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Desai v. Seneca Specialty Insurance Co.

Court of Appeals of Missouri, Western District, Third Division

July 3, 2018

NEIL DESAI M.D., ET AL., Respondents,
v.
SENECA SPECIALTY INSURANCE COMPANY, Appellant.

          Appeal from the Circuit Court of Jackson County, Missouri The Honorable James F. Kanatzar, Judge

          Before: Victor C. Howard, Presiding Judge, Cynthia L. Martin, Judge and Gary D. Witt, Judge

          Cynthia L. Martin, Judge

         Seneca Specialty Insurance Company ("Seneca") appeals the trial court's denial of its motion to intervene and motion for relief from judgment. Seneca sought to intervene in a lawsuit filed by Neil Desai ("Neil") and Heta Desai ("Heta") (collectively the "Desais")[1]against Garcia Empire, LLC ("Garcia Empire") after those parties entered into a contract under section 537.065.[2] Seneca argues that section 537.065, as amended on August 28, 2017, entitled it to notice of the section 537.065 contract and an opportunity to intervene in the Desais' lawsuit as a matter of right before the trial court entered judgment in the case. Finding no error, we affirm.

         Factual and Procedural Background[3]

         On October 2, 2014, Neil suffered a personal injury while being escorted from a Garcia Empire establishment by a Garcia Empire employee. In May 2016, the Desais filed an amended petition against Garcia Empire seeking damages arising from Neil's injury.[4]Garcia Empire held a commercial general liability policy with Seneca that was in effect at the time of Neil's injury. Garcia Empire advised Seneca of the Desais' lawsuit. Seneca offered to defend Garcia Empire subject to a full and complete reservation of rights regarding coverage. Garcia Empire rejected Seneca's offer to provide a defense subject to a reservation of rights. In November 2016, Garcia Empire entered into a contract with the Desais pursuant to section 537.065 wherein the Desais agreed to limit recovery of any judgment secured against Garcia Empire to insurance coverage.

         On August 17, 2017, the Desais' lawsuit was tried to the court. The trial court entered judgment in favor of the Desais and against Garcia Empire on October 2, 2017.

         On October 31, 2017, Seneca filed a combined motion to intervene as a matter of right pursuant to Rule 52.12(a) and for relief from judgment pursuant to Rule 74.06(b).[5] Seneca argued that it was entitled to receive notice of the section 537.065 contract between Garcia Empire and the Desais, and to intervene as a matter of right in the Desais' lawsuit against Garcia Empire, based on an amendment to section 537.065 that took effect on August 28, 2017. The August 28, 2017 amendment to section 537.065 added several new subsections, including new subsection 2 which provides as follows:

2. Before a judgment may be entered against any tort-feasor after such tort-feasor has entered into a contract under this section, the insurer or insurers shall be provided with written notice of the execution of the contract and shall have thirty days after receipt of such notice to intervene as a matter of right in any pending lawsuit involving the claim for damages.

Section 537.065.2.

         The trial court heard arguments on Seneca's motion by conference call on November 1, 2017, and received supplemental briefing from the parties on the same day. Seneca argued that the aforesaid amendment to section 537.065 was merely a procedural change that permissibly operated retroactively to require that Seneca receive notice and an opportunity to intervene in the Desais' lawsuit before the trial court could enter judgment. The Desais argued that the amendment to section 537.065 was substantive and could not apply to a section 537.065 contract entered into before the amendment's effective date without violating the Missouri Constitution's prohibition against laws retrospective in their operation. Garcia Empire also opposed Seneca's motion.

         The trial court denied Seneca's motion on November 1, 2017. The trial court held that the legislature did not expressly provide for the amendment of section 537.065 to be applied to proceedings had or commenced under the statute prior to the amendment.

         This timely appeal followed.[6]

         Standard of Review

         An appellate court "will affirm a trial court's decision concerning intervention as a matter of right under Rule 52.12(a) unless there is no substantial evidence to support that decision, it is against the weight of the evidence, or it erroneously declares or applies the law." State ex rel. Koster v. ConocoPhillips Co., 493 S.W.3d 397, 403 (Mo. banc 2016).

         "Generally, the trial court's ruling on a motion to set aside a judgment under Rule 74.06 is reviewed for abuse of discretion. However, whether a judgment should be vacated because it is void is a question of law that is reviewed de novo." Hooks v. MHS Hosp. Grp., LLC, 526 S.W.3d 136, 142 (Mo. App. W.D. 2017) (quoting Christianson v. Goucher, 414 S.W.3d 584, 588 (Mo. App. W.D. 2013)).

          Analysis

         Seneca raises three points on appeal. In Point One, Seneca argues that the trial court erred in denying its motion to intervene and for relief from the judgment because section 537.065 as amended only applies prospectively to judgments entered after the amendment's effective date. In the alternative, Seneca argues in Point Two that retroactive application of section 537.065 to contracts which predate the statute's amendment is not constitutionally impermissible because the amendment is a procedural and not a substantive change in the law. In Point Three, Seneca argues that the trial court erred in denying the motion for relief from the judgment pursuant to Rule 74.06(b) because Seneca did not receive the notice or opportunity to intervene as a matter of right afforded by section 537.065 as amended.

         Seneca acknowledges that the section 537.065 contract between the Desais and Garcia Empire was entered into prior to August 28, 2017, the effective date of the amendment to section 537.065. Seneca's points on appeal thus collectively depend for their success on our conclusion that section 537.065 as amended permissibly applies to section 537.065 agreements entered into before the amended statute became effective. Resolution of this issue requires us to address article I, section ...


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