United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 01-2527
                                   ___________

Dairy Farmers of America, Inc.,        *
                                       *
            Plaintiff/Appellant,       *
                                       *
      v.                               *
                                       *
Travelers Insurance Company,           *
                                       *
            Defendant/Appellee,        *
                                       *   Appeal from the United States
      v.                               *   District Court for the
                                       *   Western District of Missouri.
Cabool Transport, Inc.,                *
                                       *
          Third Party Plaintiff,       *
___________________________            *
                                       *
Cabool Transport, Inc.,                *
                                       *
            Fourth Party Plaintiff,    *
                                       *
      v.                               *
                                       *
National Union Fire Insurance          *
Company,                               *
                                       *
            Fourth Party Defendant.    *
                                   ___________

                             Submitted: December 14, 2001

                                 Filed: June 3, 2002
                                 ____________

Before MORRIS SHEPPARD ARNOLD, BEAM, and RILEY, Circuit Judges.
                         ___________


RILEY, Circuit Judge.

        Dairy Farmers of America, Inc. (DFA) filed a declaratory judgment action
against Travelers Insurance Company (Travelers) seeking a declaration that the
liability insurance policy issued by Travelers was excess over a primary policy and
an umbrella policy held by Cabool Transport, Inc. and Cabool Leasing (collectively
Cabool), with whom DFA had an indemnification agreement. Cabool's primary
policy was also issued by Travelers. Cabool's umbrella policy was issued by National
Union Fire Insurance Company (National Union). DFA alleged multiple tort claims
against Travelers for applying DFA's $1 million policy to settle a personal injury
claim before exhausting coverage under Cabool’s $5 million National Union umbrella
policy. Alternatively, DFA sought equitable reformation of both DFA's and Cabool's
policies with Travelers.

        DFA and Travelers filed cross motions for summary judgment. The district
court granted summary judgment in favor of Travelers. DFA appeals. We reverse in
part, affirm in part, and remand.




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I.     BACKGROUND
       A.     Factual History
       DFA is a dairy cooperative which contracted with Cabool to ship its milk and
dairy products to customers nationwide. The contract required Cabool to indemnify
DFA for claims arising out of personal injury or property damage sustained by reason
of an act or omission of Cabool or its employees. DFA and Cabool each obtained a
$1 million liability policy through Travelers using the same independent broker.
Cabool also obtained a $5 million umbrella policy from National Union.

       DFA and Cabool intended that Cabool’s primary and excess policies would be
exhausted before any claim could trigger coverage under DFA’s policy. However,
the submissions prepared by the broker did not specify this intention. DFA offered
evidence that the insurance broker understood the DFA and Cabool business
relationship and their transportation agreement containing the indemnity provision.
Although the broker believed Travelers also understood the DFA/Cabool relationship,
Travelers classified DFA as a trucker "in the business of providing transportation for
hire," disqualifying Cabool's indemnity as an "insured contract" in both the
Cabool/Travelers and Cabool/National Union policies. In response to the broker’s
submissions, Travelers prepared insurance quotations which DFA and Cabool
accepted.

      Travelers's liability policy issued to DFA had a $250,000 deductible. As
required by Travelers, DFA deposited $250,000 into a specified insurance reserve
account to cover the deductible.

      In February 1996, while transporting goods under Cabool's contract with DFA,
a Cabool driver was involved in a trucking accident. The Cabool truck hit a car
driven by Deborah Ward (Ward), causing her severe injuries. Ward sued the driver,
Cabool, DFA, and State Farm Insurance Company for $25 million. Travelers agreed



                                         -3-
to defend the driver, Cabool, and DFA and retained the same defense counsel for each
insured.

       In September 1998, Travelers informed DFA that Travelers was applying both
the DFA and the Cabool policies to the Ward claim. Travelers settled the Ward claim
for $4.4 million in February 1999. Travelers applied the $1 million policy limits from
both the DFA policy and the Cabool policy. Travelers deducted $250,000 from the
DFA reserve account to cover DFA's deductible. National Union paid the remaining
$2.4 million from Cabool's umbrella policy.

       B.     Procedural History
       In June 1999 DFA brought a declaratory judgment action against Travelers
alleging that Travelers had wrongly applied DFA’s liability policy and had wrongly
applied DFA's $250,000 deductible. DFA asserted multiple tort claims, including
breach of fiduciary duty, conversion, negligent misrepresentation, fraudulent non-
disclosure, and vexatious refusal. In the alternative, DFA sought equitable
reformation of its policy and the Cabool policy with Travelers to reflect their
intention and understanding that the DFA/Travelers policy covered claims only after
Cabool’s primary and excess policies were exhausted.

      In November 1999 Travelers filed a third-party complaint against Cabool.
Cabool moved to dismiss the third-party complaint. DFA did not object to Cabool’s
motion. In June 2000 the district court dismissed Travelers's third-party complaint
against Cabool.

       Both Travelers and DFA filed motions for summary judgment. The district
court granted summary judgment in favor of Travelers. The district court framed the
essential dispute as “whether [DFA’s] policy offers solely excess coverage relative
to both of Cabool’s policies.” The court then narrowed its inquiry to “whether DFA’s
policy is excess relative to Cabool’s umbrella policy with National Union.” After

                                         -4-
reviewing the insurance policies, the district court found that National Union’s policy
is a “true excess” or umbrella policy; whereas, DFA's policy is primary in nature and
excess only by virtue of an “Other Insurance” provision. Relying on Smith v.
Wausau Underwriters Insurance Company, 

, 293 (Mo. Ct. App.
1998), the district court held that a policy offering excess coverage only through an
“other insurance” clause is not considered excess relative to an umbrella policy
covering the same loss.

       The district court did not determine whether Travelers had erred when, in
defending DFA and Cabool, it considered DFA to be a "trucker engaged in the
business of providing transportation for hire" and deemed its policy “co-primary”
with Cabool's policy for purposes of the Ward personal injury claim.1 The district
court found this determination was unnecessary. According to the court, DFA was
not prejudiced by any such error because the DFA policy was not excess relative to
Cabool’s umbrella policy.

       Finding that DFA’s policy was not excess to the umbrella policy and that DFA
sustained no damages, the district court granted summary judgment on DFA’s
declaratory judgment, conversion, breach of fiduciary duty, and vexatious refusal
claims. Because DFA did not resist summary judgment on its negligent
misrepresentation and fraudulent non-disclosure claims, the court granted summary
judgment on these claims as well.

      The district court then considered and rejected DFA’s claim for equitable
reformation of the DFA policy. The court found the written DFA/Travelers and
Cabool/Travelers insurance policies were unambiguous and DFA had an adequate

      1
       In Travelers's brief in support of its motion for summary judgment, Travelers
argued that because both DFA's and Cabool's liability policies had identical "other
insurance" provisions, the provisions were mutually repugnant under Missouri law,
thereby causing the policies to be co-primary.

                                         -5-
remedy at law, namely a claim against Cabool based on the parties’s indemnification
agreement. Because the insurance policies had expired and DFA could pursue a
direct claim against Cabool under the indemnification agreement, the district court
found reformation was unnecessary.

      DFA filed an amended motion for reconsideration of the court's order granting
summary judgment. In the alternative, DFA sought leave to file an amended
complaint adding Cabool as a party. Travelers resisted, and the district court denied
the motion.

      On appeal, DFA contends the district court (1) erred in granting summary
judgment to Travelers on DFA's tort claims; (2) abused its discretion by refusing to
reform the DFA policy; and (3) abused its discretion by refusing to permit DFA to
amend its pleadings to add Cabool as a defendant.

II.    DISCUSSION
       We review a grant of summary judgment de novo, applying the same standard
as the district court. Jeseritz v. Potter, 

, 545 (8th Cir. 2002). When the
evidence, viewed in a light most favorable to the non-moving party, demonstrates the
existence of no genuine issues of material fact, and the moving party is entitled to
judgment as a matter of law, summary judgment shall be granted. See Fed. R. Civ.
P. 56(c); Clark v. Kellogg Co., 

, 1082 (8th Cir. 2000).

       A.    Tort Claims
       DFA contends the district court erred in granting summary judgment on its
breach of fiduciary duty, negligent misrepresentation, fraudulent non-disclosure, and
conversion claims. Travelers argues DFA's tort claims rest on the erroneous premise
that the DFA policy is excess over the Cabool policy and the National Union
umbrella policy, and fail as a matter of law for lack of proof of damages. Following
our review of the record, we conclude the district court properly granted summary

                                         -6-
judgment on DFA's conversion claim. Furthermore, because DFA did not resist
summary judgment as to its negligent misrepresentation and fraudulent non-
disclosure claims, the district court properly granted summary judgment on these
claims. However, we do not agree with the district court's ruling that DFA's breach
of fiduciary duty claim must fail as a matter of law.

             1.     Breach of Fiduciary Duty
       We must apply the law of Missouri, the forum state in this diversity action.
Fogelbach v. Wal-Mart Stores, Inc., 

, 698 (8th Cir. 2001). A claim for
breach of fiduciary duty has four elements: (1) the existence of a fiduciary
relationship between the parties, (2) a breach of that fiduciary duty, (3) causation, and
(4) harm. Koger v. Hartford Life Ins. Co., 

, 411 (Mo. Ct. App. 2000).
 A fiduciary is a person having a duty to "act primarily for the benefit of another in
matters connected with his undertaking." See Restatement (Second) Agency § 13
cmt. a (1957); Restatement (Second) of Trusts § 2 cmt. b (1959). While Missouri has
adopted no precise common-law definition, a "fiduciary relationship" is deemed to
exist when "a special confidence [is] reposed in one who in equity and good
conscience is bound to act in good faith, and with due regard to the interests of the
one reposing the confidence." Vogel v. A.G. Edwards & Sons, Inc., 

,
751 (Mo. Ct. App. 1990) (citations omitted).

        As a general principle, no fiduciary duty exists between an insurer and its
insured under Missouri law. 

Edwards & Sons, Inc. v. Drew, 

, 394 (Mo. Ct. App. 1998)). However, Missouri courts have
acknowledged that "[a] fiduciary relationship may arise as a matter of law by virtue
of the parties' relationship, e.g. attorney-client, or it may arise as a result of the special
circumstances of the parties' relationship where one places trust in another so that the
latter gains superiority and influence over the former." A.G. Edwards & Sons, 

(quoting State Sec. Ins. Co. v. Frank B. Hall & Co., 

, 945 (Ill. App. Ct. 1994)).

                                             -7-
      In Craig v. Iowa Kemper Mutual Insurance Company, 

, 723
(Mo. Ct. App. 1978), the Missouri Court of Appeals explained:

      The fiduciary duty of an insurer for good faith rests on the reservation
      of exclusive right to contest or negotiate the claim of liability brought
      against the insured, and so withhold from the insured the right to settle
      without consent of the insured. . . . Such terms of agreement repose in
      the insurer the power to act for the insured, akin to authority a client
      vests in an attorney, or a principal in an agent – each a relationship of
      inherent fiduciary obligation.

Since Craig was decided, the Missouri courts have consistently recognized "[a]n
insurer's right to control settlement and litigation under a liability insurance policy
creates a fiduciary relationship between insurer and insured." Freeman v. Leader
Nat'l Ins. Co., 

, 598 (Mo. Ct. App. 2001) (citing Duncan v. Andrew
County Mut. Ins. Co., 

, 18 (Mo. Ct. App. 1983)). See also Varnal v.
Weathers, 

, 828 (Mo. Ct. App. 1981).

       Under the terms of the liability policies issued to DFA and Cabool, Travelers
had a duty to defend its insureds, and Travelers exercised this duty by hiring the same
legal counsel to defend the driver, Cabool, and DFA in the Ward litigation. Travelers
was vested with complete control of the litigation, and DFA was bound to cooperate
fully with Travelers. We thus find that Travelers had a fiduciary relationship with
DFA and Cabool.

       Having determined that a fiduciary relationship existed between Travelers and
DFA, we must examine whether DFA established the remaining prima facie elements.
DFA claims Travelers breached its fiduciary duty by (1) assuming the defense of both
DFA and Cabool without providing notice to either DFA or Cabool of the conflict of
interest involved (the indemnification agreement); (2) failing to plead a cross-claim


                                         -8-
against Cabool for indemnification in the Ward litigation or recommending such a
cross-claim be pled; and (3) failing to provide notice to DFA before tendering
$250,000 of DFA's money to Cabool's excess carrier. The evidence is uncontroverted
that Travelers never informed DFA and Cabool of the conflict of interest involved in
representing both insureds in the Ward litigation, never pled or recommended a cross-
claim be pled against Cabool for indemnification and never notified DFA before
tendering DFA's $250,000 deductible to National Union.

       Substantial authority exists to support the legal proposition that if a liability
insurer issues policies to insureds with conflicting or adverse interests and the
insurer's duty to defend is later triggered, then the insurer must act equitably towards
both insureds by providing separate and independent counsel for each insured at the
insurer's own expense. See cases cited in 14 Couch on Insurance § 202:24 n. 89;
205:25 (3rd ed. 1999); 7C Appleman, Insurance Law & Practice § 4681 (2002 Cum.
Supp.). See also Todd R. Smyth, Annotation, Duty of Insurer to Pay for Independent
Counsel When Conflict of Interest Exists Between Insured and Insurer, 

, § 3 (1986); S.R. Shapiro, Annotation, Liability Insurer's Rights and Duties as to
Defense and Settlement as Affected by Its Having Issued Policies Covering Parties
Who Have Conflicting Interests, 

(1968). But see In re Segerstrom,

, 228 (5th Cir. 2001) (applying Texas substantive law).

        While Missouri has yet to decide whether an insurer's duty to defend includes
an obligation to identify and address conflicts of interest arising between the insurer
and its insured or between insureds, Missouri courts have, in the context of attorney-
client relationships, clearly recognized a fundamental fiduciary principal: "Each client
is entitled to the undiluted and undivided loyalty of his lawyer." Acorn Printing Co.
v. Brown, 

, 817 (Mo. Ct. App. 1964). In Acorn Printing, the court
did not reject joint representation of all clients, recognizing that "some proceedings
can be more adversary in form than fact," and "it sometimes happens that the conflict
of interest tends to be more technical than actual." 

omitted). In

                                          -9-
such cases, the court held that joint representation of adverse interests can occur but
only after "complete disclosure and with the express consent of all parties concerned."

also cautioned that certain interests may be so adverse and conflicting,
that joint representation, even with disclosure and consent, would violate public
policy. 

See Wolpaw v. Gen. Acc. Ins. Co., 

, 340 (N.J.
Super. Ct. App. 1994) (involving joint representation of multiple parties with adverse
interests resulting in a failure to plead cross-claim).

       For purposes of this appeal, we need not determine whether the indemnity
provision between DFA and Cabool created a conflict of interest "so adverse and
conflicting" as to preclude joint representation. Once Travelers issued liability
policies to DFA and Cabool, Cabool's pre-existing contractual obligation to
indemnify DFA presented a potential conflict of interest between the insureds. When
the Ward litigation arose, this potential conflict of interest became realized,
particularly in light of Travelers's interpretation of the applicable policies. In
opposition to summary judgment, DFA presented evidence that Travelers knew of the
Cabool/DFA transportation agreement containing the indemnity provision before it
issued the policies and before it retained counsel, thereby creating a genuine and
disputed issue of material fact.

       If Travelers had prior knowledge of the indemnification provision, then, as a
fiduciary placed in a superior position of trust, Travelers was obligated to (1) fully
disclose the conflict of interest to DFA and Cabool, (2) explain the consequences of
and alternatives to joint representation, and (3) obtain from both insureds their
express consent to joint representation. In the absence of informed consent,
Travelers's duty to defend obligated it to appoint separate and independent counsel
to represent DFA and Cabool.

     We also need not determine any issues regarding Travelers's classification of
DFA as a "trucker engaged in the business of transportation for hire." However,

                                         -10-
evidence concerning the classification may be relevant at trial to DFA's breach of
fiduciary duty claim.

       DFA offered evidence that Travelers knew about the DFA/Cabool business
relationship and the indemnity provision and that Travelers identified the Ward claim
solely as a Cabool policy obligation until settlement discussions became serious.
From these facts, a jury could infer improper motive and concealment. A joint
defense of DFA and Cabool, without litigating a cross-claim for indemnification, was
certainly in Travelers's economic best interest, but such strategy may not have been
in DFA's best interest.

              2.    Damages
        Travelers contends, and the district court agreed, DFA's breach of fiduciary
duty claim fails for want of damages. DFA argues, as a direct result of Travelers's
failure to enforce DFA's indemnification rights, it has been deprived of the retention
and use of its $250,000 deductible, and has been placed in the unfavorable position
of either forfeiting recovery of its deductible or expending substantial time and
expense to recover its deductible by bringing a collateral suit against Cabool, a valued
business partner. These arguments reflect some evidence of damages caused by the
alleged breach of fiduciary duty.

       Damages may arise apart from the insurance coverage issues and the $250,000
deductible. A cross-claim in the Ward litigation, at Travelers's expense, would have
saved DFA the time and the cost of separate litigation and would probably have been
more palatable for DFA than DFA suing its good business associate in a separate
action. A jury could conclude Travelers pursued its own self-interest at the expense
of DFA, breaching its fiduciary duty and thereby damaging DFA and its economic
interests.




                                         -11-
      We find DFA has shown adequate proof of damages for summary judgment
purposes, thereby establishing a prima facie case for breach of fiduciary duty against
Travelers. We conclude the district court erred in granting summary judgment to
Travelers on this claim.

       B.     Reformation
       Equitable reformation of an instrument is an extraordinary remedy which is
available only "when it is shown by clear, cogent and convincing evidence that the
instrument fails to reflect a valid underlying agreement between the parties due to
'fraud, mutual mistake, or such other grounds as will satisfy requirements for
equitable relief.'" Brennan v. Missouri State Employees' Ret. Sys., 

,
232 (Mo. Ct. App. 1987) (quoting Commercial Standard Ins. Co. v. Maryland Cas.
Co., 

, 415 (8th Cir. 1957)). The record reveals no evidence of fraud,
mutual mistake, or other grounds warranting reformation. Rather, the record shows
that DFA's and Cabool's broker submitted applications for insurance to Travelers
who, in turn, issued two liability policies. DFA and Cabool accepted the policies as
written and even renewed the policies.

       "Missouri law imposes an affirmative duty on an insured to examine its policy
promptly to ensure it contains the terms of coverage desired or agreed upon." Mark
Andy, Inc. v. Hartford Fire Ins. Co., 

, 718-19 (8th Cir. 2000) (citing
Jenkad Enters., Inc. v. Transp. Ins., Co., 

, 39 (Mo. Ct. App. 2000)).
Once an insured accepts an insurance policy as written, it cannot later seek
reformation, unless an examination of the policy would not have revealed the
mistake. Jenkad 

(declaring "[w]here an insured accepts
a policy . . . it assents to the policy's terms and cannot thereafter seek to have the
policy reformed on the ground of mutual mistake"). The mistake alleged by DFA was
apparent upon examination of the policies. We therefore affirm the district court's
ruling that DFA's acceptance of the Travelers policy precludes the remedy of
equitable reformation.

                                        -12-
       C.     Amendment of Pleadings
       We review a district court's denial of a motion for leave to amend a pleading
for an abuse of discretion. See Knapp v. Hanson, 

, 790 (8th Cir. 1999).
The district court denied DFA's motion to amend its complaint to add Cabool as a
party defendant, finding that DFA had advanced no valid reason for the amendment.
A district court "does not abuse its discretion in refusing to allow amendment of
pleadings to change the theory of a case if the amendment is offered after summary
judgment has been granted against the party, and no valid reason is shown for the
failure to present the new theory at an earlier time." Parnes v. Gateway 2000, Inc.,

, 550-51 (8th Cir. 1997). After reviewing the record, we conclude the
district court did not abuse its discretion in denying DFA leave to amend once the
court had entered summary judgment in favor of Travelers. See Humphreys v. Roche
Biomedical Labs., Inc., 

, 1082 (8th Cir. 1993).

III.  CONCLUSION
      For the reasons stated above, we reverse the district court's grant of summary
judgment on DFA's breach of fiduciary duty claim and affirm the district court's grant
of summary judgment on the remaining claims. We remand the case for further
proceedings consistent with this opinion.

       A true copy.

             Attest:

                CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.




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