Opinion
No. WD 65947
July 18, 2006
Appeal from the Circuit Court of Buchanan County, Honorable Weldon C. Judah, Judge.
The plaintiffs in a personal injury and wrongful death lawsuit dismissed their suit and filed this declaratory judgment action against Shelter Mutual Insurance Company, the insurer of the defendants in the original lawsuit. They did not name the defendants in this action.
The plaintiffs were Mark and Shauna Barron and their child, Kennadi, Christy Barron and her child, Cameron, and Richard Allen.
The issue of Shelter's insurance coverage emerged from a 2002 boating accident on Lake Pomme De Terre in Hickory County. The accident occurred when Shelter's insured, Rodney Oglesby, crashed his fishing boat into a pontoon boat while competing in a night time fishing tournament. Two persons on the pontoon boat died from injuries sustained in the accident. The plaintiffs sued Oglesby and another Shelter insured, Billy Hunt, a passenger on Oglesby's boat, for personal injury and wrongful death.
Killed in the accident were Kain Barron, Mark and Shauna Barron's child, and Carissa Barron, Christy Barron's and Richard Allen's child.
Oglesby and Hunt had purchased homeowner's and boat owner's insurance from Shelter. The plaintiffs settled with Oglesby and Hunt, and Shelter agreed to pay $100,000 under Hunt's homeowner's policy and $300,000 under Oglesby's boat owner's policy. Plaintiffs, however, contended that additional coverage existed under Hunt's boat owner's policy and under Oglesby's boat owner's and homeowner's policies. As part of their settlement, the parties agreed that plaintiffs would pursue this declaratory judgment action to determine whether or not Shelter was obligated to pay more under Oglesby's and Hunt's policies.
After the plaintiffs filed this declaratory judgment action, both parties moved for summary judgment. The circuit court granted the plaintiffs' motion for summary judgment and denied Shelter's motion. Shelter appeals.
Although the parties averred virtually the same facts in their respective motions for summary judgment, the circuit court denied Shelter's motion, partly, on the ground that the parties were contesting issues of material fact.
We do not reach the merits of Shelter's appeal because the circuit court erred in granting summary judgment. Because the plaintiffs' petition did not state a claim upon which relief can be granted, the circuit court did not have jurisdiction to consider the plaintiffs' claim. Adkisson v. Director of Revenue, 891 S.W.2d 131, 132 (Mo. banc 1995).
Although Chapter 527, governing declaratory judgment actions, "opens the doors of the court" to potential litigants before another action for relief, such as breach of contract, may be available, the General Assembly did not intend for declaratory judgment actions to expand the courts' jurisdiction over subject matter or parties. Farmers Insurance Company, Inc. v. Miller, 926 S.W.2d 104, 106 (Mo.App. 1996). A declaratory judgment action is not proper "when the issue can be raised by some other means." Lane v. Lensmeyer, 158 S.W.3d 218, 223 (Mo. banc 2005). Petitioners seeking declaratory relief must show:
(1) a justiciable controversy that presents a real, substantial, presently-existing controversy admitting of specific relief, as distinguished from an advisory decree upon a purely hypothetical situation; (2) a plaintiff with a legally protectable interest at stake, "consisting of a pecuniary or personal interest directly at issue and subject to immediate or prospective consequential relief"; (3) a controversy ripe for judicial determination; and (4) an inadequate remedy at law.
Id. at 222.
To ensure justiciability, petitioners must have present legal rights entitling them to some relief. Miller, 926 S.W.2d at 107. When petitioners are neither parties to, nor beneficiaries of, a contract, they lack standing to seek a declaration of the contracting parties' rights under that contract. Id. Mere disagreement concerning a legal question is not an adequate ground for invoking judicial power. Commonwealth Insurance Agency, Inc. v. Arnold, 389 S.W.2d 803, 806 (Mo. 1965).
The plaintiffs' petition for declaratory relief presents several significant problems. Assuming arguendo that the plaintiffs lack an adequate remedy at law — a pragmatic but questionable assumption — the principal problem in deeming the plaintiffs to have presented a justiciable controversy is that they did not make Oglesby and Hunt parties to their action. They were indispensable parties. American Economy Insurance Company v. Ledbetter, 903 S.W.2d 272, 276 (Mo.App. 1995). The plaintiffs did not have a judgment against them or a settlement establishing their liability. Rule 87.04 mandates, "When declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceedings." The plaintiffs were not parties to the insurance contracts between Hunt, Oglesby, and Shelter, and they were not third-party beneficiaries. Because they had not yet secured a judgment against the insureds, they did not yet stand in the insureds' shoes. Greer v. Zurich Insurance Company, 441 S.W.2d 15, 30 (Mo. 1969); American Family Mutual Insurance Company v. Nigl, 123 S.W.3d 297, 302 (Mo.App. 2003). The plaintiffs had not yet acquired rights under Hunt's and Oglesby's insurance contracts with Shelter. Indeed, the plaintiffs' petition in this action did not even contend that Hunt or Oglesby claimed coverage existed or disputed Shelter's interpretation or that Shelter agreed to defend but only under a reservation of rights.
The settlement that led to this action did not even name Hunt and Oglesby as parties. Concerning their liability for the plaintiffs' injuries, the settlement agreement said only: "Plaintiffs have reached settlements with Hunt and Oglesby, under which Plaintiffs are dismissing their claims against Hunt and Oglesby in the Lawsuit with prejudice and releasing them from liability as consideration for this Agreement."
Hence, we do not discern a justiciable controversy. The plaintiffs, at this point, are strangers to the contracts. See Glick v. Allstate Insurance Company, 435 S.W.2d 17, 20 (Mo.App. 1968) ("Actions are . . . merely advisory when the judgment would not settle actual rights."). That an outsider disputes one of the contracting parties' interpretations of the contract does not create a real, substantial, presently-existing controversy. Ledbetter, 903 S.W.2d at 275-76. The plaintiffs, therefore, lack standing to request a declaration that coverage exists under Hunt's or Oglesby's insurance policies.
Shelter, for the purposes of this declaratory judgment action, did admit Hunt's liability in the settlement agreement. This favors a declaratory judgment. See Glick, 435 S.W.2d at 20. But while Shelter has taken the position that Oglesby's homeowner's policy provides no coverage in this case, it has not taken this stance with regard to Hunt's boat owner's policy.
Legalisms aside, plaintiffs and Shelter seem to be seeking an advisory opinion. Rather than sue the alleged tortfeasors and pursue Shelter, if necessary, the parties agreed that the plaintiffs would file this declaratory judgment action and let the judiciary sort out Shelter's contract language. In return, Shelter has agreed to pay without making the plaintiffs "obtain a finding of liability or judgment against Hunt or Oglesby." This flies in the face of the purpose for a declaratory judgment action. It is not to be "a substitute for all existing remedies and should be used with caution." Cronin v. State Farm Fire and Casualty Company, 958 S.W.2d 583, 589 (Mo.App. 1997) (quotation omitted). Although a declaratory judgment action is intended to give relief from uncertainty and insecurity and to promote judicial economy, it is not designed to allow parties to bypass the adversarial system and to place the courts in the unenviable position of wading through the thickets of insurance policy language, which, apparently, even its drafters have difficulty comprehending. That a party to a contract disagrees with a third party's interpretation does not give the third party — certainly a stranger to the contract — standing to initiate a declaratory judgment action to have the judiciary resolve the disagreement.
To the extent that the plaintiffs and Shelter contend that their settlement agreement permitted the plaintiffs to seek a declaratory judgment action to determine whether or not Shelter was obligated to pay more under Oglesby's and Hunt's policies, we are not persuaded. We find no precedent that allows parties to confer standing upon a person who is neither a party to, nor beneficiary of, a contract to seek a declaration of the contracting parties' rights under that contract. The plaintiffs did not have standing to seek a declaratory judgment action seeking a declaration of the contracting parties' rights under the policies. Merely because the plaintiffs and Shelter agreed that plaintiffs should seek a declaratory judgment under the settlement agreement does not create a justiciable controversy.
In particular, the parties argued that, by virtue of the settlement agreement, the plaintiffs are in privity with Shelter, have the right to enforce the insurance policies, and are third party beneficiaries.
Because the plaintiffs lack standing, the circuit court should have dismissed their petition. We, therefore, reverse the circuit court's summary judgment and, pursuant to our authority in Rule 84.14, dismiss the plaintiffs' petition.
Thomas H. Newton, Presiding Judge, and Patricia Breckenridge, Judge, concur.