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Sherman v. Kaplan

Court of Appeals of Missouri, Western District, Third Division

March 14, 2017


         Appeal from the Circuit Court of Boone County, Missouri The Honorable Kevin M.J. Crane, Judge

          Before Karen King Mitchell, Presiding Judge, and Victor C. Howard and Gary D. Witt, Judges.

          Karen King Mitchell, Presiding Judge.

         Tracy Sherman (Patient) appeals the trial court's grant of Missouri Professionals Mutual-Physicians Professional Indemnity Association's (Insurer's) motion to intervene and set aside a judgment rendered in Patient's underlying medical malpractice lawsuit against Michael Kaplan (Doctor). Patient argues that the trial court lacked jurisdiction to grant intervention to Insurer, as the court's original judgment had already become final at the time it issued its ruling. For separate reasons, both parties argue that we lack appellate jurisdiction and must dismiss this appeal. But because a court's ruling on a Rule 74.06(b) motion is appealable, and because the trial court's rulings below were erroneous, we reverse.


         On April 18, 2014, Patient obtained an abdominoplasty (commonly known as a "tummy tuck") with Doctor as the surgeon and Christine Bell-Kaplan (Doctor's Wife) as Doctor's assistant. Shortly thereafter, Patient developed an infection and other complications, prompting her to file a lawsuit on July 15, 2014, against Doctor, Doctor's Wife, Doctor's practice, and the hospital where the surgery was performed. The petition alleged three counts: (1) general negligence against Doctor's Wife and Doctor's practice; (2) medical malpractice against Doctor and Doctor's practice; and (3) medical malpractice against the hospital.

         Doctor had an insurance policy with Insurer for professional liability coverage; accordingly, Insurer hired a law firm to defend Doctor in Patient's lawsuit. Counsel retained by Insurer filed an answer to Patient's petition on behalf of both Doctor and Doctor's Wife and then engaged in a brief period of discovery. (The hospital was represented by separate counsel.) On January 22, 2015, counsel for both the hospital and Doctor and Wife filed motions to dismiss on the ground that Patient had failed to file a healthcare affidavit as required by § 538.225.[1] On January 28, 2015, Patient sought leave to file a First Amended Petition, purportedly adding a count of fraud under the Missouri Merchandising Practices Act (MMPA), based upon Doctor and Doctor's Wife misrepresenting Doctor's Wife to be a licensed Physician's Assistant.[2] This request, however, was never ruled upon and no amended petition containing a claim under the MMPA was ever filed.

         On April 16, 2015, the trial court granted the motions to dismiss, without prejudice, as they pertained to Doctor and Doctor's practice but denied the motions as to Doctor's Wife and the hospital. On April 21, 2015, the parties stipulated to dismissal of the hospital with prejudice from the lawsuit, leaving only Count I of the original petition, alleging general negligence against Doctor's Wife.

         On July 7, 2015, Insurer sent Doctor a letter, advising that, as a result of the court's dismissals, only Doctor's Wife remained a defendant in the lawsuit and, because she did not qualify as an "insured person" under Doctor's policy, Insurer "must therefore deny coverage, both indemnity and defense and will provide no further benefits or payment of legal representation for the claim against [Doctor's Wife]."

         On July 8, 2015, Patient again sought leave to file a first amended petition, again alleging violation of the MMPA. On July 29, 2015, Insurer sent Doctor a second letter, indicating that it was in receipt of Patient's First Amended Petition, setting forth two causes of action: (1) general negligence against Doctor's Wife; and (2) violation of the MMPA.[3] The letter acknowledged that, "[w]hile the general statement of facts that relate to all counts of the petition refer to what may be considered under the . . . policy as a Medical Incident, the petition fails to allege a breach of the standard of care in rendering professional services against you." The letter further indicated that Doctor's policy precluded Insurer's liability for any willful, fraudulent, or intentionally wrongful activity; the violation of any statute imposing attorney's fees; and any liability based upon the insured's guarantee or warranty of the results of professional services or products. The letter concluded that, "[b]ased on the information contained in [Patient's] First Amended Petition for Damages, the policy provisions [and exclusions], [Insurer] must deny coverage, both defense and indemnity in this matter." Because Doctor was scheduled to be deposed in the pending lawsuit, following receipt of the letter, Doctor and Doctor's Wife retained their own counsel.

         On August 5, 2015, counsel for Doctor and Doctor's Wife sent a demand letter to Insurer. On August 12, 2015, Insurer responded to the demand letter, indicating that-as referenced in prior communications (specifically the letters of July 7 and July 29, 2015)-Insurer was "unable to provide defense and indemnity to [Doctor] and [Doctor's Wife]." Insurer reiterated that there was no coverage available for Doctor's Wife, as she was not insured by the policy, and there was no coverage for Doctor's alleged violation of the MMPA because of various policy exclusions.

         In light of Insurer's August 12, 2015 response to the demand letter, on August 24, 2015, Patient, Doctor, and Doctor's Wife entered into a proposed settlement agreement pursuant to § 537.065, [4] whereby Patient agreed to dismiss all claims against Doctor's Wife, Doctor consented to the filing of an amended petition premised on medical malpractice, Doctor expressly waived the affidavit requirement of § 538.225, and Doctor agreed to stipulate to a judgment in Patient's favor up to the full $500, 000 policy limit provided by Insurer. In accordance with the proposed agreement, on September 22, 2015, Patient filed a motion seeking leave to file a first amended petition, reasserting a claim of medical malpractice against Doctor and Doctor's practice.

         On September 28, 2015, the trial court granted Patient leave to file her First Amended Petition (reasserting medical malpractice), allowed Patient to dismiss her claims against Doctor's Wife, and held a hearing on the proposed § 537.065 settlement agreement. Both Doctor and Doctor's Wife were present at the hearing and represented by their own retained counsel. At the hearing, Patient testified regarding the surgery, post-surgical complications, and damages related to her claim. Neither Doctor nor Doctor's Wife offered any evidence. Patient offered the court a proposed consent judgment including damages up to the full policy amount of $500, 000, which the court accepted and entered the same date.

         Following the September 28, 2015 judgment, no appeal was taken, nor were any authorized post-trial motions filed.

         On October 29, 2015 (thirty-one days after entry of the judgment), Patient filed a separate garnishment action against Insurer, under § 379.200.[5] On December 4, 2015, Insurer filed a motion in the original medical malpractice action, seeking leave to intervene as a matter of right under Rule 52.12(a)[6] and to set aside the September 28, 2015 judgment under Rule 74.06(b), [7] arguing that the judgment was void on principles of res judicata, lack of good faith, and failure to join Insurer as a necessary party. The court held a hearing on Insurer's motion on December 21, 2015, and May 2, 2016. Thereafter, the court entered a "final ruling and order and judgment" granting Insurer leave to intervene, declaring the September 28, 2015 judgment void, and setting it aside. Patient appeals.

         Ju ...

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