Valentine-Radford, Inc. v. American Motorists Ins. Co.

• Citation: 990 S.W.2d 47
• Decision Date: 16 February 1999
• Docket Number: No. WD,INC,VALENTINE-RADFOR,WD
• Parties: , et al., Respondents, v. AMERICAN MOTORISTS INSURANCE COMPANY, Appellant. 54373.
• Court: Court of Appeal of Missouri (US)

Page 47

990 S.W.2d 47

VALENTINE-RADFORD, INC., et al., Respondents, v. AMERICAN MOTORISTS INSURANCE COMPANY, Appellant.

No. WD 54373.

Missouri Court of Appeals,

Western District.

Feb. 16, 1999.

Motion for Rehearing and/or Transfer to

Supreme Court Denied March 30, 1999.

Application to Transfer Denied

June 1, 1999.

Ward K. Brown, Kansas City, for Respondents.

James P. Barton, Jr., Kansas City, for Appellant.

Before: ULRICH, P.J., and SMART and EDWIN H. SMITH, JJ.

EDWIN H. SMITH, Judge.

American Motorists Insurance Company (American) appeals the judgment of the circuit court in favor of the respondents, Valentine-Radford, Inc. (Valentine) and Mark Spence, in the amount of $390,034 on their claims in Counts I, VIII, and IX of their first amended petition for breach of contract; vexatious refusal to pay (§ 375.420 ¹); and declaratory judgment, ² respectively. These claims were based on American's failure to defend, under a policy of liability insurance issued by American to Valentine, a lawsuit filed against them by Scott Roebuck in which the respondents prevailed.

American raises four points on appeal. In its first point, it claims that the trial court erred in entering partial summary judgment in favor of the respondents on the issue of liability on their claim for breach of contract because the respondents were not entitled to judgment as a matter of law in that, on the undisputed facts, there was no breach of contract since the policy of insurance did not provide coverage for Roebuck's claims of conversion and negligence in the underlying lawsuit, requiring American to defend. In its second point, it claims that, even if the respondents were entitled to partial summary judgment on the issue of liability on their breach of contract claim, the trial court erred in awarding Valentine damages of $250,150 for attorney's fees and expenses incurred in defending the Roebuck lawsuit because, on the record, this amount was not reasonable and customary. In its third and fourth points, American makes the same claims that it makes in Points I and II, except with respect to the respondents' claim for vexatious refusal to pay.

Because we find that there was no coverage under the policy of liability insurance for either Roebuck's conversion or negligence claims against the respondents requiring American to defend in the underlying lawsuit, we reverse and remand.

Facts

The instant case arises out of a lawsuit filed on October 12, 1994, in the Circuit Court of Jackson County against the respondents by Scott Roebuck, a former employee of Valentine. After Roebuck's employment was terminated, he filed suit against Valentine and Spence, his immediate supervisor at Valentine, alleging that he had not been paid for overtime work performed and that Valentine had failed to return to him certain personal computer-related materials. In his petition, Roebuck made claims for breach of contract, a violation of § 290.110, fraud, conversion, and unjust enrichment. On June 13, 1995, Roebuck filed an amended petition which added a negligence count and a claim for punitive damages. The instant appeal involves only Roebuck's claims for conversion and negligence in which he alleged that he was the creator and owner of certain personal documents and programs located on the computer which he used in connection with his work for Valentine. He claimed that Valentine, contrary to its agreement, failed to return and/or destroyed these materials, causing him economic loss.

After being served, Valentine notified American of the Roebuck lawsuit on March 17, 1995, and asserted that at least one of the claims alleged was covered under a commercial general liability insurance policy (the policy) issued to it by American and that, as a result, it was obligated under the policy to defend the Roebuck lawsuit. American reviewed both Roebuck's original petition and his first amended petition and determined that Roebuck's alleged damages were not the result of an "occurrence" as defined in the policy and that certain policy exclusions applied to deny coverage. As a result, American determined that because there was no coverage under the policy for the claims made against the respondents, it did not have a duty to defend them in the lawsuit. Thus, on June 28, 1995, American notified the respondents by letter that it was denying coverage under the policy and would not provide a defense in the Roebuck lawsuit.

Valentine and Spence successfully defended Roebuck's lawsuit, prevailing on all claims. The judgment was affirmed by this court in Roebuck v. Valentine-Radford, Inc., 956 S.W.2d 329 (Mo.App.1997). On December 27, 1995, Valentine filed its petition against American in the Circuit Court of Jackson County for breach of contract and declaratory judgment. Thereafter, it filed a first amended petition seeking damages for: Count I, breach of insurance policy; Count II, breach of agreement to defend; Count III, fraudulent representation; Count IV, fraudulent non-disclosure; Count V, promissory estoppel; Count VI, equitable subrogation and restitution; Count VII, vexatious refusal to pay pursuant to § 375.296; and Count VIII, vexatious refusal to pay pursuant to § 375.420. Valentine also sought in Count IX a declaratory judgment that American had a continuing obligation to defend and indemnify it with regard to the Roebuck lawsuit.

Valentine filed a motion for partial summary judgment with respect to Counts I, VIII, and IX that: (1) American was liable to Valentine for the cost of defending the Roebuck lawsuit; (2) American's refusal to defend the Roebuck lawsuit was vexatious as a matter of law pursuant to § 375.420; and (3) American was obligated to defend Valentine during the appeal of the Roebuck lawsuit. A hearing was held on this motion on February 24, 1997. On March 6, 1997, the trial court sustained Valentine's motion and entered partial summary judgment in favor of Valentine on the issue of liability as to its breach of contract and vexatious refusal to pay claims and its request for a declaratory judgment. The parties then agreed to dismiss without prejudice Counts II, III, IV, V, VI, VII, and Count IX to the extent that it was not resolved by the partial summary judgment.

In order to determine the respondents' damages on their breach of contract and vexatious refusal to pay claims, the trial court ordered them to file proof of the attorney's fees and expenses incurred in the Roebuck lawsuit and the present action. The respondents sought $250,150 for attorney's fees, expenses and interest as to Count I and $139,884 for attorney's fees, expenses and additional damages pursuant to § 375.420 as to Count VIII. A hearing on the issue of damages was held on April 30, 1997, at which both parties presented evidence as to the amount and reasonableness of the attorney's fees incurred by Valentine in defending the Roebuck lawsuit. On May 8, 1997, the trial court entered its order that Valentine recover $230,812 in attorney's fees and expenses plus $19,338 in interest as to the breach of contract claim, and $116,653 in attorney's fees and expenses and additional damages, pursuant to § 375.420, in the amount of $23,231 as to the vexatious refusal to pay claim and that Spence recover nothing.

This appeal follows.

I.

In its first point, American claims that the trial court erred in entering partial summary judgment in favor of the respondents on the issue of liability on their claim for breach of contract because the respondents were not entitled to judgment as a matter of law in that, on the undisputed facts, there was no breach of contract since the policy of liability insurance did not provide coverage for Roebuck's claims of conversion and negligence in the underlying lawsuit, requiring American to defend. Specifically, American contends that it did not have a duty to defend the respondents in the Roebuck lawsuit because his alleged injuries were not caused by a covered "occurrence," as defined in and required by the policy. In the alternative, American contends that Roebuck's claims in the underlying lawsuit were excluded from coverage by the "intentional act" and "care, custody, and control" policy exclusions.

When considering appeals from summary judgments, the Court will review the record in the light most favorable to the party against whom judgment was entered. Facts set forth by affidavit or otherwise in support of a party's motion are taken as true unless contradicted by the non-moving party's response to the summary judgment motion. We accord the non-movant the benefit of all reasonable inferences from the record.

Our review is essentially de novo. The criteria on appeal for testing the propriety of summary judgment are no different from those which should be employed by the trial court to determine the propriety of sustaining the motion initially. The propriety of summary judgment is purely an issue of law. As the trial court's judgment is founded on the record submitted and the law, an appellate court need not defer to the trial court's order granting summary judgment.

ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993) (citations omitted). Summary judgment will be upheld on appeal if: (1) there is no genuine dispute of material fact, and (2) the movant is entitled to judgment as a matter of law. Id. at 377.

To be entitled to partial summary judgment, under Rule 74.04, on the issue of liability on their breach of contract claim, the respondents were required to establish that (1) there was no genuine dispute as to the material facts on which they relied to recover and had the burden of persuasion at trial, and (2) on these undisputed facts, they were entitled to judgment as a matter of law. Rule 74.04; ITT, 854 S.W.2d at 381. To make a prima facie case for summary judgment, claimants, such as the respondents here, must establish each and every proof element of their claim with undisputed...