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Ruiz v. Bar Plan Mutual Insurance Co.

Court of Appeals of Missouri, Eastern District, Fourth Division

September 3, 2019

ELIZABETH A. RUIZ, PERSONAL REPRESENTATIVE OF THE ESTATE OF MARCIA A. PAUL, Appellant,
v.
THE BAR PLAN MUTUAL INSURANCE COMPANY, Respondent.

          Appeal from the Circuit Court of St. Louis County Honorable David L. Vincent, III

          KURT S. ODENWALD, PRESIDING JUDGE

         Introduction

         Elizabeth A. Ruiz ("Ruiz") appeals the trial court's grant of summary judgment in favor of The Bar Plan Mutual Insurance Company ("The Bar Plan") on her equitable garnishment claim filed on behalf of the estate of Marcia A. Paul ("Decedent"). Ruiz brought her claim against The Bar Plan to collect on a legal malpractice judgment entered in favor of Decedent against The Bar Plan's insured, Charles H. Steib ("Steib"). Steib renewed a claims-based professional liability insurance policy with The Bar Plan ("the Policy") effective in 2009. In the Policy, coverage for claims based upon conduct occurring before the issuance of the Policy was conditioned on Steib notifying The Bar Plan, at the time of the Policy renewal application, of any act or omission that he had a basis to believe might give rise to a claim against him. The trial court determined that the Policy did not afford coverage for Ruiz's legal malpractice claims because Steib did not report Decedent's potential malpractice claims against Steib to The Bar Plan when he reapplied for insurance coverage.

         Ruiz raises several points on appeal, each of which is premised upon Ruiz's contention that Steib fully complied with the Policy's notice requirements because he reasonably believed no malpractice claim could be brought against him on behalf of Decedent following Decedent's death. It is not disputed that coverage under the Policy was expressly conditioned upon Steib reporting any acts or omissions that could reasonably be expected to form the basis of a legal malpractice claim against him by Decedent. Because an objectively reasonable attorney in 2008 would have understood that claims of legal malpractice survived a client's death, Steib was obligated to notify The Bar Plan of Decedent's potential malpractice claim when applying to renew the Policy in 2008. Because Steib did not notify The Bar Plan of the potential claim against him, the Policy affords no coverage for Ruiz's claims. Accordingly, we affirm the judgment of the trial court.

         Factual and Procedural History

         I. The Legal Malpractice Claims Underlying the Equitable Garnishment Action

         Ruiz's legal malpractice claims against Steib arose from Steib's representation of Decedent in a declaratory judgment proceeding stemming from a medical malpractice judgment. Decedent obtained a $750, 000 settlement against Dr. Enrique Pastrana ("Dr. Pastrana") in a medical malpractice case. Decedent and Dr. Pastrana entered into a Section 537.065[1] settlement agreement, which stipulated that Decedent could collect on the settlement with Dr. Pastrana only from Dr. Pastrana's liability insurer, Intermed Insurance Company ("Intermed"). When Decedent sought to collect on the settlement, Intermed filed a declaratory judgment action seeking a ruling that Dr. Pastrana's liability policy did not cover Decedent's claims. Intermed moved for summary judgment on its petition and submitted therewith a statement of uncontroverted facts. Steib, representing Decedent, did not properly respond to Intermed's statement of uncontroverted facts.

         On July 18, 2007, the trial court granted summary judgment to Intermed. The trial court explained that Decedent did not respond to Intermed's statement of uncontroverted facts as required by Rule 74.04(c)(2), [2] causing the trial court to treat each of Intermed's facts as admitted by Decedent. Included among the admissions was the fact that Decedent's claims were not covered by Dr. Pastrana's liability policy with Intermed. The trial court found Steib's response noncompliant with Rule 74.04. The trial court admonished that it "acknowledge[d] the difficulty of [Decedent's] position but [was] nevertheless constrained by the requirements of Rule 74.04(c)(2) and the decisions of the appellate courts, which treat as true any facts alleged in a properly pleaded summary judgment motion not disputed by the non-movant." Consequently, the trial court found Intermed's uncontroverted facts admitted and, as a matter of law, granted summary judgment in favor of Intermed. Because of Steib's error, Decedent was unable to continue her efforts to collect on the $750, 000 medical malpractice judgment against Dr. Pastrana.

         Decedent appealed the trial court's grant of summary judgment to Intermed. On March 11, 2008, this Court affirmed the trial court's grant of summary judgment in a per curiam order. Intermed Ins. Co. v. Paul, 247 S.W.3d 103, 104 (Mo. App. E.D. 2008) (per curiam). In the memorandum accompanying the order, we explained that Rule 74.04(c)(2) set forth the requirements for Decedent's response to Intermed's statement of uncontroverted facts. We noted that compliance with Rule 74.04 is mandatory and that Decedent failed to comply with Rule 74.04 when Steib did not admit or deny each factual statement contained in the summary judgment motion. We held that the trial court properly treated Intermed's factual assertions as true, given that Decedent-due to Steib's error-did not dispute them. Because the facts as asserted by Intermed voided coverage under Dr. Pastrana's insurance policy, we held the trial court properly granted summary judgment in favor of Intermed.

         Steib then mailed Decedent a copy of the per curiam order. Shortly thereafter, on July 3, 2008, Decedent died. Ruiz was appointed the personal representative of Decedent's estate.

         II. The Bar Plan Policy

         Steib, through his law firm, submitted a Policy renewal application to The Bar Plan in December 2008. Section II Coverage of the Policy-effective January 21, 2009-contains the following insuring clause:

A. PROFESSIONAL LIABILITY AND CLAIMS-MADE AND REPORTED CLAUSE:
The Company will pay on behalf of an Insured all sums, subject to the Limit(s) of Liability, Exclusions and terms and conditions contained in this Policy, which an Insured shall become legally obligated to pay as Damages as a result of CLAIMS (INCLUDING CLAIMS FOR PERSONAL INJURY) FIRST MADE AGAINST AN INSURED DURING THE POLICY PERIOD OR ANY APPLICABLE EXTENSION PERIOD COVERAGE AND REPORTED TO THE COMPANY DURING THE POLICY PERIOD, THE AUTOMATIC EXTENDED CLAIM REPORTING PERIOD, OR ANY APPLICABLE EXTENSION PERIOD COVERAGE by reason of any act or omission by an Insured acting in a professional capacity providing Legal Services.
PROVIDED ALWAYS THAT such act or omission happens:
1. During the Policy Period; or
2. Prior to the Policy Period, provided that prior to the effective date of this Policy:
a. Such Insured did not give notice to the Company or any prior insurer of any such act or omission; and
b. Such Insured had no basis to believe that such Insured had committed such an act or omission.
NOTE: It is a condition precedent to coverage under this Policy that all Claims be reported in compliance with Section VII. CLAIMS, Paragraph A.

         (formatting in original).

         Under Section III Exclusions, Exclusion L expressly excludes coverage for any claim based upon or arising out of "[a] Claim against an Insured who before the Policy effective date knew, or should reasonably have known, of any circumstance, act or omission that might reasonably be expected to be the basis of that Claim" (emphasis added).

         In the December 2008 Policy renewal application, Steib affirmatively denied that his firm or any attorney or employee in the firm had knowledge of any incident, circumstance, act or ...


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