United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
A. ROSS UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendant USAA Casualty
Insurance's (“USAA”) Motion for Partial
Summary Judgment. (Doc. 16.) The motion is fully briefed and
ready for disposition. (Docs. 17, 18, 23, 25.)
Ross Dozier was injured in a car accident with Julia Dolan.
At the time, Plaintiff was covered by a USAA insurance policy
that included underinsured motorist coverage. Plaintiff
settled his claim with Dolan's insurer for her policy
limit of $25, 000. Thereafter, he made a claim for
underinsured motorist benefits under his USAA policy.
Plaintiff had incurred approximately $12, 000 in medical
bills and $4, 000 in lost wages to that point. USAA offered
to settle Plaintiff's underinsured motorist claim for $6,
000, which, when combined with the payment from Dolan's
insurer, totaled $31, 000 in benefits.
rejected the offer and filed suit on December 15, 2017. (Doc.
1.) He alleged that USAA breached its contract and
vexatiously refused to pay. (Id.) Thereafter, USAA
filed this motion, seeking summary judgment on
Plaintiff's vexatious-refusal claim, arguing that it did
not refuse to pay. (Doc. 17.)
to Federal Rule of Civil Procedure 56(a), a court may grant a
motion for summary judgment only if “there is no
genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law.” Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). The burden
is on the moving party. City of Mt. Pleasant, Iowa v.
Associated Elec. Coop. Inc., 838 F.2d 268, 273 (8th Cir.
1988). In ruling on a motion for summary judgment, all
reasonable inferences must be drawn in a light most favorable
to the non-moving party. Woods v. DaimlerChrysler
Corp., 409 F.3d 984, 990 (8th Cir. 2005). The evidence
is not weighed and no credibility determinations are made.
Jenkins v. Winter, 540 F.3d 742, 750 (8th Cir.
the moving party demonstrates that there is no genuine issue
of material fact, the nonmovant must do more than show there
is some doubt as to the facts. Matsushita Elec.
Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986). Instead, the nonmoving party bears the burden of
setting forth affirmative evidence and specific facts by
affidavit and other evidence showing a genuine factual
dispute that must be resolved at trial. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986);
Celotex, 477 U.S. at 324. “A dispute about a
material fact is ‘genuine' only ‘if the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party.'” Herring v.
Canada Life Assur. Co., 207 F.3d 1026, 1030 (8th Cir.
2000) (quoting Anderson, 477 U.S. at 248). Judgment
as a matter of law is appropriate only when “the court
finds that a reasonable jury would not have a legally
sufficient evidentiary basis to find for the party.”
Missouri law, an insured who sues “to recover the
amount of any loss under a policy of automobile
[insurance]” may be awarded additional damages
“if it appears from the evidence that [his insurance
company] has refused to pay such loss without reasonable
cause or excuse.” Mo. Rev. Stat. § 375.420. The
insured must prove that “(1) it had an insurance policy
with the insurer; (2) the insurer refused to pay; and (3) the
insurer's refusal to pay was without reasonable cause or
excuse.” Macheca Transp. v. Philadelphia Indem.
Ins. Co., 649 F.3d 661, 674 (8th Cir. 2011) (citing
Dhyne v. State Farm Fire & Cas. Co., 188 S.W.3d
454, 457 (Mo. 2006)).
argues that Plaintiff cannot show that it “refused to
pay” given the uncontroverted fact that it offered him
$6, 000. (Doc. 17 at 5.) It argues that §375.420 is a
penal statute that must be construed strictly and that
therefore any offer to pay precludes a finding of vexatious
refusal. (Id. (citing Smith ex rel. Stephan v.
AF & L Ins. Co., 147 S.W.3d 767, 778 (Mo.Ct.App.
2004).) In other words, USAA asserts that a fact-finder could
not conclude that USAA “refused to pay.”
responds that so strict a construction would render §
375.420 meaningless because an insurer could offer a token
amount and avoid any penalty based on the functional
equivalent of refusal to pay. (Doc. 23 at 4-5.) Ultimately,
Plaintiff argues, whether USAA's offer meets the standard
for a vexatious refusal is a fact question for the jury.
Court agrees with Plaintiff. The text of § 375.420
authorizes additional damages in suits to recover “any
loss under a policy” and penalizes insurers who
unreasonably refuse to pay “such loss.” Mo. Rev.
State. § 375.420. Under the plain text of the statute,
the penalty is not limited to cases in which an insurer
refuses to pay at all-it applies when the insurer
unreasonably refuses to pay the loss that the insured seeks
to recover. As USAA itself notes, a primary purpose of
section 375.420 is “to provide an incentive for
insurance companies to pay legitimate claims without
litigation.” Dhyne, 188 S.W.3d at 457 (quoting
Overcast v. Billings Mutual Ins. Co., 11 S.W.3d 62,
67 (Mo. banc 2000)). In that way, the additional damages
compensate the insured for the expense of having to sue after
the insurer unreasonably denies his claim. See Id.
(explaining that the purpose of the statute would be
eliminated if an insurer could pay on the eve of trial). This
purpose is not served by USAA's proposed construction.
because § 375.420 imposes additional damages when
“the insurer's refusal to pay was without
reasonable cause or excuse, ” Macheca Transp.,
649 F.3d at 674, the reasonableness of the insurer's
refusal is a fact question that must be answered by the jury.
This general rule is especially applicable in this case,
which, as USAA puts it, “is a case in which the parties
simply disagree as to the amount of underinsured motorist
benefits that ...