Opinion
No. 58357 (Consolidated with W.D. 58737)
Opinion Filed: June 26, 2001
APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY THE HONORABLE JAMES D. WILLIAMSON, JR., JUDGE
H. Kent Desselle, Independence for appellant
Defendant Acting Pro Se
Kip D. Richards, Kansas City for respondent.
Before Ulrich, P.J., Smith, J. and Newton, J.
Appellant-Respondents, Larry and Gwen Johnston, appeal from the entry of summary judgment by the circuit court in favor of Respondent-Appellant, Assurance Company of America [hereinafter "Assurance"], in a garnishment proceeding brought by the Johnstons, seeking recovery of the proceeds of an insurance policy issued by Assurance providing coverage to "John Sweany DBA AAA Home Maintenance" for damages resulting from a fire at the Johnstons' home. The Johnstons essentially contend that the circuit court erred in granting Assurance's Motion for Summary Judgment in the Johnstons' garnishment action against Assurance because Assurance failed/refused to provide a defense to its insured, and therefore, is bound by the judgment against its insured. Assurance cross-appeals alleging that the trial court erred in overruling its motion to award attorney's fees and expenses as provided by Rule 90.12(b). Assurance also filed a motion for attorney's fees on appeal pursuant to Rule 84.21. The motion was ordered taken with the case. The judgment as it pertains to the Johnstons' appeal is affirmed. The judgment as it relates to Assurance's cross-appeal is modified. Assurance's motion for attorney's fees on appeal is denied.
I. Facts
John Sweany is the owner of two businesses, AAA Chimney Sweeps Co., Inc. [hereinafter "AAA Chimney"], a chimney sweep service and repair company, and AAA Home Maintenance [hereinafter "Home Maintenance"], a construction and remodeling business. Both businesses are separate entities, each having its own assets, liabilities and insurance coverage. Although separate policies, the insurance on both of these businesses was purchased through the same insurance broker, Jim Toyne, Inc. AAA Chimney purchased a liability insurance policy from Colony Insurance providing coverage to the business from October 25, 1994, to October 25, 1995. Assurance provided Home Maintenance with liability insurance from November 19, 1995, to November 19, 1996. The named insured designated in the Home Maintenance policy was "John Sweany DBA AAA Home Maintenance."
On or about December 5, 1995, Larry and Gwen Johnston contracted with one of Mr. Sweany's two businesses to perform certain repair work on the Johnstons' fireplace and chimney. On December 8, 1995, three days after the repair work was completed, a fire erupted at the Johnstons' home, damaging the home and a portion of the interior contents. At the time of the fire, the Johnstons' home and contents were insured by a homeowners' policy purchased from Regent Insurance Company, a General Casualty Company [hereinafter "General Casualty"]. General Casualty paid the Johnstons $60,000.00 as a result of the fire loss.
After the fire, the Johnstons sent Home Maintenance a letter dated December 27, 1995, asserting their belief that Home Maintenance was responsible for the fire and resulting damage to their home and property. Mr. Sweany responded to the Johnstons' letter on behalf of both AAA Chimney and Home Maintenance on January 3, 1996, denying all responsibility for the fire. Mr. Sweany, however, also suggested that if the Johnstons wished to pursue damages for their loss all claims should be directed to AAA Chimney, because the work was performed by AAA Chimney and is covered under a separate AAA Chimney insurance policy.
In a letter dated January 15, 1996, General Casualty notified AAA Chimney that it was making a subrogated claim for property damage. AAA Chimney's insurance agent filed a General Liability Loss Notice with Colony Insurance on February 28, 1996, stating that "On 12-5-95 [AAA Chimney] repaired hole in smoke chamber [at the Johnstons' home and a] . . . fire occurred on 12-10-95 the Johnston [sic] allege that [AAA Chimney] did not perform the work correctly." Colony Insurance denied this claim stating that the AAA Chimney policy only provides coverage for those damages that occur during the effective dates of the policy, and the alleged incident did not occur until after the policy had expired. Mr. Sweany had asked his insurance agent to renew the AAA Chimney policy with Colony Insurance before it expired, but his agent failed to do so.
After Colony Insurance denied the claim made on AAA Chimney's behalf, the agent, without direction from Mr. Sweany, filed a General Liability Loss Notice with Assurance asserting that Home Maintenance did the work on the Johnstons' chimney and that a fire occurred at the Johnstons' home as a result of the work. A claim representative for Assurance contacted Mr. Sweany regarding the loss notice form. Mr. Sweany told the representative that he did not wish to make a claim under the Home Maintenance policy and that his insurance agent should not have submitted the loss notice form to Assurance in the first place. Mr. Sweany further explained that the claim arose out of work done by his other business, AAA Chimney, at the Johnstons' home, and that AAA Chimney had its own liability policy with another insurance company. Assurance accordingly denied liability for the claim. Mr. Sweany agreed that Assurance had no liability under the Home Maintenance policy and did not request coverage under that policy or demand Assurance defend or indemnify him or his business.
On September 30, 1996, six months after Assurance denied liability for the damages, the Johnstons filed a petition in the Jackson County Circuit Court, asserting that the negligence of "John Sweany, d/b/a AAA Chimney Sweep Co., Inc., AAA Chimney Sweep Co., Inc., and AAA Home Maintenance Co., Inc." was the direct and proximate cause of the fire at the Johnstons' home that damaged the home's structure and the contents within. A copy of the petition was forwarded to Colony Insurance; however, neither Mr. Sweany nor his insurance agent, nor anyone else ever notified Assurance that the Johnstons filed a lawsuit against Home Maintenance.
Mr. Sweany filed an answer to the Johnstons' petition on November 6, 1996, denying liability, generally, and further stating that "AAA Home Maintenance Co., Inc." was unknown to him. As president of AAA Chimney, Mr. Sweany filed a similar answer on AAA Chimney's behalf. No answer was ever filed by or on behalf of "AAA Home Maintenance Co., Inc." On April 15, 1998, Mr. Sweany signed a Confession of Judgment individually and on behalf of AAA Chimney Sweep Co., Inc. allowing the Johnstons to take a $139,500.00 judgment in the action, execution of which was limited to any available insurance proceeds. The Johnstons then mailed a copy of the Confession of Judgment accompanied by a letter demanding payment of such judgment to Assurance on May 14, 1998. Assurance did not respond to the letter.
The trial court entered final judgment in conformance with the terms of the Confession of Judgment signed by Mr. Sweany on May 27, 1998. The Johnstons, as judgment creditors, then brought a subrogated garnishment action against Assurance, as garnishee, to collect all insurance proceeds subject to the trial court's judgment in the underlying action. Assurance filed a Motion for Summary Judgment on October 27, 1999, asserting that according to the terms of the Home Maintenance insurance policy, Assurance was not liable for the Johnstons' loss. The trial court granted Assurance's Motion for Summary Judgment on February 16, 2000. This appeal followed.
II. Standard of Review
An appellate court's standard of review of a summary judgment is essentially de novo. ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp . , 854 S.W.2d 371, 376 (Mo.banc 1993). Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Rule 74.04(c)(3). The record is reviewed in the light most favorable to the party against whom judgment was entered and the non-moving party is granted the benefit of all reasonable inferences from the record. ITT Commercial , 854 S.W.2d at 376 .
This court's criteria for ascertaining the propriety of a summary judgment are the same as those used by the trial court when determining the propriety of sustaining the motion initially. Id . Summary judgment will be upheld on appeal if no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. Id . Unless contradicted by the non-moving party's response to the summary judgment motion, the facts set forth by affidavit or otherwise in support of the moving party's motion for summary judgment are taken as true. Thomas v. Special Olympics Mo., Inc . , 31 S.W.3d 442, 448 (Mo.App.W.D. 2000). A moving party may establish a right to judgment as a matter of law by showing any one of the following: 1) facts that negate any one of the elements of the claimant's cause of action, 2) the non-movant, after an adequate period of discovery, has not and will not be able to produce evidence sufficient to allow the trier of fact to find the existence of any one of the claimant's elements, or 3) there is no genuine dispute as to the existence of each of the facts necessary to support the movant's affirmative defense. ITT Commercial , 854 S.W.2d at 381 .
Once the movant has established a right to judgment as a matter of law, the non-movant must show that one or more of the material facts asserted by the movant as not in dispute is, in fact, genuinely disputed in order to overcome movant's summary judgment motion. Id . In demonstrating that a material fact is in genuine dispute, the non-moving party may not rely on mere allegations and denials of the pleadings, but must use affidavits, depositions, answers to interrogatories, or admission on file to establish the existence of a genuine issue for trial. Id .
III. The Johnstons' Points on Appeal
In their points on appeal, the Johnstons assert that the trial court erred in granting Assurance's summary judgment motion because Assurance is bound by the trial court's judgment against AAA Home Maintenance and, therefore, liable as a garnishee to the Johnstons as judgment creditors in that Assurance 1) had "actual notice" of the Johnstons' fire loss and lawsuit and 2) refused to defend its insured in the suit. Assurance, however, counters the Johnstons' argument asserting that while the Johnstons may insist that the trial court's judgment binds AAA Home Maintenance, the Johnstons' recovery from Assurance is still subject to the defenses that Assurance can assert against its insured, and the trial court was, therefore, correct in sustaining Assurance's Motion for Summary Judgment based on one of the defenses raised.
Missouri law provides that "where an injured person has recovered a judgment against an assured, and such person brings an action upon the judgment to recover the amount thereof from an insurance company whose policy covered the loss, the insurance company may assert any defense against the injured person which it might have asserted as a defense in an action brought against it by its assured." Meyers v. Smith , 375 S.W.2d 9, 13 (Mo. 1964).
The Home Maintenance policy provided by Assurance contained the following provisions as general conditions to the commercial general liability coverage:
Duties In The Event Of Occurrence, Claim Or Suit
You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include:
How, when and where the "occurrence" or offense took place,
The names and addresses of any injured persons and witnesses; and
The nature and location of any injury or damage arising out of the "occurrence" or offense.
If a claim is made or "suit" is brought against any insured, you must:
Immediately record the specifics of the claim or "suit" and the date received; and
Notify us as soon as practicable
You must see to it that we receive written notice of the claim or "suit" as soon as practicable.
You and any other involved insured must:
Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit;"
* * *
Cooperate with us in the investigation, settlement or defense of the claim or "suit;" and
* * *
No insureds will, except at their own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent.
Conditions of an insurance policy requiring that notice of an "occurrence" be given to an insurance carrier as soon as practicable and that suit papers be forwarded immediately are valid and enforceable. Anderson v. Slayton , 662 S.W.2d 575, 577 (Mo.App.W.D. 1983) ( citing Greer v. Zurich Ins. Co . , 441 S.W.2d 15, 30 (Mo. 1969)). Such conditions are precedent to recovery and applicable not only to the insured but also to the injured person seeking to recover a judgment against the insurer. McNeal v. Manchester Ins. Indem. Co . , 540 S.W.2d 113, 120 (Mo.App. 1976). The burden of proof upon the question of compliance with provisions of a policy generally rests upon the insured or upon the injured party who stands in the shoes of the insured. Meyers , 375 S.W.2d at 15 . In this case, however, because the insurance company, Assurance, seeks to escape coverage based on an alleged breach of various policy provisions requiring Mr. Sweany d/b/a AAA Home Maintenance to cooperate with Assurance in 1) giving Assurance notice of the occurrence and suit; 2) immediately sending Assurance copies of legal papers received in connection with the suit; and 3) not assuming any obligation without Assurance's consent; the burden shifts to Assurance to prove facts which would make any of these provisions relieve Assurance from liability. Id .
In its Motion for Summary Judgment, Assurance asserted facts supported by affidavits demonstrating that Mr. Sweany never made a claim under the Home Maintenance policy issued by Assurance for the Johnstons' loss nor did Mr. Sweany provide notice of the action to Assurance or forward the legal papers when the suit was filed. Assurance further demonstrated that Mr. Sweany concurred in the Confession of Judgment assuming liability for the Johnstons' loss without notifying Assurance or obtaining its consent. The facts supported by the affidavits of Mr. Sweany and Assurance's claim representative indicate that while Jim Toyne, Inc., Mr. Sweany's insurance agent, initially provided Assurance with notice of the Johnstons' loss by filing a General Liability Loss Notice, Mr. Sweany thereafter informed Assurance's claim representative that the filing of the notice with Assurance was a mistake and that neither he nor his company wished to make a claim under the Home Maintenance policy because "John Sweany d/b/a AAA Home Maintenance" did not perform the work, and the work was done by his other company, AAA Chimney. Assurance, accordingly, denied liability for the claim. Mr. Sweany agreed that Assurance had no liability and did not further request coverage under that policy or demand that Assurance defend or indemnify him or his business.
Assurance's motion and supporting affidavits further provide evidence that after the Johnstons' action was filed, Mr. Sweany did not give Assurance notice of the suit, let alone forward Assurance the legal papers and demand that Assurance defend or indemnify Mr. Sweany or his business in the lawsuit. The supporting affidavits additionally attest that Assurance received neither notice that the Johnstons had filed their lawsuit nor copies of the legal papers Mr. Sweany received in connection with the Johnstons' suit. Assurance ultimately discovered the Johnstons' suit over two years after Mr. Sweany had informed Assurance that the loss notice filed under the Home Maintenance policy concerning the incident at the Johnstons' home was filed by mistake. Assurance first made this discovery on May 20, 1998, when it received a copy of the Confession of Judgment signed by Mr. Sweany which judgment was accompanied by a letter demanding payment of said judgment. Assurance, thus, first learned of the suit against their insured less than ten days before the trial court entered its final judgment, but after Mr. Sweany had already entered into the Confession of Judgment which assumed liability on behalf of all defendants named in the Johnstons' lawsuit.
These facts asserted in Assurance's Motion for Summary Judgment and supported by affidavits demonstrate that the Johnstons did not comply with the provisions of the Home Maintenance policy. An insured, or one standing in the shoes of an insured, will not, however, be barred from recovery based on the breach of these conditions unless the insurer can show that it has been prejudiced by the insured's non-compliance with such policy provisions. Greer v. Zurich Ins. Co ., 441 S.W.2d 15, 32 (Mo. 1969).
In this case, when Assurance first learned of the Johnstons' lawsuit it was presented with a "fait accompli." Mr. Sweany, its insured, had already signed a Confession of Judgment accepting liability on behalf of all defendants in the Johnstons' lawsuit for the fire at the Johnstons' home. Mr. Sweany's failure to notify Assurance of the suit and forward all legal papers to Assurance, in addition to his failure to obtain Assurance's consent before voluntarily assuming liability on behalf of all defendants, denied Assurance of the opportunity to protect its interests. Specifically, Mr. Sweany's failure to comply with these policy provisions denied Assurance the opportunity to investigate the facts applicable to the subject of the lawsuit, to settle the dispute before trial, to defend against liability at trial, and to dispute the amount of damages.
These facts asserted in Assurance's motion and supported by affidavits are taken as true unless contradicted by the Johnstons' response to Assurance's summary judgment motion. Thomas , 31 S.W.3d at 448 . While the Johnstons assert facts in contradiction to those alleged in Assurance's motion, the mere contradiction asserted in their response, however, is not sufficient; the Johnstons' response must be supported by competent evidence — including affidavits, depositions, answers to interrogatories, or admissions on file — to establish a dispute over the existence of a material fact. ITT Commercial , 854 S.W.2d at 381 . The Johnstons failed to competently contradict the evidence asserted in Assurance's motion. Thus, the evidence is undisputed that Mr. Sweany failed to comply with the policy provisions and that such non-compliance resulted in prejudice to Assurance. The trial court was, therefore, correct in entering summary judgment in favor of Assurance. The summary judgment of the trial court as it pertains to the Johnstons' appeal is affirmed.
IV. Assurance's Point on Appeal
In its sole point on cross-appeal, Assurance contends that the trial court erred in refusing to award attorney's fees that Assurance incurred while defending itself against the Johnstons' subrogated garnishment action. Assurance argues that because the Johnstons filed exceptions to Assurance's interrogatory answers but did not obtain a judgment against Assurance, it is entitled to an award of attorney's fees according to Rule 90.12.
Missouri courts apply the "American Rule," which requires that litigants bear the expense of their own attorney's fees. Waldroup v. Dravenstott , 972 S.W.2d 364, 370 (Mo.App.W.D. 1998). Exceptions to the "American Rule" are recognized, however, that allow a party to recover attorney's fees if (1) a statute allows for their recovery; (2) a contractual provision allows for their recovery; (3) the fees are incurred due to involvement in collateral litigation; or (4) equity demands it. Id .
A garnishee may claim, and the court shall grant, an allowance for expenses and counsel fees attending the defense of proceedings against a garnishee if the plaintiff fails to recover under a garnishment of execution. § 525.240, RSMo 2000. Additionally, Missouri Supreme Court Rule 90.12(b) provides that "[i]f the garnishor files exceptions to the garnishee's interrogatory answers but does not obtain a judgment against the garnishee, all of the costs attending such garnishment shall be taxed against the garnishor." Rule 90.12(b). The rule further mandates that "[t]he court in such a case shall render judgment in favor of the garnishee and against the garnishor for an amount sufficient to indemnify the garnishee for time and expenses, including attorney's fees." Id . Thus, the only requirements the rule imposes on the entitlement of garnishee to recover its expenses is, first, that the garnishor files exceptions to the garnishee's interrogatory answers and, secondly, that garnishor does not obtain a judgment against the garnishee. Id .
The Johnstons filed exceptions to Assurance's interrogatory answers but did not obtain a judgment against Assurance. Assurance has, therefore, demonstrated a legitimate claim for its attorney's fees and expenses in accordance with Rule 90.12(b) and section 525.240. The trial court was provided with evidence supporting Assurance's requested amount of $9,854.94 in attorney's fees and expenses. The evidence further indicates that Assurance has paid this amount in full for the expenses and work performed. Under this court's power to "give such judgment as the court ought to give," Rule 84.14; Brewer v. Trimble , 926 S.W.2d 686, 689 (Mo.App.S.D. 1996), Assurance is awarded $9,854.94 for its attorney's fees and expenses incurred in defending this garnishment action. The trial court's judgment is thus modified, as provided by Rule 84.14, to award Assurance $9,854.94 for its attorney's fees and expenses.
V. Assurance's Motion for Attorney's fees on Appeal
Assurance, by separate motion that this court ordered taken with the case, seeks an award for attorney's fees on appeal as provided in Rules 84.21 and 90.12(c). To merit consideration by this court, the claim and its accompanying sworn statement of expenditures paid or incurred must be filed with this court "on or before a final submission of the cause on briefs." Rule 84.21. In Missouri appellate procedure, "final submission" occurs when the court takes the case under advisement for decision, which is generally coincident with the conclusion of oral argument. Beneficial Fin. Co. of Houston, Tex. v. Yellow Transit Freight Lines, Inc . , 450 S.W.2d 222, 228 (Mo.App. 1969). Thus, Rule 84.21 requires that the garnishee's claim and affidavit must be filed by or before the conclusion of oral argument, when the court takes the case under advisement for decision. Id .
While not specifically raised in Assurance's point relied on, Assurance originally presented this claim to the court in the argument section under the point relied on in its brief. Claims, such as these, not raised in the point relied on and advanced for the first time in the argument portion of a party's brief are not preserved for appellate review. Hoover v. Hoover , 892 S.W.2d 818, 819 (Mo.App.W.D. 1995). Moreover, this claim was also not accompanied by a sworn statement of expenditures paid or incurred upon the appeal as required under Rule 84.21.
In a subsequent motion filed after oral arguments, Assurance "renewed" its claim for an award of expenses and attorney's fees on appeal pursuant to Rule 84.21. A sworn statement of expenditures incurred on appeal accompanied Assurance's motion. Because the claim for allowance was not made before final submission, this court is unable to make any allowance to Assurance under Rule 84.21. Assurance's motion is denied.
The portion of summary judgment as it relates to the Johnstons' appeal is affirmed. The judgment as it relates to Assurance's cross-appeal is modified to award Assurance attorney's fees and expenses in the sum of $9,854.94.