Opinion
No. ED 78681
January 2, 2002
Appeal From Circuit Court of the City of St. Louis, Hon. Jimmie Edwards.
Michael F. Merritt, for Appellant.
Andrew D. Ryan, for Respondent.
Opinion
Super Sandwich Shop, Inc. (Shop) appeals from the trial court's Order and Judgment (judgment), entered on stipulated facts, finding in favor of Trinity Universal Insurance Company (Trinity) on Shop's petition for declaratory judgment and on a counter-claim for interpleader filed by the City of St. Louis (City), the Sheriff's Department of the City of St. Louis (Sheriff's Department), and Harold Beck. We affirm.
The remaining parties for purposes of this appeal include Super Sandwich Shop, Inc. and Trinity Universal Insurance Company.
Trinity's motion to dismiss appeal is denied.
The stipulated facts and record reveal the following: Ellen Keisker owned a building in which Shop operated a restaurant. A lease between Keisker and Shop provided in part that "Lessee [Shop], at [its] expense, shall maintain plate glass and public liability insurance including bodily injury and property damage insuring Lessee and Lessor [Keisker] with minimum coverage as [specified]." Trinity issued a Commercial Lines Policy (Policy) to Shop covering its premises. In relevant part, the Policy provided coverage totaling $125,000.00 on the building, $50,000.00 on the contents, and $15,000.00 for business interruption. The Commercial Property Conditions section of the Policy provided in part:
TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US
If any person or organization to or for whom we make payment under this Coverage Part has rights to recover damages from another, those rights are transferred to us to the extent of our payment. That person or organization must do everything necessary to secure our rights and must do nothing after loss to impair them. But you may waive your rights against another party in writing:
1. Prior to a loss to your Covered Property or Covered Income.
2. After a loss to your Covered Property or Covered Income only if, at time of loss, that party is one of the following:
a. Someone insured by this insurance;
b. A business firm:
(1) Owned or controlled by you; or
(2) That owns or controls you; or
c. Your tenant.
This will not restrict your insurance.
(emphasis added).
On December 11, 1997, during the period of the Policy's coverage, two vehicles collided into the building, causing "severe damage to the building and [its] contents and fixtures." On December 12, 1997, Shop notified its insurance agent about the loss to the building, its contents and fixtures. In April 1998, pursuant to the Policy's Commercial Property Coverage, Trinity paid Shop a total of $141,609.49 for damage to the building, damage to business personal property, and business interruption loss arising out of the accident. Shop also paid a $500.00 deductible for the loss.
On January 10, 1998, Keisker, Shop, and L. Lee Hinds, who had been injured during the accident, filed a negligence action against one of the drivers, Beatrice Farmer. Ultimately, through a second amended petition, Keisker, Shop, and Hinds pursued negligence claims against Farmer, as well as Beck, who was the driver of the second vehicle, City, and Sheriff's Department, Beck's employer. In particular, Shop sought damages and court costs based in part on allegations that, as a result of the collision, its business had "been damaged and destroyed and [its] restaurant ha[d] been forced to close, causing a loss of income and profits." Keisker's claims and the claims against Farmer were settled.
By letter, dated April 6, 1999, Trinity, in relevant part, stated to City's attorney: "Please protect our subrogation lien in the event the third party claim/suit settles." Trinity reiterated its subrogation position in a letter, dated April 28, 1999, to Shop's counsel by noting the counsel authoring the letter had "been retained by [Trinity] with respect to its subrogation claim." Then, again, in an October 15, 1999 letter from Trinity's counsel to Shop's counsel, Trinity's counsel stated, in relevant part, his belief "that Trinity has a valid right of subrogation . . . through [the Policy's] Commercial Property Conditions."
On September 1, 1999, Trinity unsuccessfully moved to intervene as a plaintiff in the negligence lawsuit pursued by Shop and Hinds. Trinity then filed a separate action.
City, Sheriff's Department, and Beck filed, in both the negligence action and Trinity's lawsuit, a counter-claim for interpleader seeking an order permitting the payment of the $100,000 statutory limit of liability into the trial court's registry and an order of discharge from further liability. A stipulation that Beck was liable and was in the course of his employment with Sheriff's Department at the time of the accident, and that City had no association with Beck, was also filed.
In its answer to the interpleader counter-claim, Trinity urged it was entitled to the total amount paid into the trial court's registry "up to and including . . . the amount that Trinity paid to . . . Shop . . . for structural damage, contents damage, and business interruption damage" because Shop "assigned all causes of action" to Trinity. In its response to the interpleader counter-claim, Shop contended it did not assign anything to Trinity or any assignment to Trinity was partial. Specifically, Shop argued Trinity would have a cause of action only to the extent Trinity paid Shop for a loss for which Shop could recover from City, Sheriff's Department, or Beck. Such a cause of action, Shop urged, would not include any payment by Trinity for structural damage or other items for which Shop may not recover from those parties.
Additionally, collateral estoppel and laches barred Trinity's position that Shop had assigned its claim to Trinity, Shop contended, because, since the time of the accident, Trinity had pursued a position that it had claims by subrogation. Shop also filed a petition for declaratory judgment seeking a declaration that, among other things it did not assign the cause of action to Trinity and Trinity's assignment claim was barred by collateral estoppel and laches, or alternatively, that any assignment by Shop to Trinity was for a maximum of $15,000.00 which Trinity paid for loss of income under the Policy's business interruption provisions. In this declaratory judgment petition, Shop urged in relevant part that in its underlying negligence action it sought recovery only for the value of its business and not for any structural damage to the building, for which it had an insurable interest but not a cause of action because it did not own the building.
The trial court subsequently granted Trinity's motion to intervene as a plaintiff in the negligence action pursued by Shop, and directed Shop and Trinity to file a stipulation of facts and trial briefs on the interpleader counter-claim and Shop's petition for declaratory judgment. Those parties filed trial briefs and a stipulation of facts.
Upon consideration of "the pleadings, motions, and arguments of the parties," the trial court entered its judgment finding Shop's claims were assigned to Trinity through the transfer language in the Commercial Property Conditions section of the Policy; concluding Hinds's personal injury claims were not assigned, must be maintained as a separate cause of action, and were severed from the other claims; sustaining the interpleader counter-claim "insofar as the funds deposited are in satisfaction only of Shop's claims arising from the accident"; and concluding Trinity was entitled to the $100,000 deposited in the trial court's registry in satisfaction of Shop's claims. This appeal followed the trial court's denial of Shop's Motion to Amend Judgment or in the alternative Motion for New Trial, and designation by a nunc pro tunc order both that the judgment was final for purposes of appeal and that there was no just reason for delay.
In its first point, Shop urges the trial court erred in finding the challenged Policy provision unambiguously assigned Shop's cause of action to Trinity because that provision did not use assignment language and, for about two years, Trinity interpreted the provision as creating a right of subrogation rather than an assignment. In its second point, Shop contends the trial court erred in concluding Trinity was not equitably estopped from asserting the assignment theory because Shop established Trinity asserted its inconsistent subrogation right for nearly two years, Shop relied on Trinity's subrogation position by initiating and maintaining its negligence action, and Shop was damaged.
When a non-jury case is tried on stipulated facts, the sole issue on appeal is whether the trial court drew proper legal conclusions from those facts. Sheldon v. Board of Trustees of the Police Retirement Sys., 779 S.W.2d 553, 554 (Mo.banc 1989) (declaratory judgment action); State Farm Mut. Auto. Ins. Co. v. Liberty Mut. Ins. Co., 883 S.W.2d 530, 532 (Mo.App.E.D. 1994) (declaratory judgment action); Equitable Life Assurance Soc'y v. McMorris, 697 S.W.2d 545, 547 (Mo.App.E.D. 1985) (interpleader action). We do not defer to the trial court's interpretation of an insurance policy but engage in de novo review.National Union Fire Ins. Co. v. City of St. Louis, 947 S.W.2d 505, 506 (Mo.App.E.D. 1997).
Interpreting the meaning of an insurance policy is a question of law.Devine v. Gateway Ins. Co., No. ED78592, 2001 Mo. App. LEXIS 1643, at *5 (Mo.App.E.D. Sept. 25, 2001). We give the policy language the plain or ordinary meaning an average layperson would understand, and may consult standard English language dictionaries, including Black's Law Dictionary, to do so. Id. If the insurance policy is unambiguous, we enforce it as written in the absence of a statute or public policy requiring coverage. Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300, 302 (Mo.banc 1993). We construe ambiguous policy provisions against the insurer. Gulf Ins. Co. v. Noble Broadcast, 936 S.W.2d 810, 814 (Mo.banc 1997). An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the policy's language. Id. An ambiguity is not created by the parties' disagreement over the interpretation of an insurance policy term or clause. Devine, No. ED78592, 2001 Mo. App. LEXIS 1643, at *6.
Neither party contends a statute or public policy requires coverage in this case.
Here, the parties disagree on whether the challenged transfer language of the Policy gives Trinity rights to Shop's property loss claims through subrogation or assignment. We find that the trial court properly concluded the Policy's challenged transfer language assigned to Trinity Shop's rights to recover from the tortfeasors for Shop's property loss.
After payment of a property loss, an insurer's right to pursue a lawsuit "against the tortfeasor depends upon whether it receives from the insured an assignment of the whole claim [or] merely rights of subrogation. . . . [I]f the insurer's rights are simply those of subrogation, then legal title remains in the insured and [the insured] retains the exclusive right to bring the suit" against the tortfeasor.State Farm Mut. Auto. Ins. Co. v. Jessee, 523 S.W.2d 832, 834 (Mo.App.W.D. 1975). If, however, the insurer receives from the insured an assignment of the whole claim, then the insurer "has the exclusive right to maintain the suit against the tortfeasor for the entire claim including any deductible item." Id. "[A]n assignment of an entire claim . . . is a complete divestment of all rights from the assignor and a vesting of those same rights in the assignee." Holt v. Myers, 494 S.W.2d 430, 437 (Mo.App.E.D. 1973). Importantly, there is "[n]o particular form of words . . . necessary to accomplish an assignment, so long as there appears from the circumstances an intention on the one side to assign . . . and on the other side to receive. . . ." Farmers Ins. Co. v. Effertz, 795 S.W.2d 424, 425 (Mo.App.W.D. 1990); see also Darr v. Structural Sys., Inc., 747 S.W.2d 690, 693 (Mo.App.E.D. 1988) (assignment of warranty).
The challenged Policy provision expressly transfers to Trinity, Shop's "rights to recover damages from" the tortfeasors upon Trinity's payment to Shop under the Policy's Commercial Property Coverage. This clearly indicates Trinity obtained Shop's rights to prosecute and resolve Shop's damages claims, regardless of the outcome of any effort to obtain such damages. Through the challenged Policy language then, Trinity received the rights to monetary relief from the tortfeasors by way of assignment and Shop is divested of those rights once Trinity paid Shop pursuant to the Policy Commercial Property Coverage provisions. This conclusion is supported by the definition of "transfer" in Black's Law Dictionary which defines the word as embracing "every method . . . of disposing of or parting with property or an interest in property" and specifies the four methods of transfer as: "by indorsement, by delivery,by assignment, and by operation of law." Black's Law Dictionary 1503 (7th ed. 1999) (emphasis added).
Importantly, this language does not expressly limit Trinity's right to recover to "anyone held responsible," which the Western District concluded was not an assignment because it only gave the insurer "a right to recover once the tortfeasor ha[d] been held responsible." Hagar v. Wright Tire Appliance, Inc., 33 S.W.3d 605, 610-11 (Mo.App.W.D. 2000).
In support of its position that the Policy's challenged language gives Trinity rights by way of subrogation rather than assignment, Shop first urges that language is more consistent with subrogation and does not constitute an assignment because the words "assign" and "assignor" do not appear; there is no mention of transferring "causes of action" to Trinity or of Trinity being able to sue or prosecute in its name; and the Policy's language limits the transfer "to the extent of [Trinity's] payment." Shop relies on the decisions in Holt, supra, and Alsup v. Green, 517 S.W.2d 151 (Mo.App.S.D. 1974).
In Holt, we found a "Release and Subrogation Receipt" (receipt) executed by an insured, which expressly subrogated the insurer to all of the insureds' claims, rights and interest against another liable for the loss and authorized the insurer to sue or settle the claims in the insureds' names, did not constitute an assignment. Holt, 494 S.W.2d at 435-39. Notably, the opinion did not address a provision of the policy that stated the insurer "may require from the insured an assignment of all right of recovery against any party for loss to the extent that payment therefor is made by" the insurer. Id. at 436, 436-38. We noted the word "assign" was not in the receipt and concluded the receipt was, "as it state[d]," a subrogation receipt and not an assignment. Id. at 437. We further noted the "to the extent of [the insurer's] payment" language and did not address it as dispositive of whether or not the receipt was an assignment. Id. In relevant part, we found not on point the Missouri Supreme Court decision in Steele v. Goosen, 329 S.W.2d 703 (Mo. 1959), which decided a document executed by an insured constituted an assignment to the insurer.
In Alsup, the Southern District found the relevant language of a release executed by the insureds upon payment by the insurer was "strikingly similar" to the language at issue in Holt, adopted the analysis in Holt, and, upon applying that analysis, concluded the release did not constitute an assignment. Alsup, 517 S.W.2d at 153.
Specifically, the Missouri Supreme Court in Steele construed as constituting an assignment of the insured's entire negligence claim language in a document stating in part that
in consideration of [the insurer's payment for property loss] the insured hereby assign[s] and transfer[s] to the [insurer] each and all claims, rights and demands against any person, persons, corporation or property arising from or connected with such loss or damage, and [the insurer] is subrogated in the place of and to the claims and demands of the insured against such person, persons, corporation or property in the premises who may be liable or hereafter adjudged liable for the burning, theft, destruction or damage to said property to the extent of the amount hereby paid.
Id. at 711. The Supreme Court specifically concluded it was "immaterial" that the document limited the insurer's rights "to the extent of the amount hereby paid." Id. at 711-12.
In Hoorman v. White, 349 S.W.2d 379 (Mo.App.E.D. 1961), we relied onSteele in concluding an assignment occurred when the insured signed a document that stated upon the insurer's payment of the claim, the insurer was "subrogated to all claims and rights of action [insured had] against any third person or persons, firms, corporations or estates to the amounts so paid and the [insured] assigns and sets over to the [insurer] all such claims with the right to prosecute." Id. at 379-80.
Based on these cases, it is clear that language limiting an insurer to the amount of its payment to an insured is not dispositive when deciding whether or not a document gives an insurer rights through subrogation or assignment. Thus, the fact that the Policy language at issue here transfers Shop's rights to recover "to the extent of [Trinity's] payment" does not support Shop's position the challenged Policy language constitutes a subrogation, rather than an assignment, of rights.
The fact the word "assign" is absent from the challenged Policy language also does not foreclose a determination the language constitutes an assignment. Greater Kansas City Baptist Community Hosp. Ass'n v. Businessmen's Assurance Co., 585 S.W.2d 118 (Mo.App.W.D. 1979). In that case, the Western District rejected a contention that the absence of "assign" or "assignment" rendered erroneous the trial court's determination a document constituted an assignment of insurance policy benefits. Id. at 119.
Finally, the fact the Policy's challenged transfer language does not expressly mention "causes of action" or that Trinity may prosecute claims is not dispositive. There is no set wording necessary to constitute an assignment. In Steele, the Missouri Supreme Court found an assignment existed even though the pertinent wording did not include the phrase "causes of action." Steele, 329 S.W.2d at 711. Additionally, the challenged language here clearly states Trinity obtains by transfer the "rights to recover damages from another" which Shop had when Trinity made a payment under the Policy to Shop. This language clearly indicates Trinity receives from Shop both the causes of action that may result in a recovery of damages from the tortfeasors and the ability to pursue those causes of action to conclusion. Thus, Trinity received rights to recover from the tortfeasors by assignment from Shop.
Shop further argues that the fact the challenged Policy provision allows Shop to waive its rights against a tortfeasor after a loss indicates the Policy's transfer provision does not constitute a complete divestment of Shop's rights which is necessary for an assignment.
We conclude the Policy waiver provision at issue here permits an insured to waive its rights against certain specified individuals or entities after a property or income loss only up to the point at which Trinity makes a payment under the Policy. Construing that waiver provision as permitting an insured to waive its rights against certain specified individuals or entities after the insurance company has paid under the policy for a covered property or income loss seems illogical. It appears illogical because either the insured is waiving rights it does not have once the rights have been assigned to the insurance company, as we have construed the challenged transfer provision, or, if that transfer language provides for subrogation, the insurer is permitting the insured to waive rights through which the insurer could recover the amount it paid to insured. Because the challenged transfer provision applies only upon Trinity's payment under the Policy, and the waiver provision applies only prior to Trinity's payment under the Policy, we conclude the waiver provision is inapplicable to whether or not the transfer provision constitutes an assignment.
Because we have found the Policy's challenged transfer language unambiguous and because the parties' disagreement about the language is insufficient to render that Policy language ambiguous, we also do not need to address Shop's contention that Trinity's own interpretation of the challenged Policy language indicates Trinity acquired rights by subrogation rather than by assignment.
The trial court did not err in concluding the Policy's challenged transfer provision unambiguously gave Trinity rights by assignment rather than by subrogation. Due to this conclusion, we will not address Shop's contentions regarding the extent of Trinity's subrogation interest.
Point one is denied.
In its second point, Shop contends the trial court erred in concluding Trinity was not equitably estopped from asserting the assignment theory because Shop established Trinity asserted its inconsistent subrogation right for nearly two years, Shop relied on Trinity's subrogation position by initiating and maintaining its negligence action, and Shop was damaged.
Even if equitable estoppel may be considered in circumstances such as those presented here, we conclude the trial court properly found equitable estoppel did not preclude Trinity from asserting its right by assignment. Equitable estoppel may be established upon a clear and convincing showing of each of the following elements:
(1) an admission, statement, or act by the person to be estopped that is inconsistent with the claim that is later asserted . . .; (2) an action taken by a second party on the faith of such admission, statement or act; and (3) an injury to the second party which would result if the first party is permitted to contradict or repudiate his admission, statement, or act.
Tinch v. State Farm Ins. Co., 16 S.W.3d 747, 751 (Mo.App.E.D. 2000). Importantly, "[e]stoppel is not a favorite of the law and will not arise unless justice to the rights of others demands it." Id.
Here we find that "justice to the rights of others" does not demand the application of equitable estoppel, even if the doctrine's elements otherwise exist. See Blake v. Irwin, 913 S.W.2d 923, 935 (Mo.App.W.D. 1996) (finding equitable estoppel should not apply in the case even "assuming, arguendo, that" the party claiming estoppel had clearly established each of the three elements). The undisputed facts disclose that: Shop filed its negligence action approximately one month after the accident and before Trinity made a payment under the Policy; Trinity made payments under the pertinent coverage provisions approximately three months after filing of the lawsuit and, as the parties stipulated, Trinity first advised Shop of its subrogation right approximately one year later; Trinity thereafter unsuccessfully pursued intervention in Shop's negligence action; and, approximately fifteen months after Trinity first mentioned subrogation, the trial court concluded Trinity had, as it urged, rights by assignment rather than by subrogation. The fact that the determination whether the challenged Policy language constituted an assignment or a subrogation of rights occurred late in the litigation pursued by Shop does not persuade us that justice requires application of equitable estoppel. The fact a court may be presented with and adversely resolve an issue "late" in litigation is a risk any litigant pursuing a claim must accept. Here, both Shop and Trinity had the challenged Policy language equally available to them. The basis for the equitable estoppel here is an insurer's change in its position on the meaning of the only Policy provision applicable to the issue at hand. This is not an instance when an insurer gains knowledge of some facts unavailable to the insured or when the insurer changes its position on which of several insurance policy provisions applies to a situation. Nor has Shop persuaded us its rights have been unjustly affected by Trinity's change in interpretation. Clearly, Shop was not adversely affected by Trinity's change of position between the time Shop filed its lawsuit in January 1998 and Trinity first asserted its subrogation right in April 1999. The issue whether Trinity had rights through subrogation or assignment was presented to the trial court less than a year from that first undisputed assertion of Trinity's subrogation right and was resolved by the trial court promptly without undue court proceedings. While we understand an earlier presentation of the issue both to Shop and the trial court would have been beneficial, we are unable to discern that justice requires the application of equitable estoppel under the unusual circumstances of this case.
Point two is denied.
The trial court's judgment is affirmed.
I respectfully dissent from the majority opinion's reasoning that the language of the insurance policy creates an assignment rather than a subrogation. Despite my departure from the majority's reasoning, I concur with the resolution of the remaining issues on appeal.
An assignment "is a complete divestment of all rights from the assignor and vesting of those same rights in the assignee." Holt v. Myers, 494 S.W.2d 430, 437 (Mo.App.E.D. 1973) (emphasis added). Assignment of a claim is accomplished when it "appears from the circumstances an intention on the one side to assign . . . and on the other side to receive. . . ." Farmers Ins. Co. v. Effertz, 795 S.W.2d 424, 425 (Mo.App.W.D. 1990). An instrument which is construed as an assignment, "must have completely divested relator of any legal title and right in the claim or cause of action. . . ." State ex rel. Bartlett Co., Grain v. Kelso, 499 S.W.2d 579, 582 (Mo.App. K.C. Dist. 1973) (emphasis added).
In the instant case, the provision which the majority believes creates an assignment, clearly transfers rights to the insurance company once a claim has been made. However, the provision allows the insured to waive rights against other specific parties limited by the transfer provision after a loss. This sounds of subrogation — not assignment. When a provision of an insurance policy is ambiguous, that provision is to be construed against the insurance provider. State Farm Auto. Ins. Co. v. Esswein, 43 S.W.3d 833, 842 (Mo.App.E.D. 2000); See Behr v. Blue Cross Hospital Service, Inc., 715 S.W.2d 251, 255 (Mo.banc 1986). The transfer clause does not divest clearly all causes of action on the part of the insured. Since there was not an entire divestiture of the insured's rights under the terms of the policy, there is, as a matter of law, no assignment.
This provision is set forth in the majority opinion.