Case Summary for December 7-8, 1999

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Case Summary for December 7-8, 1999

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.

DOCKET
SUPREME COURT OF MISSOURI

Tuesday, December 7, 1999

SC81702
Jeffrey David Lacy v. Director of Revenue
Stoddard County
Driver's license suspension; appeal after judgment satisfied

Jeffrey David Lacy's driver's license was suspended for driving while intoxicated. The trial court set aside the suspension on the grounds that the director failed to establish the foundation for admission of breath test results. The director removed the suspension and appealed. The Court of Appeals dismissed the appeal because the director acquiesced to the judgment, waiving appeal.

The director argues: (1) Removing the suspension did not waive or moot the appeal. The director did not benefit from complying with the judgment but, rather, complied to avoid contempt proceedings. Complying gives credit to a valid judgment and assists the driver while the appeal is pending; the Court can still grant relief. (2) The trial court erred in setting aside the suspension because the breath test was admissible. The Department of Health was within its authority to make rules when it defined the solutions to use with breathalyzers. In any event, the new, applicable rule does not require a certificate of analysis, and the evidence proved the solution's supplier. That an officer did not complete a checklist after the test does not affect the test's accuracy. Finally, the officer otherwise had probable cause to arrest the driver, and the driver did not dispute the accuracy of the test results.

Lacy responds: (1) The director voluntarily, fully performed the acts required by the judgment, thereby acquiescing in it, before filing an appeal. Therefore, the appeal is moot. (2) The court properly set aside the suspension because the Director failed to establish the foundation for admission of the breath test results. The Department of Health regulations were not followed in maintaining the machine and testing Lacy. The officer used an old checklist, used a different solution, and did not obtain a certificate from the supplier.

SC81741
Henry Dale Overcast v. Billings Mutual Insurance Company
Wright and Christian Counties
Insurance, alleged defamation in denial of coverage letter

Henry Dale Overcast's home burned. The insurance company's investigator determined Overcast set the fire. The insurer denied the claim in a letter stating its basis for denial. Overcast sued on the denial, defamation, and punitive damages. The jury found in Overcast's favor. The insurer appeals the trial court's judgment on defamation and punitive damages.

The insurer argues: (1) The court should have rejected the defamation and punitive damage claims. Statutes preempt the defamation claim, because it was actually an attack on the reason for denial, making it a wrongful denial claim, which is not an independent cause of action. Also, Overcast's alleged harm of difficulty in obtaining future coverage arises from the mere denial of coverage, not the fact that the reason is stated in the letter. Thus, Overcast failed to prove damages. In any event, the denial letter was privileged as the insurer was obligated to notify Overcast of its decision, and Overcast consented to such communication by submitting a loss claim. The defamatory material was not published to others, and there is no basis for applying the limited exception of forced or compelled self-publication.

(2) The court should have instructed the jury on the opinion privilege, an affirmative defense to defamation. It was a matter for the jury to decide whether the denial letter was a statement of fact or an expression of opinion.

(3) The court should have instructed the jury on the defense of consent to the communication.

(4) The court should have instructed the jury on the defense of truth and the insurer's belief that the statement was true. At a minimum, the jury could have found the insurer believed the statement to be true.

Overcast responds: (1) The vexatious refusal to pay statute, section 375.420, does not preempt an action for defamation. There is no absolute privilege for letters from insurers to insureds, other than in the statute. Overcast did not consent to the statement and will suffer damages from the statement. When the insurer wrote the letter, the insurer had reason to suppose Overcast would have to disclose the reason for the denial to other insurers.

(2) & (4) The opinion privilege defense and "belief as to truth" defense do not exist in the substantive law.

(3) The consent instruction was not proper for the jury but was a question for the court. There is no evidence Overcast consented, and the instruction would have caused the jury to speculate.

The Missouri Association of Mutual Insurance Companies filed an amicus curiae brief arguing there was no publication, the insurer was privileged and obligated to convey its decision, and statutes preempt the claim.

The Missouri Organization of Defense Lawyers filed an amicus curiae brief arguing that three statutes preempted the defamation action.

The Missouri Association of Trial Attorneys filed an amicus curiae brief arguing the vexatious refusal to pay statute does not preempt a claim for common law defamation.

SC81863
Carrie Lewis, Lesa Moffatt v. Snow Creek, Inc.
Platte County
Personal injuries from ski accident, assumption of the risk and release

Carrie Lewis and Lesa Moffatt separately fell and injured themselves skiing. The court granted summary judgment in Snow Creek, Inc.'s favor on their claims of negligence in failing to warn of a dangerous condition, adjusting and maintaining the ski bindings, creating a dangerous condition, and gross negligence in failing to warn of a dangerous condition it created. The skiers appeal.

The skiers, who signed a release while waiting for equipment, argue Snow Creek was not entitled to summary judgment because it cannot contract away its liability for gross negligence. In addition, Snow Creek's defense of assumption of the risk requires a jury to determine disputed facts, namely whether the skiers knew of facts creating the danger and understood the danger. Also, the waiver in the equipment lease that the skiers signed was unconscionable. Finally, the waiver released liability only to the equipment, not for failure to warn of dangerous conditions.

Snow Creek counters that the release the skiers signed bars "any claim based on negligence," which necessarily includes gross negligence since Missouri does not recognize degrees of negligence. In any event, the danger of ice on the slopes was open and obvious, so the skiers are charged with constructive knowledge of the risks, and they assumed the risks. Or, they expressly assumed the risk by signing the form acknowledging the risks of the sport listed in the form. Also, there is no duty to warn of open and obvious dangers. The waiver was not unconscionable. Finally, since the release barred any negligence claims, it barred those related to equipment and dangerous conditions.

revised 12/6/99

Wednesday, December 8, 1999

SC81920
In re: Kylar W. Broadus
Attorney discipline

The Chief Disciplinary Counsel requests the Supreme Court suspend attorney Kylar Broadus' law license indefinitely with leave to apply for reinstatement after six months for violating rules of professional conduct.

Specifically, the CDC argues: Broadus violated rules relating to competence and communication in a client's child custody and support proceeding. He also violated professional rules in his handling of a motion for change of venue and judge, by making an allegation without inquiring about it, and asserting he obtained the information from his client. Aggravating factors such as his disloyalty to his client, dishonesty to the court, multiple acts of incompetence, and motive warrant suspension.

Broadus counters: The CDC did not prove he violated any rules. He competently represented his client. She changed her telephone number and failed to communicate with him. Also, he believed the allegations in the motion, made a reasonable inquiry under the circumstances, did receive the information from his client, and did not act fraudulently. Suspension is not appropriate because he acted in good faith, negligently not recklessly, only once, without other aggravating circumstances, and after a history of good conduct and character.

SC81769
In re: The Estate of Bennie James Williams, II. Lisa Williams-Payton.
Pettis County
Probate: discovery of assets, indispensable party

Lisa Williams-Payton, an heir/beneficiary of her brother's estate, sought discovery of assets against their mother/the state's personal representative, Alyce Williams, to determine Lisa's right to an annuity after her brother's death. The court granted partial summary judgment to the estate against Alyce, declaring the annuity was the estate's and ordering repayment. Alyce appealed. The court dismissed Lisa's punitive damage claim, and Lisa appealed that ruling.

Lisa argues the court had subject matter jurisdiction over the punitive damage claim because the court can hear a common law claim for conversion and punitive damages involving breach of a fiduciary duty and converting an asset. The law (section 473.340) does not take away the common law punitive damages remedy. The law (section 472.020) gives the probate division the ability to hear all matters pertaining to probate business.

Alyce responds that the court did not have subject matter jurisdiction over the punitive damages claim because section 473.340 does not provide for it.

On her appeal, Alyce contends the court did not have subject matter jurisdiction over Lisa's petition because the administrator ad litem (who was appointed when Alyce's letters of administration were withdrawn) was not made a party to the action as law requires. In addition, the judgment was entered in the estate's favor, and the estate is not a legal entity capable of suing or being sued, so the judgment is null and void.

Lisa counters that the personal representative was named when the petition was filed and the representative was never dismissed. Also, the administrator ad litem was not an indispensable party because the estate benefited from the judgment and no more advantageous outcome could have been achieved if the administrator ad litem had been joined.

SC81837
Edward D. Moss v. State of Missouri
Lafayette County
First degree robbery, fifteen years in prison

Edward Moss was convicted after a jury trial of first degree robbery of a truck stop, and his conviction was affirmed on appeal. He appeals the denial of his rule 29.15 motion for post-conviction relief without an evidentiary hearing.

Moss argues his counsel was ineffective in failing to: (1) object to hearsay testimony from state witnesses who said Moss' co-defendant said he and Moss robbed the truck stop; (2) file a written motion for a change of venue, despite Moss' request on the day he entered his not guilty plea, because of pretrial publicity; and (3) raise the preserved claim on appeal that the court erred in permitting the state to endorse two new witnesses on the first day of trial.

The state counters that Moss must failed to show the prejudice required to prevail on his claim of ineffective assistance of counsel. (1) A change of venue would have had no effect on the trial's outcome, in that all the jurors indicated they could fairly and impartially consider the evidence. (2) Relative to alleged hearsay statements, one witness's statements were admissible as statements of a co-conspirator; the hearsay was cumulative of other evidence; and the alleged hearsay, if considered for its truth, did not implicate Moss. (3) Allowing the state to endorse two more witnesses was not fundamentally unfair. Moss had five days before trial to prepare for the witnesses.

SC81172 and SC82125
Blue Cross and Blue Shield of Missouri, a Missouri nonprofit corporation, v. Jay Angoff, in his official capacity as the Director of the Missouri Department of Insurance, and the Missouri Department of Insurance; Jeremiah Nixon in his official capacity as Attorney General of the State of Missouri. Blue Cross v. the Director of Insurance and the Attorney General.
Cole County
Insurance company re-organization

This case combines two appeals, namely one argued September 8, 1999 (see case summary of that date), and an appeal from a circuit court order that denied the parties' joint motion to approve a settlement, which would resolve the first appeal.

The parties to settlement agreement are Blue Cross, RightCHOICE, the Attorney General, and the Department of Insurance. The 300-plus page agreement essentially, in part provides that Blue Cross and its subsidiary RightCHOICE will emerge as a single, for-profit insurance company. Part of the new RightCHOICE will be owned by private investors, part by a new, public benefit, non-profit corporation organized to serve charitable healthcare purposes, the Missouri Foundation for Health.

Blue Cross argues: (1) The settlement agreement should have been approved because it is fair, reasonable, and in the public interest. It sets aside for the public benefit assets having sufficient value to meet any applicable legal standard, dedicates those assets to appropriate nonprofit purposes, and is a reasonable compromise in light of the risk of loss that each side faces in this litigation. (2) The court should have analyzed the agreement as a contract of settlement, not a suggested disposition of charitable trust assets that the court could accept or reject. Blue Cross' assets are not held pursuant to a charitable trust; the assets were not acquired by charitable gift. Even if they were held as a charitable trust, the parties would still be entitled to deference in settling their case. The public interest is best served if the attorney general has discretion to fashion a settlement subject to court approval if reasonable.

The Attorney General submits that all the parties and amici curiae agree, and the evidence shows, the settlement is fair to all, serves public interest, and is preferable to any available alternative. (1) The court should have approved the settlement because it produces full and fair value to the Foundation by any measure. (2) The Foundation is an appropriate distributee of the net value of Blue Cross' assets.

The Department of Insurance contends: (1)The circuit court's order should be reviewed final, though designated interlocutory, because the Supreme Court ordered the court to dispose finally of the motion to approve the settlement, and it does dispose of the parties' interests and issues on the merits. Appointment of a receiver would result in the loss of Blue Cross' trademark, fines and defaults in monies owed to creditors. (2) The court should have approved the settlement because the settlement addressed substantially all the special master's criticisms of an earlier proposed settlement. Specifically, more money was added to the settlement; changes were made to divest stock; more control was given to the Foundation to vote its stock; and the governor was given the full right to appoint the first board of directors. No disputed issue of law or fact remained requiring exercise of judicial discretion.

The Consumers Union of U.S., Inc., and Community Catalyst filed an amicus curiae brief supporting the settlement agreement. They state the settlement agreement upholds Blue Cross' nonprofit obligations and serves the public interest. Blue Cross unlawfully became a for-profit company through its for-profit business and will be held accountable through the settlement.

The League of Women Voters of Missouri, Reform organization of Welfare, Missouri Association of Social Welfare, American Association of Retired Persons, Missouri Consumer Health Care Watch, and named individuals filed an amicus curiae brief supporting the settlement agreement. They submit that it would establish a charitable foundation for nonprofit health purposes, consistent with charitable trust principles and the remedies for other health care conversions, plus help meet unmet health needs. The Foundation's proposed structure and governance are appropriate and consistent with the public interest. Finally, the settlement ensures the Foundation will receive the full fair market value of Blue Cross' assets.

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