Court affirms $3.6 million judgment for motorcyclist injured in accident

The Missouri Court of Appeals Western District affirmed a $3.6 million judgment for an injured motorcyclist, despite opposition from an insurer that may be liable for paying it.

The ruling is the latest in a series of cases interpreting recent changes to section 537.065 of the Revised Statutes of Missouri. Unlike prior cases, the insurer in the Sept. 15 case was able to squarely challenge the damages at the bench trial where they were determined. Nonetheless, the Western District affirmed the judgment.

The underlying case involves a 2016 motor-vehicle accident in Independence. Shirley Thompson, who is diabetic and didn’t feel well enough to drive, lent her Volkswagen Passat to a friend, Earnest Davis, and asked him to drive her to a dental appointment.

On the way, Davis stopped at a convenience store. As they were leaving the store’s parking lot, Davis turned in front of Marlon Price’s motorcycle, forcing Price to lay down the bike. He suffered leg and knee injuries, for which he remains on anticoagulant medication and will need a total knee replacement in the future. Thompson later learned that Davis didn’t have a valid driver’s license.

Price and his wife, Michelle, filed a suit against Thompson. Young America Insurance Company, which insured Thompson’s Passat, asserted a reservation of rights based on an alleged lack of cooperation in the lawsuit. It also filed a declaratory judgment action, prompting Price and Thompson to enter into a so-called ’065 agreement.

Such agreements come into play when an insurer declines to defend a defendant or does so without promising to pay any resulting judgment. Defendants who face such a reservation of rights can effectively fire their insurer and agree to allow the plaintiff to obtain a judgment against them.

With no one to contest the plaintiff’s evidence, such cases often result in large awards, which the plaintiff typically agrees to try to collect only from the defendant’s insurance policy. That results in separate litigation against the insurer where the plaintiff must prove there was coverage. Many such garnishment actions are coupled with claims that the insurer acted in bad faith in refusing to settle the case, which can expose the insurer to damages beyond the policy’s limits.

In 2017, lawmakers revised the ’065 statute to require the parties to give notice to insurance companies that they are entering into an agreement. The insurer then has 30 days to seek to intervene before the judgment can be rendered. Prior to the law’s passage, courts repeatedly had ruled that once an insurer had declined to unreservedly defend its policyholder, it no longer had a right to take part in the case.

Since the passage of the law, many plaintiffs’ attorneys have taken their cases to arbitration rather than face a contested bench trial — lawmakers, in fact, have debated additional legislation to address such end-runs. The Prices’ case, however, proceeded to a bench trial before Jackson County Circuit Judge Jennifer Phillips, marking what appears to be the first appellate case involving the kind of trial that lawmakers contemplated when revising the statute.

According to the opinion, Young America made an opening statement and closing arguments, cross-examined the Prices’ witnesses and filed a motion arguing that the plaintiffs weren’t entitled to relief, but it didn’t present evidence. The judge found in favor of Marlon Price, awarding him $3.5 million in damages and an additional $100,000 for his wife.

On appeal, Young America argued that Davis’ negligence couldn’t be imputed to Thompson because he wasn’t acting as her “agent,” particularly because the crash occurred during a stop at QuikTrip that had nothing to do with Thompson’s dental appointment. The Western District disagreed.

“Thompson’s inability to drive that day (due to her diabetic condition) and the stop at QuikTrip along the way (to which Thompson did not object) did not interrupt Thompson’s realistic right to control Davis and the ends of his activities (to drive her to her dental appointment),” Judge Thomas N. Chapman wrote. Judges Gary D. Witt and Lisa White Hardwick concurred.

Kirk Presley of Presley & Presley in Kansas City, an attorney for the Prices, didn’t return a call seeking comment. Neither did William Ray Price Jr. of Armstrong Teasdale, who argued for the insurer.

According to court records, the Prices’ garnishment action against Young America is pending. The case was removed to federal court but was sent back to Jackson County Circuit Court in August.

The case is Price v. Thompson, WD83002.