Hunter v. Moore
In the May 2015 edition of Bad Faith Update (Volume 1 Issue 7) we examined the case of Hunter v. Moore and the Eastern District Court of Appeals’ decision regarding the terms of the parties’ §537.065 agreement.
Now that the Supreme Court has issued its opinion, the case has been brought back into the spotlight.
Background and Dispute
Brittany Hunter sued Charles Moore, Sr. after she was sexually assaulted at a hotel managed by Moore.
After American Family appeared to refuse to provide a defense without a reservation to Moore, Hunter and Moore, through counsel, negotiated and agreed to enter into a §537.065 agreement, the terms of which would require Moore to allow Hunter and her counsel to pursue Moore’s extra-contractual claims against American Family and to cooperate in the pursuit of such claims.
However, after the execution of the agreement, a dispute arose as to whether Moore was required to prohibit American Family from assuming control of his defense and whether Moore was required to submit to an uncontested bench trial on liability and damages.
Trial Court and Eastern District Ruling
After Moore refused consent to an uncontested bench trial and allowed American Family to assume control of his defense, Hunter filed a separate action and moved to enforce/reform the .065 agreement to include provisions prohibiting Moore from allowing American Family to control his defense and requiring Moore to submit to an uncontested bench trial to resolve his liability to Hunter. A bench trial on the scope of the agreement was presided over by the Trial Court with Hunter and Moore introducing correspondence relating to the .065 agreement as well as eliciting testimony from the attorneys responsible for negotiating the .065 agreement. The Trial Court entered its judgment reforming the .065 agreement to include the provisions requested by Hunter.
Moore appealed and the Trial Court’s judgment was reversed by the Eastern District which determined that reformation of the .065 agreement was improper. This holding would have allowed for American Family to protect its interests by fully defending Moore and would have prevented Hunter from executing against Moore’s personal assets.
Supreme Court Weighs In
On September 22, 2015 the Supreme Court accepted and ordered the matter transferred.
The Supreme Court affirmed the Trial Court’s judgment and deferred to the Trial Court on credibility determinations. The Court determined equity required the .065 agreement be reformed due to a mutual mistake by the parties in failing to incorporate their mutual intention to preclude American Family from controlling Moore’s defense and having Moore’s liability determined at an uncontested bench trial.
In so holding, the Court highlighted a letter from Moore’s personal counsel to American Family that stated he did not trust American Family to represent him in the liability case and that counsel utilized Butters v. City of Independence and State ex rel. Rimco, Inc. v. Dowd as a guide for the parties’ .065 agreement.
The Supreme Court stopped short of declaring that implicit in every .065 agreement are provisions that an insurer cannot control the defense of the insured or that the insured must agree to a consent judgment or uncontested hearing on liability and damages. While the Court noted that parties frequently place such provisions in their agreements, neither Missouri case law nor statutes require these provisions be present.
Hunter v. Moore appears limited to its particular facts and likely will not have sweeping implications in future .065 litigation.
However, and as the Supreme Court noted on two different occasions, parties wishing to settle their disputes and make use of the protections afforded by R.S.Mo. §537.065 should reduce to writing all of the terms of their agreement if they intend to enforce those terms.
Interestingly, there was a late notice to stay the opinion, based on a resolution of the case between the parties. While it is unclear whether the mandate will issue, one thing is certain: careful drafting beats protracted appeals any day.
Have Questions About a Bad Faith Situation?
Kirk Presley and his team work on bad faith cases on a routine basis. If you need help, call him at (816) 931-4611 or send him an email.