Over the past five plus years, the Missouri legislature has continued to grant insurer’s new rights and protections. This includes requirements for time-limited demands, interpleader protections and the ability to intervene into certain actions brought against insureds even when the carrier has denied coverage. Despite these efforts, Missouri courts have limited the insurers’ new rights and protections to only those situations specifically addressed by the new legislation.
McCrackin v. Mullen/Safeco, 2024 WL 1392726 (Mo. App. April 2, 2024)
Background
Tragically, Riley McCrackin (McCrackin) was shot and killed outside a Raytown pool hall in March 2019. Tynan Mullen and Logan England were believed to be involved in the shooting and were ultimately indicted for their roles in the shooting. England would eventually plead guilty to second degree murder. After several years, Mullen plead guilty to involuntary manslaughter for “recklessly” causing the death of Riley McCrackin.
Underlying Lawsuit and Declaratory Judgment Action
Jeromy McCrackin and Erica Robinson, McCrackin’s parents (“Parents”), brought a wrongful death suit against Mullen and others for their son’s death. The initial petition alleged a count for civil conspiracy to kill their son and a count for battery. At some point during the course of the lawsuit, Parents learned that Mullen was a potential insured under his grandmother’s homeowner’s policy with Safeco Insurance Company. Parents’ attorney provided Safeco with notice of the underlying lawsuit and a policy limits demand.
Safeco responded by denying there was any coverage available for Mullen’s actions. Safeco soon filed a declaratory judgment action in federal court asking that court to find it had no obligation to provide any coverage to Mullen or to Parents’ for the wrongful death claims plead in the initial petition in the underlying lawsuit.
A few months later, Parents filed a series of amended petitions in the wrongful death case. The final amended petition alleged negligence and failure to warn counts against Mullen for his role in McCrackin’s death. Safeco continued to deny that any coverage was available for the claims, including those based on negligence. After Safeco’s continued denials, Parents and Mullen agreed to resolve the wrongful death case via a bench trial but did not enter into any settlement agreement that included a covenant not to execute. Parents and Mullen also moved to stay the federal declaratory judgment action given the upcoming bench trial.
After receiving notice of the upcoming bench trial in the underlying lawsuit, Safeco moved to intervene into the wrongful death case. Safeco stated its sole reason for moving to intervene was to stay the wrongful death case pending resolution of the declaratory judgment and a determination of Safeco’s coverage obligations. Unfortunately for Safeco, the federal declaratory judgment action was stayed a week after Safeco moved to intervene.
The trial court in the wrongful death case quickly denied Safeco’s motion to intervene and stay. The trial court explained that Safeco lacked a statutory right to intervene and lacked a direct interest as only a potential indemnitor of Mullen. Moreover, Safeco’s requested remedy, a stay pending resolution of the federal declaratory judgment, was impossible since the federal court had stayed that action pending resolution of the wrongful death case. After denying Safeco’s motion to intervene, the trial court entered a judgment in favor of Parents on their wrongful death claims against Mullen for $16.5 million.
Staring down a potential $16.5 million judgment, Safeco appealed the denial of its motion to intervene and stay.
Appellate Decision
At the Western District, Safeco asserted that the trial court erred in denying its motion to intervene as a matter of right and erred when refusing to stay the wrongful death case. The Western District disagreed on both points.
As it related to Safeco’s right to intervene, the Western District noted that §537.065.4 did not provide Safeco with a statutory right to intervene. No covenant not to execute had been entered into between the Parents and Mullen rendering §537.065.4 provisions on intervention inapplicable. Without a statutory basis, the Western District followed decades of precedent when it confirmed that Safeco’s status as a possible indemnitor for Mullen was insufficient to justify granting Safeco’s the right to intervene.
Additionally, the Western District took the opportunity to clarify any confusion from prior decisions concerning an insurer’s right to stay an underlying liability action while the insurer pursues a declaratory judgment on coverage issues. The Court unequivocally stated that an insurer has no independent legal right to intervene and seek a stay of the underlying liability action. Further, the Court noted that even if an insurer has a statutory right to intervene in an underlying liability action, the trial court is not required to stay the liability action while the insurer pursues a declaratory judgment on coverage issues. Trial courts are well within their discretion to deny an insurer’s requested stay.
Despite repeated efforts from other government branches to grant insurance carriers new rights, McCrackin demonstrates Missouri courts are inclined to follow precedent in the absence of a conflicting statutory mandate. Absent a covenant not to execute, insurers still have no right to intervene or stay liability actions while challenging their coverage obligations.
