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Henry v. Farmers Ins. Co., Inc.

Court of Appeals of Missouri, Western District, First Division

July 22, 2014

JEFFREY HENRY, et al., Appellants,
v.
FARMERS INSURANCE COMPANY, INC., Respondent

Page 472

APPEAL FROM THE CIRCUIT COURT OF PLATTE COUNTY. THE HONORABLE OWENS L. HULL, JR., JUDGE.

Bruce B. Brown, Kearney, MO, for appellant.

Justin S. Chapell, Bradley M. Zaffiri, Thomas M. Ward, St. Louis, MO, for respondent.

BEFORE DIVISION ONE: MARK D. PFEIFFER, PRESIDING JUDGE, LISA WHITE HARDWICK AND KAREN KING MITCHELL, JUDGES. ALL CONCUR.

OPINION

Lisa White Hardwick, Judge

Page 473

Jeffrey Henry and Elizabeth Edmundson (collectively, " Appellants" ) appeal from the summary judgment in favor of Farmers Insurance Company, Inc., (" Farmers" ) on their petition for declaratory judgment, attorney's fees, and breach of fiduciary duty. Appellants contend the circuit court erred in granting Farmers' summary judgment motion because (1) their declaratory judgment claim was not moot; (2) they demonstrated special circumstances entitling them to attorney's fees; and (3) they established the requisite harm to support their breach of fiduciary duty claim. Appellants further assert that the court erred in denying their motion for summary judgment and in ruling that Farmers did not have a legal duty to train its agents on the specific holdings of two Missouri insurance cases. For reasons explained herein, we affirm.

Factual and Procedural History

In August 2010, Edmundson was involved in a motor vehicle accident with Lucius Oliver. At the time of the accident, Farmers insured Edmundson and Henry under an automobile insurance policy. Oliver submitted a claim to Farmers, as Edmundson's insurer, for the alleged damage to his vehicle. Farmers opened a claims file and conducted an investigation. Farmers denied Oliver's claim in November 2010, after determining that Edmundson was not at fault.

In January 2011, Farmers' claims representative, Cory Cannon, notified Appellants that Oliver had filed an " intercompany arbitration" claiming that Edmundson was liable for the property damage to his vehicle. Cannon informed Appellants that Farmers would defend them in the arbitration and that the arbitration would be binding. Edmundson filed a separate lawsuit against Oliver alleging that his negligence caused the accident and seeking compensation for the damage to her vehicle.

Over the course of the next several months, Appellants' counsel and Cannon exchanged letters concerning the evidence presented in the arbitration proceedings. Appellants' counsel initially sent a letter to Cannon asking for a copy of any documents presented in the arbitration proceeding by Oliver's insurer, Metropolitan General Insurance, so that Appellants could " review the evidence and dispute it if necessary." In response, Cannon informed Appellants' counsel that the evidence in the arbitration proceeding would be presented either by mail or by being electronically uploaded to the arbitration forums' website and that each party would submit a written contention along with their evidence. Cannon further said that each party could read the other's contention but that neither party would be required to disclose their evidence to the other party. Cannon told Appellants' counsel that Farmers would not receive copies of Metropolitan General's evidence.

Appellants' counsel sent a letter to Cannon asking that, if he obtained any arguments or evidence from Metropolitan General, he forward it to Appellants' counsel. Appellants' counsel also told Cannon that he " would be interested in reviewing [Cannon's] contentions and the decision of the arbitrator." Cannon responded by telling Appellants' counsel that he was unable to send a copy of his contentions because

Page 474

" those are considered work product." He did, however, describe the substance of his contentions. Additionally, Cannon told Appellants' counsel that he could not send a copy of the decision because " it contains information about the other party and the panelist which cannot be shared." Cannon said that, when the arbitration hearing was concluded, he would send a detailed explanation of the decision.

Appellants' counsel sent a letter to Cannon asserting that the arbitration process is a part of the " liability claims process/file" and that, under Grewell v. State Farm Mutual Automobile Insurance Company, 102 S.W.3d 33 (Mo. banc 2003) (" Grewell I " ), the claims file belongs to the insured, there is no work product privilege, and the insurer must provide free and open access to the entire file. In Grewell I, the insureds brought a declaratory judgment action against their insurer when their insurer denied their request for the contents of the claims file on the basis that it was work product. Id. at 34. The circuit court dismissed the cause of action for failure to state a claim. Id. On appeal, the Missouri Supreme Court reversed, finding that an insurance claims file " is analogous to the file of a client held by an attorney" and belongs to the insured, and that the insured " should be provided free and open access to that file." Id. at 37. Appellants' counsel alleged that, based on Grewell I, Cannon had to provide them a copy of the decision and information about the other party and the panelist.

In March 2011, following the conclusion of the arbitration proceeding, Cannon notified Appellants' counsel that the arbitrator had ruled in favor of Farmers and had determined that Edmundson had no fault or liability for the accident. Cannon stated that the arbitration decision was binding and that Farmers had closed the claim.

Appellants' counsel sent a letter to Cannon asking that he provide " all of the other party's evidence and contentions." In response, Cannon again stated that Farmers had not received copies of Metropolitan General's evidence. On March 29, 2011, Appellants' counsel sent another letter stating that " there appears to be a failure to communicate. To simplify this matter, please send a copy of the entire liability claims file in Farmers' possession generated as a result of the adverse party's claim."

After Appellants' counsel requested a copy of the entire claims file, Farmers' Senior Field Claims Representative, Tanya M. Lofquest, contacted Appellants' counsel by telephone to discuss the file. As a result of this conversation, Lofquest sent Appellants' counsel " copies of any statements [Farmers] ha[d] taken, the police report, scene photos and arbitration determination." In response, Appellants' counsel sent Lofquest a letter noting that he had asked her to provide him " a list of the documents which [Farmers] would not produce from the liability claims file and the reasons for not doing so." Appellants' counsel also asked that Lofquest send him certain other documents. When Lofquest responded by sending Appellants' counsel some, but not all, of the additional documents he requested, Appellants' counsel sent Lofquest a certified letter stating, " in light of the lack of response to my previous requests, I am assuming that you are refusing to allow any further access to the liability claims file generated in the above-referenced matter and will act accordingly." Farmers did not respond to this letter.

A month later, in June 2011, Appellants filed suit against Farmers asserting claims based upon Farmers' failure to produce the claims file. In Count I, Appellants asserted a claim for declaratory judgment,

Page 475

in which they asked that the court order Farmers to produce the claims file. In Count II, Appellants alleged that Farmers' failure to produce the claims file constituted a breach of fiduciary duty, which was constructive fraud, and they requested an award of attorney's fees and costs under Sections 527.080 and 527.100, RSMo 2000,[1] of the Declaratory Judgment Act.[2] In Count III, Appellants asserted that Farmers had a duty to train its agents and claims representatives as to Missouri law governing the relationship between an insurer and its insured, specifically, the holdings of Grewell I and Grewell v. State Farm Mutual Automobile Insurance Company, 162 S.W.3d 503 (Mo. App. 2005) (" Grewell II " ). Appellants contended that Farmers' failure or refusal to train its employees was in bad faith, without just cause or excuse, intentional, frivolous, and outrageous, entitling them to actual and punitive damages.[3]

In August 2011, Farmers' counsel agreed to produce the entire claims file to Appellants. In September 2011, three months after Appellants filed their petition and six months after their counsel initially requested the entire ...


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