JEFFERSON CITY, Mo. (Legal Newsline) - The Missouri Supreme Court, in a ruling Tuesday, said a circuit court properly found that a baseball team owner's excess insurer is bound by a $4.58 million judgment in a wrongful death lawsuit.
Christine Ewing died from injuries she sustained after falling from a portable rock climbing wall at a minor league baseball game. Her parents, Kathleen Schmitz and Craig Ewing, sued Marcus Floyd, the owner and operator of the rock wall, and the baseball team's owner, Columbia Professional Baseball.
The parents settled their case against Floyd for $700,000, and the suit against CPB remained.
CPB had a primary and an excess insurance policy, but both insurers refused to defend.
Virginia Surety Company's policy provided primary coverage of $1 million, and Great American Assurance Company's policy provided excess coverage of $4 million. Virginia Surety denied any duty to defend or indemnify because its policy excluded coverage for injuries sustained from the use of an amusement device. Great American denied any duty to defend or indemnify, claiming its policy provided the same coverage as the underlying coverage from Virginia Surety.
After partial summary judgment was entered in favor of the parents, the primary insurer settled for less than its policy limit. In return, the parents brought an equitable garnishment lawsuit against the insurers and entered a release for the full amount of the policy limit.
The excess insurer disputed that it was required to pay because the primary insurance policy had not been exhausted and because the trial court's judgment -- $4,580,076 in damages -- was not reasonable.
The equitable garnishment court, in turn, found that the judgment was unreasonable and that the excess insurer was not required to pay because the primary insurance policy had not been exhausted.
The parents appealed to the state's high court, arguing that the excess insurance policy did not require the primary insurance policy to be exhausted before the excess insurer was obligated to pay. They also claim the judgment is not subject to the so-called "reasonableness test."
In a unanimous decision written by Justice Mary R. Russell, the Court affirmed the judgment in part, reversed it in part and remanded the case for further proceedings.
It said in its 16-page ruling that the circuit court properly found that a policy exclusion did not apply because the climbing wall is not an "amusement device" under the policy. The court also properly found the excess insurer is bound by the $4.58 million judgment because it "unjustifiably refused" to defend or provide coverage.
The Court said the lower court erred, however, in finding that the excess insurer's obligation to pay the claim was dependent on the primary insurer to exhaust its policy limits; the policy contained no such requirement.
"The Great American policy clearly states that its coverage will apply when the underlying insurer is obligated to pay the full amount of the underlying limits of insurance. 'Obligated to pay' has a different meaning than 'has already paid,'" it explained.
"Further, contrary to Great American's arguments, there are no other provisions in its insurance policy that require exhaustion of the underlying insurance."
The justices said the court also erred in applying the reasonableness test, which applies only to settlements and not to a judgment entered after a trial at which the excess insurer had an opportunity to present a defense but declined to do so.
From Legal Newsline: Reach Jessica Karmasek by e-mail at email@example.com.