BSCR Firm News/Blogs Feed Feb 2020 00:00:00 -0800firmwise Court of Missouri Overturns $2.3 Million Negligent Credentialing Verdict but Grants New Trial Feb 2020Missouri Law Blog<p>In a case of first impression, the Supreme Court of Missouri, in <i>Thomas E. Tharp, et al. v. St. Luke&rsquo;s Surgicenter-Lee&rsquo;s Summit, LLC</i>, <a href="">overturned</a> a $2.3M verdict and granted a new trial after the unusual step of holding a rehearing and vacating an earlier opinion.</p> <p>In February 2019, the Court overturned a jury verdict in favor of a patient and his wife against a surgery center because there was no proof the surgery center negligently granted staff privileges to a surgeon. Though other Missouri courts had recognized the existence of a negligent credentialing cause of action, this opinion was the first from the Supreme Court of Missouri to address the essential elements of such a claim.&nbsp;</p> <p>At the rehearing, the plaintiffs claimed they possessed additional evidence which, if presented upon retrial, would allow them to make a submissible case of negligent credentialing.&nbsp; This purportedly includes evidence of low scores the surgeon received on continuing medical education exams, thus suggesting an inability to retain essential knowledge necessary to competently perform surgery.&nbsp; This also purportedly includes evidence of the surgeon's litigation history showing he was sued more frequently as he aged, and expert witness testimony regarding the significance of the statistics.&nbsp; The Court did not take a position on the admissibility of this proffered new evidence, or its probative value (which is for a jury to decide), but the Court found this sort of evidence could possibly support a finding that the surgeon was incompetent or generally careless, which is the required standard for a negligent credentialing claim.</p> <p>The Court said it decided to hold a rehearing and order a new trial because it would be manifestly unfair to deny the plaintiffs a new trial when they did not know and could not have known what evidence the Court would require to make a submissible case.&nbsp; Legal precedent requires remand for a new trial if the plaintiff's legal failure was caused not by a strategic decision, avoidable or invited error, but by an extrinsic factor outside the plaintiff's control.&nbsp; One such extrinsic factor is ignorance of the evidence necessary to support a cause of action when there is no statute or binding appellate precedent setting forth same.&nbsp; As mentioned above, though other Missouri courts have recognized the existence of a negligent credentialing cause of action, no court had addressed the essential elements or evidence required.&nbsp; Thus, the Court found the plaintiffs&rsquo; legal failure justifiable and not punishable in the absence of guidance from the Court. &nbsp;</p> <p>This is the first ruling of its kind to provide guidance to Missouri lower courts and practitioners prosecuting or defending a negligent credentialing claim.&nbsp; These claims are difficult to prove, as they require proof beyond that which is required to support a direct medical negligence claim.&nbsp; Absent credible evidence of a physician&rsquo;s incompetence generally, and the negligent failure of a healthcare facility to discover the incompetence and act accordingly, courts should dispose of these claims via dispositive motion.&nbsp; Further, it is not enough to prove that but for the credentialing, the physician could not have performed the conduct that produced the injury.&nbsp; Rather, a plaintiff must prove the injury was the natural and probable consequence of the physician&rsquo;s incompetence.</p> This opinion did not address whether the negligent credentialing theory conflicts with V.A.M.S. &sect; 538.210.4 (2017), which provides, in part, that &ldquo;[n]o health care provider whose liability is limited by the provisions of this chapter shall be liable to any plaintiff based on the actions or omissions of any other entity or individual who is not an employee of such health care provider . . . .&rdquo;&nbsp; Negligent credentialing liability necessarily depends on negligent actions or omissions of a non-employee physician.&nbsp; In the event this argument is raised, it is unclear how the Court would address the apparent conflict of law.&nbsp;&nbsp; of St. Louis falls to 5th on the Judicial Hellhole list with Madison and St. Clair Counties, Illinois close behind ranking 7th. Feb 2020Missouri Law Blog<p>Thanks to &ldquo;junk science,&rdquo; the &ldquo;Show-Me-Your-Lawsuit&rdquo; state remains within the top 10 of judicial hellholes throughout the country.&nbsp;St. Louis is home to the largest talc verdict to date thanks to a July 2018 City of St. Louis verdict awarding $550 million in actual damages and $4.14 billion in punitive damages to a group of 22 plaintiffs.&nbsp;Not only are there forum shopping concerns with regards to the talc litigation, there is concern that St. Louis City judges allow plaintiffs&rsquo; lawyers to introduce &ldquo;junk science&rdquo; as evidence.&nbsp;Specifically, plaintiffs&rsquo; experts have been allowed to tell jurors that talcum powder causes ovarian cancer, even though research is mixed and biased as to increased risk, if any, with the use of talcum powder.&nbsp;Nonetheless, the City of St. Louis continues to allow this &ldquo;junk science&rdquo; to be heard in their courtrooms, which can result in big verdicts.&nbsp;</p> <p>The Missouri legislature, however, has taken steps toward addressing the plaintiff-friendly forum, resulting in the City of St. Louis seeing a decline from 4th to 5th in the judicial hellhole rankings this year.&nbsp;But it has a long way to go, as do Madison and St. Clair Counties in Illinois.</p> <p>In Madison and St. Clair Counties, the plaintiffs&rsquo; bar continues to push pro-plaintiff agendas. For example, pro-plaintiff legislation eliminating the statute of repose for asbestos-related occupational disease has been passed, along with legislation which essentially eliminates the power of special interrogatories.&nbsp;&nbsp;The ATRF Report also puts the blame for these judicial hellholes on the Illinois Supreme Court.&nbsp;&nbsp;</p> <p>The American Tort Reform Foundation (&ldquo;ATRF&rdquo;) Report attributes &ldquo;no-injury&rdquo; lawsuits as overburdening Illinois businesses, and the Illinois Supreme Court helped open those floodgates when it issued its decision in <i>Rosenbach v. Six Flags Entertainment</i>, 2019 IL 123186.&nbsp;In <i>Rosenbach</i>, the court found that the plaintiff need not have suffered actual harm to maintain and win a lawsuit filed under the Illinois Biometric Information Privacy Act (&ldquo;BIPA&rdquo;), 740 Ill. Comp. Stat. 14 (2008).&nbsp;Since this decision, the ATRF Report indicates that more than 250 lawsuits have been filed with BIPA at the forefront of the issues in those suits, making businesses vulnerable to massive potential liability in the State of Illinois.</p> <p>Moreover, according to the ATRF Report, Madison and St. Clair Counties continue to remain the preferred jurisdiction in the United States for plaintiffs&rsquo; lawyers to file asbestos lawsuits.&nbsp;The Report further notes that the Gori Law Firm (formerly known as Gori, Julian &amp; Associates, P.C.), &ldquo;one of the top asbestos filers in the nation,&rdquo; was able to &ldquo;stack&rdquo; [sic] the deck higher when Barry Julian, co-founding partner of Gori Julian, was appointed to the Madison County bench in January 2019.&nbsp;The ATRF Report claims the &ldquo;plaintiff-friendly reputation, low evidentiary standards, and judges&rsquo; willingness to allow meritless claims to survive&rdquo; make Madison and St. Clair Counties a flocking ground for asbestos litigation.&nbsp;</p> <p>Until the legislature in both Missouri and Illinois decide to create meaningful reforms, these three counties are likely to continue to rank high on ATRF Report&rsquo;s Judicial Hellholes list.&nbsp;</p> Approved Jury Instruction Isn't Always the Best Choice Dec 2019Missouri Law Blog<p>The Missouri Court of Appeals (Western District) recently <a href="">reversed</a> a defense verdict because the trial court&rsquo;s verdict directing instruction, taken from the Missouri Approved Instructions (MAI), didn&rsquo;t accurately state the law applicable to Plaintiff&rsquo;s claim.&nbsp;</p> <p>In <i>Gary Miller v. Norfolk Southern Railway Company</i>, Plaintiff Miller sued his railroad employer based on the Federal Employer&rsquo;s Liability Act (&ldquo;FELA&rdquo;).&nbsp; Miller claimed to have sustained cumulative injuries caused by defective locomotive cab seats.&nbsp; Specifically, he claimed that the railroad&rsquo;s cab seats were &ldquo;loose and wobbly&rdquo; and they failed to protect him from excessive shock, jarring and vibration. This negligence caused him to suffer back injuries.&nbsp;&nbsp; The jury was instructed on two theories of recovery for Miller under the FELA:&nbsp; general negligence and negligence <i>per se</i> for violation of the Locomotive Inspection Act (&ldquo;LIA&rdquo;, 49 U.S.C. s. 20701 <i>et seq.</i>).&nbsp;&nbsp; The jury found for the railroad on both theories.</p> <p>On appeal, Miller asserted that the trial court erred by refusing his proffered verdict director relating to his negligence <i>per se</i> theory, and by submitting an instruction that did not properly state the law applicable to his claim.&nbsp; The Court of Appeals agreed.&nbsp;&nbsp;<br /> <br /> The Court of Appeals observed that the LIA supplements the FELA by imposing on railroads an absolute duty to provide safe locomotives.&nbsp; The LIA provides that railroads may only use locomotives that &ldquo;are in proper condition and safe to operate without unnecessary danger of personal injury&rdquo;.&nbsp; Pursuant to the LIA, the Federal Railroad Administration (&ldquo;FRA&rdquo;) promulgated regulations governing standards of care for locomotives, including cab seats.&nbsp; These regulations include 49 C.F.R. s. 229.119(a) which states that cab seats &ldquo;shall be securely mounted and braced&rdquo;.</p> <p>The Court further noted that a railroad can violate the LIA by breaching the broad statutory duty to provide locomotives that are &ldquo;safe to operate without unnecessary danger of personal injury&rdquo; (the general statutory duty) <i>or</i> by failing to comply with regulations issued by the FRA (a specific regulatory duty).&nbsp;</p> <p>Miller requested a verdict directing instruction on his negligence <i>per se</i> theory based on the railroad&rsquo;s failure to comply with the specific regulatory duty, i.e. 49 C.F.R s. 229.119(a).&nbsp; He intended to forgo a verdict director based on the general statutory duty, i.e. 49 U.S.C. s. 20701.&nbsp; The approved instruction for an FELA claim based on an LIA violation tracks the language of the LIA&rsquo;s general statutory duty.&nbsp; There is no approved instruction that tracks a specific regulatory duty. &nbsp;The trial court refused Plaintiff&rsquo;s proffered instruction and instead gave Defendant&rsquo;s instruction that was based on MAI.</p> <p>The Court of Appeals concluded that the difference between proceeding under a theory that the railroad violated a specific regulatory duty - as opposed to the general LIA statutory duty - is significant. &nbsp;&nbsp;A violation of the general statutory duty required Plaintiff to prove that the railroad&rsquo;s cab seats were not &ldquo;safe to operate without unnecessary danger of personal injury&rdquo;. &nbsp;&nbsp;This proof is not required when a railroad allegedly violates a specific regulatory duty because regulations promulgated by the FRA pursuant to the LIA have already been supported by a finding that the regulation is necessary to eliminate unnecessary danger of personal injury.</p> <p>The Court added that the lack of an approved instruction based on the specific regulatory duty didn&rsquo;t bar Miller from submitting his theory to the jury, nor did this relieve the trial court of its duty to accurately instruct the jury on applicable regulatory standards.</p> Jurisdiction in Missouri: Just One Touch May be Enough Dec 2019Missouri Law Blog<p>On October 29, 2019, the Supreme Court of Missouri, in <i>State ex rel. Key Insurance Company v. Roldan</i>, <a href="">held</a> Missouri courts may exercise personal jurisdiction over a foreign corporation when the corporation has made at least one contact with Missouri and Plaintiff&rsquo;s tortious cause of action arises out of that contact.</p> <p>Plaintiff Phillip Nash, a resident of Missouri, was involved in a motor vehicle collision with Josiah Wright in Jackson County, Missouri. Defendant Key Insurance Company, a Kansas corporation, insured Nash&rsquo;s vehicle, through its policy issued to Nash&rsquo;s daughter, a Kansas resident. Key Insurance denied Nash&rsquo;s claim for coverage. Wright sued Nash in Jackson County and was later awarded $4.5 million in arbitration. Jackson County Circuit Court confirmed the award as a final judgment. Nash then sued Key Insurance in Jackson County Circuit Court to collect insurance proceeds in a classic &sect; 537.065 agreement. (See our <a href=";an=67599&amp;format=xml&amp;stylesheet=blog&amp;p=5258">July 2017 blog</a> on amendments to &sect; 537.065, and how these agreements work.) Nash specifically alleged that Key Insurance committed the tort of bad faith refusal to settle. Key Insurance moved to dismiss Nash&rsquo;s claim for lack of personal jurisdiction. The trial court denied the Motion to Dismiss. Key Insurance thereafter petitioned the Missouri Court of Appeals for a Writ of Prohibition, which was denied. But in January 2019, Key Insurance petitioned the Supreme Court of Missouri, and the Supreme Court surprisingly issued a Preliminary Writ of Prohibition, agreeing to hear defendant&rsquo;s claim of lack of jurisdiction.</p> <p>Key Insurance argued that the Circuit Court usurped its jurisdiction on two grounds: (1) Key <br /> Insurance&rsquo;s alleged conduct did not fall within Missouri&rsquo;s long-arm statute, and (2) Key Insurance did not have sufficient minimum contacts with Missouri to satisfy the requirements and protections of the Due Process Clause.</p> <p>The Missouri Supreme Court held that Missouri&rsquo;s long-arm statute gives Missouri courts personal jurisdiction over a foreign corporation that commits a tortious act <i>within</i> Missouri. The Court found that Nash made a prima facie showing as to his tort claim against Key Insurance. In so finding, Key Insurance&rsquo;s alleged conduct &ndash; its alleged bad faith refusal to settle - did fall within Missouri&rsquo;s long-arm statute. The Court reasoned that because Nash&rsquo;s cause of action arose out of a contract to insure property at risk in Missouri, Nash&rsquo;s claim was proper under Missouri&rsquo;s long-arm statute. Additionally, Nash resided in Jackson County, Missouri, and the $4.5 million judgment against Nash was confirmed by the Jackson County Circuit Court.</p> <p>The Supreme Court also held that one contact with Missouri &ndash; the contact being the tortious act itself &ndash; is sufficient to satisfy constitutional due process protections. The Court reasoned that because Nash&rsquo;s claim arose out of Key Insurance&rsquo;s tortious contact with Missouri, Key Insurance&rsquo;s contact was sufficient alone to satisfy constitutional due process.</p> <p>The Supreme Court of Missouri therefore concluded that Key Insurance was not entitled to a Writ of Prohibition, and that the trial court had personal jurisdiction over the Kansas insurer. The Supreme Court quashed its preliminary writ of prohibition, allowing Nash to proceed to trial, and pursue damages against Key Insurance for bad faith refusal to settle.</p> <p>Insurers and insureds alike take notice of these cases and the protections and pitfalls afforded under RSMo. &sect; 537.065. Even with the recent statutory changes and additional requirements of a valid &sect; 537.065 agreement, insurers should be wary and cautious in coverage determinations and any cases where &sect; 537.065 could be properly exercised by the insured defendant.&nbsp;</p> "Insurance Question" in Missouri - the Right to Ask is Not Absolute Oct 2019Missouri Law Blog<p>In <i>Eoff v. McDonald</i>, the Supreme Court of Missouri <a href="">upheld</a> a St. Louis County circuit judge&rsquo;s refusal to allow plaintiffs&rsquo; counsel additional time during jury selection to ask the &ldquo;insurance question&rdquo;, after counsel forgot to do so earlier when it was his turn to question potential jurors. The decision hinged on the determination that the right to ask the question is not absolute and must follow a procedure designed to balance the plaintiff&rsquo;s right to ask the question to ensure a fair and impartial jury with potential prejudice to the defense by unduly highlighting the insurance issue.&nbsp;</p> <p>It is common practice for&nbsp; Missouri plaintiff counsel, consistent with the holding in&nbsp;<i>Ivy v. Hawk,&nbsp;</i>878 S.W.2d 442 (Mo. banc 1994) (reversing and ordering new trial where trial court failed to allow plaintiffs&rsquo; counsel to ask prospective jurors the preliminary insurance question), to question potential jurors whether they have a financial interest in the defendant&rsquo;s malpractice insurer.&nbsp;<i>Ivy</i>&nbsp;is one in a long line of Missouri cases holding a trial court must permit this even though evidence of a defendant&rsquo;s liability insurance is inadmissible under the collateral source rule. The&nbsp;<i>Ivy</i>&nbsp;opinion explains the proper procedure: (1) obtain the court&rsquo;s approval outside the jury panel&rsquo;s presence; (2) ask only one &quot;insurance question;&quot; and, (3) do not ask it first or last in a series of questions so as to avoid unduly highlighting it. The form of the question is at the trial court's discretion &ndash; it generally encompasses whether any members of the panel or their families work for or have a financial interest in the named insurance company.&nbsp;&nbsp;&nbsp;</p> <p>The&nbsp;<i>Eoff</i>&nbsp;plaintiffs sued a physician and her employer for the alleged wrongful death of their daughter during delivery at birth. During discovery, the physician disclosed the identity of her medical malpractice insurer, a small insurance company located nearly 300 miles from St. Louis County. At trial, Plaintiffs&rsquo; counsel submitted to the court in writing his proposed insurance question for jury selection. Defense counsel did not object, and counsel proceeded with lengthy jury selection, covering 173 pages of trial transcript. Plaintiffs&rsquo; counsel concluded his questioning without asking the insurance question, apparently forgetting to do so. After realizing his mistake, Plaintiffs&rsquo; counsel sought the court&rsquo;s permission for additional time to ask the question after defense counsel&rsquo;s final question. Plaintiffs&rsquo; counsel indicated he would ask the question as the second of three additional questions. The trial judge denied the request because she believed the risk of prejudice to the defense by unduly highlighting the insurance issue outweighed any prejudice to plaintiffs, especially considering the insurance company was small and located across the state.&nbsp;&nbsp;&nbsp;</p> <p>After a six-day jury trial resulting in a defense verdict, the trial judge denied the plaintiffs&rsquo; motion for new trial. The plaintiffs appealed, and the Missouri Court of Appeals, Eastern District, reversed and remanded for a new trial based on the trial judge&rsquo;s refusal to allow Plaintiffs&rsquo; counsel to ask the insurance question. The Supreme Court of Missouri accepted the case for review.</p> <p>The Supreme Court of Missouri disagreed with the Court of Appeals, and affirmed the trial court&rsquo;s decision and jury verdict. &nbsp;The Supreme Court held that&nbsp;<i>Ivy</i>&nbsp;neither affords plaintiff counsel the unqualified right to ask the insurance question nor divests a trial court&rsquo;s discretion to control the timing and sequence of jury selection. The Eoffs&rsquo; counsel failed to follow the procedure set forth in&nbsp;<i>Ivy</i>,&nbsp;and therefore waived the right to ask the insurance question.&nbsp; Under&nbsp;<i>Ivy</i>, a new trial is warranted only if a trial court denies the right to ask a proper insurance question. Here, it was not incumbent on the trial court to permit the Eoffs&rsquo; counsel a second chance.</p> <p>The&nbsp;<i>Eoff</i>&nbsp;opinion breathes new life into a mainstay of the jury selection process for many Missouri medical negligence jury trials. The holding confirms the right to ask the insurance question.&nbsp;&nbsp;But it also emphasizes both the importance of following proper procedure, and the trial court&rsquo;s discretion in conducting jury selection and balancing the right to ask the question with the risk of potential prejudice. <i>Eoff</i> serves as a stark warning to trial counsel to remember to ask the insurance question, and to do so at the appropriate time.</p> Buck Stops Here: When Agents May Become Liable for the Wrongful Acts of their Principal. Oct 2019Missouri Law Blog<p>Missouri courts have long held that when an agent for another makes a contract with a third party without disclosing the agency, the individual will be bound by the contract and the third party may hold the agent or the undisclosed principal responsible at his election. On September 24, 2019, the Missouri Court of Appeals, Western District, in <i>Alpha Petroleum Company vs. Hani Daifallah, et al</i>. applied this principle, and held that agents who did not properly disclose the agency relationship when entering into a business relationship with a third party were personally liable for the ensuing transactions.</p> <p>The case involved the lease of a convenience store with gasoline services, between Plaintiff Alpha Petroleum&rsquo;s sister company, A.J. Partnership, and the Defendants. Under the lease agreement, Defendants were required to purchase gasoline products from Alpha Petroleum. In the regular course of the dealing between the parties, Alpha Petroleum would ship the fuel to the convenience store location and subsequently invoice the Defendants. After Alpha Petroleum advised the Defendants that it was terminating the lease of the convenience store, the parties agreed to a six month extension to allow Defendants additional time to vacate the premises. Before the premises were vacated, Defendants received two more fuel deliveries, both of which went unpaid. Alpha Petroleum sued, seeking damages for nonpayment on account and unjust enrichment. Defendants contended that a separate entity, Zik Moe, Inc., a corporation owned in part by Defendant Mohammed Daifallah, operated the convenience store and was therefore liable for any debt owed to Alpha Petroleum. The trial court entered a judgment against Defendants, jointly and severally, for the entirety of the unpaid balances.</p> <p>On appeal, Defendants argued that (1) there was no substantial evidence in the record to support the trial court&rsquo;s conclusion that Defendants were personally liable for the debt owed by Zik Moe, and (2) the trial court misapplied the law by piercing the corporate veil to find Defendant&rsquo;s personally liable for the debt owed to Alpha Petroleum. The Court of Appeals affirmed the ruling below.&nbsp;It noted that to prevail on a substantial evidence challenge, a defendant must demonstrate that there was no evidence in the record tending to prove a fact necessary to sustain the trial court&rsquo;s judgment as a matter of law. But here, the trial court record contained evidence that the Defendants failed to disclose they were purported agents of a corporation during the five years they had done business with Alpha Petroleum, which was sufficient for the trial court to conclude that Defendants were personally liable for the unpaid invoiced, based on their failure to disclose an alleged agency relationship.&nbsp;Having upheld the judgment in favor of the Plaintiff on the first point, the Court of Appeals concluded it did not need to consider whether the trial court properly found Defendants personally liable for the debt Alpha Petroleum by piercing Zik Moe&rsquo;s corporate veil.</p> <p>The ruling reinforces the need for agents to be fastidious in disclosing the agency relationship, and in ensuring that the existence and identity of the principal are known, in order to avoid potential personal liability for future misdeeds of their principal.</p> <p><a href=" ">Alpha Petroleum Company vs. Hani Daifallah, et al. (Missouri Court of Appeals, Western District, WD82222 and WD82230)</a></p> Joins Long, Strange Legal Trip of a Used Car Dealer's Legacy in Missouri Law Aug 2019Missouri Law Blog<p>In 2008, Chad Franklin became a party to several lawsuits related to the &ldquo;Drive for Life&rdquo; promotion at his used car dealership, Chad Franklin National Auto Sales North, LLC. A full explanation of the details of the &ldquo;Drive for Life&rdquo; promotion can be found within a previous BSCR blog post <a href=";an=33412&amp;stylesheet=blog&amp;p=5258">here</a>. At the time, Franklin was insured by Universal Underwriters Ins. Co. (&ldquo;Universal&rdquo;). &nbsp;Universal denied defense and coverage for the claims. &nbsp;Franklin filed suit for wrongful denial of coverage for the &ldquo;Drive for Life&rdquo; claims which were eventually settled in 2010 for $900,000.&nbsp;This $900,000 settlement would eventually trigger another round of litigation.&nbsp;</p> <p>Soon thereafter, Lewellen filed suit against Franklin alleging fraudulent misrepresentation and violations of the MMPA, resulting in a 2012 &nbsp;award of $25,000 in actual damages and $1 million in punitive damages against Chad individually for his fraudulent misrepresentation, and $25,000 in actual damages and $500,000 in punitive damages against Chad Franklin National Auto Sales North, LLC for a violation of the MMPA. Lewellen was also awarded attorneys&rsquo; fees totaling $82,810. In 2013, Lewellen sued Universal and Franklin, alleging that the $900,000 settlement between Universal and Franklin was fraudulent.&nbsp;&nbsp;The Clay County Circuit Court entered the following in that action, which were appealed to the Western District:&nbsp;</p> <ul> <li>Denial of insurance coverage on the Lewellen&rsquo;s claim that Franklin committed fraudulent misrepresentation in the sale of a vehicle;</li> <li>Awarding insurance coverage under Lewellen&rsquo;s policy with Universal for the actual and punitive damages on the Lewellen&rsquo;s MMPA claim against Franklin;</li> <li>Summary judgment in favor of Universal on Lewellen&rsquo;s claims that the settlement agreement was a civil conspiracy to commit a fraudulent transfer and violated the MMPA;</li> <li>Denial of Lewellen&rsquo;s claim for tortious interference with a business expectancy;</li> <li>Striking Franklin&rsquo;s pleadings after several alleged discovery violations and entering default judgment on Lewellen&rsquo;s fraudulent transfer and MMPA claims against him.</li> </ul> <p>After Franklin&rsquo;s pleadings were stricken, a jury awarded Lewellen $266,370in actual damages and $450,000 in punitive damages on each of her two claims. The court merged the actual damages on the two claims but granted the total amount of punitive damages and awarded Lewellen $189,060 in attorneys&rsquo; fees.</p> <p>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>The Court of Appeals upheld the denial of insurance coverage for Lewellen&rsquo;s claim that Franklin committed fraudulent misrepresentation in the sale of a vehicle.</u></p> <p>Lewellen contended the court erred in denying insurance coverage for the damages awarded on her fraudulent misrepresentation claim against Franklin. The Western District appellate court disagreed, and found that the policy&rsquo;s exclusion of dishonest and fraudulent acts was valid, rejecting Lewellen&rsquo;s contention that the language was ambiguous. The court also held that the definition of &ldquo;occurrence&rdquo; in Franklin&rsquo;s Universal policy did not provide insurance coverage for damages on Lewellen&rsquo;s fraudulent misrepresentation claim.</p> <p>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>The Court of Appeals reversed the finding of insurance coverage under Lewellen&rsquo;s policy with Universal for the actual and punitive damages on the Lewellen&rsquo;s MMPA claim against Franklin. </u></p> <p>Universal argued on appeal that the trial court erred in finding Franklin&rsquo;s policy covered Lewellen&rsquo;s MMPA claim, asserting that the fraud exception and the policy definition of &ldquo;occurrence&rdquo; noted above should preclude coverage. &nbsp;Lewellen argued that not only did Franklin&rsquo;s policy afford coverage to her MMPA claim, but the coverage of that claim triggered the concurrent proximate cause rule granting coverage to her extinguished fraudulent misrepresentation claim.</p> <p>The appellate court first turned to the policy definition of &ldquo;loss&rdquo; which was defined as &ldquo;all sums the INSURED legally must pay as DAMAGES because of INJURY to which this insurance applies caused by an OCCURRENCE.&rdquo;&nbsp;The court held that the conduct underlying Lewellen&rsquo;s fraudulent misrepresentation and MMPA claim was the same conduct.&nbsp;Because the Court had already determined that Franklin&rsquo;s actions were intentional and, therefore, not an &ldquo;occurrence&rdquo; under the policy, it found the same for the MMPA claims.&nbsp;The Court reversed summary judgment in Lewellen&rsquo;s favor and denied coverage for the MMPA claims.&nbsp;In reaching this decision, the Court found that the concurrent proximate cause rule did not apply to Lewellen&rsquo;s claims.</p> <p>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>The Court of Appeals affirmed summary judgment in favor of Universal on Lewellen&rsquo;s claims that the settlement agreement was a civil conspiracy to commit a fraudulent transfer and violated the MMPA.</u></p> <p>Lewellen contended the trial court erred in granting Universal&rsquo;s motion for summary judgment on her claims that Universal&rsquo;s settlement agreement with Franklin amounted to a civil conspiracy to commit a fraudulent transfer with Franklin.&nbsp;In granting summary judgment in Universal&rsquo;s favor, the trial court noted that the &ldquo;[f]acts that may cause the bad faith settlement payments to Tiffany Franklin to appear suspicious (or even if arguably fraudulent) do not offset&rdquo; the common law requirement that without a lien, a mere general creditor does not have a sufficient right or interest in his debtor&rsquo;s property to give him standing to maintain a suit against a third person converting the debtor&rsquo;s property with the intent to defraud the debtor's creditors. Lewellen argued that the Missouri Uniform Fraudulent Transfer Act (&ldquo;UFTA&rdquo;) removed the common law rule that a lien was a condition precedent for standing to maintain a lawsuit against a third party.</p> <p>After a lengthy discussion of the language of the UFTA&nbsp;and analysis of opinions rendered in other jurisdictions on the issue, the Court adopted &nbsp;the majority viewpoint that absent a proper lien, a claim of civil conspiracy against a third party cannot be maintained under the UFTA.</p> <p>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>The Court of Appeals affirmed denial of Lewellen&rsquo;s claim against Universal for tortious interference with a business expectancy. </u></p> <p>Lewellen argued that the circuit court erred in granting Universal&rsquo;s motion for summary judgment on her claim that Universal tortiously interfered with a business expectancy. The appellate court affirmed the trial court&rsquo;s finding that there was no authority for the proposition that a plaintiff in a lawsuit possesses &ldquo;a valid business expectancy&rdquo; in the future collection of a judgment either before or after a judgment is entered.&nbsp;</p> <p>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>The Court of Appeals upheld the trial court&rsquo;s entry of default judgment against Franklin after several alleged discovery violations.</u></p> <p>Franklin claimed that striking his pleadings as a discovery sanction was inappropriate because Lewellen was not prejudiced by his failure to appear at his scheduled deposition, which the appellate court rejected. The Court of Appeals noted that even with threats of sanctions, Franklin still failed to make appearances and it was not until later that his counsel learned that he was in a rehabilitation center.&nbsp;Additionally, Franklin claimed that the circuit court abused its discretion by improperly considering and taking judicial notice of his discovery violations in other cases. The court of appeals found that the circuit court had not its discretion because the other cases were related, and even consolidated, with the current case at issue. Furthermore, the court reasoned that Franklin was an experienced businessman who was &ldquo;no stranger&rdquo; to the legal system, and who knew or should have known of the dire consequences of disappearing, without notice, during pretrial proceedings.</p> <p>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>The Court of Appeals reversed the jury&rsquo;s award of punitive damages.</u></p> <p>Franklin argued that the trial court committed instructional error by providing a damage instruction and verdict director that removed the threshold finding of outrageousness for an award of punitive damages. &nbsp;The Court of Appeals agreed, holding that the modification of 10.01 removing the requirement that the jury find that Franklin&rsquo;s conduct was outrageous was &ldquo;unnecessary and improper&rdquo; and materially affected the merits and the outcome of the case. The appellate court also agreed with Franklin that the trial court erred in the exclusion of evidence as to the nature and structure of the settlement with Universal.&nbsp;&nbsp;The case was remanded for a new determination of punitive damages.<br /> <br /> <i><a href=" ">Lewellen v. Universal Underwriters Insurance Company et al</a></i>., WD81171.<br /> <br /> <em>* Kelly M. &ldquo;Koki&rdquo; Sabat&eacute;s, Summer Law Clerk, assisted in the research and drafting of this post.&nbsp;Sabat&eacute;s is a&nbsp;rising 3L student at the University of Missouri-Columbia.</em></p> Update: Hopping On The Missouri Bandwagon? Not So Fast Out Of State Litigants. Jul 2019Missouri Law Blog<p>In <a href="file:///C:/Users/LJR/Desktop/Second%20Update%20to%20March%202019%20Blog.docx#%20;an=89968&amp;format=xml&amp;stylesheet=blog&amp;p=5258">this March 18, 2019 blog post</a> and in this <a href=";an=91244&amp;format=xml&amp;stylesheet=blog&amp;p=5258">May 20, 2019 blog post</a> we reported on important pending legislation that could substantially change Missouri&rsquo;s venue rules.</p> <p>In May, the House passed the venue and joinder bill (<a href=";BillID=29">Senate Bill 7</a>) by a 100-46 vote. The bill primarily aims to restrict non-Missouri plaintiffs from joining their claims, in the same lawsuit, with those of a Missouri resident, where the non-residents&rsquo; claims have no legal nexus to Missouri.&nbsp;Read more <a href="file:///C:/Users/LJR/Desktop/Second%20Update%20to%20March%202019%20Blog.docx#%20;an=89968&amp;format=xml&amp;stylesheet=blog&amp;p=5258">here</a> and <a href="file:///C:/Users/LJR/Desktop/Second%20Update%20to%20March%202019%20Blog.docx#;BillID=29">here</a>.&nbsp;Senate Bill 7, however, was still waiting for the Governor&rsquo;s signature to become law in May.</p> <p>In case you missed the news (again), look no further&hellip;..</p> <p>Governor Mike Parson has officially <a href="">signed Senate Bill 7</a> (along with three other tort reform bills) into law on July 10, 2019.&nbsp;This move was anticipated based on prior, favorable <a href="">statements</a>&nbsp;he made about the bill.&nbsp;</p> <p>Opponents of the bill continue to believe that the passage of this bill <a href=";utm_campaign=a8d86d2c77-RSS_EMAIL_CAMPAIGN&amp;utm_medium=email&amp;utm_term=0_226e302527-a8d86d2c77-88888931">&ldquo;will harm state citizens by favoring corporations over individuals.&rdquo;</a> Proponents of the bill, now law, believe that this move will make Missouri <a href=";utm_campaign=a8d86d2c77-RSS_EMAIL_CAMPAIGN&amp;utm_medium=email&amp;utm_term=0_226e302527-a8d86d2c77-88888931">&ldquo;a pro-business state.&rdquo;</a></p> the East to the West, Does Arbitration in Missouri Reign Best? Missouri Courts Uphold and Invalidate Arbitration Agreements Jun 2019Missouri Law Blog<p>This past May, the Missouri Supreme Court, Missouri Court of Appeals, and both United States District Courts in Missouri analyzed the validity and enforceability of arbitration provisions. Three key concepts have emerged from these recent decisions:</p> <p>(1) A challenge to the delegation clause in an arbitration agreement (one that says the arbitrator gets to decide who decides whether the dispute is fit for arbitration) must be pleaded separately from a challenge to the contract</p> <p>(2)&nbsp;&nbsp; Incorporation of the AAA rules in an arbitration agreement generally constitutes clear and unmistakable evidence of the parties&rsquo; intention to arbitrate.</p> <p>(3)&nbsp;&nbsp; Under long-standing Missouri law, an employee&rsquo;s continued employment, without more, does not in and of itself constitute adequate consideration for an agreement to arbitrate.</p> <p><b>Consideration for the Entire Contract is Separate from Consideration for the Delegation Provision</b><br /> <i><br /> Newberry v. Jackson</i>, 2019 WL 2181859 (Mo. banc. 2019)</p> <p>The Missouri Supreme Court affirmed, <i>en banc</i>, the circuit court&rsquo;s motion to compel arbitration and stay court proceedings. Employees brought discrimination and retaliation claims against their former employer, Dollar General. The employer responded with Motions to Compel Arbitration and Stay Further Proceedings, to which the employees responded that there was no consideration for the arbitration agreements. More specifically, the employees claimed that the delegation provisions were unconscionable and there was no clear and unmistakable evidence of the parties&rsquo; intent to incorporate them. Although the employees admitted to signing the documents and knew they would be bound to arbitration, they did not necessarily understand the documents. Nevertheless, the circuit court sustained the motions to compel arbitration and stay the proceedings under the Missouri Supreme Court&rsquo;s <i>Pinkerton </i>decision (which upheld a delegation clause in an arbitration agreement), and alternatively held the arbitration agreements valid because they were not unconscionable on their face and supported by consideration by mutuality of enforcement and continued at-will employment.</p> <p>The Missouri Supreme Court accepted the case for review, and affirmed its earlier <i>Pinkerton </i>decision, which it found to be consistent with the U.S. Supreme Court decision in <i>Rent-A-Ctr v. Jackson</i>. The court found the employee&rsquo;s allegations of unconscionability to be inadequate because they challenged the entire contract&mdash;not the delegation provision, specifically. Under <i>Rent-A-Center</i>, the &ldquo;delegation clause must be treated as a separate contract within the larger arbitration contract and must be challenged on an additional ground or basis beyond the fact it is contained in an arbitration contract that the party also contends is invalid.&rdquo; The court found that because the lack of consideration that the employees assert is the same lack of consideration they claim should invalidate the overall arbitration agreements, &ldquo;they do not raise a unique challenge to the delegation clauses. Accordingly, the delegation provisions are valid,&rdquo; and the employer &ldquo;did not have a burden in the circuit court to show legally sufficient consideration.&rdquo;</p> <p><b>Incorporation of AAA Rules Is Clear and Unmistakable Evidence of Intent to Arbitrate</b></p> <p><i>Hughes v., </i>2019 WL 2260666 (Mo. App. Ct. W.D. May 28, 2019) (not officially published)</p> <p>Although Missouri state courts have consistently held that continued at-will employment alone does not constitute consideration for an arbitration agreement, they continue to hold that the incorporation of the AAA rules in an arbitration agreement shows clear and unmistakable evidence of intent to arbitrate. In this consumer action, the Missouri Court of Appeals for the Western District reversed the trial court&rsquo;s denial of a motion to compel arbitration.&nbsp;Consumers brought an action against for allegedly releasing their private health information to third parties without their expressed permission. The company responded with a Motion to Compel Arbitration and Stay Litigation which was subsequently denied by the circuit court. The Court of Appeals reversed and remanded because the consumers failed to separately contest the validity of the delegation provision.</p> <p>The court reviewed the case <i>de novo </i>because arbitrability is a matter of contractual interpretation, which is a question of law. The court had to first determine whether the parties&rsquo; agreement contained a provision that clearly and unmistakably delegated threshold issues of arbitrability to the arbitrator. The provision in the agreement incorporated the AAA rules, which has been held to constitute clear and unmistakable evidence of the parties&rsquo; intent to arbitrate. The court then had to determine the validity of the provision. The Missouri Court of Appeals also reasoned that under <i>Rent-A-Center</i>, the validity of the delegation provision must be challenged separately from a challenge against the agreement, as a whole.</p> <p><i>Hobby Lobby Stores, Inc. v. Bachman</i>, 2019 WL 2331006 (E.D. Mo. May 23, 2019)</p> <p>In this employment discrimination case, the United States District Court of Missouri for the Eastern District had to determine if the Mutual Arbitration Agreement was valid and enforceable in order to grant the employer&rsquo;s Petition to Compel Arbitration. For the reasons discussed above<i>, </i>the court held that because the Mutual Arbitration Agreement incorporated the AAA rules and the employees had not challenged the delegation provision specifically, the agreement was, indeed, enforceable.</p> <p><b>Continued At-Will Employment and Presentation of Agreement Does Not Manifest Mutual Assent</b></p> <p><i>Wilbur v. Securitas Security Services USA, Inc. </i>2019 WL 1980703 (W.D. Mo. May 3, 2019)</p> <p>In this employment discrimination case, the United States District Court for the Western District of Missouri had to determine if there was a valid arbitration agreement and if the dispute fell within the terms of the agreement. As the party seeking to compel arbitration, the employer bore the burden of proving the existence of the valid and enforceable arbitration agreement. The &ldquo;Dispute Resolution Agreement Acknowledgment&rdquo; stated, <i>inter alia, </i>that all claims against the parties must be solved by Arbitration instead of in a court of law. The employee signed and printed his name; however, the lines for the employer representative signature and printed name were left blank. The employer argued that even though the agreement lacked their signature, the presentation of the agreement, the employee&rsquo;s acceptance of the agreement, and their continued employment provided adequate consideration and gave rise to mutual assent. The court cited Missouri state court precedent, in <i>Baier v. Darden Restaurants,</i> in holding that an &ldquo;acknowledgment&rdquo; of this type was not adequate evidence of mutual assent to arbitrate, and that continued employment, without more, did not constitute adequate legal consideration for an agreement to arbitrate.</p> <p><b>Significance</b></p> <p>Missouri has continued to hold that incorporation of the AAA Rules is clear and unmistakable evidence of the parties&rsquo; intent to engage in arbitration. When challenging arbitration, the delegation provision must be challenged <i>separately</i> from a challenge to the whole contract. Presentation of an arbitration agreement to an employee, the employee&rsquo;s acknowledgement of receipt, and the employee&rsquo;s continued at-will employment are not enough to form an enforceable arbitration agreement. An employer should always obtain the employee&rsquo;s expressed assent - i.e., a signature agreeing to the terms of the arbitration provision, and not merely acknowledging its receipt.&nbsp;Additionally, an employer should always specifically express its agreement in order to avoid a mutual assent challenge.<br /> <br /> <em>* Kelly M. &ldquo;Koki&rdquo; Sabat&eacute;s, Summer Law Clerk,&nbsp;assisted in the research and drafting of this post.&nbsp;Sabat&eacute;s is a&nbsp;rising 3L student at the University of Missouri-Columbia.</em></p> References- Is there a duty in Missouri to refrain from making a negligent recommendation to a prospective employer? Jun 2019Missouri Law Blog<p>In recent years, the plaintiffs&rsquo; employment bar has continued to explore new and more creative avenues to state claims in Missouri. In <i>Doe v. Ozark Christian College</i>, Plaintiff filed a negligence action against Ozark Christian College, claiming the college negligently recommended a prospective employee to the employer church, which directly resulted in the employee then injuring Plaintiff after two years. The employee in question had been a student at Ozark Christian College from 1982 to 1989. The employer, a church, contacted Defendant for recommendations on filling an open position. Plaintiff alleged that based upon Defendant&rsquo;s positive recommendation, the church hired the employee in 2004. Plaintiff further alleged that as a result of that employment, employee then sexually abused Plaintiff from 2006 through 2010.</p> <p>The Southern District of the Missouri Court of Appeals, however, affirmed the trial court&rsquo;s ruling that Missouri has not defined or recognized a duty to make recommendations to a prospective employer, whether such a recommendation is done appropriately, or as alleged here, negligently. The Court of Appeals found that while some other states like California, New Mexico and Texas have permitted a &ldquo;negligent job reference&rdquo; cause of action, Missouri had not yet done so. The Court of Appeals reasoned that a whether a duty exists is purely a question of law, either imposed by a controlling statute, ordinance, contract, or by common law. While Plaintiff conceded there was no established case law or statutory authority for such a duty in Missouri, he argued that Missouri should recognize this duty because: Defendant assumed the duty under Section 324A of the Restatement Second of Torts; Section 311 of the Restatement Second of Torts imposes a duty and liability for negligent misrepresentation involving risk of physical harm; other states have recognized this as a duty of common law; and public policy facts support an imposition of this duty upon the Defendant. In a case of first impression, the arguments were ultimately struck down.</p> <p>The Court of Appeals found that Plaintiff&rsquo;s arguments contemplated the declaration of a new common-law duty rather than supporting the existence of a current duty. The threshold application of Section 324A is whether a defendant assumed an obligation or intended to render services for the benefit of an employer. Because Plaintiff lacked proper pleadings to support this legal conclusion, there could be no finding regarding Defendant&rsquo;s undertaking to render services to the employer and therefore application of Section 324A was not appropriate.</p> <p>The Court also held that there is no precedent in Missouri jurisprudence to allow the application of Section 311, where Plaintiff had failed to identify any controlling duty that exists under Missouri common law. While Plaintiff provided case law from New Mexico, Texas, and California in support of his arguments, the Court found numerous contrary cases in Indiana, Kentucky, Washington, Illinois, and New York. The Court of Appeals further stated that it is an error-correcting court, whereas the Supreme Court of Missouri is a law-declaring court and therefore declaration of a new duty is not properly within the Court of Appeals&rsquo; purview.</p> <p>While numerous jurisdictions, like Missouri, that have declined to recognize a duty related to employment recommendations and prospective employers, the rise of these new theories of liability have caused great concern among employers who face a variety of challenges for giving a good reference, a bad reference or an incomplete reference. For this reason, many employers uniformly follow a policy that if asked for a reference for a former employee, they will provide only the person&rsquo;s dates of employment and positions held.&nbsp;Because the law in this area varies from state to state, employers with blanket policies of referrals need to reconsider and make sure that each such request is reviewed using common criteria and guidelines. Questions regarding hiring and employment procedures and policies can always be directed to counsel. &nbsp;</p> <p>John Doe v. Ozark Christian College, SD35573.</p>