338 S.W.3d 336
Mo. Ct. App.2011Background
- Fostill Lake Builders contracted H Design to design Miramar Condominiums and to comply with building codes, including accessibility provisions.
- Fostill faced federal (FHA, ADA) and state (MHRA) claims asserting Miramar failed handicap accessibility; Fostill also asserted a Missouri-law cross-claim for professional negligence against H Design.
- Tudor Insurance refused to defend H Design under a discrimination exclusion, leading to settlements in which Fostill limited recovery to Tudor policy proceeds and a Section 537.065 settlement with H Design.
- A federal bench trial awarded Fostill $365,586 for H Design’s negligence; Tudor attempted to intervene later to challenge the judgment as void for lack of subject-matter jurisdiction.
- Fostill filed an equitable garnishment in state court to collect against Tudor; the trial court granted Tudor summary judgment concluding lack of jurisdiction and policy exclusion, which Fostill and H Design appealed.
- Appellate court reversed the trial court on jurisdiction and coverage issues, remanding for proceedings consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the federal judgment validly adjudicated despite alleged preemption? | Fostill | Tudor | Federal jurisdiction was valid; cross-claim fall under supplemental jurisdiction. |
| Did FHA/ADA preempt Fostill's state-law cross-claim so the federal judgment was void? | Fostill | Tudor | Preemption defense waived; not timely raised; judgment not void. |
| Did Tudor have a duty to defend H Design and thus incur costs in defending the cross-claim? | H Design | Tudor | Tudor had a defense duty; coverage issue unresolved; costs recoverable on remand. |
| Does the Tudor policy cover Fostill's cross-claim despite the discrimination exclusion? | Fostill | Tudor | Discrimination exclusion ambiguous; coverage for professional negligence claim affirmed; remand for costs. |
| Is the decision reasonable and consistent with section 537.065 settlements? | Fostill | Tudor | Reasonableness supported by trial evidence; remand to address remaining issues. |
Key Cases Cited
- ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371 (Mo. banc 1993) (standard for de novo review of summary judgment.)
- Reese v. U.S. Fire Ins. Co., 173 S.W.3d 287 (Mo.App. W.D. 2005) (underlying judgment not collaterally attacked when subject-matter jurisdiction exists.)
- Truck Ins., Exch. v. Prairie Framing, LLC, 162 S.W.3d 64 (Mo.App. W.D. 2005) (duty to defend when facts could potentially bring claims within policy coverage.)
- Equal Rights Ctr. v. Niles Bolton Assocs., 602 F.3d 597 (4th Cir. 2010) (analysis of preemption and indemnity/contribution under federal fair housing law.)
- Virginia Electric & Power Co. v. Northbrook Property & Cas. Ins. Co., 252 Va. 265, 475 S.E.2d 264 (1996) (interpretation of ambiguous insurance policy exclusions against insurer.)