of trustees in their official capacities. The trial court did not address the contention that MOPERM is not a liability insurer, and therefore owes no duty of good faith to its insureds to attempt to settle claims within policy limits. The trial court did not address the contention that MOPERM's funds cannot be used to pay claims of the nature asserted by Estes. And the trial court did not address the contention that MOPERM has paid all that it is statutorily permitted to pay for claims arising out of a single occurrence. However, we "will affirm the trial court's summary judgment on any ground supported by the record, whether relied on by the trial court or not." Sisk v. Union Pac. R. Co. , 138 S.W.3d 799, 809 (Mo. App. W.D. 2004) (quotation omitted); see also Nowden v. Div. of Alcohol & Tobacco Control , 552 S.W.3d 114, 116 (Mo. banc 2018) ("[T]he trial court's judgment may be affirmed on any basis supported by the record." (quotation omitted)).

Analysis

Estes raises three points on appeal challenging the trial court's grant of summary judgment in favor of MOPERM and its board of trustees. The first and second points address the trial court's stated basis for granting summary judgment--sovereign immunity.⁶ Specifically, in her first...