Court of Appeals of Missouri, Eastern District, Fourth Division
Appeal from the Circuit Cou of City of St. Louis Honorable David L. Dowd
ROY L. RICHTER, Judge
Charles Moore, Sr. ("Appellant") appeals from the trial court's judgment ordering reformation and specific performance under an agreement pursuant to Section 537.065, RSMo (2000), which allows a claimant and tortfeasor to contract to limit recovery to specified assets or an insurance contract. The reformed agreement required Appellant to agree to a consent judgment or to have an uncontested hearing on liability and damages to prohibit American Family Mutual Insurance Company ("American Family") from controlling the defense in a pending personal injury case brought by Brittany Hunter ("Respondent") against Appellant. We reverse and remand.
On March 27, 2012, Respondent brought suit in Franklin County against the Delta Motel and others, including Appellant, seeking recovery as a result of being raped and sexually assaulted at the Delta Motel. Appellant was the motel manager at the time of the assault, and Respondent generally alleged negligence and other wrongful conduct by Appellant and others that caused or contributed to her sexual assault.
American Family insured the Delta Motel and was tasked to provide a defense and indemnity of Respondent's lawsuit for both the motel and Appellant. American Family filed a Second Amended Petition for Declaratory Judgment on April 5, 2012, and added Appellant as a defendant in this action. American Family then sent Appellant a reservation of rights letter notifying him it would defend him in the Franklin County action, but that it would not indemnify him against any judgment due to two exclusions in his policy. Appellant then hired Patrick Horsefield ("Horsefield") in April 2012, and a month later Horsefield sent American Family a letter on behalf of Appellant informing it that Appellant refused and rejected American Family's defense in the Franklin County litigation and requesting that American Family withdraw its reservation of rights and dismiss Appellant from the declaratory judgment action.
American Family sent Appellant a letter on June 1, 2012, stating that it was withdrawing its limited defense and reservation of rights and agreeing to dismiss Appellant from the declaratory judgment action. Appellant, however, was not dismissed from the declaratory judgment action prior to American Family subsequently filing a motion for summary judgment requesting judgment be entered in its favor, finding that "no coverage exists" for Appellant. In a letter dated September 4, 2012, Horsefield informed American Family that Appellant had entered into a settlement agreement (the "537 Agreement") with Respondent. After having filed its motion for summary judgment, American Family received this letter and finally dismissed Appellant, albeit without prejudice, from the declaratory judgment action on September 10, 2012.
The 537 Agreement provides that at the time of the alleged negligence at the Delta Motel, Appellant was insured under a policy issued by American Family, and that Respondent would only seek satisfaction under the policy, unless Appellant's income exceeded $50, 000 in any calendar year. The agreement also provided that Appellant was obligated to authorize and empower Respondent's counsel, James O'Leary, to pursue all claims against American Family, that Appellant would cooperate in those claims, and that any proceeds from those claims would be divided equally among Appellant and Respondent, unless the 50% Appellant recovered exceeded the amount necessary to satisfy any judgment in the underlying lawsuit.
One key point of contention between the parties is whether the following paragraph was included in the agreement:
The parties further agree that in the event of a global settlement of all claims, including the underlying litigation and the claims for bad faith failure to settle, bad faith failure to defend and indemnify, and any other claim filed by Moore against American Family, plaintiff shall receive full compensation, plus interests and costs awarded plaintiff, set forth in any underlying judgment in the lawsuit before the parties split the proceeds from any settlement, verdict or judgment against American Family pursuant to the terms of paragraph 2 herein.
O'Leary's original proposed agreement included this paragraph, but Horsefield testified that he deleted this paragraph from the version he recommended to Appellant and had Appellant sign. O'Leary testified that he "may have" taken Appellant's signature from the revised version of the 537 Agreement Horsefield sent him and attached it to his version of the agreement.
The second key point of contention between the parties is whether or not the 537 Agreement required Appellant to concede liability or submit to a non-contested trial. Horsefield testified that he believed and intended there would still be a trial on liability and damages, while O'Leary testified that he certainly intended for Appellant to submit to a non-contested trial and not cross-examine Respondent's liability and damage experts. O'Leary did admit that the 537 Agreement "doesn't specifically say" that there will be an uncontested hearing on liability and damages in Franklin County in the underlying case.
Ultimately the trial court entered judgment in favor of Respondent, reforming the 537 Agreement by removing the paragraph quoted above and adding two provisions. The added provisions required Appellant to not allow American Family to have control over the defense of the underlying liability case, and required Appellant to cooperate with Respondent in that case, either by agreeing to a ...