Clayborne v. Enterprise Leasing Co. of St. Louis
524 S.W.3d 101
Mo. Ct. App.2017Background
- Parker rented a 2013 Ford Escape from Enterprise on March 6, 2013 and declined Enterprise’s offered insurance and supplemental liability protection (initialed declination on the rental contract).
- On March 11, 2013 Parker ran a stop sign and collided with Clayborne; Parker had his own auto policy through Benchmark at the time.
- Clayborne sought to settle for $25,000 in April 2014; Benchmark later paid $15,000 under a Section 537.065 agreement reserving recovery to listed assets (including insurers).
- Clayborne sued Parker; after a bench trial the court entered a $575,000 judgment against Parker on October 6, 2014.
- Clayborne garnished Enterprise/ELCO for the MVFRL $25,000; Enterprise/ELCO paid $25,000 and were dismissed with prejudice from the garnishment action. Parker then asserted cross-claims against Enterprise/ELCO for breach of contract (duty to defend) and bad-faith refusal to settle.
- The trial court granted summary judgment for Enterprise/ELCO, finding no contractual or statutory duty to defend Parker and no bad-faith duty because Enterprise is a self-insured rental company (not Parker’s insurer) and Parker declined optional coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Enterprise/ELCO had a duty to defend Parker | Parker: rental agreement creates insurer-like obligations (covers vehicle for MVFRL minimums and controls claims), so it owed duty to defend | Enterprise/ELCO: rental agreement does not obligate them to defend; Parker declined optional coverage; they only owe MVFRL third-party minimums | No duty to defend; summary judgment for Enterprise/ELCO |
| Whether Enterprise/ELCO acted in bad faith by failing to settle within MVFRL limits | Parker: Enterprise reserved exclusive control over claims and thus could be liable in bad faith for refusing to settle, entitling him to excess judgment | Enterprise/ELCO: bad-faith doctrine applies to liability insurers; Enterprise is not Parker’s insurer, accepted no premiums, and fulfilled MVFRL duty by paying $25,000 | No bad-faith liability; summary judgment for Enterprise/ELCO |
Key Cases Cited
- Zumwalt v. Utilities Ins. Co., 228 S.W.2d 750 (Mo. 1950) (recognized rule limiting insurer liability for excess judgment unless insurer reserved settlement control and acted in bad faith)
- Scottsdale Ins. Co. v. Addison Ins. Co., 448 S.W.3d 818 (Mo. banc 2014) (outlines elements of bad-faith refusal-to-settle claim by a liability insurer)
- ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371 (Mo. banc 1993) (summary judgment standard)
- Renaissance Leasing, LLC v. Vermeer Mfg. Co., 322 S.W.3d 112 (Mo. banc 2010) (non-movant’s burden to show specific facts in response to summary judgment)