Axis Specialty Insurance Company et al v. New Hampshire Insurance Company

Filing 138

ORDER AND OPINION (1) DENYING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT, AND (2) DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT, 108 and 116 . Signed on 1/23/17 by District Judge Ortrie D. Smith. (Matthes Mitra, Renea)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
AXIS SPECIALTY INSURANCE
COMPANY,

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Plaintiff,
vs.
NEW HAMPSHIRE INSURANCE
COMPANY,
Defendant.

Case No. 15-0809-CV-W-ODS

ORDER AND OPINION (1) DENYING DEFENDANT’S MOTION
FOR PARTIAL SUMMARY JUDGMENT, AND (2) DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Pending are New Hampshire Insurance Company’s (“NHIC”) Motion for Partial
Summary Judgment (Doc. #108), and AXIS Specialty Insurance Company’s (“AXIS”)
Motion for Partial Summary Judgment (Doc. #116). Both motions are denied.

I.

STANDARD

A moving party is entitled to summary judgment on a claim only if there is a
showing that “there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” Williams v. City of St. Louis, 783 F.2d 114,
115 (8th Cir. 1986). “[W]hile the materiality determination rests on the substantive law,
it is the substantive law’s identification of which facts are critical and which facts are
irrelevant that governs.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Thus, “[o]nly disputes over facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary judgment.” Wierman v.
Casey’s Gen. Stores, 638 F.3d 984, 993 (8th Cir. 2011) (quotation omitted). In applying
this standard, the Court must view the evidence in the light most favorable to the nonmoving party, giving that party the benefit of all inferences that may be reasonably
drawn from the evidence. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 588-89 (1986); Tyler v. Harper, 744 F.2d 653, 655 (8th Cir. 1984). However, a

party opposing a motion for summary judgment “may not rest upon the mere allegations
or denials of the… pleadings, but… by affidavits or as otherwise provided in [Rule 56],
must set forth specific facts showing that there is a genuine issue for trial.” Fed. R. Civ.
P. 56(e).

II.

DISCUSSION1

A. NHIC’s Motion
Earlier in this case, NHIC sought summary judgment on AXIS’s vexatious refusal
claim (Count III). NHIC argued AXIS could not bring a vexatious refusal claim and a
bad faith failure to settle claim based upon the same facts. The Court denied the
motion, finding there were disputed material facts pertaining to both claims. Doc. #81.
NHIC renews its motion and argument. Doc. #108. The cases cited by NHIC do not
explicitly prohibit a party from bringing both a vexatious refusal claim and a bad faith
failure to settle claim when the claims are based on the same facts.
NHIC relies on this Court’s decision to grant a motion to dismiss a vexatious
refusal claim. See W. Am. Ins. Co. v. RLI Ins. Co., Case No. 07-CV-0566, 2001 WL
3376878 (W.D. Mo. Nov. 6, 2007). This Court dismissed that claim because the plaintiff
was not the insured and only alleged a third-party claim. Id. at 2. There were no facts
establishing the plaintiff was assigned the insured’s claims. Here, the insured assigned
AXIS all causes of action arising out of the claims alleged against and judgment entered
against the insured in the Rider lawsuit. Doc. #81, at 2, 4.2 The Court’s previous
dismissal order does not shed light on this particular situation.
NHIC relies on another decision issued by the Western District of Missouri
wherein the plaintiff alleged claims of bad faith failure to settle, negligent failure to settle,
breach of fiduciary duty, and breach of contract. See Purscell v. Tico Ins. Co., Case No.
12-CV-4039, 2012 WL 1934015, at *1 (W.D. Mo. May 29, 2012). In Purscell, Judge
Laughrey did not find, and was not asked to find, whether claims for vexatious refusal
and bad faith failure to settle could be brought when based upon the same facts.

1

Background facts were previously outlined in the Court’s August 11, 2016 Order. See
Doc. #81.
2
See Doc. #81, at 4-6.
2

NHIC also relies on a decision issued by Eastern District of Missouri. See Elec.
Power Sys. Int’l, Inc. v. Zurich Am. Ins. Co., Case No. 15CV1171, 2016 WL 147096
(E.D. Mo. Jan. 13, 2016). In Electric Power Systems International, the Court denied a
motion for judgment on the pleadings because a party’s vexatious refusal claim and bad
faith failure to settle claim were not based upon the same set of facts. Id. at *3. The
Court did not find a party could not bring both a vexatious refusal claim and a bad faith
failure to settle claim based upon the same facts. Id.
Finally, NHIC’s reliance on Zumwalt v. Utilities Insurance Co., 228 S.W.2d 750
(Mo. banc 1950), is misplaced. In Zumwalt, the Missouri Supreme Court addressed, for
the first time, whether insurer liability is based upon bad faith or negligence. Id. at 753.
The remainder of the decision examined alleged instructional errors. Id. at 754-56. The
Court did not state a party was not permitted to bring claims of vexatious refusal and
bad faith failure to settle if the claims were based upon the same facts.
NHIC has not cited – and the Court has been unable to find – a case explicitly
prohibiting a party from bringing claims for vexatious refusal and bad faith failure to
settle based upon the same facts. Instead, the Missouri Supreme Court held the
vexatious refusal statute “does not displace or preempt any remedies nor does it
provide an immunity from liability….There is not one word in the statute to support the
notion that [it] ‘preempts’ any claim.” Overcast v. Billings Mut. Ins. Co., 11 S.W.3d 62,
69 (Mo. banc 2000) (citing Mo. Rev. Stat. § 375.420). Without an unambiguous
prohibition against bringing these two claims based on the same facts, the Court is not
persuaded to decree such a prohibition.
Alternatively, NHIC argues AXIS’s vexatious refusal claim fails as a matter of law.
To establish a vexatious refusal claim, the plaintiff must show (1) the claimant made a
demand, (2) the insurer failed or refused to pay for a period of thirty days after the
demand, and (3) the refusal to pay was vexatious and without reasonable cause.
Tauvar v. Am. Family Mut. Ins. Co., 269 S.W.3d 436, 439 (Mo. Ct. App. 2008) (citation
omitted). The Court finds disputed issues of material fact exist regarding this claim;
therefore, NHIC is not entitled to summary judgment on AXIS’s vexatious refusal claim.3
3

To the extent the jury is instructed on both claims and duplicative or overlapping
damages are awarded for both claims, the Court will address those issues post-trial.
3

B. AXIS’s Motion
(1) Bad Faith Failure to Settle
AXIS seeks summary judgment on its bad faith failure to settle claim (Count I).
The Court finds genuine issues of material fact exist with regard to whether NHIC acted
in bad faith. Therefore, AXIS’s motion for summary judgment on this claim is denied.

(2) Equitable Subrogation
AXIS argues it is entitled to an award of attorneys’ fees, interest, and costs it has
incurred by virtue of its equitable subrogation claim (Count II). AXIS contends it was
forced to bring this lawsuit because NHIC refused to pay the entire judgment in the
Rider lawsuit, engaged in “scorched-earth discovery tactics” in this matter, and filed
unnecessary summary judgment motions. Doc. #117, at 36-37. For these reasons,
AXIS asks the Court to enter summary judgment in its favor with regard to its attorneys’
fees, costs, and interest. NHIC disagrees with AXIS’s assessment, and argues, among
other things, the Court does not have authority to award AXIS its pretrial attorneys’ fees.
In August 2016, the Court found it was premature to consider granting summary
judgment on a claim for attorneys’ fees. Doc. #81, at 9. Given the disputed facts of
material fact related to AXIS’s claims at this juncture, the Court cannot determine
whether this matter meets one of the rare occasions where it may consider awarding
attorneys’ fees. Accordingly, the Court denies AXIS’s motion for summary judgment.4

III.

CONCLUSION

For the foregoing reasons, NHIC’s Motion for Partial Summary Judgment (Doc.
#108) is denied, AXIS’s Motion for Partial Summary Judgment (Doc. #116) is denied.

IT IS SO ORDERED.
/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT

DATE: January 23, 2017

4

With regard to AXIS’s motion to enter summary judgment in its favor regarding costs
and interest, the Court denies that request at this time and refers AXIS to the Court’s
August 11, 2016 Order, which discussed those issues. Doc. #81, at 10-12.
4