Lead Opinion
Franklin Allen (hereinafter, “Allen”) obtained a $16 million personal injury award against Wayne Bryers (hereinafter, “Bryers”) after Bryers’ handgun discharged and severely injured him. Allen subsequently filed a Rule 90 garnishment action in aid of execution seeking proceeds from an insurance policy issued by Atain Specialty Insurance Company (hereinafter, “Insurer”), which insured the premises where the shooting occurred.
This Court holds that the garnishment court’s rulings on Insurer’s motions to intervene and to set aside the judgment were void. Insurer’s appeal with respect to those claims is dismissed. This Court further holds that Insurer, who wrongfully refused to defend Bryers, is bound by the result of the underlying tort action, including the findings related to coverage, because it had the opportunity to control and manage the litigation but declined to so do. However, the garnishment court exceeded its authority in ordering Insurer to pay $16 million to Allen because he failed to demonstrate Insurer engaged in bad faith in refusing to defend or settle his claim. Accordingly, Allen is only entitled to receive the $1 million policy limit from Insurer. The remainder of the garnishment court’s judgment is affirmed as modified, and the cause is remanded to the garnishment court for entry of a judgment awarding Allen $1 million plus post-judgment interest on the entire $16 million underlying tort judgment until Insurer pays, offers to pay, or deposits in court its 1 million policy limit.
Factual and Procedural History
John Frank (hereinafter, “Frank”) owns the Sheridan Apartments in Kansas City, Missouri. Insurer issued a commercial general liability policy to Frank d/b/a The Sheridan Apartments in 2011 with a $1 million limit for liability claims filed against an insured for personal injury. The policy’s definition of “insured” included “employees” but only covered “acts within the scope of their employment by [the insured] or while performing duties related to the conduct of [the insured’s] business.” The policy applied to an “occurrence,” which is defined as “an accident.” The
On June 10, 2012, Allen was at the Sheridan Apartments when he was injured severely by the discharge of a handgun carried by Bryers, the property and security manager for the apartment complex, as Bryers was removing Allen from the premises. Allen was rendered a paraplegic from a gunshot that severed his spinal cord. Bryers cooperated with police and several witnesses were interviewed, but no criminal charges were filed against Bryers in connection with the incident.
On August 27, 2012, Allen’s attorney sent a letter to Frank advising him that Allen intended to assert a negligence claim against Frank’s employee, Bryers. Shortly thereafter, Allen’s attorney sent a similar letter to Insurer, informing it of the severity of Allen’s injury and Allen’s claim against Frank and Bryers.
On September 12, 2012, Insurer sent a letter to Bryers that set forth a full reservation of rights. The letter stated that Insurer’s investigation revealed that Bryers, acting as the Sheridan Apartments property manager, was involved in an altercation with Allen that resulted in Allen’s injury due to Bryers firing a handgun. Insurer informed Bryers that it believed there may not be coverage for Bryers’ action under the policy pursuant to the bodily injury provision and the exclusions for expected or intended injuries, employment-related practices, and assault and battery. Insurer explained it had a right and duty to defend Bryers, but only if the claims were covered by the policy. Insurer reserved its right to deny coverage based on the above-mentioned exclusions. Insurer informed Bryers of the $1 million policy limit and his duty to cooperate in the investigation, handling, and potential settlement of the claim. Insurer concluded the letter by stating, “[Insurer] denies any and all coverage under the policy in connection with the claim described above and furthermore denies that it has any legal obligation to indemnify you in the event a lawsuit is filed and a judgment is entered against you.”
On October 22, 2012, Insurer filed a declaratory judgment action in federal district court to determine coverage issues. Insurer maintained the policy did not provide Bryers coverage due to the assault and battery exclusion, the expected or intended injury exclusion, and that the claimed damages did not result from an “occurrence” under the policy.
On November 8, 2012, Allen’s attorney sent a letter to Insurer stating:
As a result of the filing of the declaratory judgment action, the purported defense of Bryers pursuant to a reservation of rights and the rejection of the demand to settle within policy limits, [Allen has] agreed in principle to enter*25 into a [section] 537.065 agreement4 with ... Bryers and will have the specific agreement executed by next week.
On December 4, 2012, Allen filed a petition for damages against Bryers, alleging “[t]his is a negligence cause of action that arises out of the unintentional and accidental discharge of a weapon that occurred” at the Sheridan Apartments while Allen “was being escorted off and/or physically removed” from the premises by Bryers, “who managed the Sheridan Apartments for the benefit and as the agent of the owner of the Sheridan Apartments ... Frank .... ” The petition stated that Bryers did not intend to discharge the handgun nor did Bryers engage in any act that foreseeably could cause injury to Allen. To the extent Bryers used force in attempting to escort off and/or physically remove Allen from the premises, the petition claimed Bryers used only that amount of force that was reasonably necessary to protect persons and property located in or around the Sheridan Apartments. Allen’s petition stated his injury was not caused or contributed to be caused by an assault, battery or an expected or intentional act. The petition further contended Bryers was acting in the scope and course of his employment, and Bryers purchased the handgun at Frank’s direction. Allen contemporaneously filed a declaratory judgment action against Bryers and Insurer seeking a declaration that the policy provided coverage for Allen’s injury.
Insurer sent correspondence to Bryers on December 14, 2012, notifying Bryers that Allen had filed suit and Insurer retained counsel on Bryers’ behalf “with [Insurer’s] reservation of rights to deny coverage as set forth by the facts and policy provisions” outlined in its September 12, 2012 letter. Insurer informed Bryers that it filed a declaratory judgment action and it believed several exclusions were present that precluded coverage. Insurer reiterated that it was reserving its rights, reminded Bryers about the cooperation clause, and stated again that the policy may not provide coverage.
On January 4, 2013, Insurer’s retained counsel filed an answer to Allen’s petition on Bryers’ behalf. The answer generally denied all of Allen’s claims and raised affirmative defenses that Allen’s injuries were a result of his own negligence. However, Bryers refused to accept Insurer’s reservation of rights defense, and Insurer’s retained counsel withdrew from the case. Shortly thereafter, Bryers withdrew the answer filed by retained counsel and consented to the entry of judgment against him consistent with the section 537.065 agreement he executed with Allen.
Insurer filed a motion to intervene on April 5, 2013, requesting intervention for the limited purpose of seeking a stay of the personal injury action until Allen’s declaratory judgment action was resolved.
The circuit court held a bench trial on Allen’s negligence claim on April 18, 2013. Allen presented evidence from an evaluating physician who provided a prognosis and testified about Allen’s need for future medical care and services. Allen entered into evidence his deposition testimony and that of his girlfriend. Allen also offered into evidence Bryers’ judicial admissions, which admitted the allegations set forth in Allen’s petition. Bryers did not object to any of the testimony, the depositions, or the exhibits offered at the bench trial. Bryers did not conduct cross-examination or present any of his own evidence. Allen made a closing argument regarding liability and damages and requested the circuit court award $20 million in damages. The circuit court took the case under advisement, stating it wanted to research the liability issues before entering a judgment.
The circuit court entered its judgment five days later. The circuit court’s judgment stated that Frank hired Bryers to assist in managing the Sheridan Apartments. It found one of Bryers’ duties included monitoring pedestrian traffic in and out of the premises to keep loitering at a minimum, which required escorting off and/or physically removing persons who Bryers determined were not on the premises properly. The judgment found Frank directed Bryers to acquire and carry a handgun to assist Bryers in performing his duties due to a series of criminal events that occurred at or near the apartment complex.
The circuit court noted that Bryers admitted Allen was injured as a direct result of his negligence and/or improper handling of the handgun, which was discharged when Bryers escorted Allen off of the premises. The circuit court determined Bryers was acting in the course of his employment and carrying out management duties. However, the circuit court found Bryers was under the influence of alcohol at the time the handgun discharged and injured Allen. The circuit court stated that Bryers had no intent to discharge the handgun and the discharge was unintentional, accidental, negligent and/or reckless as a result of Bryers’ intoxication and lack of training in the proper handling of a firearm. The circuit court ruled out that the incident involved an assault, a battery or any intentional act and held Allen did not intentionally assault, strike or batter Bryers during the incident. The circuit court determined Bryers’ use of force during the course of his employment was reasonable. The circuit court held Allen suffered a permanent and disabling spinal injury and awarded him $16 million in damages.
After the underlying tort judgment became final, Allen filed an Execution/Garnishment/Sequestration Application Order pursuant to Rule 90 and chapter 525. The garnishment action contained the same style and case number as the underlying tort judgment and was presided over by the same circuit judge. The garnishment order listed Allen as the garnishor, Bryers as the debtor, and Insurer as the garnishee. Allen propounded interrogatories to Insurer. Insurer filed its answers and denied that the policy provided indemnity to Bryers. In response, Allen filed exceptions, objections, and denials to Insurer’s interrogatory answers. Allen’s exceptions alleged Insurer: (1) wrongfully refused to defend Bryers; (2) acted in bad faith when it refused to settle Allen’s claim against
Insurer denied all of Allen’s allegations and raised several affirmative defenses, including: the section 537.065 agreement was a result of fraud or collusion; the underlying tort judgment was unreasonable; the policy was void or subject to rescission; several coverage defenses were present; it had no duty to defend or indemnify Bryers; Bryers violated the cooperation clause; an inherent conflict of interest existed; its due process rights were violated; the appropriateness of several issues being adjudicated as premature; and challenged any potential award of punitive damages for any finding of bad faith on its part in handling Allen’s claim.
Allen filed a motion for summary judgment on the garnishment petition, alleging there were no issues of material fact and he was entitled to judgment as a matter of law. Allen’s uncontroverted facts mirrored the facts found in the underlying tort judgment. Allen also alleged Insurer engaged in bad faith in failing to perform its duty to defend, duty to settle, and duty to indemnify under the policy. In response, Insurer argued it did not have a full and fair opportunity to litigate the coverage issues in the underlying tort action, and, therefore, it could not be bound by the judicial determinations made in that proceeding. Insurer set forth what it believed to be additional controverted facts, which consisted largely of eyewitness accounts of the altercation between Bryers and Allen that contradicted the facts found in the underlying tort judgment. Insurer also contended that if Allen was entitled to any recovery, it was restricted to the $1 million policy limit because bad faith had not been proven.
On April 25, 2014, almost a year after the underlying tort judgment became final, Insurer filed a second motion to intervene. Insurer also filed a motion to set aside the underlying tort judgment on the basis of fraud. On July 25, 2014, the garnishment court overruled Insurer’s motions, entered summary judgment in Allen’s favor on his garnishment petition, and ordered Insurer to pay Allen $16 million, stating that “extra-contractual” damages were appropriate because Insurer was suffering the consequences of its breach of its duty to defend and its failure to settle within the policy limit. After Insurer’s motions for reconsideration were overruled, Insurer appealed.
Motions to Intervene
This Court first addresses Insurer’s claim that the circuit court erred in overruling its motions to intervene in the underlying tort action because Insurer had an absolute right to intervene given it had an interest in the lawsuit after Bryers entered into the section 537.065 agreement and consented to judgment. Insurer contends it is so situated that the factual determinations in the underlying tort action impaired or impeded its ability to protect its interests because it was not allowed an opportunity to litigate the facts relating to coverage under the policy. The garnishment court overruled Insurer’s motion, finding that because Insurer denied “any and all coverage,” it had no authority to contest the terms of the section 537.065 agreement.
Rule 52.12(a) governs intervention as a matter of right. Insurer does not maintain that a statute confers it an unconditional right to intervene. In the absence of a statute conferring an unconditional right to intervene, Rule 52.12(a)(2) requires an entity seeking to intervene as a
Insurer filed two motions to intervene. The first motion was filed before the bench trial in the underlying tort action. The circuit court overruled Insurer’s motion. Insurer asked for reconsideration of the ruling on the morning of trial, but the circuit court declined relief. Insurer had the right to appeal the circuit court’s denial of its application to intervene as a matter of right when the circuit court entered its final judgment in the underlying tort action. State ex rel. Koster v. ConocoPhillips Co.,
Insurer’s second motion to intervene was sought for the purposes of setting aside the judgment on the basis of fraud and was filed almost a year after the underlying tort judgment was entered. Rule 75.01 limits the circuit court’s control over a judgment to thirty days after a judgment is entered, provided no authorized after-trial motions are filed. See Rule 81.05(a)(1). Rule 75.01 states the circuit court “retains control over judgments during the thirty-day period after entry of judgment and may, after giving the parties an opportunity to be heard and for good cause, vacate, reopen, correct, amend, or modify its judgment within that time.” Id. There is no dispute the underlying tort judgment was final, none of the parties filed authorized after-trial motions, and none of the parties sought an appeal within the time frame contemplated by Rule 75.01. Hence, Insurer’s second motion to intervene was filed untimely.
Insurer also could not file an authorized after-trial motion because it was not a party to the action. “After the expiration of the 30 days provided by Rule 75.01, the trial court is divested of jurisdiction, unless a party timely files an authorized after-trial motion.” Spicer v. Donald N. Spicer Revocable Living Trust,
Finally, in its reply brief, Insurer raised the additional argument that it was entitled to intervene because its right to do so ripened when it was called on to indemnify Bryers and pay for the underlying tort judgment. See Ballmer v. Ballmer,
Motion to Set Aside Underlying Tort Judgment
Relatedly, Insurer argues the garnishment court erred in overruling its motion to set aside the underlying tort judgment because it was a result of fraud, collusion, and misrepresentation due to Allen and Bryers entering into a section 537.065 agreement. Insurer claims the section 537.065 agreement required Bryers to consent to judgment, allowed Allen and Bryers to stipulate to untrue facts, and presented these stipulations to the circuit court with the intent that the circuit court rely upon them to foreclose Insurer from an opportunity to litigate the facts relating to its coverage issues under the policy.
Rule 74.06(b)(2) provides that the circuit court may relieve a party or the party’s legal representative from a final judgment or order for fraud, misrepresentation, or other misconduct of an adverse party. Rule 74.06(c) requires that the motion to set aside be filed not more than one year after the judgment or order was entered. A circuit court’s ruling on a Rule 74.06(b) motion is in the nature of an independent proceeding and is appealable. In re Marriage of Hendrix,
The underlying tort judgment was entered on April 30, 2013. Insurer timely filed its motion to set aside that judgment, under Rule 74.06(b), on April 25, 2014. However, the provisions of Rule 74.06(b) are limited to parties. State ex rel. Wolfner v. Dalton,
Insurer brings several points challenging the propriety of the garnishment court’s entry of summary judgment in Allen’s favor on his garnishment petition. This Court addresses these claims out of the order presented by Insurer for the sake of clarity.
Standard of Review
This Court reviews a grant of summary judgment de novo. ITT Commercial Fin. Corp. v. Midr-Am. Marine Supply Corp.,
Garnishment
“There are two avenues for a judgment creditor to collect money from an insurance company: (1) a traditional garnishment under section 525.240 and Rule 90 or (2) a direct action against the insurer authorized by section 379.200.” Johnston v. Sweany,
“Garnishment is purely a creature of statute in derogation of the common law.” Moore Auto. Grp., Inc. v. Goffstein,
Opportunity to Litigate Coverage
Insurer argues the garnishment court erred in sustaining Allen’s motion for summary judgment because Insurer was entitled to an opportunity to litigate the facts relating to the coverage issues under the policy. Insurer claims the garnishment court erroneously relied upon factual determinations in the underlying tort action to determine coverage under the policy. Specifically, Insurer points to facts regarding assault, battery, intentional acts, and the facts related to the course and scope of Bryers’ employment that Insurer maintains negates coverage. Allen responds that Insurer waived its opportunity to defend in the underlying tort action when it refused to defend Bryers and filed a declaratory judgment action challenging coverage before Allen’s petition was filed.
An insurer’s duty to defend is broader than its duty to indemnify. Piatt v. Indiana Lumbermen’s Mut. Ins. Co.,
[E]ven if the plaintiff bringing a claim against the insured initially pleads the ‘wrong’ cause of action, or one that is likely to be subject to a motion to dismiss, if, at the time the claim is made, facts are known to the insurer or could reasonably be ascertained by the insurer that would potentially put the claim within the scope of the policy, the insurer must defend the insured.
Fostill Lake Builders, LLC v. Tudor Ins. Co.,
Insurer’s initial letter to Bryers acknowledged Bryers was acting as Frank’s property manager at the time of the incident. Accordingly, Bryers was Frank’s employee and, therefore, was an insured as defined under the terms of the policy. Insurer’s initial letter, which it sent prior to receiving Allen’s petition, also made clear that it “denie[d] any and all coverage under the policy in connection with the
An insurer may not reserve the right to disclaim coverage and at the same time insist upon controlling the defense. Butters v. City of Independence,
An insurer’s decision to file a declaratory judgment action instead of foregoing its reservation of rights defense is a risky one. Ballmer,
Once an insurer unjustifiably refuses to defend or provide coverage, the insured may enter into an agreement with the plaintiff to limit his or her liability to the insurance policy limits. Schmitz,
Bound by the Result of the Litigation
Insurer next contests the extent to which it is bound by the underlying tort judgment. “Where one is bound to protect another from liability, he is bound
[T]he first judgment is conclusive on the plaintiff and defendant, and hence the garnishee, as to defendant’s liability to plaintiff on the tort cause of action in the amount of the verdict rendered. Nevertheless, the judgment in the tort action is not conclusive on the parties in the garnishment suit as to facts not actually litigated in the first action or to facts that were merely evidentiary or ... inferentially involved in the first.
Id. at 236. Moreover, an underlying judgment “is conclusive in a later action on the indemnity contract as to those issues and questions necessarily determined in the underlying judgment.” Assurance Co. of America v. Secura Ins. Co,,
Insurer argues that many of the facts found in the underlying tort judgment were not essential, material, or necessary to reaching the issue of liability and damages and it should not be bound by those findings in the garnishment proceeding. This Court disagrees. Allen could not have prevailed on his negligence claim had the evidence established that Bryers acted intentionally, committed an assault or battery, or used reasonable force during the course and scope of his employment in attempting to remove Allen from his employer’s premises. Insurer, who wrongfully refused to defend its insured, cannot now complain that these necessary findings concurrently resolved several questions regarding coverage under the policy. Consequently, Insurer is bound by the result of the underlying tort action and the factual findings as they dovetail into resolving coverage issues under the policy.
Inherent Conflict of Interest
Alternatively, Insurer argues an inherent conflict of interest exists between it and Bryers that made it legally impossible for Insurer to litigate the coverage issues in the underlying tort action. To support its conflict of interest argument, Insurer relies on Cox v. Steck,
In Cox, the victim’s explicitly raised allegations of assault in his petition provided the insurer with a valid basis upon which to assert a reservation of rights or to deny a defense.
Insurer next argues the garnishment court erred in entering summary judgment in Allen’s favor because he failed to establish that each of Insurer’s affirmative defenses failed as a matter of law. Insurer pleaded defenses of fraud, collusion, rescission, void policy, violation of the cooperation clause, and others to defeat summary judgment. Insurer argues Allen’s summary judgment motion failed to address any of these affirmative defenses, much less establish material facts entitling him to judgment as a matter of law with respect to each defense.
Many of Insurer’s affirmative defenses are a second attempt to litigate coverage under the policy. Insurer had an opportunity to litigate coverage and chose not to so when it wrongfully refused to defend Bryers, filed a declaratory judgment action, and took no steps to protect its interests when it failed to appeal the first motion for intervention. Accordingly, Insurer is bound by the results of the underlying tort judgment regarding the necessary findings that addressed Insurer’s substantive policy defenses, such as the assault, battery, expected or intentional act, and employment-related practices.
In Insurer’s answer to Allen’s exceptions, it alleged Frank misrepresented facts relating to security at the Sheridan Apartments, which Insurer believes subjected the policy to rescission and/or rendered the policy void. Insurer bears the burden of proving Frank made a material misrepresentation in his application for insurance. Smith ex rel. Stephan v. AF & L Ins. Co.,
demonstrate that a representation is both false and material in order to avoid the policy when (1) the representation is warranted to be true, (2) the policy is conditioned upon its truth, (3) the policy provides that its falsity will avoid the policy, or (4) the application is incorporated into and attached to the policy. Otherwise, the insurance company must demonstrate that the representation in the application was false and fraudulently made in order to avoid the policy.
Id. (quoting Cont’l Cas. Co. v. Maxwell,
With respect to fraud and collusion, Insurer points to Bryers’ deposition obtained during the garnishment proceeding. Bryers asserted his Fifth Amendment privilege to remain silent throughout the questioning about the terms of his employment, the incident, and the circumstances surrounding the section 537.065 agreement, and the trial. “A party seeking the benefit of a negative Fifth Amendment inference in a civil case must ... make an affirmative showing to support its right to judgment and cannot rely exclusively upon the other party’s refusal to testify.” Johnson v. Missouri Bd. of Nursing Adm’rs,
The record demonstrates that, beyond Bryers’ refusal to testify during the deposition, Insurer set forth only conclusory allegations that Allen and Bryers engaged in fraud or collusion when entering into the section 537.065 agreement. After Insurer asserted a reservation of rights, denied coverage, and sought a declaratory judgment action, Bryers was free to enter into a section 537.065 agreement to limit his exposure to liability. Schmitz,
Finally, turning to Bryers’ alleged breach of the policy’s cooperation clause, “if the garnishee seeks to escape coverage solely because of an alleged breach of a policy provision requiring the insured to cooperate with the insurer, the burden is upon the insurer to prove facts that would make that provision relieve the insurer from liability.” Johnston,
Excessive Garnishment Award
Insurer next contends the garnishment court exceeded its authority and erred in awarding Allen $16 million in damages. First, Insurer argues relief under a statutory garnishment action in aid of execution is limited to the collection of money that the garnishee has a present obligation to pay the debtor and Insurer had no present obligation to pay Allen. This argument fails because this Court ruled that Insurer is bound by the result of the underlying tort judgment. Bryers was Insurer’s insured under the policy and found to have harmed Allen negligently during the course and scope of his employment while using reasonable force to remove Allen from his employer’s property. Accordingly, Insurer has a present obligation to pay Allen for the damages he suffered by way of Bryers’ negligence that
Next, Insurer maintains that Allen’s claim for $16 million was based upon separate independent claims of breach of contract and/or bad faith. Insurer contends a statutory garnishment action does not allow for the litigation of separate claims for damages by the garnishor, and Bryers never filed an independent action asserting tort or breach of contract claims that would expose Insurer for damages beyond the $1 million policy limit. Insurer argues that “extra-contractual liability” based upon these types of claims is not appropriate in a garnishment action. Insurer cites Landmark Bank to support its argument.
In Landmark Bank, a traditional garnishment action, the issues were whether the garnishee possessed or controlled any of the debtors’ funds and whether the garnishee breached its fiduciary duty to the garnishor if it disbursed those funds. Landmark Bank,
Landmark Bank is distinguishable because it involved an attempt by the gar-nishor to collect directly on a breach of fiduciary duty claim allegedly owed by the garnishee to the garnishor, not the judgment debtor. The garnishor was not attempting to collect on any liability owed to the debtor, but, rather, was seeking to collect on a fiduciary duty claim purportedly owed to itself. That is not the case here.
Allen filed exceptions to Insurer’s answers to his interrogatories, wherein he alleged, inter alia, that Insurer: (1) wrongfully refused to defend Bryers; (2) acted in bad faith when it refused to settle Allen’s claim; and (3) acted in bad faith when it refused to defend Bryers.
In Columbia Casualty, an insurer that refused to defend its insured and refused to participate in settlement negotiations contested its liability for damages that were agreed to through a settlement between the insured and a class of injured plaintiffs. Columbia Cas. Co.,
This Court affirmed the circuit court’s judgment, rejecting the insurer’s argument that it was only obligated to indemnify the insured for the policy limits and not the full amount of the settlement because no bad faith allegations were raised in that case. Id. at 273. This Court stated that because the insurer wrongfully refused to defend the insured, the insurer put itself in the position to indemnify the insured for all damages flowing from its breach of the duty to defend. Id. “[The insurer] simply is suffering the consequences of its breach of its duty to defend and its failure to settle within the policy limits.” Id. This Court concluded that the insurer could not “benefit from its wrongful refusal to assume control of the proceedings” and could not avoid liability for the settlement judgment entered in that case. Id. at 274.
This Court agrees that Columbia Casualty is distinguishable and does not support the garnishment court’s finding that Insurer is liable for the entire amount of the underlying tort judgment. Notably, Columbia Casualty was a declaratory judgment action where several specific coverage issues were at issue, not a traditional garnishment case. Second, the declaratory judgment court explicitly found the insurer engaged in bad faith when it both refused to defend and to settle the claim. The bad faith determination was not challenged on appeal. Finally, because the insurer acted in bad faith for refusing both to defend and to settle, the insurer was liable for the entire amount of the judgment beyond the policy limits. Here, while the garnishment court found Insurer refused to defend and refused to settle, it made no finding of bad faith.
This Court has found Insurer wrongfully refused to defend Bryers in the underlying tort action. “[A]n insurance company is liable to the limits of its policy plus attorney fees, expenses and other damages where it refuses to defend an insured who is in fact covered.” Landie v. Century Indemnity Co.,
This Court has described bad faith as “the intentional disregard of the financial interest of [the] insured in the hope of escaping the responsibility imposed upon [the insurer] by its policy.” Zumwalt v. Utilities Ins. Co.,
While it is clear Insurer wrongfully refused to defend Bryers, the garnishment court did not find that Insurer acted in bad faith. Consequently, the garnishment court exceeded its authority in awarding Allen the full amount of the underlying tort judgment because Allen was only entitled to the $1 million policy limits per Landie. Accordingly, the garnishment court erred in entering judgment in excess of the $1 million policy limit.
Rule 84.14 permits this Court to enter the judgment as the trial court ought to have entered, rendering remand unnecessary. Hunter,
This Court must next determine the amount of interest which Insurer is liable for on the modified judgment. The Insurer’s policy sets forth what “Supplementary Payments” it will pay and includes the following language:
1. [Insurer] will pay, with respect to any claim we investigate or settle or any “suit” against an insured we defend: g. All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in*40 court the part of the judgment that is within the applicable limit of insurance.
In Miller v. Secura Ins. & Mut. Co. of Wisconsin,
Miller then analyzed the amount of post-judgment interest the insurer was liable for under the policy. The insured asserted the insurer owed him post-judgment interest on the entire amount of the judgment. The insurer argued it was obligated to pay interest only on the part of the judgment which did not exceed the policy limit. The Western District examined the policy language and found the language did not determine how interest was calculated; instead, it limited the duration of the insurer’s liability for interest. Id. at 157. The Western District explained the language outlined what the insurer had to pay, offer to pay, or deposit into the court before post-judgment interest would stop accruing. Id. at 157. Accordingly, the Western District determined the insurer had to pay post-judgment interest on the entire judgment to stop interest from accruing going forward. Id. The Western District then remanded the case to the circuit court to calculate interest in accordance with its opinion. Id. at 160.
The policy language in the instant case is almost identical to that in Miller and supports Allen’s contention that Insurer is liable for post-judgment interest on the entire $16 million judgment in the underlying tort case because Insurer has not paid, offered to pay, or deposited the $1 million policy limit with the circuit court. This Court remands this matter to the garnishment court for entry of a judgment awarding Allen $1 million plus post-judgment interest on the entire $16 million underlying tort judgment until Insurer pays, offers to pay, or deposits in court its $1 million policy limit.
Conclusion
Because the garnishment court’s rulings on Insurer’s motions to intervene and to set aside the judgment were void, Insurer’s appeal with respect to those claims is dismissed. This Court affirms the remainder of the garnishment court’s judgment as modified, and the cause is remanded for a calculation of post-judgment interest.
Notes
. The insurance policy limit was $1 million.
. This Court transferred this case after an opinion by the Missouri Court of Appeals, Western District. Mo. Const, art. V, sec. 10. Portions of the court of appeals' opinion are incorporated without further attribution.
, This action was dismissed without prejudice after Allen subsequently filed his own declaratory judgment action in state court.
, Section 537.065, RSMo 2000, allows a claimant and a tortfeasor to contract to limit recovery to specified assets or insurance coverage. See Hunter v. Moore,
. Bryers filed a cross-claim in Allen’s declaratory judgment action in which he alleged that, as an insured under the policy, he was enti-tied to a defense and indemnification from Insurer against any damages that arose out of Bryers’ attempt to escort Allen from the premises. Insurer removed Allen's declaratory judgment action to federal district court; however, the declaratory judgment action was dismissed after the circuit court entered summary judgment in Allen’s favor in the garnishment action.
. The section 537.065 agreement was not entered into the record in any of the underlying proceedings. This Court cannot speak to the date of execution or the terms of the agreement, specifically whether it confines the scope of liability to the policy limits. However, the record reflects that Allen submitted the section 537.065 agreement to the circuit court for an in camera review prior to trial.
. Even if Insurer could bring the Rule 74.06(b) motion as a "party,” the record re-fleets Allen filed a motion to strike Insurer’s motion to set aside the judgment and Insurer filed no responsive pleading, rendering Allen’s motion unopposed. Again, Insurer offers no explanation as to why it failed to respond to Allen’s motion to strike, which could have given the garnishment court an opportunity to rule upon the merits of Insurer’s motion, provided it was a party to the underlying tort judgment.
. Traditional garnishment and an equitable action filed pursuant to section 379.200 are not mutually exclusive remedies. Johnston,
. In Cox, the victim filed suit against the insured after being injured in a bar fight, alleging assault, and, in the alternative, negligence. The insurer defended the insured under a reservation of rights and denied policy coverage for the claim. The insured and victim entered into a section 537.065 agreement that the insured "negligently injured” the victim. After a brief trial, the circuit court entered judgment finding the insured negligently injured the victim and awarded damages. Id. In the victim's garnishment action, the insurer denied coverage, arguing the insured engaging in a “willful and malicious act” that resulted in an "expected or intended” bodily injury. The insurer also asserted it could not have defended the insured in the underlying action because there was an inherent conflict
. In James, the insured stabbed his estranged wife’s paramour at the insured’s home. James,
. This Court notes that the answer filed by Insurer’s retained counsel asserted an affir
. Because Insurer had an opportunity to manage and control the underlying tort action and was bound by the necessary findings as they related to coverage, this Court summarily denies Insurer’s Point VI, which alleges there are genuine issues of material fact as to: (1) the existence of the policy; (2) coverage for the claimed loss under the policy; (3) Insurer’s opportunity to defend the underlying tort action; and (4) Insurer’s affirmative defenses including fraud, collusion, and Bryers’ violation of the cooperation clause.
. After Allen filed the garnishment action, he and Bryers entered into a stipulation wherein Bryers assigned any and all interest he may have in the policy to Allen. This included granting Allen the right to assume and prosecute any claims Bryers may have had against Insurer for its failure to defend and indemnify Bryers, the right to defend or prosecute any claims that Bryers may have for determination of Bryers’ rights under the policy, and the right to seek declaration from a court to determine Insurer’s liability to defend and indemnify Bryers for the damages suffered by Allen.
. Landie explained the insured’s scope of recovery upon the insurer’s breach of its contractual duty to defend includes “the limits of the policy plus attorney fees, costs, interest and any other expenses incurred by the insured in conducting the defense of the suit which was the obligation of the company to perform under the contract.” Id. at 562. While Allen would be entitled to these fees and costs under Landie, at no point did Allen request attorney fees or costs related to the defense of the underlying tort action. The
. Given the disposition of this claim, this Court need not address Insurer’s additional arguments contained in Point III (questions of fact remain regarding its duty to defend) and Point IX (due process arguments related to the excessive award).
Concurrence Opinion
Insurer was denied an opportunity to litigate coverage here, but it has only itself to blame. As the tortured history described in the majority opinion shows, Insurer had three separate chances to litigate coverage. In the end, however, it abandoned all three.
Insurer could have intervened as a matter of right in the underlying tort suit. It made a motion to that effect, but the trial court overruled that motion. Insurer had an opportunity to challenge that ruling by filing an appeal once the trial court entered its final judgment in the underlying tort suit, but it failed to do so.
The Insurer could have relied upon the trial court’s ruling that it had no interest in the underlying tort suit that would be impaired or impeded if it were not granted intervention, and litigated coverage in a separate action for declaratory judgment. Again, Insurer started down this road— filing two such suits, one in federal court and one in state court — but it abandoned both suits by dismissing them before a judgment on the merits could be entered.
Accordingly, because of the unique facts of this case, I concur in the result reached in the majority opinion.