In Franklin Allen v. Wayne Bryers
, plaintiff Allen was injured in 2012 when defendant Bryers’ handgun discharged while removing Allen from an apartment complex. The gunshot severed Allen’s spinal cord, rendering him paraplegic. Bryers was never charged with any crime in connection with this incident. Allen sued Bryers and the apartment building for negligence in Circuit Court. The building’s insurer, Atain Specialty Insurance, issued a CGL policy with one million dollar limits for liability claims for personal injury. Atain said Bryer’s actions were excluded from coverage based on an “expected or intended injury” exclusion and another exclusion for “assault and battery.” Atain sought to defend the lawsuit under a reservation of rights, but Bryers rejected that offer so Atain withdrew from the case. Bryers then entered into an agreement with Allen under Sec. 537.065, RSMo, allowing Allen to obtain an essentially uncontested judgment against the defendant on condition that it would only be collected from the insurer. Following a bench trial, the Circuit Judge entered a sixteen million dollar judgment in favor of plaintiff.
Two collection avenues exist under Missouri law, those being (1) a separate equitable garnishment suit against the insurance company under Sec. 379.200 or (2) a garnishment in aid of execution pursuant to Rule 90. Allen chose the Rule 90 garnishment. The same trial judge presided over the garnishment action and found Atain liable for the entire amount of the underlying judgment. A prior Missouri Supreme Court case, Columbia Casualty v. HIAR Holding LLC
, held that when the insurance company wrongfully refuses to defend, it is liable for the underlying judgment as damages flowing from its breach of duty to defend. The Supreme Court in the Bryers
case, however, noted that while the insurer wrongfully refused to defend Bryers, the garnishment court did not make any finding that Atain had acted in bad faith. In the HIAR
case, a finding of bad faith was made, which distinguishes HIAR
from the holding in Bryers
Accordingly, the Missouri Supreme Court held that plaintiff Allen is only entitled to the one million dollar policy limit. The Bryers
case clarifies that plaintiffs need to get rulings on both the coverage piece and the issue of bad faith refusal to defend.
If you have any questions regarding this case or any other insurance law issues, please contact one of our Insurance Law attorneys