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Case Summary for April 2, 2014

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.


Attached to the following docketed cases are electronic copies of briefs filed by the parties. These electronic briefs have been converted to PDF to accommodate various word processors. If you do not already have Acrobat reader, which is necessary to open the PDFs, you may obtain it free at the Adobe website. (A set of free tools that allow visually disabled users to read documents in Adobe PDF format is available from access.adobe.com.) These briefs do not reflect any opinion of the Court about the appropriateness of the format of the briefs or the merits of the case, nor are they official court records. Copies of all briefs filed with the Court are available at the Supreme Court Building in the court en banc division.

The attachments below may not reflect all briefs filed with the Court, the complete filing or the format of the original filing. Appendices and other attachments generally will not be posted here. To see what documents have been filed in a particular case, visit Case.net.



DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

9 a.m. Wednesday, April 2, 2014

____________________________________________________________________________________________________

SC93502
Ken and Janet Allen and Franklin Quick Cash v. Continental Western Insurance Company
Franklin County
Duty of insurance company to defend action
Listen to the oral argument: SC93502.mp3SC93502.mp3
Continental was represented during arguments by Bethany K. Culp of Hinshaw & Culbertson LLP in Minneapolis, MN, and the Allens were represented by Bradley H. Lockenvitz, a private practitioner in Columbia.

Continental Western Insurance Company provided accident-based commercial general liability insurance coverage to Franklin Quick Cash, a title and payday loan business, from June 2004 to June 2005. Stephanie Whipple sued Quick Cash alleging that, in March 2005, the business took unauthorized possession of her vehicle through repossession and that she suffered damages as a result. Continental sent a letter to the payday loan lenders, Ken and Janet Allen and Quick Cash stating Continental would not represent them in the action because the damages sought were not covered by the policy. Whipple amended her petition to state that the Allens’ and Quick Cash’s conduct was intentional, willful, wanton and malicious, and that they intended to exercise control over the vehicle. Continental still refused to defend because its policies state that Continental has no duty to defend against suits seeking damages for bodily injury and property damage not covered by the policies. It also states that damage or injury expected or intended by the insureds is excluded from coverage. The trial court granted the Allens’ and Quick Cash’s motion for summary judgment(judgment on the pleadings, without presentation of evidence). Continental appeals.

Continental argues the trial court erred in finding that it was obligated to defend the present action. It contends Whipple did not allege property damage as defined in the policies because there was no physical injury or loss of use of the vehicle. Continental asserts the damages were not the result of an accident as required by the policy but rather the result of the insureds seizing the vehicle. It argues coverage was excluded because the insureds expected and intended the damages. Continental contends the only damages occurred while the vehicle was in the care, custody and control of the insureds. It asserts the trial court incorrectly applied the doctrine of reasonable expectations to the policies because the policies are clear.

The Allens and Quick Cash respond the trial court correctly determined that Continental was obligated to defend the present action. They concede that Whipple’s allegations of negligence were incomplete and did not state a cause of action. The Allens and Quick Cash contend, however, that the allegations did put Continental on notice that a negligence claim was being asserted. They assert the allegations raised the potential for a claim of negligence to be pursued. The Allens and Quick Cash argue that an insurer has a duty to defend if a petition merely alleges facts giving rise to a potential claim under the policy.


SC93502_Continental_Western_Ins_brief.pdfSC93502_Allen_and_Quick_Cash_brief.pdfSC93502_Continental_Western_Ins_reply_brief.pdf


SC93702
Cynthia Decormier v. Harley-Davidson Motor Company Group, Inc. and St. Louis Motorcycle, Inc. d/b/a Gateway Harley Davidson
St. Louis County
Challenge to exculpatory clause in release
Listen to the oral argument: SC93702.mp3SC93702.mp3
Decormier was represented during arguments by Matthew R. Davis of Heller, Gallagher & Finley LLP in St. Louis, and Harley Davidson and Gateway were represented by Terese A. Drew of Hinshaw & Culbertson in St. Louis.


Cynthia Decormier enrolled in a new rider course held on Gateway Harley Davidson’s property and marketed by Harley Davidson. As part of the event registration, she signed a release form containing an exculpatory clause (release from liability). Decormier was injured during the event when her motorcycle slipped and landed on her leg. Decormier claims there was rain, drizzle, snow and mist at the time of the accident. She filed claims for negligence against Harley Davidson Motor Company and Gateway Harley Davidson. Harley Davidson and Gateway filed a motion for summary judgment (judgment on the pleadings, without presentation of evidence), which the circuit court granted, finding the exculpatory clause released Harley Davidson and Gateway from liability. Decormier appeals.

Decormier argues the circuit court erred in granting summary judgment to Harley Davidson and Gateway. She contends they should not have been given deference simply because there was an exculpatory clause in the release form. Decormier asserts there is a genuine dispute of material fact as to whether Harley Davidson’s and Gateway’s actions constituted gross negligence. She argues Harley Davidson and Gateway did not deserve to be given the benefit of summary judgment due to their gross negligence. Decormier contends that the conditions at the time of her injury were dangerous and that the instructors had a duty to maintain a low-risk environment as well as to ensure participant safety.

Harley Davidson and Gateway respond the circuit court correctly granted them summary judgment. They argue that an affirmative defense of release is proper when a party voluntarily signs an exculpatory agreement. Harley Davidson and Gateway contend Decormier failed to plead gross negligence properly or provide sufficient evidence to support such a claim. They assert a claim of gross negligence must be for conduct not released under the exculpatory clause and must be pleaded properly. Harley Davidson and Gateway argue that Decormier only pleaded negligence and premises liability claims, which were released under the exculpatory clause, and therefore, summary judgment was proper.

The Missouri Association of Trial Attorneys argues, as a friend of the Court, that exculpatory clauses are not generally popular. It contends the clauses are unenforceable to the extent they permit businesses to escape punishment for grossly negligent or reckless behavior.

The Motorcycle Safety Foundation argues, as a friend of the Court, that it is against public policy to find that Harley Davidson and Gateway were not protected by the exculpatory clause. It contends a mere allegation of recklessness is insufficient to circumvent the protection of an exculpatory clause to which a party knowingly and voluntarily agrees.

SC93702_DeCormier_brief.pdfSC93702_Harley_Davidson_&_STL_Motorcycle_brief.pdfSC93702_DeCormier_reply_brief.pdf

SC93702_MO_Association_Trial_Attorneys_amicus_brief.pdfSC93702_Motorcycle_Safety_Foundation_amicus_brief.pdfSC93702_Mo_Org_of_Defense_Lawyers_amicus_brief.pdf


SC93769
Shelby E. Watson v. Wells Fargo Home Mortgage, Inc., et al.
St. Louis city
Modification and foreclosure under merchandising practices act
Listen to the oral argument: SC93769.mp3SC93769.mp3
Watson was represented during arguments by Mitchell B. Stoddard of Consumer Law Advocates in St. Louis, and Brian Bear of the attorney general's office in Jefferson City; and Wells Fargo was represented by David T. Hamilton of Hazelwood & Weber LLC in St. Charles.

Shelby Watson secured a mortgage loan for her loft condominium in 2006 and executed a deed of trust as security. The mortgage was taken over by Wells Fargo less than one year later. Watson ultimately defaulted on the loan and applied for a modification to reduce her monthly payments. Wells Fargo approved the modification but failed to notify Watson. She claims she secured a modification in June 2010, but Wells Fargo foreclosed on the condo two days later. Watson sued Wells Fargo, alleging it violated the state merchandising practices act by negotiating in bad faith, proceeding with foreclosure following the modification and using its powers to dictate the terms of the modification agreement without an opportunity for her to negotiate. Wells Fargo filed a motion for summary judgment (judgment on the pleadings, without presentation of evidence), which the circuit court granted, finding Wells Fargo’s acts may have been unfair and deceptive but did not violate the act because they did not relate to the sale or advertisement of merchandise. The circuit court further found Watson was required to claim the conduct occurred before or at the time of the initial loan extension or that Wells Fargo was a party to the initial transaction. Watson appeals.

Watson argues the circuit court erred in granting summary judgment to Wells Fargo. She contends the circuit court interpreted the language of the act, especially the phrase “in connection with,” too narrowly. Watson asserts that exempting post-sale unlawful acts from coverage violates the plain language of the merchandising practices act. She argues that the act applies to events occurring before, during or after a sale. Watson contends that for the circuit court to find the act does not apply to such events is contrary to both the act and prior decisions of this Court.

Wells Fargo responds that the circuit court correctly granted it summary judgment. It argues Watson has provided insufficient evidence to prove there is a connection between the alleged unfair practice and the origination of the loan. Wells Fargo contends the act can apply only if there is a connection between the creation of the loan in 2006 and the alleged deceptive practices because the act applies to the sale or advertisement of merchandise. It asserts Watson’s claim under the act fails as a matter of law.

The National Consumer Law Center argues, as a friend of the Court, that unfair and deceptive practices are not limited to those acts occurring prior to the sale to induce a purchase. It contends the merchandising practices act applies to fraud and unfair practices occurring before, during and after events in connection with the sale or advertisement of merchandise. The center asserts unfair and deceptive conduct can apply to the foreclosure of a home mortgage as being “in connection with” the sale of goods and services. It argues this Court, as well as two districts of the Missouri Court of Appeals, previously have extended the act to apply to post-sale conduct.

The attorney general argues, as a friend of the Court, that one of the cases on which Wells Fargo relies to avoid liability in this situation is contrary to the remaining case law on this subject. The attorney general contends that upholding the decision in that case effectively could destroy the merchandising practices act and create a method for parties to avoid liability for unfair and deceptive practices. The attorney general asserts that an interpretation of “in connection with” should be broader than that created by that one particular case. The attorney general argues that to find that a modification or foreclosure of a home mortgage is not related to, linked to or associated with the underlying mortgage leaves the act with little effect on future unfair and deceptive acts.


SC93769_Watson_brief.pdfSC93769_Wells_Fargo_brief.pdfSC93769_Watson_reply_brief.pdf


SC93769_National_Consumer_amicus_brief.pdfSC93769_Attorney_general_amicus_brief.pdf


SC93951
Davis R. Conway and Sheri D. Conway v. Citimortgage, Inc. and Federal National Mortgage Association, Inc.
St. Charles County
Challenge to interpretation of merchandising practices act
Listen to the oral argument: SC93951.mp3SC93951.mp3
The Conways were represented during arguments by Mitchell B. Stoddard of Consumer Law Advocates in St. Louis, and Brian Bear of the attorney general's office in Jefferson City; and Citimortgage was represented by Amy J. Thompson of Bryan Cave LLP in St. Louis.

Davis and Sheri Conway purchased property in Wentzville in 2007 with intent to remodel it and took out a mortgage with Pulaski Bank backed by CitiMortgage. The mortgage later was reassigned to the Federal National Mortgage Association (Fannie Mae). After the property was lost in a fire, the Conways settled with their insurance company and forwarded the funds to CitiMortgage. CitiMortgage held $15,000 of the funds in escrow, which it refused to release when the Conways became delinquent on their loan payments. CitiMortgage claimed the funds were pending completion of remodeling to the property and ultimately foreclosed on the property. The Conways sued CitiMortgage and Fannie Mae for the value of the equity put into the lost property and the value of lost personal property as well as violations of the merchandising practices act for fraud and unfair practices relating to the sale of the mortgage to Fannie Mae. The financial organizations filed a motion to dismiss, which the circuit court granted, finding the financial organizations’ conduct was not related to the original financing of the property as required by the act. The Conways appeal.

The Conways argue the circuit court erred in granting the financial organizations’ motion to dismiss. They contend the circuit court interpreted the act too narrowly by exempting unlawful acts occurring post-sale from the act’s coverage. The Conways assert the plain language of the act states that it applies to conduct occurring before, during and after a sale. They argue third parties will escape liability under the act if the circuit court’s interpretation is upheld, which contradicts this Court’s prior determinations. The Conways contend CitiMortgage should have sent the foreclosure notice to their home address because they had been receiving mail at that address regarding the property. They further assert CitiMortgage should have applied the escrow funds to the remaining mortgage amount, which would have satisfied the remaining balance.

The financial organizations respond the circuit court correctly granted their motion to dismiss. They argue the act does not apply to actions that do not relate to the original loan transaction. The financial organizations contend that unrelated conduct is not “in connection with” a sale as required by the act’s language. They assert that the “before, during and after” language does not eliminate the need for conduct to be in connection with a sale or advertisement of merchandise. The financial organizations argue their actions were neither temporally related nor pertinent to the initial transaction. They contend this Court’s prior decisions relied on in their argument is consistent with other cases, but the case relied on by Conway is distinguishable.

The attorney general argues, as a friend of the Court, that one of the cases on which the financial companies rely to avoid liability is contrary to the remaining case law on this subject. The attorney general contends that upholding that decision effectively could destroy the merchandising practices act and create a method for parties to avoid liability for unfair and deceptive practices. The attorney general asserts that an interpretation of “in connection with” should be broader than that created by that one particular case. The attorney general argues that to find that a modification or foreclosure of a home mortgage is not related to, linked to or associated with the underlying mortgage leaves the act with little effect on future unfair and deceptive acts.


SC93951_Conway_brief.pdfSC93951_Citimortgage_&_Federal_National_brief.pdfSC93951_Citimortgage_&_Federal_National_brief.pdfSC93951_Conway_reply_brief.pdfSC93951_Conway_reply_brief.pdf

SC93951_Attorney_General_amicus_brief.pdf


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