Section 15 Litigable Issues Insufficient When Insurer’s Attitude Is Vexatious and Recalcitrant

• Library: Damages 2012

Regardless of whether there is a litigable issue regarding questions of law or fact, an insurer may still be subject to the imposition of vexatious penalties if the insurer’s attitude is vexatious and recalcitrant. DeWitt v. Am. Family Mut. Ins. Co., 667 S.W.2d 700, 710 (Mo. banc 1984). See also:

· Joachim Sav. & Loan Ass’n v. State Farm Fire & Cas. Co., 764 S.W.2d 648, 651 (Mo. App. E.D. 1988)

· Victor v. Manhattan Life Ins. Co., 772 S.W.2d 826, 830 (Mo. App. E.D. 1989)

· Shafer v. Auto. Club Inter-Ins. Exch., 778 S.W.2d 395, 399 (Mo. App. S.D. 1989)

· Schaffer v. Bess, 822 S.W.2d 871, 878 (Mo. App. E.D. 1991)

· Howard Constr. Co. v. Teddy Woods Constr. Co., 817 S.W.2d 556, 562 (Mo. App. W.D. 1991)

· Hester v. Am. Family Mut. Ins. Co., 733 S.W.2d 1, 2 (Mo. App. E.D. 1987)

The trial judge first determines whether the case involves a reasonably litigable issue. Morris v. J.C. Penney Life Ins. Co., 895 S.W.2d 73, 76 (Mo. App. W.D. 1995). Even though the insurer may have been initially justified in denying payment under the policy, it may become subject to vexatious penalties for failure to pay the claim if it later becomes aware that its reasons for denial were not justified. The rule is stated in Cohen v. Metropolitan Life Insurance Co., 444 S.W.2d 498, 506 (Mo. App. E.D. 1969) (citation omitted):

It is a well settled rule of law, where there is an open...