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Billingsley v. Farmers Alliance Mutual Insurance Co.

Court of Appeals of Missouri, Southern District, Second Division

June 18, 2018


          APPEAL FROM THE CIRCUIT COURT OF GREENE COUNTY Honorable Calvin R. Holden, Judge

          Before Rahmeyer, C.J./P.J., Bates, J., and Scott, J.

          PER CURIAM.

         Appellant Billingsley challenges (1) an adverse summary judgment on his petition to collect insurance or recover premiums after a fire loss, and (2) respondent Farmers' counterclaim judgment against him for prima facie tort based on Billingsley's complaint to Missouri's Department of Insurance. We affirm the former and reverse the latter.


         In late 1983, Billingsley, a Kansan, bought two adjacent Springfield rental houses and engaged Carol Martin to manage them, then almost immediately warranty-deeded both houses to his sister, Joanna, a Springfield attorney.[1] In 1986, a fire policy was applied for and issued by Farmers to "Joanna V. Billingsley c/o Carol Martin Property Mgmt." as named insured, and was renewed each year with no change in the named insured even after Joanna deeded both houses back to Billingsley in 1992.

         Fire destroyed one house in 2002. Farmers denied Billingsley's policy claim on the ground that it had not contracted with or insured him. In 2004, Billingsley sued Farmers on the policy or alternatively for a premium refund.[2] In 2010, Farmers won summary judgment on the policy claim, but was denied summary judgment on the refund claim, which remained pending.

         In 2011, Billingsley complained to Missouri's Department of Insurance (MDI) about Farmers, citing the still-pending lawsuit and its case number. MDI requested Farmers to respond and provide all relevant documents within 20 days. Farmers paid its lawsuit counsel $4, 354 to do so. After receiving Farmers' response, MDI encouraged Billingsley to work with his lawyer and defer to the court's official determinations, but took no action against Farmers.

         Billingsley soon voluntarily dismissed his case and refiled a petition asserting seven counts against Farmers - five seeking to recover on the policy under various theories, plus a vexatious-refusal claim and an alternative count for premium refund. Farmers counterclaimed for prima facie tort based on Billingsley's MDI complaint.

         Farmers again sought summary judgment, asserting that Billingsley would be unable to prove an element (or more) of each of his newly-pleaded claims. See ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 381 (Mo. banc 1993). The court granted Farmers' motion, [3] then tried Farmers' counterclaim to a jury. At trial, Farmers claimed damages of $4, 354 for its attorney fees in responding to MDI after Billingsley's complaint. The jury found for Farmers in that amount, plus $20, 000 punitive damages.

         After entry of a final judgment consistent with all the above, Billingsley filed this appeal. We first address his points challenging summary judgment on his petition's claims.

         Points re Billingsley's Pleaded Claims

         Preliminary Legal Principles

         The first element of a traditional fire-policy claim is that an insurer issued a fire policy to the claimant. Travers v. Universal Fire & Cas., 34 S.W.3d 156, 160 (Mo.App. 2000); MAI 31.09. That Farmers issued no policy to Billingsley prima facie defeats such claim, illustrated by Billingsley's prior summary-judgment loss on his 2004 petition.

         Seeing that he needed more to get to a jury, Billingsley dismissed that case and filed a beefed-up petition asserting new allegations and theories. To the extent these new allegations might let Billingsley recover although he had no policy, they were "elements facts" that were his burden to prove, so Farmers could show a prima facie right to judgment on any count by showing either:

1. facts that negated any one of Billingsley's "elements facts, " or
2. that despite adequate time for discovery, Billingsley had not produced and would not be able to produce evidence sufficient to allow a factfinder to find the element(s) challenged by Farmers.

See ITT, 854 S.W.2d at 381. Billingsley could not then rest on his pleaded allegations, but had to produce specific facts showing a genuine issue for trial or suffer summary judgment. Id.

         Points 1 & 2 (re Count I)

         Billingsley's new petition alleged generally that Joanna was Billingsley's "agent" (without describing the agency's nature or scope), and its Count I policy claim hinged on those allegations. Yet even under that scenario and Billingsley's cited cases, he could not recover on the policy unless Joanna's agency to acquire and hold insurance for him had been disclosed to or known by Farmers. See Estes v. Great Am. Ins. Co., 112 S.W.2d 153, 157-59 (Mo.App. 1938). See also United Fire & Cas. v. Garvey, 328 F.3d 411, 413-14 (8th Cir. 2003), and on subsequent appeal, 419 F.3d 743, 746-49 (8th Cir. 2005) (considering Estes in context of insurer's alleged captive agent).

         As to Joanna's alleged agency, Farmers' statement of uncontroverted facts ("SUMF, " see Rule 74.04(c)(1)) established at least the following:

• Joanna never represented to Farmers or its alleged agent ("Insurors") that she was Billingsley's agent for the purpose of procuring insurance. She had no contact with Farmers or Insurors regarding the properties or their insurance prior to the fire. She did not know she was the named insured until after the fire. She never talked with Billingsley before the fire about who the policy insured, and took no action herself to check or confirm who was insured.
• Carol Martin never knew of the deeds to or from Joanna, or that anyone but Billingsley owned the properties the entire time. She testified that, prior to the post-fire lawsuit, neither Billingsley nor Joanna nor anyone else ever told her that Joanna was any kind of agent regarding the properties.
• Billingsley had no contact with Farmers or Insurors regarding the properties prior to the fire.

         Farmers thus successfully asserted that Billingsley could not produce evidence from which jurors could find either Joanna's agency or Farmers' scienter.[4]

         Even if one assumes arguendo Joanna's agency as pleaded, we cannot find where Billingsley's petition alleges that Joanna disclosed her agency to anyone, or that anyone knew she was Billingsley's agent for property-insurance purposes or otherwise, or that the summary-judgment record raises a genuine issue as to scienter of Joanna's property-insurance agency. Points 1 or 2 do not address Billingsley's failure to plead or prove this "elements fact" of his claim. Points denied.

         Point 3 (re Count IV)

         To quote Billingsley's brief, "Count IV of the petition asserted that Carol Martin and/or Joanna Billingsley had insurable interests and were entitled to recover under the policy." Billingsley's third point charges that Farmers did not show a prima facie right to judgment on Count IV because Farmers' SUMF omitted "that Carol Martin and Joanna Billingsley did not have insurable interests in 1516 North Grant related to obligations to insure the property or otherwise …."

         Initially, we note that this complaint, like most of Billingsley's summary-judgment points, indicates a failure to understand Rule 74.04 burden shifting:

"When a motion for summary judgment is made and supported as provided in this Rule 74.04, " i.e., when the movant makes a prima facie showing that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law, "an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this Rule 74.04, shall set forth specific facts showing that there is a genuine issue for trial." Rule 74.04(e). [Emphasis added.]

ITT, 854 S.W.2d at 381.

         In other words, it is not enough that Billingsley's summary-judgment points complain that Farmers did not also negate facts that either were (1) Billingsley's duty to show after the ITT/Rule 74.04 burden shifted, or (2) not "material" because they would not change Farmers' right to judgment. Particularly as to the latter, we reiterate that Farmers only had to knock out (so to speak) one element of a pleaded claim to win summary judgment, not multiple elements or other allegations of the petition. ITT, 854 S.W.2d at 381.

         At any rate, Billingsley fails to show how Joanna had any insurable interest after she parted with title in 1992 (see Estes, 112 S.W.2d at 157, 157-58), or how property manager Carol Martin ever had an insurable interest, or, for that matter, his right, by assignment or otherwise, to assert their claims. We deny Point 3.

         Point 6 (re Count III)

         We take this point out of order. Billingsley's Count III alleged that the property was mortgaged, and the policy identified and insured the mortgagees at the time of loss, but Farmers denied the mortgagees' claim, forcing Billingsley to pay "approximately $20, 000.00" to satisfy the mortgage, so he sought "at least $20, 000.00" from Farmers.

         Per the summary-judgment record, (1) the mortgage was satisfied, released, and thus extinguished before the mortgagees submitted their policy claim; and (2) further, Farmers denied the mortgagees' claim for the stated reasons that they "misrepresented the amount due and owing on the Note and … failed and refused to provide records and documents requested by Defendant Farmers that were necessary to calculate the actual amount due and owing on the Note."

         Billingsley, in Point 6, claims this summary judgment was improper because Farmers' SUMF "omitted as an actual material fact" that Farmers had no policy obligation to pay the mortgagees. We disagree for at least two reasons. First, the burden had shifted to Billingsley to show, despite the summary-judgment record, some evidence that the mortgagees were entitled to recover on the policy. ITT, 854 S.W.2d at 381. Second, as with the last point, Billingsley fails to show (or even to have pleaded) his standing to assert the mortgagees' policy rights. We deny Point 6.

         Points 4 & 5 (re Counts II & V)

         Billingsley challenges the summary judgments on Count V (policy coverage by estoppel) and alternative Count II (premium refund for unjust enrichment) because Farmers' SUMF did not assert that Farmers could retain premiums "after asserting that the policy was void and after denying that anyone was insured or entitled to coverage" thereunder.

         The underlying principle was discussed in Gutting v. Shelter Mut. Ins. Co., 905 S.W.2d 550 (Mo.App. 1995), which collected over a dozen Missouri cases to the following effect: When an insurer asserts that its policy "was not in force and effect from the beginning, it is its duty to tender back to [the insured] the premiums paid by him within a reasonable time after the discovery of the facts upon which it intends to base such defense." Id. at 551 (internal quotation marks and citation omitted).

         Yet Billingsley offers no adequate response when Farmers notes that it did not claim the policy was void ab initio or that Farmers "was entitled to receive, accept and retain premiums in exchange for providing coverage to the named insured [from 1986-92 when Joanna held title] and mortgagees as described herein [from 1986 policy inception through 2002 loss]."[5] Points 4 and 5 fail.

         Point 7 (re Count VII)

         Billingsley's Count VII vexatious-refusal claim required success on his policy claim. See MAI 10.08 ("If you find in favor of plaintiff on the claim on the insurance policy, and if …."). Failure of the foregoing points thus moots this one.

         Having found no merit in Points 1-7 relating to Billingsley's pleaded claims, we affirm the judgment in those respects and turn next to the counterclaim judgment for prima facie tort.

         Points re Prima Facie Tort Judgment

         Preliminary Legal Principles

         "Missouri courts, while recognizing prima facie torts at least nominally, do not look upon them with favor and have consistently limited the application of the prima facie tort." Hertz Corp. v. RAKS Hosp., Inc., 196 S.W.3d 536, 549 (Mo.App. 2006). The theory's essential elements are said to be (1) an intentional lawful act by the defendant; (2) with intent to injure the plaintiff; (3) resulting in such injury; and (4) no justification or insufficient justification for the defendant's act. See Porter v. Crawford & Co., 611 S.W.2d 265, 268 (Mo.App. 1980).

         Points 9 & 11 (Damages)

         We begin with Billingley's Point 9 complaint that "the only damages Farmers claimed were the attorney fees it incurred in responding to the Department of Insurance and those fees were not allowed under any exception to the American Rule."[6] In reply, Farmers claims benefit of the "collateral litigation" exception and argues that no Missouri case "squarely holds" said exception could not apply here.[7]

         We also find no particularly helpful Missouri case. But in introducing prima-facie-tort doctrine to Missouri jurisprudence, Porter accurately observed that "the leading modern authorities arise in New York"; that "in no state other than New York has the doctrine been developed with such care"; and that "the willingness of the New York courts to recognize and confront the issues presents an unusual opportunity to vicariously assess the whole ambit of issues involved in the development and application of the theory." 611 S.W.2d at 270.

         The only New York case we find runs against Farmers' position. See Howard v. Block, 454 N.Y.S.2d 718 (App. Div. 1982) (attorney fees incurred in prior proceedings not recoverable in prima facie tort). "That prior actions were meritless or vexatious does not, without more, spell out prima facie tort, and attorney's fees incurred therein do not spell out special damages …." Id. at 719.

         We see no reason to depart from this view. We grant Point 9 against Farmers' judgment for actual damages, as well as Point 11 as to the punitive-damage award, which fails absent an actual-damage recovery (Ellison v. Fry, 437 S.W.3d 762, 777 (Mo. banc 2014)), and reverse the counterclaim judgment in its entirety.

         Further Observations

         Although Billingsley's remaining points are moot, we would be remiss not to observe that Farmers never proved the third element of prima-facie-tort liability per Porter; i.e., that the intended injury resulted.

         According to Farmers' not-in-MAI verdict director, [8] Billingsley intended to injure Farmers "by compelling it to pay him" under the policy, which never happened. The legal fees Farmers claimed as damages differed from the "injury" required for prima facie tort. See Porter, 611 S.W.2d at 271, and its cited ...

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