The Hon. Richard S. Arnold stepped down as Chief Judge of the United States 1 Court of Appeals for the Eighth Circ uit at the close of business on April 17, 1998. He has been succeeded by the Hon. Pasco M. Bowman II.



## United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 97-3769

___________ Cretcher-Lynch & Company; * Steve Hatcher, * * Plaintiffs-Appellants, * * Appeal from the United States v. * District Court for the Western * District of Missouri. National Council on Compensation * Insurance, Inc., * [PUBLISHED] * Defendant-Appellee.

___________

Submitted: April 13, 1998 Filed: July 10, 1998

___________ Before RICHARD S. ARNOLD, Chief Judge, LAY and LOKEN, Circuit Judges. 1

___________ PER CURIAM. Cret cher-Lynch& Co. (“CLC”) and Steve Hatcher (“Hatcher”) filed this sui t aga inst the National Council on Compensation Insurance, Inc. (“NCCI”), allegin g NCCI failed to properly bind workers compensation insurance for Hatcher’s sol e proprietorship, Prestige Homes and Additions, Paramount State of the Art RoofingUnder this assigned risk method, NCCI processes an employer’s application, 2 binds coverage, selects a servicing carrier, and forwards the employer’s application and premium deposit to that serv icing carrier. See J.A. at 208. This servicing carrier then issues a policy under its company name and provides the same insurance services t o the Plan policyholder as it provides to its other policyholders. See id. -2- (“Pr estige/Paramount”). The district court granted summary judgment in favor o f NCCI. Hatcher and CLC now appeal. We affirm, but for reasons different than those stated by the district court.

Factual and Procedural Background NCCI administers the Missouri Workers Compensation Insuran ce Plan (“Plan”). Using an assigned risk method, the Plan provides workers compensation insurance to 2 Missouri employer s who cannot obtain such coverage on the voluntary market. Hatcher could not obtain workers compensation coverage for Prestige/Paramount on the voluntary market, sohe applied for coverage under the Plan. CLC is an insurance brokerage that assisted Hatcher in the application process. On July 15, 1992, CLC submitted Hatcher’s application for coverage to NCCI. The app lication named Prestige/Paramount as the entity seeking coverage, and i t indica ted Prestige/Paramount was a sole proprietorship. Hatcher’s brother, Da n Hatcher, signed the application as the representative of Hatcher, and he also signed an
acco mpanying third-party finance agreement. Dan Hatcher owned Hatche r Construction, Inc., which had ceased operations sometime before the formation o f Prestig e/Paramount. Dan Hatcher previously had obtained workers compensatio n insurance through the Plan, and apparently he owed outstanding premium to one of the Plan ’s servicing carriers. The Plan’s procedures provide that an employer with a n outsta nding obligation for workers compensation insurance is not entitled to Pla n insurance. See J.A. at 209, 231.-3-

Af ter reviewing the application and its records regarding Dan Hatcher an d Hatcher Construction, Inc., NCCI determined it needed more information regarding the ownership of Prestige/Paramount. NCCI returned Hatcher’ s application to CLC along with a letter dated July 30, 1992. The letter stated, in relevant part:
This a pplication is being returned to you for the reason(s) listed below

. If a d eposit premium was submitted with the application, the origina l binding date may be honored provided the application, with complet e information, is postmarked within fifteen (15) cal endar days following the date of this letter and the risk is otherwise deemed eligible for coverage. The original binding date will be void unless all items reques ted below are provided

. OUR RECORDS INDICATE A CHANGE HAS OCCURRED I N OW NERSHIP, NAME, LEGAL STATUS, MERGER O R ADDITI ONALNAMED INSURED. IN ORDER TO DETERMIN E ELIGIBILITY FOR COVERAGE, THE ENCLOSED ERM-14 FORM MUST BE COMPLETED IN FULL AND SIGNED. SIS [sic ] THIS RISK OPERATE UNDER A DIFFERENT NAME A T ONE TIME.
J.A. at 244 (emphasis added). Gayle Brunner, a CLC employee, received the letter on August 3, 1992 an d observed the letter requested the ERM-14 form be returned within fifteen days of July 30, 1992. CLC did not return the f orm to NCCI within fifteen days, because the letter and form “got caught in the shuffle of paper on [Gayle Brunner’s] desk.” See J.A. at 312 (reprinting parties’ Joint Stipulation of Facts). CLC did not forward the form to Hatcher un til August 19, 1992, and CLC did not inform Hatcher of the fifteen-da y deadline.The Honorable Gary A. Fenner, United States District Judge for the Wester n 3 District of Missouri. -4- On Au gust 27, 1992, one of Hatcher’s employees was injured on the job an d sometime t

hereafter, filed a workers compensation claim. On August 31, 1992, CLC receivedthe completed ERM-14 form and forwarded the form and Hatcher’s othe r application materials to NCCI. NCCI bound coverage effective September 5, 1992 and asserts Hatcher’s employee’s workers compensation claim that arose in the interim was not insured by the Plan. Hatcher asserted a claim against CLC for indemnity against any loss resulting from the uninsured workers compensation claim. In turn, CL C demanded indemnity from NCCI, which NCCI refused to provide . CLC’s professional liabi lity insurer eventually settled the workers compensation claim on behalf o f Hatcher.
OnAugust 23, 1996, Hatcher and CLC filed suit in state court, alleging NCCI breached it s duty to bind coverage upon its receipt of Hatcher’s initial applicatio n materials. The complaint asserted NCCI was directly liable to Hatcher and secondarily liable to CLC as Hatcher ’s equitable subrogee. See J.A. at 11-17. On September 30, 1996, NCCI removed the action to federal district court. On July 31, 1997, NCC I moved for summary judgment, contending Hatcher could not make out a prima facie
case a s to NCCI’s liability, and CLC was not entitled to equitable subrogation. O n September 18, 1997, the district court granted NCCI’s motion for summary judgment, 3 finding there was no contract between NCCI and Hatcher, and NCCI did not breach any duty it owed to Hatcher. Cretcher-Ly nch & Co. v. National Council on Compens. In s., Inc. , No. 96-1016-CV-W-4, slip op. at 8-9 (W.D. Mo. Sept. 15, 1997)

. Moreover, the court rejected CLC’s equitable subrogation claim, concluding CLC’ s equitabl e subrogation rights depended upon Hatcher having rights against NCCI, and Hatcher had no rights against NCCI in either contract or tort. Id. at 9.-5-

Real Party In Interest
The first issue we address is whether CLC and Hatch er are proper parties to this
ac tion. At oral argument, NCCI alleged that Hatcher has no claim against NCC I because he su ffered no damages. NCCI further alleged that CLC has no independent leg al rights against NCCI. On the other hand, CLC asserts it has a legitimate clai m against NCCI under the doctrine of equitable subrogation.
Even if we assume CLC has a vali d claim of equitable subrogation by reason of payi ng Hatcher’s injured employee workers compensation benefits, see America n Nursing R esources, Inc. v. Forrest T. Jones & Co. , 812 S.W.2d 790, 794 (Mo. Ct

. App. 1991) (defining subrogation), under Missouri law, CLC is noneth eless not the real party in interest to bring the claim against NCCI. The law of Missouri has long held that in a claim for equitable subrogation, in th e absence of an assignment, the subrogee owns only an equitable interest in the claim. See Kroeker v. State Farm M ut. Auto. Ins. Co. , 4 66 S.W.2d 105, 110 (Mo. Ct. App. 1971). Thus, in the present case, it i s Hatcher w ho holds legal title to any claims against NCCI. See id. Even thoug h Hatche r has been paid, as trustee, he was obligated to prosecute these claims and t o cooperate with CLC in that regard. See id. According ly, CLC’s claim is dismissed without prejudice on the basis that it is not the real party in interest. Howev er, we also conclude that the NCCI is incorrect in stating Hatcher has no claim against it because CLC’s payment of the worker s com pensation claim means Hatcher has not been damaged. See Waterwiese v. KBA Con str. Managers, Inc. , 820 S.W.2d 579, 584-85 (Mo. Ct. App. 1991). CLC’ s pay ment on behalf of Hatcher did not extinguish Hatcher’s legal title to his claim s against NCCI. Thus, Hatcher remains a proper party to this action.-6-

Hatcher’s Complaint
Hatcher’s claim as set forth in his original petition neither mentions breach o f contract nor explicitly alleges that NCCI was negligent. Instead, Hatcher’s claim i s b a sed on the theory that NCCI has breached its duty to bind coverage of his workers compens ation insurance upon receipt of his application, which he alleges wa s forwarded to NCCI in good faith.

In its order granting summary judgment in favor of NCCI, the district court characterizedHatcher’s claim as a “contract and/or tort claim against NCCI. ” Cretcher- Lynch

& Co. , No. 96-1016-CV-W-4, slip op. at 6. The court rejecte d Hatcher’s contract claim upon the basis that there was no mutuality of agreemen t between NCCI and Hatcher

. Id. at 6-8. The court also rejected Hatcher’s negligence claim, finding NCCI “has a duty to ‘promptly review all ap plications as received[,] [t]o issue binders promptly to all emplo yers who appear to be qualified for coverage under the Plan’” and “that in promptly reviewing Hatc her’s application for coverage, alerting him to what was necessary to be qualified for coverage, and in making him aware of th e deadline by which the information must be received in order that he be promptl y bound, NCCI did not breach its duty.” Id. at 8-9.
On appeal, Hatcher asserts he “do[es] not predicate NCCI’s liability upon a contract theory.” H atcher Reply Br. at 12. Instead, Hatcher asserts that there was an immediate duty of NCCI to automatically bi nd coverage for all applicants who applied in good faith. He asserts that he made his application in good faith and that NCCI now
conce des the original application contained all of the material information necessary to bind the app lication. In effect, Hatcher urges that notwithstanding NCCI’s request for additional information, under the terms of the Plan and the Plan’s Information and Procedu res Handbook (“Handbook”), coverage was bound upon receipt of th e application as there was no showing that the application was not submitted in goo d faith. Hatcher asserts that under these circumstances, NCCI’s unilateral request forThe evidence demonstrates that N CCI marked the application in the right-hand 4 corner with the abbreviation “Bd 7 16 92,” in dicating that was the effective date of the coverage. SeeJ.A. at 47. Hatcher’s employee who was injure d on the job incurred his injury on August 27, 1992. At that time, the ERM-14 form had not been returned to CLC or NCCI. -7- additio nal information did not affect the original date of binder placed on th e application. 4

Breach of Contract Hatcher does not argue that he has filed a breach of contract claim; nonetheless, under the fa cts stipulated we view his complaint and argument as one for breach o f contra ct. However, we need not resolve any contract issues on appeal, becaus e Hatc her has abandoned any breach of contract claim by asserting he does no t “predicate NCCI’s liability upon a contract theory” and, therefore, did not respond to NCCI’s argume nt on this point. It is not our duty to question such abandonment

. Abandonment

may be made for various reasons, but it is fundamental, at least in this court, that if a party, by and through counsel, has abandone d a claim, this court will not review t he same. See Jasperson v. Purolator Courier Corp. , 765 F.2d 736, 740 (8th Cir. 1985); Fed. R. App. P. 28(a). Negligence
Thus, Hatcher’s claim on appeal, as he has asserted it, is that NCCI wa s essentially negligent in failing to bind the coverage upon receip t of his application. The argument is made that under the terms and conditions of the Plan and Handbook, NCCI had a duty t o provide coverage and failed to comply with that duty. Assuming tha t NCCI had such a duty, it is clear to us that this duty rested solely upon the claim that the parties consensually contracted for coverage through Hatcher’s application and-8-

te nder of the premium, the alleged acceptance by NCCI by binding the coverag e pursuant to t

he Plan and Handbook, and the retention of the deposit premium. Under Missouri law, the mere non-performance of a contract does not provide a basis for tort liability. See Preferred Physicians Mut. Management Group v. Preferred Physician s Mut. Ris k Retention , 918 S.W.2d 805, 814 (Mo. Ct. App. 1996) (citing Khulusi v

. Sou thwestern Bell Yellow Pages , 916 S.W.2d 227, 2[30] (Mo. Ct. App. 1995))

. Hatcher’s claim is simply one of non-performance of a promise. It is clear that there
was no duty apart from the alleged contract to perform, and under the circumstances, Hatcher’s claim for negligence must be dismissed. Although it is for different reasons than those set forth by the district court, we affirm the judgment of dismissal.
JUDGMENT AFFIRMED. A true copy.

Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.