United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 06-1904

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Douglas Wood and Carolyn Wood, *

*

Appellants, *

* Appeal from the United States

v. * District Court for the Eastern

* District of Missouri.

Foremost Insurance Company, *

*

Appellee. *

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Submitted: October 19, 2006

Filed: December 28, 2006

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Before MELLOY, BENTON, and SHEPHERD, Circuit Judges.

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BENTON, Circuit Judge.

A tornado damaged Douglas and Carolyn Wood's roof. They made a claim

under their homeowner's policy. The Woods contend that Foremost Insurance

Company did not promptly settle. They seek compensation for damage to their

property; penalties and attorney's fees under the Vexatious Refusal to Pay Claim

statute; damages for injuries suffered by Mr. Wood when he fell from the roof while

trying to repair it; and interest. The district court granted summary judgment to

Foremost. The Woods appeal.
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I.

After the tornado on May 6, 2003, the Woods immediately filed a claim. On

May 17, a roofing company estimated repairs at $7,753. The Woods say they

promptly forwarded the estimate to Foremost, which it refused. Foremost denies

receiving a written estimate until November 4; the Woods claim that they thrice

submitted the estimate to Foremost after the initial refusal.

Foremost inspected the Woods' property on May 20, and delivered a check for

$2,722 on May 21. The Woods told Foremost that it had not satisfied the policy. On

June 17, Foremost paid an additional $1,267. With the roof still damaged and snow

forecast, on November 23 Mr. Wood was injured when he fell from the roof while

laying a tarp. Foremost inspected the roof on November 24, and sent another $3,338.

On January 14, 2004, Foremost inspected the home's interior, and two weeks later

paid an additional $4,530. After three inspections and four payments over eight

months, the Woods' claim was settled (minus depreciation and the deductible).

II.

This court reviews de novo a grant of summary judgment. Wallace v. DTG

Operations, Inc., 442 F.3d 1112, 1117 (8th Cir. 2006). Summary judgment is

appropriate when there is no genuine issue as to any material fact and the moving

party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c). The evidence

is viewed most favorably to the nonmoving party. Hitchcock v. FedEx Ground

Package Sys., Inc., 442 F.3d 1104, 1106 (8th Cir. 2006).

III.

The insurance policy reads, "We [Foremost] will make settlement within 30

days after we receive an acceptable proof of loss from you and the amount of loss is
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determined as provided in the policy." The policy does not define an "acceptable

proof of loss," and thus is ambiguous as to when payment was due. When interpreting

an insurance policy, Missouri courts follow the principle of contra proferentem, and

construe any ambiguity against the insurer. See Krombach v. Mayflower Ins. Co.,

827 S.W.2d 208, 210 (Mo. banc 1992).

Mr. Wood says he submitted an estimate to Foremost on May 20, and three

times thereafter. Foremost denies receiving a written estimate from the Woods until

November 4. For purposes of summary judgment, this court assumes that Foremost

received an estimate from the Woods on May 20. Equally, any ambiguity as to an

"acceptable proof of loss" is resolved against Foremost. Thus, a reasonable jury could

find that Foremost was obligated to settle within 30 days after May 20 – which did not

happen. A reasonable jury could find that Foremost breached the policy.

Foremost emphasizes that the Woods' claim is now settled, with full

compensation for all damages (including mold, corrosion, and water damage to the

home's interior). This argument ignores that the Woods also seek damages under the

Vexatious Refusal to Pay Claim statute, sections 375.296 and 375.420 RSMo. If an

insurance company refuses to pay a claim "without reasonable cause or excuse," then

a jury may award "damages not to exceed twenty percent of the first fifteen hundred

dollars of the loss, and ten percent of the amount of the loss in excess of fifteen

hundred dollars . . . ." Section 375.420 RSMo. The statute also allows interest and

attorney's fees. Id. Viewing the facts most favorably to the Woods, a reasonable jury

could find Foremost liable under the Vexatious Refusal statute. See Dhyne v. State

Farm Fire & Cas. Co., 188 S.W.3d 454, 458-59 (Mo. banc 2006) (upholding a jury

verdict imposing liability under this statute after a three-month delay by the insurance

company).
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IV.

Before Foremost made its last two payments, Douglas Wood was injured when

he fell from the roof while trying to lay a tarp in anticipation of a snowfall. The

Woods seek compensation for his medical bills, lost income, physical and emotional

pain, and for Mrs. Wood's loss of consortium. The policy does not cover personal

injury claims.

In Missouri, recovery "by the insured against the insurance company for the

policy benefit . . . is limited to that provided by the law of contract plus, if section

375.420 applies, the enhancements provided by the statute." See Overcast v. Billings

Mut. Ins. Co., 11 S.W.3d 62, 68 (Mo. banc 2000). "[A]n insurance company's denial

of coverage itself is actionable only as a breach of contract and, where appropriate, a

claim for vexatious refusal to pay." Id. at 69.

The Woods' personal injury claim is limited by the law of contract in Missouri.

Generally, only reasonably foreseeable damages are recoverable in a contract case.

SeeKansas City Bridge Co. v. Kansas City Structural Steel Co., 317 S.W.2d 370, 381

(Mo. 1958).

According to the Woods, their injuries were reasonably foreseeable when the

policy was issued. In addition to claiming that Foremost knew their difficult financial

position, the Woods invoke the policy language: "If you have a loss, you must protect

your dwelling, other structures or personal property from any further damage. If you

fail to do so, any further damage will not be insured by this policy." Accompanying

Foremost's checks was a warning to "cash this check promptly and use its proceeds

to repair your damaged property," or there will be no coverage for "any additional

damage caused by your failure to repair or for unreasonably delayed repairs."
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The Woods cite no Missouri authority to support their argument that Mr.

Wood's fall was reasonably foreseeable. The most apposite precedent is Bassett v.

Federal Kemper Insurance Co., 565 S.W.2d 823 (Mo. App. 1978). In Bassett, the

insurance company vexatiously refused paying a claim by retroactively cancelling the

policy. The insured could not pay the repair shop, which refused to release the

damaged car. The insured sued under the Vexatious Refusal statute for, among other

things, $11 in replevin costs and $56 in lost wages. The Missouri Court of Appeals

rejected recovery for these damages, holding: "The statute, being penal in nature, must

be strictly construed . . . The statutory provision necessarily excludes other

consequential or collateral damages which do not arise under the policy." Id. at 827.

By this rule, the Woods may not recover for their personal injuries – which are

damages not arising under the policy.

The Woods invoke at length the rule of Hadley v. Baxendale, 156 Eng. Rep.

145, 151 (Ex. 1854):

Where two parties have made a contract which one of them has broken,

the damages which the other party ought to receive in respect of such

breach of contract should be such as may fairly and reasonably be

considered either arising naturally, i.e., according to the usual course of

things, from such breach of contract itself, or such as may reasonably be

supposed to have been in the contemplation of both parties, at the time

they made the contract, as the probable result of the breach of it.

The Missouri Supreme Court says that Hadley excludes "accidental" losses.

"Damages for breaches of contract are only those which are incidental to, and directly

caused by, the breach, and may reasonably be supposed to have entered into the

contemplation of the parties and not speculative profits or accidental or consequential

losses, or the loss of a fancied good bargain." Weber Implement Co. v. Acme

Harvesting Mach. Co., 187 S.W. 874, 876 (Mo. 1916) (emphasis added); see also

United Iron Works, Inc. v. Twin City Ice & Creamery Co., 295 S.W. 109, 113 (Mo.
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banc 1927) (Hadley does not cover "speculative profits, or accidental or consequential

losses").

Missouri insurance law uses a dictionary definition of "accident": "An event

that takes place without one's foresight or expectation; an undesigned, sudden and

unexpected event. Hence, often, an undesigned or unforeseen occurrence of an

afflictive or unfortunate character; a mishap resulting in injury to a person or damage

to a thing; a casualty; as, to die by accident." West v. Jacobs, 790 S.W.2d 475, 477

(Mo. App. 1990); see also Soukop v. Employers' Liab. Assurance Corp., Ltd., 108

S.W.2d 86, 91 (Mo. banc 1937) (defining "accident" in similar terms); see generally

JUDGE ALMON H. MAUS, 30 MISSOURI PRACTICE: INSURANCE LAW AND PRACTICE §

7.16 (1997).

Mr. Wood's fall was an accident. It was not foreseen by the parties when the

contract was formed, in light of the Bassett case and Missouri's modified Hadley rule.

Under the law of contract in Missouri, the Woods may not recover for their personal

injuries.

V.

The grant of summary judgment is reversed as to the non-personal-injury

claims. As to the personal injury claims, summary judgment is affirmed.

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