12 F.4th 845
8th Cir.2021Background
- Aug. 16, 2014: McClune injured her right shoulder in a car accident; she settled driver liability for $100,000 and claimed med-pay ($5,000) and UIM ($500,000) under her Farmers policy.
- McClune initially sought $400,000 (June 2016); Farmers evaluated the UIM claim and made low settlement offers ($2,500 then $6,850 after records).
- In July 2017 McClune reported a new left-shoulder injury (allegedly from overuse) and increased her demand (up to $500,000); Farmers reopened the investigation and requested additional medical records.
- After months of intermittent exchanges, Farmers’ counsel asked (April 17, 2018) for updated records and that McClune submit to an examination under oath (EUO); six days later McClune sued instead of complying.
- District court granted Farmers’ summary judgment, finding McClune materially breached the policy cooperation clause by refusing the EUO, prejudicing Farmers; McClune appealed; the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McClune materially breached the policy by refusing to submit to an EUO | McClune: her duty to cooperate ended after Farmers said it had completed its review (Nov. 7, 2017) | Farmers: the duty to submit to an EUO continued when the investigation was reopened after McClune’s increased demand | Held: McClune materially breached by filing suit and refusing the EUO |
| Whether Farmers waived or is estopped from requesting an EUO | McClune: Farmers’ Nov. 7 letter ("completed review") impliedly waived the right to an EUO; she relied to her detriment | Farmers: it never clearly and unequivocally relinquished the right; reopening investigation defeated waiver/estoppel | Held: No waiver or estoppel—no clear relinquishment and no detrimental reliance |
| Whether McClune’s refusal prejudiced Farmers | McClune: Farmers already had sufficient information when it said the review was complete | Farmers: the EUO was needed to investigate whether left-shoulder injury predated the accident; refusal prevented further investigation | Held: Prejudice established because EUO was necessary to probe key issues |
| Whether Farmers acted with reasonable diligence in seeking cooperation | McClune: request was a delay tactic / acted in bad faith | Farmers: timely reopened investigation after new demand and reasonably requested an EUO about one month after the $450,000 counteroffer | Held: Farmers exercised reasonable diligence; delays mostly attributable to McClune |
Key Cases Cited
- Gardner v. Wal-Mart Stores, Inc., 2 F.4th 745 (8th Cir. 2021) (summary judgment review standard)
- Heubel Materials Handling Co. v. Universal Underwriters Ins. Co., 704 F.3d 558 (8th Cir. 2013) (apply state law to insurance policy interpretation in diversity cases)
- Med. Protective Co. v. Bubenik, 594 F.3d 1047 (8th Cir. 2010) (elements required to deny coverage for cooperation-clause breach)
- Roller v. Am. Modern Home Ins. Co., 484 S.W.3d 110 (Mo. Ct. App. 2015) (failure to submit to EUO can breach cooperation clause)
- Hendrix v. Jones, 580 S.W.2d 740 (Mo. 1979) (cooperation clauses enforceable in Missouri)
- Chaganti & Assocs. v. Nowotny, 470 F.3d 1215 (8th Cir. 2006) (mutual assent required to modify contracts)
- Calvert v. Safeco Ins. Co. of Am., 660 S.W.2d 265 (Mo. Ct. App. 1983) (waiver/forbearance issues in insurer requests for additional statements)
- Brown v. State Farm Mut. Auto. Ins. Co., 776 S.W.2d 384 (Mo. 1989) (estoppel requires detrimental reliance)
- Sanzone v. Mercy Health, 954 F.3d 1031 (8th Cir. 2020) (preservation of arguments for appeal)