Missouri Insurance Lawyer Blog

During this difficult time, our thoughts and prayers turn to the victims of last week's devastating disaster in Southwest Missouri. Not only do the victims of natural disaster have to deal with the loss of family members, injuries, and loss of property, those victims also have to somehow navigate a maze of legal issues related to their losses.

Lawyers from across the state are joining forces to assist in any way that we can. The Missouri bar has established a 24 hour help hotline: 1-800-829-4128. The Missouri Association of Trial Attorneys has an Emergency Response Team that has been mobilized to the Joplin area beginning Saturday, May 28th. The local Jasper County Bar has pushed aside its own sorrows, and is already giving free advice to others in distress. In addition, Legal Aid of Western Missouri is also sponsoring a free legal clinic which will be open this weekend.

Legal issues in this situation can run the gamut from insurance issues regarding homeowners or automobile coverage; health insurance or other aid to cover medical bills; life insurance; or end of life issues related to probate, wills, trusts, and powers of attorney.

If you have friends or family in the Joplin area that need legal assistance, please tell them about the legal resources available or direct them to organizations such as the Red Cross who are coordinating efforts of all of the legal volunteers. The partners and staff at Tatlow, Gump, Faiella & Wheelan, LLC, in Moberly extend our condolences to those who have suffered losses in this terrible disaster.

Do you have a judgment against an insurance company that is refusing to pay? You can obviously follow the general law and practices for executing on your judgment to collect the proceeds from the insurance company's assets. However, you should be aware of an alternate source of collection. Missouri Revised Statute Section 375.490 specifically provides that some or part of the judgment may be satisfied against funds held by the Missouri Department of Insurance. In the normal course of business insurers have to comply with the financial regulations and laws necessary to do business. Under these laws, depending upon the type of insurer, and the business they are engaged may have to deposit security in order to do business in Missouri. If a plaintiff has a partially or wholly unsatisfied execution, upon three days notice to the Director of Insurance, an execution may be served on the Director and the Director must dispose of said assets at the best price possible to satisfy said judgment. While this method is limited to any securities that are on deposit at the time, it is an often overlooked source for collecting funds against insurers. Almost every state in the union has a similar version of this statute which allows execution of a judgment against an insurer on funds held by the Department of Insurance as security for conducting business.

If you have an uncollected judgment against an insurance company you should be aware of these special provisions and how they can assist you in collecting what you are owed from the insurance company.

Continue reading "COLLECTING JUDGMENTS AGAINST INSURANCE COMPANIES" »

On April 26, 2011, the Missouri Supreme Court, in the case Schmitz v. Great American Assurance Company, -- (S.W.3d - 2011) (2011 W.L. 1565447), held that a trial court was not permitted to determine a reasonableness of an underlying judgment against an insured in an equitable garnishment proceeding when the underlying case was tried to the court.

In Schmitz the insurer argued that the equitable garnishment trial court had to apply the reasonableness test from the Gulf Insurance case, 936 S.W.2d at 815. The Gulf Insurance test, as held by the supreme court applies only to settlements under Section 537.065, and does not apply where a underlying bench trial, determines both liability and damages. The insurer argued that the trial lacked any semblance of an adversarial proceeding because the insured did not present a defense. The Schmitz court made clear what the insurer was ignoring that the insurer had had an opportunity to present a defense, but because it had declined to do so by denying coverage, it was not entitled a second bite at the apple. The court made clear that there is a difference between a settlement, and a bench trial where no defense was presented, because the trial court did not have to find liability or damages in favor of the plaintiff. Thus, the plaintiff risked the possibility that the court would find against him. To hold otherwise would force the plaintiff in a garnishment action to relitigate the entire case before the equitable garnishment court so the court in that proceeding could determine whether or not the judgment was reasonable. The Supreme Court noted that the insurers proposed application of the Gulf Insurance test would effectively allow all insurers "two bites of the apple" - once when the trial court determines liability and damages and once when the equitable garnishment court determines reasonableness. The Supreme Court held that this application of the Gulf Insurance test in the underlying proceeding was in error.

The Schmitz decision by the Supreme Court makes clear that insurance companies who refuse to honor an insurance contract to their insured, do not get to relitigate the reasonableness of the underlying judgment and therefore have their cake and eat it too. Instead, if the trial court in the proceeding in which the insurer refused to defend enters a judgment against them on liability and damages, the insurer will be bound by the judgment. It should be noted that the insurers' position in the coverage case was unreasonable. The court noted that the insurer in coming up with its reasons for denial had actually ignored the insurance company's own policy language. Sadly this is too often the case in Missouri. Insurance companies often abandoned their insureds and deny coverage by misapplying the policy language or stretching or twisting its meaning. While this decision is favorable for insureds and strikes an appropriate balance between the insurer/insureds interest, it will likely have no detouring effect on insurers poor treatment by some insurers.

In the 2011 March and April edition of the Journal of the Missouri Bar, there appeared an interesting article entitled "Towards a Unified Theory of Insurance Law". The article was written by David C. Knieriem, of the Law Offices of David C. Knieriem.
The article can be found at the Missouri Bar website.

On Wednesday, April 27, 2011 the Supreme Court ruled that consumers can be bound by arbitration clauses in cellular phone and/or other contractual agreements even if state law permits class action law suits for claims arising out of such agreements. AT&T Mobility LLC v. Concepcion et ux. What the Supreme Court's ruling means for consumers is that if you agree to the terms of a contract, whether you read the contract or not, and that contract contains an arbitration clause stating that arbitration rather than the court system can decide the outcome of any grievance you have against the corporation with which you have contracted, you must use arbitration as your only means to obtain any compensation for damages suffered.

Arbitration is a way to resolve disputes without using the court system. During arbitration an arbitrator, a neutral third party, will decide the outcome of a case. The determination made by the arbitrator may based partially on law, but is usually based on the agreement and what the arbitrator determines is fair for all the parties. If you have agreed to an arbitration clause in a contract, the decision made by the arbitrator is then binding upon the parties and cannot be modified by the court system.

When entering into a contract for a cellular telephone or entering into a contract on-line be aware that arbitration clauses can and do exist in those contracts. Based upon this Supreme Court decision, should you sign a contract with an arbitration clause included, any dispute you may have against another party to the contract will be determined by arbitration which is binding and precludes you from seeking a remedy in a court of law.