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Travelers Commercial Casualty Co. v. Vac-It-All Services, Inc.

Court of Appeals of Missouri, Eastern District, Third Division

December 16, 2014

VAC-IT-ALL SERVICES, INC., Respondent/Cross-Appellant

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[Copyrighted Material Omitted]

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Appeal from the Circuit Court of St. Louis County. Hon. Richard C. Bresnahan.

FOR APPELLANT: John J. Michener, St. Louis, MO.

FOR RESPONDENT: Gregory G. Fenlon, Clayton, MO.

ROBERT G. DOWD, JR., Judge. Kurt S. Odenwald, P.J. and Gary M. Gaertner, Jr., J., concur.


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Travelers Commercial Casualty Company appeals from the judgment entered after a jury verdict awarding its insured, Vac-It-All, $8,000 in overpaid premiums on the parties' competing breach of contract claims. Vac-It-All cross-appeals seeking prejudgment interest on that award. We affirm the judgment on the jury's verdicts, but reverse and remand for the entry of prejudgment interest.[1]

Travelers provided workers' compensation insurance for Vac-It-All. Travelers was the State's residual or " high-risk" market carrier, which is a market of " last resort" for employers who cannot get workers' compensation insurance elsewhere.

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The premium for insurance was based on the type of work Vac-It-All's employees performed. On its application for insurance, Vac-It-All classified its employees as performing " debris removal" and " equipment rental and drivers." The estimated premium based on those classifications was approximately $24,000 for the policy period.

The policy issued for the period of September 8, 2006 to September 9, 2007. The policy provided that Travelers could audit the insured during the policy period and use the audit information to determine the final premium. The final premium " will be determined after this policy ends by using the actual, and not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy." Premium payments were to be paid " when due."

After a preliminary audit, Travelers determined that the correct classification for Vac-It-All's employees was for " roofing." In February of 2007, Travelers sent Vac-It-All a letter informing it of the change in classification and resulting increased " total premium" of an additional $127,137 for the policy period. Vac-It-All disputed that classification, but upon further review, Travelers declined to change it. On April 12, 2007, Travelers sent Vac-It-All a letter stating that the insured must pay the " undisputed portion" of the increased premium due for that quarter and at the same time stating that it was cancelling the policy. Vac-It-All did not believe there was an " undisputed premium" and did not pay the increased premium.

Travelers filed a petition against Vac-It-All, alleging that failure to pay the increased premium was a breach of the insurance contract resulting in over $81,000 in damages for unpaid premiums. Vac-It-All counterclaimed, alleging that Travelers's cancellation of the policy based on the failure to pay the increased premium before the expiration of the policy term was a breach of the contract resulting in over $16,000 in damages for overpayments. At trial, there was evidence regarding: what type of work Vac-It-All's employees performed, how Travelers conducted its audit, the dispute over the classification and the amount of premiums paid. The jury found that Travelers had breached the policy, but Vac-It-All had not. It awarded Vac-It-All $8,000 in damages. Travelers's motions for judgment notwithstanding the verdict and for new trial were denied, as was Vac-It-All's motion for prejudgment interest. This appeal and cross-appeal follow.

In Point I, Travelers claims the trial court erred by allowing Vac-It-All's insurance broker, Daniel Boehme, to give expert opinions on the ground that he had not been identified as an expert witness in response to interrogatories. Although the interrogatories were not made part of the record of this appeal, the parties agree that Boehme was not disclosed as an expert of any kind, but was listed as a witness. Travelers claims that allowing him to testify as an expert was prejudicial since it could not depose him before trial or retain its own expert to rebut his opinions. Travelers does not argue that Boehme was not qualified to give his opinion. We find no error in allowing Boehme to testify.

The portion of Boehme's testimony challenged on appeal is as follows:

The position I took and I take today is that they [Travelers] are wrong in using [the " roofing" code]. . . . I told [the auditor] that that code was wrong, that the codes we have on the policy were an accurate reflection of what they do. And she had not visited the job site. The auditor did not visit a job site, and how could they possibly make that determination.

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Travelers also challenges Boehme's responses to its own questioning on cross-examination: when asked if he was aware that the " debris removal" code does not apply to new construction, Boehme answered that when there is no classification that fits precisely, one should use the " best fit" and that " debris removal" was the best fit for Vac-It-All's employees.

Even if these statements constituted the opinions of a non-retained expert--one whose opinion was not formed in anticipation of litigation--and even if Boehme was not properly disclosed as a non-retained expert, we find no abuse of the trial court's broad discretion in deciding to allow him to testify despite that discovery violation. The trial court has broad discretion in resolving discovery violations. See Feiteira v. Clark Equipment Company, 236 S.W.3d 54, 61 (Mo. App. E.D. 2007). The purpose of the discovery rules is to take the surprise out of trials so that all relevant facts and information pertaining to the action may be ascertained in advance of trial. St. Louis County v. River Bend Estates Homeowners Association, 408 S.W.3d 116, 132-33 (Mo. banc 2013) (discussing difference between retained experts, about whom more information must be disclosed to prevent such surprise, and non-retained experts, about whom less must be disclosed). Thus, on appeal, we consider whether the challenged act by the trial court, under the totality of the circumstances, has resulted in prejudice or unfair surprise. Feiteira, 236 S.W.3d at 61. We conclude that Travelers was not prejudiced or unfairly surprised by Boehme's testimony as to why the classifications he chose were accurate and the one Travelers chose was not.

The record indicates that Travelers was aware that Boehme disputed its classifications long before trial. Boehme signed Vac-It-All's application and was the person who contacted Travelers to dispute Travelers's classification after the audit. According to the auditor's deposition, she had multiple phone conversations with Boehme regarding the disputed classification. Travelers received Boehme's written letter of dispute and ultimately, sent Boehme a letter indicating the final resolution of his dispute. Boehme's affidavit, filed in conjunction with cross-motions for summary judgment, states that he disputed Travelers's reclassification of Vac-It-All's employees to " roofing." It is clear that Travelers was aware Boehme had an opinion regarding those classifications; in fact, it sought to exclude his testimony before trial. Because Boehme was identified as a lay witness, Travelers was aware he might testify at trial and, because it was already aware that he disputed its classification, could have deposed him to further discover the basis for that dispute. The failure to list Boehme as a non-retained expert did not have any effect on Travelers' ability to learn his opinions because discovery of the facts known and opinions held by a non-retained expert " shall be discoverable in the same manner as for lay witnesses." Rule 56.01(b)(5). Any surprise to Travelers by Boehme's testimony at trial was not unfair and was due to its own failure to depose him before trial. See Beaty v. St. Luke's Hospital of Kansas City, 298 S.W.3d 554, 559-60 (Mo. App. W.D. 2009) ( no obligation to provide even properly disclosed non-retained expert for deposition, as such experts can be deposed like any other lay witness).

Nor did Travelers suffer prejudice, as it claims, by its inability to retain its own expert to rebut Boehme's opinions because its own witnesses all testified in a way that contradicted Boehme's opinion. The Travelers auditors both testified as to why they thought " roofing" was the proper classification, and the underwriter testified similarly. These expert opinions, like

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Boehme's, came from non-retained persons who were primarily testifying about the facts of the case. Allowing Boehme to give his reasoning for disputing the classification to the same extent Travelers's witnesses gave their reasoning was appropriate, even though he may not have been properly disclosed. Having been presented with no other basis for excluding his testimony, the trial court did not abuse its discretion in allowing Boehme to testify.

Point I is denied.

In Point II, Travelers challenges the verdict-director given on Vac-It-All's counterclaim, claiming that the failure to identify the specific contractual obligation in the second paragraph ...

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