Katie McCarthy and Jon Morrow of KNM’s St. Louis office recently obtained partial summary judgment on vexatious refusal claims in front of the Western District of Missouri.
The insured-plaintiff sought insurance coverage for property damage caused by fire, freeze, and vandalism under a policy issued by KNM’s client. The insurer’s investigation into the loss concluded the fire was the result of arson and the insured failed to demonstrate that its freeze and vandalism claims were covered under the insurance policy. After the insurer’s denial, the insured filed suit alleging breach of contract and vexatious refusal to pay under Missouri Revised Statute §§ 375.420 and 375.296. Additional discovery during litigation further supported the insurer’s coverage denial, and KNM moved for summary judgment on the claims. Although the court concluded that there were disputed facts precluding summary judgment on the breach of contract claims, it granted summary judgment on plaintiff’s claims for vexatious refusal relating to all the claimed damages.
The Court found that there was “abundant evidence that the fire was intentionally set” and that there was no evidence clearly establishing that the other claimed damages were covered under the insurance policy. The Court concluded that the evidence demonstrated a question of coverage that was the subject of reasonable and substantial dispute, and that there “may be no vexatious refusal where the insurer has reasonable cause to believe and does believe there is no liability under its policy and it has a meritorious defense.” Accordingly, the insured-plaintiff could not, as a matter of law, succeed on its vexatious refusal claims, and the insurer was granted summary judgment on those issue.
Generally, the question of whether an insurer acted vexatiously in denying a claim is a factual question left to the jury’s discretion, and therefore, usually not decided on summary judgment. However, in rare circumstances, as here, no jury could reasonably find that the insurer’s denial of coverage was vexatious. KNM is pleased to have been able to secure a summary judgment on vexatious claims for its client.
Read the full order here.