April 17, 2019
Kent Bevan
In Britt v. Otto, Britt was injured in an accident involving her vehicle and a vehicle driven by Otto, who was insured by American Family Mutual Insurance Company (AFI). Britt extended a time limited demand to settle to AFI providing that Britt would unconditionally release Otto from all liability in exchange for all applicable policy limits and payments. AFI sent a letter purporting to accept Britt’s settlement demand for all policy limits applicable to Otto, in the sum of $100,000. Britt sent an email disagreeing that all applicable policy limits was limited to $100,000 since the policy provided that AFI would pay, in addition to its limits of liability, expenses Britt incurred for her emergency first aid. AFI thereafter sent a letter repeating that Otto’s policy had bodily injury liability limits of $100,000 and stating that it had accepted Britt’s settlement demand by agreeing to pay that policy limit.
AFI filed suit against Britt in federal district court seeking to enforce the settlement agreement with Britt. The federal suit did not name Otto as a party nor did it seek a declaratory judgment to resolve whether the first aid clause in Otto’s policy afforded Britt additional coverage. Otto sent an email to AFI expressing his belief that as a result of the federal action, AFI was refusing to afford him a defense without reservation of rights. Otto’s email advised AFI that he and Britt had entered into a 537.065 agreement.
Britt and Otto entered into an agreement to resolve all issues arising out of the accident by binding arbitration pursuant to the Federal Arbitration Act and Missouri’s Uniform Arbitration Act. AFI stated it would not participate in the arbitration because if it agreed to do so, it would have to dismiss its earlier filed federal action to enforce the settlement. AFI further took the position that 537.065.2 expressly provides that the insurer has an opportunity to intervene in a lawsuit between the parties and that Britt and Otto were apparently seeking to avoid this by operation of an arbitration agreement.
An arbitration hearing was conducted and the award issued concluded that Otto was the sole and only tortfeasor who caused the accident and that there was no evidence to support a finding of comparative fault. The arbitration award concluded that the first aid provision afforded coverage for Britt’s emergency medical treatment and, as a result, AFI’s response to Britt’s settlement demand, which limited payment of all applicable policy limits to the $100,000 bodily injury policy limit, was a counter offer and not an acceptance of Britt’s demand. The arbitration award thereby rejected the affirmative defense of settlement and release finding that Britt had been damaged in an amount of over $5,900,000.
Britt filed an application to confirm the arbitration award and to enter judgment against Otto and sent a copy of the arbitration award to AFI by email, demanding that AFI pay the award.
AFI filed a motion to intervene in the action to confirm the arbitration award, stating that it was entitled to intervene as a matter of right under the statute and also under Rule 52.12(a) because AFI had an interest in the subject action and other arguments which it made. The trial court denied AFI’s motion to intervene and also issued a judgment which confirmed the arbitration award, incorporated the arbitration award by reference, and entered judgment in favor of Britt and against Otto in the amount determined in the arbitration award. AFI appealed.
The Missouri Court of Appeals, Western District, discussed the implications of §537.065, including a new subsection enacted by the General Assembly, effective August 28, 2017, describing when a judgment can be entered against a tortfeasor who has entered into a §537.065.1 contract. The unambiguous language of the amended statute afforded AFI the right to intervene as a matter of right within 30 days after receipt of Otto’s written notice of the execution of a § 537.065.1 contract. AFI claimed the statutory right to intervene applied to the action to confirm the arbitration award; however, the action to confirm the arbitration award was filed more than 30 days after AFI’s receipt of Otto’s written notice of the § 537.065.1 contract. AFI did not file a motion to intervene within 30 days of receipt of the written notice of the § 537.065.1 contract. The appellate court expressed no opinion about whether or not the arbitration proceeding qualifies as a “pending lawsuit” for purposes of § 537.065.2 except to note that in arguing to the contrary, neither party engaged in the required analysis.
The court went on to discuss intervention as a matter of right under Rule 52.12 at some length. Ultimately, the court ruled that the trial court did not err in denying AFI’s motion to intervene as a matter of right pursuant to Rule 52.12 since AFI did not establish that it had the requisite interest relating to the property or transaction, which is the subject matter of the action to confirm the arbitration award. The court also determined that the trial court did not abuse its discretion in denying AFI’s motion to permissibly intervene in the action to confirm the arbitration award. The trial court’s authority in that action was strictly limited by statute and would not have extended to permitting AFI to litigate whether it was liable to pay the arbitration award. Furthermore, the trial court was entitled to consider that AFI declined the invitation to participate in the arbitration proceeding.
As a result, the trial court’s judgment was affirmed.