Walters Auto Body Shop, Inc. v. Farmers Ins. Co., Inc.

• Decision Date: 14 April 1992
• Docket Number: No. WD,WD
• Citation: 829 S.W.2d 637
• Parties: WALTERS AUTO BODY SHOP, INC., Respondent, v. FARMERS INSURANCE COMPANY, INC., Appellant. 44765.
• Court: Missouri Court of Appeals

Page 637

829 S.W.2d 637

WALTERS AUTO BODY SHOP, INC., Respondent, v. FARMERS INSURANCE COMPANY, INC., Appellant.

No. WD 44765.

Missouri Court of Appeals,

Western District.

April 14, 1992.

Motion for Rehearing and/or Transfer to

Supreme Court Denied

June 2, 1992.

Lance W. LeFevre, Heilbron & Powell, Kansas City, for appellant.

P. Thomas Loughlin and Mitchell B. Martin, Loughlin, Johnson, Campbell & Martin, Kansas City, for respondent.

Before KENNEDY, P.J., and FENNER and BRECKENRIDGE, JJ.

BRECKENRIDGE, Judge.

Farmers Insurance Company, Inc. ¹ , appeals from an order granting summary judgment in favor of Walters Auto Body Shop, Inc., in an action for recovery on a policy of insurance for property loss due to damage by fire. Farmers Insurance Company claims that the trial court erred in granting summary judgment to Walters Auto Body Shop, Inc., because the questions presented in the instant case are questions of fact properly determined by a trier of fact and not properly decided as a matter of law in a motion for summary judgment. The judgment is reversed and remanded.

In December 1984, Walters Auto Body Shop, Inc., ("Walters") contracted for insurance coverage with Truck Insurance Exchange, a member company of Farmers Insurance Group ("Farmers"). At the same time, Walters entered into an agreement with Prematic Service Corporation ("Prematic"), a billing company for Farmers. Under this agreement, Walters' annual premium payable to Farmers was to be billed to Walters by Prematic in twelve monthly installments, with an additional monthly service charge. Additionally, pursuant to the terms of the agreement, Walters was required to maintain a deposit with Prematic in the amount of one monthly premium. A provision of that agreement covered dishonored checks, stating: "It is understood, however, that if the check is presented and dishonored for any reason and the payment of the monthly deposit is not otherwise paid, or if the monthly deposit is not paid after a bill has been properly mailed to customer, the Prematic Service Corporation assumes no responsibility for the lapse of coverage or cancellation of a policy or policies covered under this Budget Agreement." As no copy of the insurance policy issued to Walters is included in the legal file it cannot be determined what agreement, if any, Farmers had with its insured. There is also nothing in the record concerning Farmers' agreement with Prematic on the subject of dishonored checks.

Prematic issues two types of billings: a regular billing when the premium for the prior month has been paid in full and a cancellation billing when the billing for the prior month has not been paid in full. Prematic's practice is to close a customer's account and cancel any policies of insurance that are serviced by that account when, following a cancellation billing, any payment made results in a balance still owing in an amount equal to or greater than 150% of the sum of the premium for the previous month plus any service charges due.

Walters' payment record is rife with notices of cancellation. On all but one previous occasion, however, Walters made a subsequent payment reducing the balance still owing to under 150% of the monthly premium plus service charge. On that occasion, May 1987, Walters made no payment pursuant to a notice of cancellation.

Its policy went out of force on May 31, 1987. Thereafter, on June 18, 1987, by agreement among Walters, Prematic and Farmers, the Prematic Service Agreement and the insurance policy it serviced were reinstated. From that point in time until November 1988, although Walters received numerous cancellation notices, its outstanding balance never exceeded 150% of the monthly premium.

In November 1988, Prematic made a fourth consecutive cancellation billing to Walters in the amount of $4,016.90, an amount which appears to be the amount for two monthly premiums. On November 23, 1988, Farmers' agent Ernie Collyer accepted a check drawn by Walters in the amount of $2,008.45. The amount of the check would have reduced the balance owing below the 150% required for the policy to remain in force. Collyer forwarded this check to Prematic, who received the check on November 28, 1988. The check was submitted to Walters' bank for payment but was returned to Prematic because Walters' account contained funds insufficient to cover the amount of the check. Prematic resubmitted the check, which was again returned because of insufficient funds on December 12, 1988. No other payment had been made by Walters at this time. On December 11, 1988, the building insured under the policy of insurance serviced by Prematic was destroyed by fire.

On December 13, 1988, a fifth consecutive cancellation billing was mailed to Walters reflecting that Walters' account with Prematic had been credited with the $2,008.45 payment of November 23, 1988. On December 14, 1988, Farmers issued a claims draft to Walters in the amount of $10,000.00. On December 15, 1988, Farmers stopped payment of the draft. On December 21, 1988, Walters tendered a cashier's check in the amount of $5,671.40, of which amount Farmers retained $1,700.50 for past due premiums. In a letter dated December 22, 1988, Farmers refunded to Walters the balance of $3,970.90. The letter informed Walters, "Our current underwriting requirements will not permit us to reinstate this policy, and we must decline your request for this insurance." The letter concluded by stating that the coverage applied for "will cease at 12:00 Noon on November 30, 1988 without further notice."

Walters filed suit against Farmers for recovery under the policy of insurance issued by Truck Insurance Exchange. Truck Insurance Exchange filed a general denial and alleged in its answer that it had been erroneously sued as Farmers Insurance Company, Inc.

Walters subsequently filed a motion for partial summary judgment and an affidavit by Walter Mainhart, owner and president of Walters. Walters, citing Western Casualty & Sur. Co. v. Herman, 318 F.2d 50 (8th Cir.1963), claimed that by sending an additional notice to Walters on December 13, 1988, Farmers offered to continue the policy "in full force without interruption," provided full payment as specified on the billing was received before December 31, 1988; that by this offer, Farmers treated the insufficient funds check as a "subsisting obligation"; and that the December 13 notice was an "express waiver" of any cancellation rights that Farmers may have had on November 30, 1988. Walters also claimed that by repeatedly accepting late payments without a lapse in coverage, Farmers waived its right to insist on prompt payment to continue coverage; that this repeated acceptance of late payments induced a reliance by Walters; and that Farmers is thus estopped to cancel the policy in that it did not notify Walters of its intention to insist on punctuality. In support of its position, Walters cited Armour v. Cameron Mut. Ins. Co., 770 S.W.2d 464 (Mo.App.1989). Based on the holding in Armour, the trial court sustained Walters' motion for partial summary judgment and declared the insurance policy to be in full force and effect as of December 11, 1988. Subsequent to the entry of the trial court's order, the parties entered into a stipulation that the petition should be amended to name the defendant as Truck Insurance Exchange and that as a result of the fire to its building, Walters sustained damages in the amount of $225,000.00. Walters filed a second motion for summary judgment alleging that no genuine issue of material fact remained, and that Walters was entitled, as a matter of law, to judgment against Farmers in the sum of $225,000.00. Walters' motion was sustained and this appeal followed.

On appeal, Farmers claims that the trial court erred in sustaining the motion for summary judgment. Farmers asserts that the question of whether it had waived or was estopped to rely on its rights pursuant to the November 15, 1988, cancellation notice is a question of fact to be determined by the trier of fact and not a question of law determinable by the court on a summary judgment motion. Farmers did not affirmatively plead failure of consideration nor did Walters plead estoppel with the particularity required by Rule 55.08. However, the particularity requirement will be waived if it is not attacked by motion of the opposing party. McGuire v. Bode, 607 S.W.2d 165, 167 (Mo.App.l980). As neither party raised the particularity issue, the defenses are treated here as properly pleaded. Arnett v. Venters, 673 S.W.2d 67, 72 (Mo.App.1984).

When reviewing a ruling on a motion for summary judgment, the record must be scrutinized in the light most favorable to the party against whom the motion was filed and against whom judgment was rendered, according to that party all reasonable inferences that may be drawn from the evidence. West v. Jacobs, 790 S.W.2d 475, 479 (Mo.App.1990). Summary judgment is a drastic remedy in that it denies the opposing party its day in court. Great caution must be exercised in its use. Olson v. Auto Owners Ins. Co., 700 S.W.2d 882, 884 (Mo.App.1985). Summary judgment is inappropriate unless the prevailing party has shown by unassailable proof to be entitled thereto as a matter of law. First Nat'l Bank v. Chemical Products, Inc., 637 S.W.2d 373, 375 (Mo.App.1982). Summary judgment may be granted only when the pleadings, depositions, admissions and affidavits on file show no genuine issue as to any material fact. Rule 74.04(c). "The fact in doubt must be a material one which has legal probative force as to a controlling issue." First Nat'l Bank, 637 S.W.2d at 375. While an appellate court will give great...