KAREN KING MITCHELL, Presiding Judge.
ABC Seamless Siding & Windows, Inc. (ABC), appeals the trial court's grant of summary judgment in favor of Brian K. Ward; Brian K. Ward Agency, LLC; and Brian Ward Agency, Inc. (Ward), on ABC's claims for negligence, negligent misrepresentation, and breach of fiduciary duty, all premised upon Ward's allegedly erroneous advice to one of ABC's owners, Christopher Scott Martin, indicating that
Martin had worked in the siding and windows business for approximately fifteen years when he began working for Dale Oyer, the owner of the ABC Seamless of Kansas City franchise. At that time, Oyer had owned the Kansas City franchise for twenty-two or twenty-three years.
In January 2006, Martin considered purchasing his own ABC franchise, and he sought Oyer's advice. Oyer told Martin that he would be interested in joining Martin in purchasing another franchise. Martin began to determine what the start-up costs would be in order to decide whether he could afford the franchise. That same month, Martin attended an ABC Seamless franchise meeting with Oyer, where Martin met with other franchise owners and discussed advertising costs, sales, and volume.
ABC alleges that sometime in February or March 2006, Martin contacted Brian Ward, an insurance agent for American Family Insurance Company whom Martin had used for his personal insurance needs the preceding fifteen years, to discuss the insurance costs and needs for the franchise. ABC claims that Martin asked Ward if he would need workers' compensation insurance, and Ward advised him, "if you're a corporation with two or less employees that — that were officers, that you were not required in Missouri to have Workers' Compensation."
On December 12, 2006, Martin and Oyer, with the help of Circle Tax in Kansas City, formed an S Corporation with Martin and Oyer as the only shareholders, each with an equal number of shares. Consistent with the alleged advice from both Ward and Oyer, individuals at Circle Tax also indicated that, if the business was filed as an S Corporation and had two or fewer employees, they would not need workers' compensation insurance.
Eventually, Oyer and Martin agreed that Springfield, Missouri, would be a good location for the new franchise, and, on December 26, 2006, Martin moved to Nixa, Missouri, to begin the process of starting the business. That same month, when Martin went to the City of Springfield to apply for a business license, he was asked whether he carried workers' compensation insurance. When Martin explained his understanding that, because he was using subcontractors, he was not required to maintain workers' compensation insurance, he was advised that, if he did not carry workers' compensation insurance, he would need to obtain an exemption from the State. He was then given some contact information for the State of Missouri Division
Martin spoke with an employee of the Division, who advised Martin that, if he did not intend to carry workers' compensation insurance, he would need to obtain an exemption. On January 8, 2007, the Division employee sent Martin a letter, advising Martin how to obtain an exemption, along with various excerpts from the Missouri Workers' Compensation Law in order to explain the "proper use of the exemption form and those Missouri employers required to carry workers' compensation insurance for [Martin's] use in determining if [he was] required to purchase workers' compensation insurance." The letter specifically directed Martin's attention to "the requirements for construction industry employers." The statutory excerpts contained construction licensing requirements from sections 287.061.1-.3; the definition of "employer" from section 287.030.1; the sole proprietor and partner exclusion from section 287.035.1; the corporate exemption from section 287.090.5; and the criminal penalties for noncompliance and fraud from section 287.128.
After obtaining an exemption, Martin contacted Ward to request that Ward procure liability insurance for ABC. Martin did not request that Ward procure workers' compensation insurance. On February 26, 2007, American Family Mutual Insurance Company, through Ward, issued Martin a Commercial General Liability Policy, in accordance with Martin's request, that covered equipment, property, and liability; the policy did not cover any expenses related to on-the-job employee injuries.
In September 2007, ABC employed Gordan Cox, a subcontractor, to handle a siding job. Although Martin discussed workers' compensation coverage with Cox and Cox represented that he carried workers' compensation insurance through Missouri Employers Mutual (MEM), Martin did not obtain a certificate of insurance from Cox to verify coverage. Jerry Baker, an installer hired by Cox, injured himself on the job by cutting the tip of his finger off when removing the blade from his Skilsaw. It was later discovered that, although Cox had a workers' compensation insurance policy through MEM, the policy coverage had lapsed at the time of Baker's injury. Baker sued ABC and Martin. The parties entered into a settlement agreement, whereby Martin agreed to pay $35,000 to Baker to remove himself individually from the lawsuit and agreed to file a civil action on behalf of ABC against Ward for the balance of the judgment in Baker's favor.
ABC filed claims against Ward for negligence, negligent misrepresentation, breach of fiduciary duty, and failure to procure insurance. Following discovery, Ward filed a motion for summary judgment, arguing (1) that ABC's claims failed because Ward had no duty to advise ABC about the need for workers' compensation insurance, because any advice Ward provided about the exemption was true, and because by filing for an exemption to workers' compensation,
"When considering appeals from summary judgments, the Court will review the record in the light most favorable to the party against whom judgment was entered." ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). "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." Id. The non-movant is accorded "the benefit of all reasonable inferences from the record." Id.
Appellate "review is essentially de novo" because "[t]he criteria on appeal for testing the propriety of summary judgment are no different from those [that] should be employed by the trial court to determine the propriety of sustaining the motion initially." Id. "If the [summary judgment pleadings] show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law, the court shall enter summary judgment forthwith." Rule 74.04(c)(6).
ABC raises four points on appeal, all challenging the rationale for the trial court's entry of summary judgment in favor of Ward. In its first point, ABC argues that the trial court erred in finding that Ward owed no duty to ABC to advise ABC of its need to obtain workers' compensation insurance or the risks associated with failing to do so. In its second point, ABC argues that the trial court erred in determining that ABC could not demonstrate a breach of fiduciary duty in light of the fact that Ward procured all insurance policies requested by ABC, and ABC reiterates its arguments regarding the existence of a duty of care owed by Ward to ABC. In its third and fourth points, ABC argues that the trial court erred in finding that ABC could not demonstrate that Ward made a negligent misrepresentation in light of the fact that the information allegedly provided
Because there appears to be some confusion by the parties as to what the Workers' Compensation Law requires, we address this issue first.
"The purpose [of the Workers' Compensation Law] is to provide a simple and nontechnical method of compensation for injuries sustained by employees through accident arising out of and in the course of employment and to place the burden of such losses on industry." Bethel v. Sunlight Janitor Serv., 551 S.W.2d 616, 618 (Mo. banc 1977). "[T]he law is intended to enable an injured employee to recover compensation and to do away with the common law defenses and disabilities." Id.
The law's scope is extremely broad: "Every employer and every employee, except as in this chapter otherwise provided, shall be subject to the provisions of this chapter and respectively to furnish and accept compensation as herein provided." § 287.060. For purposes of the law, an "employer" is defined, in pertinent part, as "[e]very ... corporation ... using the service of another for pay...." § 287.030.1(1). To fall within the coverage of the law, however, any "employer[] must have five or more employees ..., except that construction industry employers ... shall be deemed an employer ... if they have one or more employees." § 287.030.1(3).
Construction industry employers, however, have the option of withdrawing from the protections of the Workers' Compensation Law — and thereby open themselves up to the risk of civil liability in the face of an employee injury — if they meet certain requirements. "A corporation may withdraw from the provisions of this chapter, when there are no more than two owners of the corporation who are also the only employees of the corporation, by filing with the division notice of election to be withdrawn." § 287.090.5.
According to ABC's allegations, Ward advised Martin that a corporation with two or fewer employees who were both officers of the corporation was not required to carry workers' compensation insurance. This statement is true only if the corporation has also applied for and obtained the exemption outlined in section 287.090.5. In other words, the exemption does not automatically flow from the structure of a particular business. And, in the absence of an exemption, the corporation — as a construction industry employer — would still be required to maintain workers' compensation insurance if it had at least one employee, regardless of whether that employee was also an owner.
Here, ABC was a corporation with only two owners (Martin and Oyer), who were also the only employees, and it was engaged in the construction industry insofar as its primary business was installing and
Although the parties disagree about whether Ward owed a duty of care to ABC (either because of a special relationship or as a fiduciary) and about whether the advice Ward allegedly provided was true,
The three claims upon which ABC appeals the grant of summary judgment all require some demonstration of justifiable reliance on the advice allegedly provided by Ward.
"The test of whether a plaintiff relied upon a misrepresentation is simply whether the representation was a material factor influencing final action." Grossoehme v. Cordell, 904 S.W.2d 392, 397 (Mo.App. W.D.1995). Because reliance is necessarily entwined with causation in claims pertaining to negligent advice, we briefly discuss the requirements for causation.
"`But for' [causation] is an absolute minimum for causation because it is merely causation in fact." Callahan v. Cardinal Glennon Hosp., 863 S.W.2d 852, 862 (Mo. banc 1993). "Any attempt to find liability absent actual causation is an attempt to connect the defendant with an injury or event that the defendant had nothing to do with." Id. "Mere logic and common sense dictates that there be some causal relationship between the defendant's conduct and the injury or event for which damages are sought." Id. In the context of reliance, but-for causation is established by the plaintiff's reliance in fact. DAN B. DOBBS, THE LAW OF TORTS § 474, at 1360 (2000). But bare reliance, alone, is not enough to prove that the misrepresentation was the proximate cause of the injury.
Callahan, 863 S.W.2d at 865. As it relates to reliance, proximate cause requires that the reliance be justifiable. See DAN B.
"Generally, whether a party has justifiably relied on a misrepresentation is an issue of fact for the jury to decide," Renaissance Leasing, 322 S.W.3d at 132, which would preclude the grant of summary judgment. See Rule 74.04(c)(6). "Despite the general rule[, however] ..., a party who undertakes an independent investigation does not have the right to rely on the misrepresentations of another." Renaissance Leasing, 322 S.W.3d at 132. "[W]here a party makes his own independent investigation, he will be presumed to have been guided by what he learned and the conclusions he reached and will not be permitted to say that he relied on misrepresentations of another and that he was deceived thereby." Consumers Coop. Ass'n v. McMahan, 393 S.W.2d 552, 556 (Mo.1965).
Here, even assuming that ABC relied upon Ward's alleged advice, that reliance was no longer justifiable — as a matter of law — once ABC undertook its own investigation by contacting the Division and then learned what the law actually provided. The uncontroverted facts demonstrate that the information provided by the Division to ABC indicated that ABC needed to either maintain workers' compensation insurance or obtain an exemption. It was only after learning this information that ABC applied for and obtained the exemption. The fact that ABC did not have workers' compensation insurance at the time of Baker's injury was a result, not of Ward's alleged advice, but of ABC's own independent investigation and decision to seek an exemption from the Workers' Compensation Law.
ABC argues, essentially, that, because of Ward's alleged advice, it failed to fully appreciate the risk it was taking on by obtaining the exemption. But ABC's argument is still flawed as it relates to reliance insofar as the statement attributed to Ward does not mention either the possibility or the wisdom of seeking an exemption from the Workers' Compensation Law.
Had ABC simply failed to obtain workers' compensation insurance, then the question of reliance would be a fact-bound one for a jury. But ABC conducted its own independent investigation into the legal requirements of the Workers' Compensation Law, determined that it qualified for an exemption, and apparently decided that obtaining an exemption was a reasonable option for its business. Therefore, ABC cannot, as a matter of law, demonstrate any justifiable reliance upon the statement attributed to Ward.
As the issue of reliance is dispositive of all of ABC's claims, we need not address its individual points on appeal.
Because ABC cannot, as a matter of law, demonstrate any reasonable reliance upon the statement attributed to Ward, and because reasonable reliance is a necessary showing for each of the claims ABC raised below, the trial court committed no error in granting summary judgment in favor of Ward. The trial court's judgment is affirmed.
THOMAS H. NEWTON and LISA WHITE HARDWICK, Judges, concur.