On April 6, 2021, the Missouri Court of Appeals for the Western District issued a unanimous verdict in favor of MTSE client Sprint Lumber. The case arose when Sprint Lumber and some of its employees were sued by a competitor for whom the employees previously worked. Sprint Lumber submitted a claim to its liability insurance company, Continental Western Group. Within a matter of mere hours, the insurance adjuster decided the lawsuit was not covered without performing any investigation into the underlying facts and refused to defend its insureds.
When you purchase liability insurance and pay your insurance premiums, you rightly assume that your insurance company will protect you when you need them. As a locally-owned small business, Sprint Lumber and its employees depended on their insurance company to protect them in their hour of need. However, the insurance company completely abandoned its insureds and forced them to litigate and defend the lawsuit alone and out of their own pocket. They were eventually able to reach a settlement agreement with the competitor that sued them which the insurance company again refused to pay.
Sprint Lumber and its employees hired MTSE attorneys Michael Taylor, Ken Siemens, and Ben Creedy to file a lawsuit against the insurance company for failing to defend and indemnify them when they were sued by the competitor. The insurance company tried to claim there was no coverage for the competitor’s lawsuit under the insurance policy. The trial court, however, agreed with MTSE and held the insurance company breached its duty to defend its insureds and to pay for the settlement – awarding Sprint Lumber a judgment of over $1.7M.
The insurance company appealed the verdict, but the Western District issued a unanimous opinion in favor of MTSE’s client Sprint Lumber and against the insurance company. The Court of Appeals held the insurance company had a duty to defend Sprint Lumber and its employees in the competitor’s lawsuit and had a duty to reimburse Sprint Lumber for the money it paid on its own to settle the competitor’s lawsuit. In addition, the Court of Appeals held that the case should be remanded to the trial court for further proceedings to determine whether the insurance company should be liable for additional damages for bad faith. An insurance company acts in bad faith when it places its own financial interests ahead of its insured’s interests. Insurance companies that act in bad faith can be liable for punitive damages as well as other damages, and there will be another trial against the insurance company seeking additional damages, including punitive damages.
A lawsuit shouldn’t be required to force insurance companies to keep their promises. Sometimes, however, an insurance company will deny coverage when it shouldn’t in order to save money. If that happens to you, call the attorneys at MTSE at (816) 364-6677. We have a proven history of successfully holding insurance companies accountable.
*Past results afford no guarantee of future results. Every case must be judged on its own merits.