Section 39 Effect of Existence of Vexatious Penalty Statutes; Extent of Preemption of Tort Claims Including Bad Faith
Library | Damages 2012 |
Overcast v. Billings Mut. Ins. Co., 11 S.W.3d 62 (Mo. banc 2000), involved three counts seeking relief:
Breach of contract Vexatious refusal to pay statutes Defamation
The trial court had previously granted summary judgment to Billings Mutual, finding that it was not subject to the vexatious refusal to pay statute, § 375.420, RSMo 2000, because § 380.511, RSMo 2000, provides that mutual insurance companies are not covered by § 375.420. Overcast, 11 S.W.3d at 64. Neither party appealed that ruling. A judgment was entered in favor of the plaintiff on his claim for defamation, and on appeal in response to Billings Mutual’s position that the vexatious refusal to pay statute preempted the defamation claim, the Court stated:
The insurance company’s major contention on appeal is that Missouri’s vexatious refusal to pay statute, section 375.420, preempts and excludes other remedies that the insured may have against his insurance company. However, the language of the statute does not purport to preempt the common law breach of contract remedy but only to add to that remedy. Nor is there any such preemptive intent discernable from the context of the statute.
Id. at 66.
The Court went on to state that there had not been a tort claim that supplanted or supplemented the basic contract claim and remedy when an insurance company wrongfully refused to pay a loss incurred by its own insured. It stated:
Overcast’s tort claim for defamation is not dependent on the elements of the contract claim. Indeed it would be possible for the insurance company to defame Overcast even in a situation where it had decided to pay his claim. Thus, Overcast’s defamation claim is not based on the company’s refusal to pay and is based on conduct quite distinct from conduct that merely constituted a breach of contract. We cannot infer that the legislature intended, by providing the vexatious refusal to pay remedies in section 375.420, to immunize insurers against all other claims made by an insured for any conduct occurring during a claim determination.
To support its contention that section 375.420 preempts Overcast’s defamation claim, the insurance company cites four court of appeals decisions that decline to extend the “bad faith tort” to actions by an insured against his own insurer—commonly called “first party” claims. Without much analysis, these court of appeals cases cite section 375.420 as “preempting” the bad faith tort claim. The lengthiest discussion is found in Duncan v. Andrew Co....
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- Section 1 Introduction: Purpose and Scope
- Section 2 Purpose of Vexatious Statutes
- Section 3 Standard of Liability
- Section 4 Statutory Basis for Vexatious Penalties
- Section 5 Construction of Vexatious Penalty Statutes
- Section 6 Elements of Vexatious Refusal
- Section 7 An Insurance Policy
- Section 8 Insurer’s Refusal to Pay
- Section 9 Insurer’s Refusal Was Without Reasonable Cause or Excuse
- Section 10 Factual Basis Supporting Application of Vexatious Penalties
- Section 11 Effect of Adverse Verdict Against Insurer
- Section 12 Generally
- Section 13 Examples of Litigable Issues: Open Questions of Fact
- Section 14 Examples of Litigable Issues: Open Questions of Law
- Section 15 Litigable Issues Insufficient When Insurer’s Attitude Is Vexatious and Recalcitrant
- Section 16 Effect of a Claim That Is More Than Is Owed Under the Policy or When Amount Owed Is Uncertain or Undetermined
- Section 17 Effect of Insurer Obtaining Expert Opinion
- Section 18 Stated Value Policies
- Section 19 Evidence to Justify Refusal of Claim
- Section 20 Admissibility of Discussions and Negotiations Between Insured and Insurer
- Section 21 Penalties Based on Knowledge or Conduct of Insurance Agent
- Section 22 Items of Loss on Which Vexatious Penalties Can Be Calculated
- Section 23 Vesting of Damages
- Section 24 Damages Are Discretionary
- Section 25 Basis for Awarding Attorney Fees
- Section 26 Allowance of Attorney Fees Without Award of Other Damages
- Section 27 Attorney Fees in Connection With Appeal
- Section 28 Attorney Fees Incurred by Insured in Performing Duties of Insurer
- Section 29 Attorney Fees Under Vexatious Penalty Statutes in Connection With Declaratory Judgment Actions by Insurer
- Section 30 Limitations on Recovery of Attorney Fees
- Section 31 Claim for Attorney Fees Must Be Supported by Evidence
- Section 32 Expenses
- Section 33 Consequential Damages
- Section 34 Prejudgment Interest
- Section 35 Parties Entitled to Make a Claim
- Section 36 Pleading Vexatious Penalties
- Section 37 Burden of Proof
- Section 38 Jury Instructions
- Section 39 Effect of Existence of Vexatious Penalty Statutes; Extent of Preemption of Tort Claims Including Bad Faith
- Section 40 Vexatious Penalties Under Uninsured Motorist Coverage
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