Court Opinion

ID: 9677352
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:49:49.281536+00
Date Added: 2024-06-11T12:18:56.542224
License: Public Domain

SHRUM, Judge,
concurring.
Because of State Farm’s Point III relied on, I concur in the result.
In Point III State Farm correctly states that the party seeking a summary judgment has the affirmative burden of demonstrating that no genuine issue of material fact exists. Rule 74.04(c). See Earl v. State Farm Mut. Auto. Ins. Co., 820 S.W.2d 623, 624[1] (Mo.App.1991). State Farm is also correct in observing that the issue purportedly resolved by the trial court’s summary judgment, that is, whether or not State Farm acted in bad faith in failing to defend or settle the wrongful death action against its insured, is ordinarily, by its very nature, a fact issue. Thus, in Ganaway v. Shelter Mut. Ins. Co., 795 S.W.2d 554 (Mo.App.1990), Judge Hogan, writing for this court said:
[T]he precedent by which we are bound holds that the existence of “bad faith” is usually a question of fact.... [T]he “good faith” action is an action which involves a state of mind. Zumwalt ... 228 S.W.2d at 754. It has been consistently held that cases in which the underlying issue is one of motivation, intent, or some other subjective fact are particularly inappropriate for summary judgment.
Id. at 562. See Moore v. Bentrup, 840 S.W.2d 295, 298[7] (Mo.App.1992).
State Farm continues its Point III argument by suggesting that here there were *757disputed fact issues concerning its state of mind and whether it acted in bad faith, that such fact issues were obviously material, and, therefore, application of the foregoing principles mandate reversal of the summary judgment. Upon reviewing the record, I find merit in State Farm’s argument in this regard. In my view the claimants failed to meet their burden of demonstrating the absence of a genuine fact issue with respect to their claim of bad faith on the part of State Farm.
I do not agree, as the claimants argue, that the “intent” or “state of mind” of State Farm was not in dispute. Nor do I agree with their claim that the “bad motive” or “bad faith” of State Farm was conclusively demonstrated by showing that State Farm paid its policy limits into court soon after Halpin v. American Family Mut. Ins., 823 S.W.2d 479 (Mo. banc 1992), was decided. For example, in the record, there is evidence that State Farm, in addition to raising the household exclusion as a defense to coverage, also notified its insured that it declined coverage because of the insured’s failure to comply with his duties under the policy, including the duty to cooperate.1 Believing that a material fact dispute existed, I would hold that summary judgment was not available based upon this record. I would reverse and remand for that reason.
I respectfully disagree with the view of the majority that State Farm had no duty to defend the wrongful death action. I do not believe that Halpin, 823 S.W.2d 479, excuses State Farm from its contractual obligation to defend.
The focus of Halpin was the “household exclusion clause” commonly found in liability insurance policies.' Because of the “plain purpose” of the Motor Vehicle Financial Responsibility Law, §§ 303.010-303.370 RSMo 1986, to require “motor vehicle liability policies to provide coverage coextensive with liability, subject to the statutory limits,” the Halpin court effected a partial invalidity of the household exclusion clause. Id. at 480-482. The “partial invalidity” language in Halpin says that household exclusion clauses are invalid only to the extent of the limits required by the Financial Responsibility Law (presently 25/50/10). If the “contract language is clear ... [§] 303.190.7 manifests to insureds that they have no basis for expecting coverage in excess of the requirements of § 303.190.2.” Halpin, 823 S.W.2d at 483. However, in Halpin, as well as in State Farm v. Zumwalt, 825 S.W.2d 906 (Mo.App.1992) (cited by the majority), the “coverage” issue was the dollar limit, not cost of defense.
I believe that the duty to defend here exists because of the policy provisions. In its contract State Farm agrees that it “will ... defend any suit against an insured for such damages with attorneys hired and paid by us_” Although the term “such damages” refers, in part, to those “which an insured becomes legally liable to pay because of ... bodily injury to others,” State Farm’s household exclusion clause does not exclude coverage for defense. It reads:
THERE IS NO COVERAGE: ... FOR ANY BODILY INJURY TO: ... ANY ... MEMBER OF AN INSURED’S FAMILY RESIDING IN THE INSURED’S HOUSEHOLD.
The effect of Halpin was to cover this insured to the extent of 25,000/50,000/10,000. Halpin does not extend coverage above those minimum limits, nor does it require defense coverage. Rather, once the insured was cov*758ered for bodily injury to a member of the insured’s household in any amount, the contract stated that State Farm would provide defense coverage.
If State Farm wanted to clearly exclude itself from providing defense coverage for an insured when a claim is made by a household member it could have said so in the exclusion provisions. Not having done so, I believe that State Farm had a duty, based upon contract, to defend this insured.
Finally, I am unconvinced in this case that a demand for payment by the insured is an essential element of an action for bad faith refusal to settle. The bad faith refusal to settle cause of action against an insurance company is not based upon a breach of contract theory nor upon negligence principles; rather, it is an action in tort for the wrong committed by an insurer when it fails to act in good faith in determining whether or not to accept an offer to settle a claim against its insured within the limits of its policy. Landie v. Century Indemnity Company, 390 S.W.2d 558, 563 (Mo.App.1965).
Because the cause of action developed in cases where the liability insurer assumed control over negotiation, settlement, and legal proceedings brought against the insurer, e.g., Zumwalt v. Utilities Ins. Co., 360 Mo. 362, 228 S.W.2d 750 (1950); Dyer v. General American Life Ins. Co., 541 S.W.2d 702 (Mo.App.1976), it has been stated — over broadly in my opinion — that a demand for settlement within the policy limits is an element of the cause of action.
I find no authority for the proposition that a demand for settlement is an essential element of this cause of action where the insurer has refused to defend and has denied coverage while at the same time insisting upon the insured’s cooperation, including that the insured, “when asked, assist [the insurer] in ... [mjaking settlements.” By its letter State Farm told its insured that (a) it would not defend the case, (b) it assumed no liability for any loss arising out of the incident, (c) the insured was to cooperate with State Farm and, “when asked," was to assist in making settlements, and (d) the insured was not, except at his own costs, to voluntarily make any payment or assume any obligation to the claimants. Having given the foregoing instructions to its insured, State Farm should be estopped from relying upon the insured to make a demand that the claim be settled within the policy limits.
In H & S Motor Freight v. Truck Ins. Exchange, 540 F.Supp. 766, 769[1] (W.D.Mo.1982), following an extensive analysis of the issue, Senior Judge John Oliver found himself convinced that a demand for payment by the insured was not an essential element of an action based upon Missouri law for bad faith refusal to settle a claim. See Ganaway, 795 S.W.2d at 564. Quoting from Appleman, Insurance Law & Practice § 4711, he observed that “ ‘absence of an offer is only one factor in considering whether an insurer was guilty of bad faith in failing to settle a claim against the insured.’ ” H & S Motor Freight, 540 F.Supp. at 768.
Continuing, Judge Oliver wrote: “And on page 398 of § 4711, Appleman states that ‘an insurer may not set up, as a defense to the insured’s action ... against the insured, the fact that the insured did not demand acceptance by the insurer of an offer of settlement because the insurer by reserving to itself the right to make settlements was estopped from relying upon the insured to make a demand that the claim be settled within the policy limits.” Id.
Confining my remarks to this case only, I would apply the analysis made in H & S Motor Freight, 540 F.Supp. 766, to hold that the making of a demand by the insured and a rejection of that demand by State Farm was not an essential element of the claimant’s case. I believe State Farm was estopped from relying upon the insured to demand that the claim be settled within the policy limits.

. On November 8, 1990, Jim Rogers, claims manager for State Farm, wrote to Thomas W. Cline, personal representative of Lance L. Met-calf's estate. After noting Cline’s earlier refusal to accept a defense with reservation of rights, Rogers advised:
"[W]e must consider you as an insured under the policy and subject to the duties of an insured as described in the policy issued to Lance L. Metcalf.
I refer you to [the] policy ... which states ... [t]he insured shall cooperate with us.... The insured shall not, except at his ... costs, voluntarily:
a. Make any payment or assume any obligation to others; ... In view of the foregoing, you are hereby notified that State Farm ... will not assume any liability for any loss ... sustained as a result of the loss....” (Underlining in original; italics added.)