Insurer found liable for $7.5M balance of wrongful death judgment

The Court of Appeals Western District ruled Jan. 12 that an insurer is on the hook for the $7.5 million remaining balance of a wrongful death judgment.

Liberty Insurance Corporation provided a $10 million umbrella policy to Sharpe Holdings Inc., which operates a dairy farm in northeastern Missouri used as part of a rehabilitation program operated by CNS International Ministries. On Sept. 26, 2015, Richard Geiler, a resident of the program, died after he was ejected from a company van.

In 2017, an Adair County judge approved a $9.5 million wrongful death judgment for Geiler’s family. Sharpe’s primary insurer, Starr Indemnity & Liability Company, paid its policy limits of $2 million. Liberty, however, had denied coverage for the suit and refused to provide a defense.

That prompted the Geiler family to enter into an agreement with Sharpe and Starr under Section 537.065 of the Revised Statutes of Missouri in which the plaintiffs agreed to try to recover the rest of the judgment from the excess carrier.

Liberty argued that the judgment was void. Geiler had worked at the dairy farm as part of the recovery program, so his exclusive remedy was under Missouri’s workers’ compensation system. As a result, the insurer argued, the judge lacked subject matter jurisdiction in the case.

But the Western District said that even if the judge lacked statutory authority in the case, he still had jurisdiction over the claim, and that the insurer could not attack the wrongful death judgment as part of a separate proceeding. 

“As it is clear that a statutory bar has no effect on subject matter jurisdiction (does not render the judgment void), Liberty’s collateral challenge to the Wrongful Death Judgment on that basis is without merit and thus fails,” Judge W. Douglas Thomson wrote for the court. Judges Thomas N. Chapman and Mark D. Pfeiffer concurred.

In a footnote, Thomson added that the insurer could have protected its interests if it had countered the wrongful death lawsuit with a declaratory judgment action, which could have halted the suit while the insurance coverage dispute was resolved.

Liberty also said it should have been allowed to conduct discovery to contest the reasonableness of the $9.5 million judgment, arguing that the trial judge didn’t take into account that Geiler was a repeat felon without assets or much of a work history, and that the judgment might have included punitive damages not covered by the policy.

The Western District, however, said the wrongful death judgment was supported by the record, as the bench trial included testimony from Geiler’s two daughters and father, numerous exhibits about the accident and an economist’s report showing a total loss of $9,446,337.

The insurer also had argued that its policy excluded coverage for bodily injuries arising out of CNS Ministries’ operations.  But the Western District said Liberty had failed to contest part of the plaintiffs’ statement of material facts, which stated that Geiler “was not involved in the ongoing operations” of CNS. As a result, the court said, that fact was deemed admitted.

Brett Emison of Langdon & Emison, an attorney for the Geilers, said that, while that was the correct result, he believed he would have been able to prove coverage whether the insurer had contested those facts or not.

“We are confident those exclusions did not apply,” Emison said. “We alleged those facts because they were truthful.”

Angela Higgins of Baker Sterchi Cowden & Rice, an attorney for Liberty, couldn’t be reached for comment. 

The case is Geiler v. Liberty Insurance Corporation, WD83363.