KAREN KING MITCHELL, Judge.
This case involves a professional negligence claim, a breach of fiduciary duty claim, and a breach of contract claim. The issue is whether and to what extent section 537.060
Appellant American National Property and Casualty Company ("American National") is an insurance company. American National engaged Respondent Ensz & Jester, P.C., a law firm, to represent its insured, Justin Kurtz, in an automobile accident case. Respondents Jim Ensz and Randall Thompson were attorneys at Ensz & Jester who were involved in the representation of Kurtz.
After an excess judgment against Kurtz in the underlying automobile accident case, he sued Ensz & Jester for malpractice and American National for bad faith. American National and Ensz & Jester independently settled Kurtz's claims against them. American National then sued Ensz & Jester for professional negligence, breach of contract, and breach of fiduciary duty, alleging, as damages, the amounts it paid in the bad-faith matter, including its attorneys' fees, and the amounts it paid Ensz & Jester in the automobile accident case.
The facts of the underlying litigation—in which Ensz & Jester represented Kurtz, American National's insured—were as follows. Wilma Rapp suffered injuries in an automobile accident involving Kurtz. At
When American National retained Ensz & Jester, American National provided the law firm with certain litigation guidelines, which, American National claims, Ensz & Jester failed to follow. For example, American National alleges that Ensz & Jester failed to report information that would have affected American National's decision whether to settle. At first, Rapp reported her medical damages to be less than $5,000. Ensz & Jester advised American National that, with less than $5,000 in medical special damages, the reasonable settlement value was $28,000. Through the course of the litigation, Rapp increased the amount of the medical damages she was alleging to $80,000, but Ensz & Jester failed to timely report the increases to American National.
American National also alleges that Ensz & Jester failed to report a conflict of interest. American National requested that Ensz & Jester provide American National legal opinions regarding (1) whether American National's insurance policy covered Employer; and (2) whether it would be a conflict of interest for Ensz & Jester to represent both Kurtz and Employer. Viewed in the light most favorable to American National, the facts of the underlying case established that, when the accident occurred, Kurtz was acting within the scope of his employment with Employer. Nevertheless, Ensz & Jester advised American National that Kurtz was not acting in the course and scope of employment and that there was no conflict of interest inherent to Ensz & Jester representing both Kurtz and Employer.
Employer moved for summary judgment, arguing that Kurtz was not acting in the course and scope of his employment, but the circuit court denied the motion. Thereafter, Ensz & Jester continued to represent both Kurtz and Employer and continued to argue that the accident occurred when Kurtz was not in the course and scope of his employment. If Employer had been found liable for Kurtz's negligence, an additional $500,000 in coverage would have been available. That amount would have satisfied the ultimate judgment, and there would have been no excess claim against the Kurtzes.
American National also alleges that Rapp offered to settle with Kurtz and his parents in exchange for payment to Rapp of the applicable policy limits, with an understanding that Kurtz would cooperate in testifying at trial regarding the claims against Employer but that Ensz & Jester never relayed the offer to American National.
Rapp's case proceeded to trial and the jury returned a verdict against Kurtz and his parents in excess of his insurance policy's limits. Kurtz and his parents then sued Ensz & Jester and American National for malpractice and bad faith, respectively. American National and Ensz & Jester independently settled the Kurtzes' claims.
American National then filed this lawsuit against Ensz & Jester. American National alleges that, had Ensz & Jester followed the litigation guidelines, it could have settled Rapp's case against Kurtz and thereby avoided Kurtz's bad-faith lawsuit against it. American National also alleges that Ensz & Jester breached professional,
Ensz & Jester moved for summary judgment, arguing that section 537.060 barred American National's claims in that American National was seeking to be indemnified for the amounts it expended in settling Kurtz's claims. Since Ensz & Jester had entered into a good-faith settlement with Kurtz, section 537.060, it argued, barred as against it any claim by another tortfeasor for indemnification for the same injury. In response to the motion for summary judgment, American National admitted that no contract of indemnity existed between the parties and that Ensz & Jester never agreed to indemnify it, but it claimed that a contract did exist between the parties, arising from litigation guidelines provided to Ensz & Jester by American National. American National does not allege that it was held vicariously liable for Ensz & Jester's conduct. The circuit court agreed with Ensz & Jester that section 537.060 barred American National's claims, and it accordingly entered summary judgment in favor of Ensz & Jester. American National appeals.
"We review the circuit court's grant of summary judgment de novo. De novo review means that we will consider the propriety of summary judgment under the same standard that applied to the circuit court when it considered the issue." Hughes v. Davidson-Hues, 330 S.W.3d 114, 117 (Mo.App. W.D.2010) (citation omitted).
The circuit court must grant a motion for summary judgment if the motion, the response, and any other materials show that (1) there is no genuine issue of material fact; and (2) the moving party is entitled to judgment as a matter of law. Rule 74.04(c)(6).
"Facts set forth by affidavit or otherwise in support of a party's motion are taken as true unless contradicted by the non-moving party's response to the summary judgment motion." ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). The court makes all reasonable factual inferences in favor of the non-moving party. Id.
The moving party is entitled to summary judgment if the undisputed facts show that it is entitled to judgment as a matter of law. Id. at 380. When, as here, the defendant has moved for summary judgment based on an affirmative defense, it must show "that there is no genuine dispute as to the existence of each of the facts necessary to support [its] properly-pleaded affirmative defense." Id. at 381 (emphasis omitted).
If the motion establishes that judgment as a matter of law is appropriate for part, but not all, of the plaintiff's claims,
Rule 74.04(d).
American National argues that the circuit court erred in granting summary judgment in that section 537.060 does not bar its claims against Ensz & Jester because (1) the parties had a "legal relationship"; or (2) its claims are not for "indemnity." We disagree with the first point but agree in part with the second.
Section 537.060 provides:
(Emphasis added.)
The circuit court held that Ensz & Jester's settlement with Kurtz triggered section 537.060 with respect to American National's claims and therefore discharged Ensz & Jester from any liability for those claims.
American National argues that its claims are not for "indemnity," and therefore section 537.060 does not apply. We agree in part.
"Indemnity" is the shifting of responsibility from one party to another. Beeler v. Martin, 306 S.W.3d 108, 110 (Mo. App. W.D.2010); SSM Health Care St. Louis v. Radiologic Imaging Consultants, 128 S.W.3d 534, 539 (Mo.App. E.D.2003). It is
SSM Health Care, 128 S.W.3d at 539. If the plaintiff seeks reimbursement from the defendant for amounts the plaintiff paid in discharging a liability to a third party, the claim is for "indemnity," irrespective of whether the plaintiff calls it something else. See Cardinal Glennon Hosp. v. Am. Cyanamid Co., 997 S.W.2d 42, 45 (Mo.App. E.D.1999).
Here, American National seeks to recover the amounts it paid in settling Kurtz's bad-faith claim against it and its attorneys' fees incurred in that litigation. However, it calls its claims "attorney negligence/malpractice," "breach of fiduciary duty," and "breach of contract." But however
In Cardinal Glennon, a hospital and a manufacturer of a vaccine were sued for medical malpractice. Id. at 43. After it had settled the underlying medical malpractice lawsuit, the hospital sued the manufacturer for contribution, indemnity, and fraud, arguing in the latter cause of action that the manufacturer's conduct in the underlying medical malpractice lawsuit (giving an allegedly false deposition) caused it to suffer damages in that action. Id. at 43-45. The hospital sought as damages the amount it paid to the injured party and the attorneys' fees it incurred in defending the lawsuit. Id. at 45. The Eastern District of this court held that section 537.060 barred the contribution claim,
Id. at 45-46 (emphasis added).
Likewise, in this case, American National's claims for the amount it paid in settling the bad-faith claim and the amount it paid in attorneys' fees associated with the bad-faith claim would not exist but for Kurtz's claim against American National. American National's position is that Ensz & Jester should ultimately bear the responsibility for the damages associated with Kurtz's bad-faith claim. That is the essence of indemnity, irrespective of what American National calls it.
The issue is different, however, with respect to American National's claimed entitlement to a refund of the fees it paid to Ensz & Jester in the automobile accident case. Giving all reasonable inferences to American National's petition, it
Again, a plaintiff seeks indemnity when it seeks to shift to the defendant the responsibility for damages the plaintiff incurred by virtue of its liability to a third party. SSM Health Care, 128 S.W.3d at 539. In seeking a refund of the fees it paid Ensz & Jester, American National is not attempting to shift responsibility for the damages it incurred by virtue of being liable to Kurtz. Unlike its damages associated with Kurtz's bad-faith claim, American National's claim for attorneys' fees incurred in the automobile accident case could conceivably exist even if Kurtz's bad-faith claim did not. Cf. Cardinal Glennon, 997 S.W.2d at 45-46. That is, if a law firm violated contractual duties or other duties it owed to an insurer, the insurer could conceivably
Thus, we hold that American National's claims for reimbursement of the amount it paid to Kurtz and the amount it expended in litigating Kurtz's bad-faith lawsuit are claims for indemnity that may be subject to section 537.060. However, American National's claim to a refund of the attorneys' fees it paid to Ensz & Jester in the underlying automobile accident case is not a claim for indemnity, and therefore section 537.060 does not bar American National from asserting it. Point denied in part, granted in part.
American National argues that, even if some or all of its claims are for indemnity, section 537.060 does not apply because it had a "legal relationship" with Ensz & Jester in that an attorney-client relationship existed and/or a contractual relationship existed between the parties and therefore Ensz & Jester's duty to indemnify American National is not "noncontractual indemnity,"
In contrast, when equitable (implied-in-law) indemnity is involved, the intention of the parties is irrelevant. "Instead, the law imposes indemnity due to the relationship of the parties ... regardless of intention." Wells Dairy, 762 N.W.2d at 471. "[T]he question is whether there is some duty between the indemnitor and the indemnitee sufficient to impose indemnity on the indemnitor as a matter of law," regardless of their intentions. Id. Generally, to give rise to equitable indemnity, a relationship between the parties must be found. Developments in Indemnity Law, 79 Mass. L.Rev. at 56. A party asserting equitable indemnity, or implied-in-law indemnity, is therefore not asserting that a contractual right to indemnity exists, id. ("Equitable indemnity arises from noncontractual obligations."); rather, such a party is asserting that, given the special nature of the case's circumstances, equity demands that one party indemnify the other.
Here, American National is asserting a claim to equitable indemnity. It has admitted that it has no contractual right to indemnity. That admission is broad enough to encompass both express contractual indemnity and implied-in-fact indemnity, which, as explained, are both forms of contractual indemnity. Since we decided above that American National is seeking indemnity, and since American National has admitted that it is not seeking express or implied-in-fact contractual indemnity, the only possible conclusion is that American National is seeking equitable indemnity, which is the only kind of indemnity that remains.
The plain meaning of the term "noncontractual indemnity" includes equitable indemnity. Indeed, we have recently explained that noncontractual indemnity may also be referred to as equitable indemnity. Beeler, 306 S.W.3d at 111. Since American National has asserted a form of indemnity that is noncontractual in nature, section 537.060 discharges Ensz & Jester, which settled with the injured party in good faith, from any duty to indemnify American National. § 537.060 ("The agreement shall discharge the tort-feasor to whom it is given from all liability for ... noncontractual indemnity to any other tort-feasor.") ("the discharging clause"). Thus, despite American National's attempts to characterize its claims as "not noncontractual," it is clear that it is seeking equitable indemnity, which is a form of noncontractual indemnity.
The last sentence of section 537.060 provides that "[t]he term `noncontractual indemnity' as used in this section refers to indemnity between joint tort-feasors culpably negligent, having no legal relationship to each other and does not include indemnity which comes about by reason of contract, or by reason of vicarious liability." That sentence is meant to clarify that the exception to the discharging clause "excludes only indemnity which comes about by reason of contract or by reason of vicarious liability." Bostic v. Bill Dillard Shows, Inc., 828 S.W.2d 922, 928 (Mo.App. W.D.1992); see also Tiny Totland, Inc. v. Spalding & Evenflo Co., 242 F.3d 830, 834 (8th Cir.2001). Here, it is an undisputed fact that neither contractual indemnity nor vicarious liability applies. Since they do not apply, section 537.060 does. See Bostic, 828 S.W.2d at 928.
American National argues that such a reading of section 537.060 renders the phrase "having no legal relationship" meaningless. If possible, we will avoid a construction that renders statutory language meaningless. In re Estate of Hough, 457 S.W.2d 687, 692 (Mo.1970). However, our construction of section 537.060 does not render the last sentence meaningless. Without the last sentence, "noncontractual indemnity" could be read to exclude from the statute's discharging provision only indemnity based on an express contract. The last sentence clarifies that any indemnity arising out of a contract (which would include implied-in-fact contractual indemnity) and indemnity based on vicarious liability are also excluded from the statute's discharging clause.
Thus, it is American National's reading of the last sentence, which would exclude from the statute's discharging provision all indemnity claims based on any legal relationship (be it based on an express contract, an implied contract, or principles of equity), that would render the statute's language meaningless. That is, in the absence of a duty to indemnify imposed by law, there is no right to indemnification unless explicitly imposed by a contract. Haynes v. Kleinewefers, 921 F.2d 453, 456 (2d Cir.1990); McNally & Nimergood v. Neumann-Kiewit Constructors, Inc., 648 N.W.2d 564, 570 (Iowa 2002); 41 AM.JUR.2D Indemnity § 2 (2005). Thus, there is no such thing as indemnity between persons who have no legal relationship. An indemnitor, by definition, has a legal duty, whether imposed by contract or imposed by law, to bear the responsibility for the indemnitee's liability to a third party. Since we will not adopt a reading of the statute that renders the discharging clause meaningless, we reject American National's reading of "no legal relationship."
American National attempts to distinguish Bostic and other cases on the ground that they did not allege a relationship that existed because of an express contract, whereas American National does allege that an express contract existed between it and Ensz & Jester and that the contract created the relationship between American National and Ensz & Jester. Under American National's view, an express contract between the parties that does not provide, expressly or impliedly, for indemnity will render section 537.060 inapplicable because the contract creates a legal relationship that, as a matter of equity, should give rise to indemnity. The "legal relationships" at issue in Bostic were the implied warranties of merchantability and fitness for a particular purpose. See §§ 400.2-314; 400.2-315. In holding that those warranties were not a "legal relationship" for purposes of section 537.060, we stated that noncontractual indemnity "excludes only indemnity which comes about by reason of contract." Bostic, 828 S.W.2d at 928. American National has not explained how indemnity "can come about by reason" of an express contract that does not include an express or implied agreement to indemnify. Like the implied warranties of merchantability and fitness, an express contract that does not mention indemnity does not generally
In any case, we reject a reading of section 537.060 that would limit it to parties who have never entered into any kind of express contract with one another. If we
Nor can we accept American National's argument that the special nature of an attorney-client relationship renders section 537.060 inapplicable. As noted above, indemnity that arises via the special relationship of the parties cannot properly be termed "contractual indemnity." Wells Dairy, 762 N.W.2d at 472. Assuming, for the sake of argument, that, by the nature of their relationship, a client has a right to be indemnified by its attorney when both are liable to a third party for the same injury, the nature of that right is equitable, not contractual, unless, of course, the parties have expressly or impliedly agreed to it. American National has admitted that Ensz & Jester did not agree to indemnify it. Rather than claiming an express or implied-in-fact contractual right to indemnity, American National argues that its contract with Ensz & Jester created a relationship which should give rise to indemnity, which means that any right to indemnity that American National may have is equitable in nature. Since section 537.060 discharges liability for equitable indemnity when the alleged indemnitor settled in good faith with the injured party, Ensz & Jester's liability for indemnity (if any) has been discharged.
Section 537.060 applies to tortfeasors liable for the same injury unless (1) one of them has contractually agreed to indemnify the other; or (2) one was held vicariously liable for the other's conduct. Bostic, 828 S.W.2d at 928. Since it is undisputed that neither circumstance is present here, American National's arguments fail. Point denied.
Section 537.060 bars American National's claims for reimbursement of the amounts it paid in discharging its liability to Kurtz because (1) those claims are for indemnity; (2) it is undisputed that the parties have no express or implied-in-fact contract of indemnity; and (3) American National does not allege that it was held vicariously liable for Ensz & Jester's conduct. Section 537.060 does not bar American National's claim to a refund of the amounts it paid to Ensz & Jester in the automobile accident case because that claim is not for indemnity, and the summary judgment motion alleged no other basis for judgment as a matter of law. Accordingly, we affirm in part, reverse in part, and remand for proceedings consistent with this opinion.
VICTOR C. HOWARD, Presiding Judge, and ALOK AHUJA, Judge, concur.