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Braughton v. Esurance Ins. Co.

Court of Appeals of Missouri, Western District, First Division

March 17, 2015

KEYEN BRAUGHTON, A MINOR, AND KONNOR BRAUGHTON, A MINOR, BY AND THROUGH CONSERVATORS, DAVID AND MICHELLE BRAUGHTON, Respondents,
v.
ESURANCE INSURANCE COMPANY, Appellant

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Appeal from the Circuit Court of Clay County, Missouri. The Honorable Larry D. Harman, Judge.

James S. Manning, Harrisonville, MO, for respondents.

Mark D. Chuning, Kansas City, MO, for appellant.

Before Division One: Cynthia L. Martin, Presiding Judge, Thomas H. Newton, Judge and Mark D. Pfeiffer, Judge. All concur.

OPINION

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Cynthia L. Martin, Judge

Esurance Insurance Company (" Esurance" ) appeals a judgment in favor of Keyen Braughton and Konnor Braughton (collectively " Minors" ) for breach of an insurance contract following the wrongful death of their mother, the named insured on the insurance contract (" Judgment" ). The Judgment found that Esurance breached the insurance contract with the Minors by failing to pay uninsured motorist proceeds as directed by an earlier judgment approving a wrongful death settlement. Esurance argues that the judgment allocating proceeds to the Minors followed an even earlier judgment which allocated proceeds to the Minors' father, and which authorized father to sign a release individually and on behalf of all wrongful death beneficiaries. Esurance thus argues that it was released from all liability to the Minors under the insurance contract.

The trial court's Judgment finding that Esurance breached its insurance contract with the Minors is affirmed, though for reasons other than those set forth in the Judgment. The Judgment's award of damages is affirmed in part and reversed in part.

Factual and Procedural History

On May 15, 2010, Julie Braughton (" Mother" ) was killed in a car accident when her vehicle was struck by an uninsured motorist. Mother was survived by her husband, Joseph Braughton (" Father" ), the Minors, and her parents, Ernie and Sandra Gibbs (collectively " Grandparents" ). At the time of the accident, Mother was insured by an automobile policy issued by Esurance with combined uninsured motorist (" UM" ) coverage of $150,000.

On July 21, 2010, Father signed a settlement and release of claims (" Release" )

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with Esurance. Father signed the Release individually and as class representative of all those entitled to recover for the wrongful death of Mother pursuant to section 537.080.[1] The Release described the consideration as $150,000, the full extent of the UM coverage, and released Esurance and its agents from all claims relating to Mother's accident " specifically limited to any and all claims made under or relating to the Esurance Insurance Company, Policy Number PAMO-003506483." The Release also described the allocation of the UM coverage such that $143,612.25 would be paid to Father, and $6,387.75 would be paid to resolve a hospital lien. The Release was accompanied by affidavits signed by Grandparents confirming their agreement with the terms of the Release and with the allocation of the UM proceeds.

Proceedings in 10CY-CV08631

On July 28, 2010, Esurance prepared and filed a petition for " Approval of Wrongful Death Settlement" in the Clay County Circuit Court. The petition named Father, the Minors, and Grandparents, as plaintiffs, and Esurance as defendant. The petition identified Father as " class representative" of the class of persons entitled to bring a wrongful death claim pursuant to section 537.080. The petition noted that the named plaintiffs had made a claim against Esurance as a result of Mother's accident, referenced the agreement reached to resolve the claim by paying out the UM policy limits in the manner allocated in the Release, and noted that the settlement would " serve to extinguish any and all claims of Plaintiffs against Defendant arising from the insurance policy obtained by decedent from Defendant." None of the plaintiffs identified in the petition were represented by counsel. Though the Minors were named plaintiffs in the proceeding, they were not represented by a duly-appointed next friend, guardian, or conservator.

A hearing was conducted on August 13, 2010. Father and the Minors attended the hearing, along with an attorney for Esurance. Esurance called Father to testify, and Father reiterated the terms of the settlement and Release as outlined in the petition. Father testified that the settlement was in the best interests of Father, the Minors, and Grandparents and requested approval of the settlement and Release. When asked by the trial court, Father confirmed that the Minors lived with him, that he was still serving as their natural father and natural guardian, and that he was taking care of their needs.

The trial court orally approved the settlement at the hearing. Esurance tendered a check to Father for $143,612.25 on the record, and Father acknowledged receipt of the check.

On August 13, 2010, the trial court entered its " Order and Judgment Approving Wrongful Death Settlement" (" Settlement Judgment" ). The Settlement Judgment found the settlement between Esurance and the plaintiffs to be " fair and reasonable," and approved distribution of the $150,000 settlement amount in the manner set forth in the Release. The Settlement Judgment noted that Father " is hereby authorized and has executed a Release as class representative of Plaintiffs, thereby releasing all claims which Plaintiffs have and may have against [Esurance]."

On September 23, 2010, a satisfaction of judgment signed by Father was filed which stated that Father, as class representative for himself, the Minors, and Grandparents, had received a check for $143,612.25 in satisfaction of the Settlement

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Judgment entered on August 13, 2010.

On November 2, 2010, Father was indicted on four counts of second degree statutory sodomy. Father was arrested on November 4, 2010, and was thereafter in jail pending trial.

David and Michelle Braughton were appointed conservators (" Conservators" ) for the Minors on July 7, 2011. On July 26, 2011, the Minors, by and through the Conservators, filed a motion to set aside the Settlement Judgment pursuant to Rule 74.06(b). The motion argued that the Minors had not been given notice of the earlier settlement hearing,[2] and that in any event, Rule 52.02[3] was violated because no next friends or guardians were appointed for the Minors in connection with the settlement. The motion informed the trial court about Father's most recent indictment; that Father had previously been indicted on May 29, 2007, for first degree child molestation, second degree child molestation, and second degree statutory sodomy; and that Father had thereafter been out on bond until his new charges and arrest in November 2010. The motion also advised the trial court that at the time of the August 13, 2010 hearing, everyone was under the impression that the settlement proceeds were being allocated to Father for the care of the Minors but that the settlement proceeds had not been so used by Father. The Minors thus argued that the Settlement Judgment was procured by mistake, fraud, or misrepresentation, and should be set aside.

The trial court conducted a hearing on the Minors' motion on August 3, 2011. Esurance argued that its UM coverage had already been paid out in exchange for the Release, and that the Settlement Judgment had been satisfied. Esurance also argued that Rule 52.02 does not apply to wrongful death settlements, and that even if it did, the Minors' interests were adequately protected as reflected by the trial court's inquiry of Father during the settlement hearing.

On August 4, 2011, the trial court entered an order that granted, in part, the Minors' motion to set aside the Settlement Judgment. The order provided, in pertinent part:

That portion of [Settlement Judgment] that allocates and apportions the sum of $143,612.25 to [Father] is set aside and vacated. The Court finds that [Father] had a conflict of interest with other members of the class entitled to bring an action for wrongful death and that the judgment allocating $143,612.25 was obtained by fraud and/or misrepresentation. The remaining aspects of [Settlement Judgment] remain in full force and effect. An allocation of proceeds of the settlement shall be made following hearing at a mutually agreed time, or as set by the Court.

( Emphasis added.)

A hearing to allocate settlement proceeds was held on September 28, 2011. At the conclusion of the hearing, Esurance asked the trial court to confirm that the Release remained in force and effect since the August 4, 2011 order only set aside that portion of the Settlement Judgment allocating settlement proceeds, and did not expressly set aside that portion of the

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Settlement Judgment which authorized and acknowledged Father's execution of the Release " thereby releasing all claims which Plaintiffs have and may have against [Esurance]." The trial court responded only that the August 4, 2011 order spoke for itself.

On October 11, 2011, the trial court entered a second judgment " Approving Wrongful Death Settlement and Apportioning Proceeds" (" Second Settlement Judgment" ). The Second Settlement Judgment found that Father, the Minors, and Grandparents were the only members of the class of beneficiaries pursuant to section 537.080 entitled to make a claim for the wrongful death of Mother and that Father had not appeared at the hearings conducted in connection with the Minors' motion to set aside the Settlement Judgment.[4] The Second Settlement Judgment concluded that the " proposed settlement" of $150,000 was fair and reasonable and ordered the settlement approved. The Second Settlement Judgment ordered that the " proposed settlement" " shall be divided" such that the Minors would each be paid $70,000, Father would be paid $3,612.25, and the hospital holding a lien would be paid $6,387.75. The Second Settlement Judgment did not address who would be responsible for this division of proceeds. Other than identifying Esurance as having appeared in the proceeding, the Second Settlement Judgment made no other reference to Esurance. Specifically, the Second Settlement Judgment did not order Esurance to pay anyone, did not mention Mother's insurance policy, and did not address the previously executed Release and satisfaction of judgment. No appeal was taken from the Second Settlement Judgment.

Proceedings in 12CY-CV01274/12CY-CV03550

On November 14, 2011, the Minors sent Esurance a letter demanding payment of $70,000 to each of them pursuant to the Second Settlement Judgment. However, the Minors took no ...


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