Court Opinion

ID: 9495581
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:06:20.843798+00
Date Added: 2024-06-11T17:52:38.739699
License: Public Domain

BEAM, Circuit Judge,
concurring and dissenting.
I reluctantly concur in the court’s affir-mance of the denial of the defendant’s motion for a new trial, sought because of the district court’s evidentiary error concerning the autopsy report, a mistake duly recognized by the court in its opinion. However, the district court’s decision to award prejudgment interest is clearly wrong and should be reversed. Accordingly, I respectfully dissent on this issue.
*355The district court and this court rely upon an expansive and incorrect reading of Missouri Revised Statute § 408.040.2 for authority to award prejudgment interest, in derogation of Missouri common law to the contrary. See Overcast v. Billings Mut. Ins. Co., 11 S.W.3d 62, 69 (Mo.2000) (statutes displacing common law are to be strictly construed). However, of greater importance, section 408.040.2 is, whether liberally or narrowly applied, simply not applicable under the facts of this case. A brief recapitulation of the relevant circumstances is helpful.
The accident occurred on June 30, 2000. On August 18, 2000, Ms. Harrison’s lawyer, Wally Bley, sent a demand letter/settlement offer to Bob Reynolds, an insurance adjustor with Empire Fire and Marine Insurance Company, Purdy Brothers’ insurer. The demand was for $2,499,999 and coverage under the Empire policy was limited to $1,000,000. On November 3, 2000, Ms. Harrison commenced a wrongful death action against Purdy Brothers and driver David Carey in the Circuit Court of Boone County, Missouri. Purdy Brothers filed a notice of removal in the United States District Court for the Western District of Missouri on December 13, 2000.
The Bley letter of August 18, 2000, is the sole basis for the claim for prejudgment interest.
Section 408.040.2 provides, in pertinent part, as follows:
In tort actions, if a claimant has made ... an offer of settlement of a claim, to the party, parties or their representatives and the amount of the judgment ... exceeds the ... offer of settlement, prejudgment interest, at the rate specified in subsection 1 of this section, shall be calculated from a date sixty days after the demand or offer was made .... Any such demand or offer shall be made in writing and sent by certified mail and shall be left open for sixty days unless rejected earlier.
Mo. Ann. Stat. § 408.040.2 (emphasis added). The court and the parties spend considerable time arguing over the statutory meaning and breadth of the word “representatives.” However, they ignore a more fundamental problem. The offer of settlement, if the Bley letter can be properly construed as such, was not made in a tort action. Indeed, no tort action, as defined by Missouri law, existed when Mr. Bley sent his demand of August 18, 2000. The tort action was commenced on November 3, 2000, almost three months later.
In defining the meaning of the phrase a tort action, Missouri has adopted a “usual and ordinary sense” of the word “action.” North v. Hawkinson, 324 S.W.2d 733, 744 (Mo.1959). “ ‘Generally, an action is such a judicial proceeding as, conducted to termination, results in a judgment.’” Id. (quoting State ex rel. Silverman v. Kirkwood, 361 Mo. 1194, 239 S.W.2d 332, 336 (1961)). It is also clear that an “action is commenced by filing a petition with the court.” Ostermueller v. Potter, 868 S.W.2d 110, 111 (Mo.1993) (emphasis added). When Bley mailed his letter, there was no tort action. Accordingly, I would find that section 408.040.2 is inapplicable.
I recognize that there is obiter dictum in Lester v. Sayles, 850 S.W.2d 858 (Mo.1993) (en banc) that counsels a contrary conclusion. In Lester, a case ultimately remanded for a new trial, defendant Sayles asserted a due process void-for-vagueness defense to section 408.040.2, claiming it was ambiguous as to whether the demand must come before or after the filing of a lawsuit. In response, the Missouri Supreme Court held that the words, “a demand for payment of a claim or an offer of settlement,” placed no limits on when a plaintiff may make this offer. Id. *356at 873. However, in its discussion, the court totally ignored the “[i]n a tort action” language that commences and, time wise, frames the section. Further, under the facts of Lester, “the offer of settlement was made approximately one year after the filing of the lawsuit.” Id. (emphasis added), not three months before. So, on the facts, the before-after issue was moot.
Further, the demand was sent to an insurance representative who had, because of a deficiency in insurance coverage, no duty, obligation or means to affirmatively respond to the demand. So, assuming for purposes of discussion, that the pre-action demand or claim could somehow be construed to have been made in a tort action, an insurance carrier with insufficient coverage to meet the “offer of settlement” cannot be construed to be a representative under the intent and purposes of section 408.040.2.
Missouri, somewhat uniquely in the present day, apparently does not assemble a history of legislative intent. Nonetheless, Purdy Brothers cites various Missouri statutes that recognize a distinction between a person’s “insurer” and its “representative.” See, e.g., Mo. Ann. Stat. §§ 379.820.1 and 490.715.2. Purdy Brothers also points out that section 408.040.2 was enacted as part of House Bill 700 in 1987. See 1987 Mo. Laws 792, 807-08. As part of the same bill, the Missouri legislature enacted another provision that refers explicitly to a party’s insurer and to its authorized representative. See § 490.715.2. Thus, Purdy Brothers argues, construing “representative” to include a party’s insurer under section 408.040.2 is inconsistent with the legislative act as a whole. See Hagely v. Bd. of Educ. of Webster Groves Sch. Dist., 841 S.W.2d 663, 667 (Mo.1992) (“Provisions of the entire legislative act must be construed together and, if reasonably possible, all provisions must be harmonized.”). Finally, Purdy Brothers accurately points to instances when the Missouri legislature has distinguished between “agents” and “representatives” and argues that, if the legislature wanted to permit service of settlement demands on a party’s “agent,” it knew how to do so. See, e.g., Mo. Ann. Stat. §§ 376.500, 376.510.
Missouri law does not recognize an insurer’s duty to defend (or presumably to settle) beyond the applicable policy limits. See Millers Mut. Ins. Ass’n v. Shell Oil Co., 959 S.W.2d 864, 867 (Mo.App.1997). But here, the court would ignore the policy limits of $1,000,000, and would ignore this limitation in duty, but would impose prejudgment interest, reciting the supposition that Empire should have tendered its coverage limits into the face of the larger demand before it could shed the mantle of “representative” under section 408.040.2. This construction is totally at odds with the plain language and clear intent of the prejudgment interest statute. The legislation is obviously designed to penalize a party with assets or insurance coverage sufficient to settle a claim asserted in a tort action, but who willfully refuses to do so. The penalty is the imposition of prejudgment interest. Indeed, to activate the benefits of section 408.040.2, Ms. Harris and her counsel had a duty to make an offer of settlement directly to Purdy Brothers or Purdy Brothers’ representative in the tort action she filed. This was not done.
Accordingly, I dissent.