Wright v. Nash
| Docket Number | WD 84602 |
| Decision Date | 31 May 2022 |
| Citation | 652 S.W.3d 246 |
| Parties | Josiah WRIGHT, Respondent, v. Phillip NASH, Respondent, and Key Insurance Company, Appellant. |
| Court | Missouri Court of Appeals |
James Patrick Maloney, Kansas City, MO, for appellant.
Thomas J. Hershewe, Kansas City, MO, for respondent.
Before Division Four: Cynthia L. Martin, Chief Judge, Presiding, Anthony Rex Gabbert, Judge and Janet Sutton, Judge
Key Insurance Company ("Key Insurance") appeals from the trial court's entry of judgment in favor of Josiah Wright ("Wright") in an equitable garnishment action pursuant to section 379.2001 seeking to collect proceeds from an automobile insurance policy after an accident with Phillip Nash ("Phillip").2 Key Insurance argues that the trial court erroneously declared and applied the law when it concluded that Key Insurance waived its right to rescind the policy after a claim arose, and that the trial court's finding that no material misrepresentations were made by Takesha Nash ("Takesha") when the policy was secured was against the weight of the evidence. Finding no error, we affirm.
Takesha purchased an automobile insurance policy issued by Key Insurance through an independent broker with an effective date of February 21, 2014 (the "First Policy). Takesha was the only named insured on the First Policy. The First Policy insured a 2002 Kia Optima ("the Kia") and a 2001 Pontiac. Takesha represented that the vehicles insured by the policy were garaged at her residence in Kansas City, Kansas. The First Policy was renewed by Key Insurance through December 2016.
Phillip was not a named insured on the First Policy and did not live with Takesha. On December 17, 2016, Phillip was involved in a collision while driving the Kia ("the 2016 Collision"). Key Insurance paid a property damage claim associated with the 2016 Collision. However, Key Insurance's investigation led it to believe that Phillip was a registered owner of the Kia, that he operated the Kia on a regular basis, and that he garaged the vehicle at a location other than the location listed on the policy. Key Insurance determined that Phillip was an unacceptable risk because he had a revoked driver's license. Key Insurance issued Takesha a "Notice of Cancellation or Non-Renewal" dated December 21, 2016 (the "First Cancellation") cancelling the First Policy due to an "undisclosed driver" effective "one minute after midnight (12:01 am) on 1/23/2017." Key Insurance issued a "Policy Flag" on the First Policy in its system on December 20, 2016 which stated:
On January 20, 2017, a few days before the First Policy was set to expire, Takesha applied for automobile insurance at Tom Rich Insurance Agency, an independent insurance broker. In her application, Takesha identified herself as the named insured, stated that she owned the Kia and a 2001 Pontiac, and identified her residence in Kansas City, Kansas as the location where the vehicles were garaged. Unaware of the Policy Flag on the First Policy, Tom Rich Insurance Agency wrote an auto insurance policy for Takesha with Key Insurance for the Kia and the 2001 Pontiac (the "Second Policy").
While processing issuance of the Second Policy, Key Insurance was alerted to the Policy Flag on the First Policy. Key Insurance made the decision to cancel the Second Policy for the same reasons it cancelled the First Policy, and because it recognized there was a "risk that [Phillip] in fact was still operating the [Kia] on the policy." Key Insurance issued a "Notice of Cancellation or Non-Renewal" dated January 25, 2017 (the "Second Cancellation"). Like the First Cancellation, the Second Cancellation provided that the Second Policy was being cancelled due to an "undisclosed driver." Though the Second Policy was set to expire on February 20, 2017, the Second Cancellation notice informed Takesha that coverage under the Second Policy would "cease one minute after midnight (12:01 am) on 2/27/2017."
On February 1, 2017, Phillip was operating the Kia when he was involved in a collision with Wright ("the 2017 Collision"). Wright submitted a claim for bodily injuries. Key Insurance investigated the claim, and its employee Halley Dean ("Dean") had a recorded phone conversation with Takesha on March 6, 2017 as follows:
Key Insurance denied Wright's claim and rescinded the Second Policy, alleging that Takesha made misrepresentations concerning the ownership, operator, and garaging location of the Kia in her policy application. Key Insurance notified Takesha of the rescission in a March 8, 2017 letter ("Rescission Notice") which stated: "Per our statement with you on March 6, 2017, you advised that both you and [Phillip] own the Kia, that it is garaged at his residence, and that he was not added to your policy, despite being the owner and principle [sic] driver of the vehicle because it would increase the premium." The Rescission Notice directed Takesha to her signed application for the Second Policy which stated that " The Rescission Notice further advised Takesha:
Please review your policy language, which states:
Key Insurance explained, "Because of this, we are denying this claim [for the 2017 Collision], and your coverage will be rescinded."
Phillip and Wright agreed to arbitrate the dispute concerning the 2017 Collision. On March 5, 2018, the arbitrator entered an award in favor of Wright and against Phillip in the amount of $4.5 million. The arbitration award was confirmed by the Circuit Court of Jackson County. Wright then filed this equitable garnishment action against Phillip and Key Insurance in the Circuit Court of Jackson County, seeking, as Phillip's judgment creditor, to "enforce the insurance policy issued by [Key Insurance]" and to recover insurance proceeds pursuant to section 379.200. Phillip filed a crossclaim against Key Insurance, asserting claims of bad faith failure to settle and breach of contract.
Wright's equitable garnishment claim was tried to the court on January 19, 2021. Key Insurance relied upon K.S.A. 40-2,1184 to argue at trial that it could not be required to pay Wright's claim because the claim involved a fraudulent insurance act by Takesha, as she materially misrepresented the ownership, operator, and garaging location of the Kia.
On March 16, 2021, the trial court issued its "Findings of Fact, Conclusions of Law and Judgment" ("Judgment") in favor of Wright and against Key Insurance on Wright's equitable garnishment claim. The trial court concluded that the Second Policy was in effect on the date of the 2017 Collision and that it provided coverage to Phillip for Wright's judgment. The trial court found that Takesha did not materially misrepresent the ownership, garaging location, or operator of the Kia. The trial court alternatively found that even if Takesha made material misrepresentations, Key Insurance waived the right to rescind or void the Second Policy when, with knowledge of the alleged material misrepresentations, it elected to retain...
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