Craig Payne v. Grinnell Mutual Reinsurance Co
2013 U.S. App. LEXIS 11362
| 8th Cir. | 2013Background
- Paynes purchased a home from Brandows in 2007 and relied on a seller disclosure statement.
- Paynes discovered pre-existing defects after taking possession, including structural cracks and damage.
- In 2009 Paynes sued Brandows for misrepresentation, concealment, and MMPA violations.
- Brandows were insured by Grinnell Mutual, with Grinnell defending under a reservation of rights in 2010.
- Brandows settled the underlying suit in December 2010; Paynes sought equitable garnishment against Grinnell to collect a judgment.
- District court granted summary judgment for Grinnell, holding the underlying claim did not allege property damage under Missouri law; Missouri §379.200 governs equitable garnishment.
- Paynes argue the alleged structural damage could be a covered occurrence causing property damage; Grinnell argues policy exclusions bar coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether misrepresentation qualifies as an occurrence causing property damage under the policy. | Paynes contend misrepresentation is a covered occurrence. | Grinnell argues misrepresentation does not cause property damage under the policy. | No; no property damage absence—misrepresentation alone not a covered property damage event. |
| Whether the structural damage constitutes property damage covered by the policy despite preexisting defects. | Paynes allege damage from covered occurrence. | Grinnell relies on exclusions for property owned by insured and for premises sold. | Exclusions apply; there was no covered property damage caused by the occurrence. |
| Whether equitable garnishment under Missouri §379.200 is available to Paynes. | Paynes stand in Brandows' shoes to reach insurance proceeds. | Grinnell asserts no policy coverage for the asserted damage; garnishment requires coverage in insured-insurer dispute. | Garnishment not available because Brandows could not obtain coverage for the asserted damage. |
Key Cases Cited
- Lippincott v. St. Paul Fire & Marine Ins. Co., 287 F.3d 703 (8th Cir. 2002) (plain meaning governs insurance policy terms for property damage)
- Esicorp, Inc. v. Liberty Mut. Ins. Co., 266 F.3d 859 (8th Cir. 2001) (property damage requires physical injury to tangible property)
- Carroll v. Mo. Intergovernmental Risk Mgmt. Ass’n, 181 S.W.3d 123 (Mo. Ct. App. 2005) (equitable garnishment stands in insured's shoes; MS policy coverage threshold)
- Meyers v. Smith, 375 S.W.2d 9 (Mo. 1964) (insured-insurer action governs garnishment contours)
- Wood v. Safeco Ins. Co. of Am., 980 S.W.2d 43 (Mo. Ct. App. 1998) (negligent misrepresentation may be within 'occurrence' but coverage limited to property damage)