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Allstate Indemnity Co. v. Dixon

United States District Court, W.D. Missouri, Southern Division

August 18, 2016

ALLSTATE INDEMNITY COMPANY, Plaintiff/Counterclaim Defendant,
v.
JOSEPH DIXON and Y DIXON, Defendants/Counterclaim Plaintiffs,
v.
LORETTA BAILEY AGENCY, INC. and BETHANY FLENNIKEN, Counterclaim Defendants.

          ORDER

          DOUGLAS HARPOOL UNITED STATES DISTRICT JUDGE.

         Before the Court are cross Motions for Summary Judgment (Doc. 135, 141). The Court has carefully considered the motions and their accompanying arguments, and hereby DENIES Defendants/Counterclaim Plaintiffs’ Motion for Summary Judgment (Doc. 135) and GRANTS IN PART AND DENIES IN PART Plaintiff/Counterclaim Defendant’s Motion for Summary Judgment as to Counts IV, V, and VI (Doc. 141).

         BACKGROUND

         On February 14, 2014, Joseph Dixon and Casey Dixon purchased property at 791 State Hwy T, West Plains, Missouri, for $120, 000. Around the end of February 2014, Mr. Dixon contacted Loretta Bailey Agency, Inc., which serves as an insurance agency for Allstate Indemnity Company, seeking an insurance policy covering the dwelling and all personal property on the land. Bethany Flenniken, a licensed insurance agent and employee of Loretta Bailey Agency, Inc., provided insurance premium quotes for $116, 411, $300, 000 and $479, 857. The quote for $479, 857 was based on a computation of the actual cash value of the real property generated partially based on the square footage of the property, which was originally estimated as 4800 square feet.

         On March 10, 2014, the parties entered into an insurance agreement providing dwelling coverage for $479, 857 and personal property coverage for $60, 000. The insurance policy was written and bound by Ms. Flenniken. On March 13, 2014, Allstate requested an inspection of the property. Following this inspection, Ms. Flenniken increased the square footage of the property in the policy to 7796 square feet. A new computation of the actual cash value of the real property returned a value of $732, 855. During her deposition, Ms. Flenniken stated that she did not inform the Dixons of the new estimation of the property’s actual cash value.

         On the evening of April 12, 2014, a fire damaged the dwelling and personal property, and the Dixons later submitted a claim under the insurance policy seeking $532, 857. Allstate Indemnity Company filed this action seeking declaratory judgment regarding its rights and obligations under the insurance policy. Allstate asserted that the policy did not provide coverage under the circumstances for either of two reasons: (1) Defendants concealed or misrepresented material facts when they told Allstate that neither they, nor anyone at their direction, intentionally started the fire; or (2) Defendants are barred from recovering under the policy because they, or someone at their direction, started the fire.

         Joseph Dixon and Casey Dixon filed a counterclaim against Allstate for breach of contract and vexatious refusal to pay, the latter of which is governed by Mo. Rev. Stat. §§ 375.296 and 375.420. The Dixons also joined claims against third parties Loretta Bailey Agency, Inc. and Bethany Flenniken as agents of Allstate for general negligence, negligent omission, and negligent representation. The Dixons alleged that Ms. Flenniken, as an employee of Loretta Bailey Agency, Inc., was negligent when she failed to inform the Dixons that the estimated actual cash value of the home had changed from $479, 857 to $732, 855. The Dixons also alleged that Ms. Flenniken negligently represented to them that personal property purchased for the purpose of using the dwelling as a bed and breakfast would be covered by the personal property policy. Allstate was joined as a defendant to these negligence claims based on agency theories of liability. The Court received a Notice of Settlement regarding the claims against Loretta Bailey Agency, Inc. and Bethany Flenniken. The Dixons continue to pursue all claims against Allstate, including the negligence claims.

         The Dixons filed a Motion for Summary Judgment for all of their claims and Allstate’s arson defense. Allstate filed a Motion for Summary Judgment regarding Counts IV, V, and VI of the Dixons’ counterclaim. After full briefing on each of the issues, the matter is now ripe for review.

         STANDARD OF REVIEW

         Summary judgment is proper if, viewing the record in the light most favorable to the non-moving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). “Where there is no dispute of material fact and reasonable fact finders could not find in favor of the nonmoving party, summary judgment is appropriate.” Quinn v. St. Louis County, 653 F.3d 745, 750 (8th Cir. 2011). Initially, the moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. If the movant meets the initial step, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). To do so, the moving party must “do more than simply show there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

         DISCUSSION

         As to the Dixons’ Motion for Summary Judgment, the Court finds there are genuine issues of material fact regarding Allstate’s arson defense, Count I of the counterclaim alleging breach of contract, and Count II of the counterclaim alleging vexatious refusal to pay. Therefore, the court denies the Dixons’ Motion for Summary Judgment as to those issues. As to Allstate’s Motion for Summary Judgment, the Court finds no genuine issues of material fact and holds that Allstate is entitled to judgment as a matter of law regarding Counts IV and V of the counterclaim alleging general negligence and negligent omission. Therefore, the Court grants Allstate’s Motion for Summary Judgment on those issues. However, as to Count VI of the counterclaim, alleging negligent misrepresentation, the Court concludes that no live controversy currently exists due to the legal positions taken by the parties, denies both parties’ motions for summary judgment, and defers ruling on the issue of mootness until the issue can be taken up on a motion for directed verdict.

         A. Count I - Breach of Contract / Allstate’s Arson Defense

         Allstate’s complaint seeking declaratory judgment and the Dixons’ breach of contract counterclaim are two sides of the same coin. If summary judgment is improper as to Allstate’s arson defense, it is also improper as to the Dixons’ breach of contract claim. Thus, the Court will address them together.

         The Dixons’ argument for summary judgment rests upon the premise that Allstate, as a matter of law, cannot submit sufficient evidence such that a jury could find four “elements” of an insurer’s arson defense.[1] However, Missouri courts have repudiated this analysis of arson defenses, stating, “Missouri law . . . is not so regimented.” Farm Bureau Town & Country Ins. Co. of Mo. v. Shipman, 436 S.W.3d 683, 685 (Mo.Ct.App. 2014) (noting the analysis of arson defenses set out in Fleming and rejecting it). Instead, Missouri law requires only a single factual determination: Whether ...


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