Case Summary for March 5, 2009

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Case Summary for March 5, 2009

THE FOLLOWING DOCKET SUMMARIES ARE PREPARED BY THE COURT'S STAFF FOR THE INTEREST AND CONVENIENCE OF THE READER. THE SUMMARIES MAY NOT INCLUDE ALL ISSUES PENDING BEFORE THE COURT AND DO NOT REFLECT ANY OPINION OF THE COURT ON THE MERITS OF A CASE. COPIES OF ALL BRIEFS FILED WITH THE COURT ARE AVAILABLE AT THE SUPREME COURT BUILDING, COURT EN BANC DIVISION. SUMMARIES ARE UNOFFICIAL AND SHOULD NOT BE QUOTED OR CITED.

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DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

9:30 a.m. Thursday, March 5, 2009

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SC89728
Karri Kinnaman-Carson and Randy Carson v. Westport Insurance Corp. and ABC Specialty, Inc., d/b/a ABC Tow a/k/a ABC Tow
Jackson County
Exclusion to insurance liability
Listen to the oral argument:

Kinnamon-Carson was represented during argument by Jonathan Sternberg of Owens & Baker in Kansas City, and Westport was represented by Barry W. McCormick of McCormick, Adam & McDonald in Overland Park.

In the summer of 2004, an ABC Towing employee towed a Honda Civic to the towing company’s impound lot in Lee's Summit. ABC eventually obtained title to the car. The employee and his friend took the Honda, although it is unclear whether the employee still worked for ABC at the time. The friend, who was intoxicated, drove the car across the center line of a highway into oncoming traffic and collided head-on with a car driven by Karri Kinnaman-Carson. The friend and the employee both were killed in the accident and Kinnaman-Carson was injured seriously. ABC later reported the Honda was stolen. Kinnaman-Carson sued ABC for negligence. She and ABC entered into an agreement that her award was not to exceed $1.7 million with the understanding she would not levy or execute the judgment against ABC. After obtaining a default judgment against ABC in circuit court for more than $1.3 million, Kinnaman-Carson filed for equitable garnishment against ABC's insurer, Westport Insurance Company, to pay the judgment. Westport denied coverage because a provision in ABC's policy excluded coverage for bodily injury or property damage arising out of the ownership or use of any automobile owned or operated by any insured. The trial court sustained Westport's motion for summary judgment. Kinnaman-Carson appeals.

Kinnaman-Carson argues that the exclusion does not apply and that, in any event, Westport waived the exclusion in its suit against the towing company. She contends that exclusions in insurance contracts are construed strictly against the insurer and that the insurance policy did not exclude coverage for the damages in the underlying case. Kinnaman-Carson asserts her injuries were caused by ABC's independent negligence because an unauthorized person used ABC's car for unauthorized purposes. She argues ABC was negligent in its failure to have proper security, to screen employees properly, and to supervise and train employees properly. Kinnaman-Carson further contends Westport is estopped from declining coverage when it elected to defend and indemnify ABC without a reservation of rights, thereby waiving the defense that its policy did not cover this claim. She argues Westport's subsequent denial of coverage was a breach of its duty of good faith and fair dealing.

Westport responds that Kinnaman-Carson's claims against ABC are excluded from coverage based on the first two paragraphs of the exclusion in its policy. First, the claims are not independent from the ownership, use or maintenance of an auto owned by ABC and, therefore, are excluded by the first paragraph. Second, the claims are not independent from the supervision, hiring, employment, training or monitoring of others; the occurrence that caused the claimed bodily injury involved the ownership, maintenance, use or entrustment of an auto owned by ABC; and, therefore, the occurrence is excluded by the second paragraph. Westport contends it has not waived its defenses to coverage, nor is it estopped to assert these defenses. It asserts that Kinnaman-Carson did not plead that Westport had waived its policy defenses and that no facts or arguments were presented in opposition to Westport's motion for summary judgment raising such a claim.

SC89762
Edgar T. Edgerton v. Stephen K. Morrison, M.D., et al.
Greene County
Medical malpractice
Listen to the oral argument:

Morrison was represented during argument by Gary R. Cunningham of Lathrop & Gage LLP, of Springfield, and Edgerton was represented by David W. Ransin of Springfield.

Edgar Edgerton had a heart attack in August 1989. Dr. Stephen Morrison performed bypass surgery on Edgerton, which included a sternotomy (when the surgeon divides the sternum in half to expose the heart for bypass). In January 1990, Edgerton learned of complications in his sternum. Eventually, it was determined that Edgerton's sternum had become necrotic and liquefied, essentially destroying it. In 1991, Edgerton sued Morrison, alleging the doctor had failed to diagnose him properly and treat him properly after surgery. In August 2006, Morrison moved for a directed verdict (alleging Edgerton had not proven his case). The trial court overruled Morrison's motion and the jury returned a negligence verdict against Morrison. The trial court entered judgment for Edgerton and Morrison moved for a judgment notwithstanding the verdict or for a new trial and again was overruled. Morrison appeals.

Morrison argues Edgerton failed to make a submissible case on the causation-in-fact element of his medical malpractice claim because there was insufficient evidence to demonstrate that his failure to diagnose and treat Edgerton caused damage. He asserts the verdict-directing instructions did not track Edgerton's theory of the case as established at trial. A prejudicial roving commission resulted, he contends, because the instruction allowed the jury to make a finding of liability that was not supported by the evidence. Morrison also argues the instruction regarding damages was misleading and prejudicial because it allowed the jury to award damages against one defendant, regardless of whether damages could have been assessed against other defendants. Finally, Morrison contends the verdict form failed to follow Missouri Approved Instruction No. 36.21 by improperly modifying the verdict form. He asserts that one-sided references to Edgerton's verdict directors were inserted into the form, thereby emphasizing those instructions to the exclusion of all others.

Edgerton responds that he made a submissible case on the causation-in-fact element of tort action based on improper health care. He contends his evidence showed that "but for" Morrison's failure to diagnose Edgerton's health problems from September 1989 through January 1990, Edgerton probably would have undergone a surgical repair to restore the structural integrity of his chest. Edgerton argues his verdict director tracked his theory of his case as established at trial, was supported by the evidence offered at trial and, therefore, did not result in a prejudicial roving commission. He asserts the trial court properly submitted jury instructions on damages pursuant to the requirements of Missouri Approved Instruction Nos. 21.03, 19.01 and 4.01 because Morrison elected not to allege any comparative fault or allege fault should be apportioned among any of his co-defendants. Edgerton further responds the verdict form properly complied with MAI 36.21.

SC89663
MSEJ, LLC v. Transit Casualty Company in Receivership
Cole County
Interpretation of receivership laws
Listen to the oral argument:

MSEJ was represented during argument by Nicholas M. Monaco, of Inglish & Monaco, P.C. in Jefferson City, and Transit was represented by Thomas W. McCarthy, III, of McCarthy, Leonard & Kaemmerer, L.C. of Chesterfield.

Transit Casualty Company sold six commercial excess umbrella insurance policies to Johns-Manville Corporation, which created products containing asbestos, to cover the period of 1980 to 1983. Each of the policies protected the corporation against general liability, product liability and occupational disease claims. In 1982, the corporation entered Chapter 11 bankruptcy due to injury claims caused by asbestos. The corporation filed proofs of claims to Transit pursuant to the six insurance policies. It received some of the money for the claims filed under the policy, but, in 1985, Transit was declared insolvent, all its insurance policies were cancelled and it was placed in receivership. The court set a deadline of December 31, 1987, for filing a claim against Transit. In 1997, MSEJ purchased the corporation's insurance claims against Transit. MSEJ submitted the claims to Transit's receiver, but the receiver denied them because MSEJ failed to present evidence to support the claim in a timely manner pursuant to Administrative Order 49. The circuit court approved the receiver's denial of the claims. MSEJ appeals.

MSEJ argues it should not have been prevented from claiming the balance of the corporation's remaining insurance claims under the Transit policies. It contends section 375.1214, RSMo, permits it to provide supplemental information to the circuit court when the court reviews the denial of its claims. MSEJ asserts that Administrative Order 49 cannot override this statutory right and that the evidence it sought to submit to the circuit court was evidence that previously was not available to MSEJ.

Transit responds that MSEJ's claims are equitably estopped (cannot be brought) because MSEJ made previous representations that it would be making no further claims. Transit contends it was prejudiced by MSEJ's untimely claims. It asserts that, had it known, at the time of the assignment, that MSEJ would assert alleged "new" claims, it would have collected reinsurance, but because it didn't know, it did not collect any reinsurance. Transit argues MSEJ's claims are subject to section 375.1214, which requires that claim dispute proceedings be conducted in an informal manner and provides that a court may rely on evidence that comes into the record without objection to support a finding of estoppel. Further, Transit responds, the order must be read with Missouri insolvency statutes and all parts of a particular local rule. It argues that, under applicable rules of construction, Administrative Order 49 must be read with Amended Local Rule 75 and Missouri statutes, and supersedes any inconsistent provisions that were issued at an earlier date. Transit contends that MSEJ's claim was not supported by evidence as it did not adequately prove that the new information to support the additional funds was not available to MSEJ from 1997 through March 2001.

Pricewaterhousecoopers LLP argues, as a friend of the Court, that the court-appointed receiver erred in denying MSEJ's receivership claim based on the administrative order. It contends the order does not create any limitation or bar to evidence in the adjudication of disputed claims by the circuit court or court-appointed referee.

CBS Corporation argues, as a friend to the Court, that the administrative order required that each creditor submit all evidence in support of claims no later than March 2001 and provided that failure to comply would result in that creditor's claim being barred. It contends permitting MSEJ to submit new information is unfair to other creditors and will prejudice other creditors by diminishing the recoveries due to other creditors.

SC89666
State of Missouri, ex rel. Jeremiah W. Nixon, Attorney General, State of Missouri v. Lorne Bass and Hanrahan Trapp, P.C.
Cole County
Applicability of incarceration reimbursement act to certain funds
Listen to the oral argument:

Hanrahan Trapp was represented during argument by William P. Nacy of Hanrahan Trapp of Jefferson City and the state was represented by Christie Kincannon of the attorney general's office in Jefferson City.

Lorne Bass was arrested for drug possession in March 2006. During the arrest, the sheriff's office seized more than $4,400. In April 2006, Bass authorized release of the money to the Hanrahan Trapp law firm for legal fees. Bass pleaded guilty and was sentenced to three years imprisonment. The state filed a petition to recover the assets under the state's incarceration reimbursement act. In July 2006, Hanrahan Trapp sought to intervene. Ultimately, the circuit court granted summary judgment to the state. Hanrahan Trapp appeals.

Hanrahan Trapp argues that Bass released the funds to the law firm prior to the time the state filed its petition, and, because the funds no longer were an asset belonging to Bass, the funds were not subject to incarceration reimbursement. It contends there was uncontroverted evidence on which the state affirmatively relied that Bass had assigned the funds to Hanrahan Trapp. Hanrahan Trapp asserts that it was retained by Bass to represent him in the underlying criminal case and that there was no evidence that, by then, the firm had not earned the entirely of its fee.

The state responds the trial court properly granted summary judgment because Bass is an offender with assets and the state is entitled to his assets pursuant to the incarceration reimbursement act. It asserts the facts show Bass did not assign his funds to Hanrahan Trapp. The state argues Hanrahan Trapp altered its basis for its claim of relief in arguing that it had earned its fee; nonetheless, the state asserts, the new basis does alter the fact that the release was not an assignment of funds.