          IN THE MISSOURI COURT OF APPEALS
                  WESTERN DISTRICT
U-HAUL COMPANY OF MISSOURI                         )
and ARCOA RISK RETENTION                           )
GROUP, INC.,                                       )
                                                   )
                 Appellants,                       )
                                                   )
v.                                                 )       WD81506
                                                   )
TIMOTHY ANDRE CARTER,                              )       Opinion filed: January 22, 2019
CHRISTY WILSON-FINISTER,                           )
DAVON WILSON, KEITH L.                             )
WILLIAMS, ASHLEY KNIGHT and                        )
KEITH DAWSON,                                      )
                                                   )
                 Respondents.                      )

     APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI
            THE HONORABLE KENNETH R. GARRETT, III, JUDGE

                    Before Division One: Lisa White Hardwick, Presiding Judge,
                    Edward R. Ardini, Jr., Judge and Thomas N. Chapman, Judge

        This is an appeal from a declaratory judgment action. U-Haul Company of Missouri (“U-

Haul”) and ARCOA Risk Retention Group, Inc. (“ARCOA”) appeal the judgment of the Circuit

Court of Jackson County granting summary judgment in favor of Respondents 1 and denying U-

Haul and ARCOA’s motions for default judgment. The declaratory judgment action sought to

resolve insurance coverage questions arising from an automobile collision involving Timothy


1
 When we refer to “Respondents,” we only mean to include Christy Wilson-Finister, Davon Wilson, Keith Williams,
and Ashley Knight. The other two named respondents in this appeal, Timothy Carter and Keith Dawson, did not
participate in this declaratory judgment action below and have not participated on appeal.
Carter (“Carter”). It is the position of U-Haul and ARCOA that the collision was the product of a

scheme perpetrated by Carter and Respondents to submit fraudulent insurance claims and, as a

result, U-Haul and ARCOA had no duty to defend or indemnify Carter under the terms of the

relevant policies. The trial court granted summary judgment in favor of Respondents, finding U-

Haul and ARCOA were estopped from litigating the coverage issues raised in this action based on

a judgment entered in a separate personal injury lawsuit that found Carter negligently caused the

collision. Because we determine Respondents have failed to establish they are entitled to summary

judgment, we reverse and remand.

                              Factual and Procedural Background

       On April 28, 2014, Carter rented a U-Haul moving truck. As part of that transaction, Carter

and U-Haul entered into a Rental Contract that provided Carter with liability insurance coverage.

That coverage did not apply, however, to “any intentional torts or criminal acts; false or fraudulent

claims…and any liability for an accident which occurs while the EQUIPMENT is obtained or used

in violation of this Agreement.” Carter also purchased an Excess Rental Liability Policy that was

underwritten by ARCOA. The Excess Rental Liability Policy voided coverage for any claim where

“an Insured commits fraud, or intentionally conceals or misrepresents any material fact.”

       While driving the truck later that same day, Carter collided with a 2001 Acura. Respondent

Christy Wilson-Finister (“Wilson-Finister”) claimed to have been driving the Acura, and

Respondents Davon Wilson (“Wilson”), Keith Williams (“Williams”) and Ashley Knight

(“Knight”) claimed to have been passengers.

       U-Haul’s claims handler, Repwest Insurance Company (“Repwest”), investigated the

collision. In September 2014, Carter spoke with Repwest investigators. Carter signed a written

statement attesting that the collision was staged for the purpose of submitting fraudulent insurance



                                                 2
claims for profit and that he participated in the scheme with the expectation that he would profit

monetarily. Based on Carter’s admissions, U-Haul and ARCOA denied coverage for the claims

arising out of the collision.

         In July 2016, more than two years after the collision, Respondents filed a personal injury

action against Carter, U-Haul, and Midtown Investment Corp. (“Midtown”).2 They asserted one

count of negligence against Carter, alleging that Carter collided with the Acura after failing to stop

at a stop sign, that the collision was caused by “the negligence, carelessness, and recklessness” of

Carter, and that “as a direct and proximate cause of the negligence, carelessness, and recklessness”

of Carter, Respondents “sustained severe and permanent personal injuries.” Respondents asserted

one count of negligent entrustment against Midtown, alleging that Midtown leased the truck to

Carter knowing that Carter “was unlicensed.” Finally, Respondents asserted one count of “agency”

against U-Haul, alleging that Midtown was U-Haul’s agent and therefore U-Haul was responsible

for the acts of Midtown.

         U-Haul and Midtown filed counterclaims against Respondents and crossclaims against

Carter for fraud and civil conspiracy. U-Haul and Midtown alleged Wilson-Finister and Carter

agreed that Carter would rent a truck and “they would stage a car accident and file claims for

property damage and personal injury.” U-Haul and Midtown further alleged that Carter confessed

to this fraudulent activity, and attached as exhibits Carter’s written statement and the transcript of

Carter’s recorded statement.

         In March 2017, U-Haul filed this declaratory judgment action against Respondents, Carter,

and Keith Dawson (“Dawson”), who U-Haul alleged was a passenger in the truck with Carter. U-



2
  Respondents alleged that Midtown owned the truck and leased it to Carter. Midtown is not a party to this declaratory
judgment action.


                                                          3
Haul sought a declaration that it owed no duty to defend Carter under either the Rental Contract

or the Excess Rental Liability Policy which U-Haul alleged was “void due to Carter’s fraudulent

activity and intentional concealment and misrepresentation of material facts after the collision.”3

U-Haul similarly alleged that it had no duty to indemnify under either policy. U-Haul was later

granted leave to add ARCOA—the underwriter of the Excess Rental Liability Policy—as a

plaintiff.

         All parties jointly moved in the personal injury action to stay those proceedings pending

resolution of the declaratory judgment case. That request was denied.4

         In May 2017, Respondents dismissed with prejudice their claims against U-Haul and

Midtown in the personal injury lawsuit. Respondents retained their personal injury claim against

Carter. In response, U-Haul and Midtown dismissed with prejudice their counterclaims against

Respondents, and dismissed without prejudice their crossclaim against Carter.

         In June 2017, Respondents proceeded to a bench trial on the remaining claim in the

personal injury action against Carter. Carter did not appear at trial. After Respondents presented

witnesses and exhibits, the trial court entered its judgment finding that Carter negligently operated

the truck and that such negligence caused bodily injury to Respondents. The trial court awarded


3
  U-Haul and ARCOA further alleged that Carter and Respondents “misrepresented their relationship and involvement
in the staged Collision after the fact.”
4
  The judge in both the personal injury lawsuit and the declaratory judgment action was the same. Given the fact that
the judge would have been privy to the written and signed statement by Carter in which he admitted to being a
participant in a fraudulent scheme relating to the collision which was the subject matter of the personal injury lawsuit,
we are perplexed as to why the judge declined to stay the personal injury lawsuit until the declaratory judgment action
could be resolved. This decision is more confounding given that the stay was jointly requested by all of the parties to
the personal injury lawsuit. Missouri courts have expressly advised that insurers with good faith coverage questions
in similar scenarios should file a declaratory judgment action simultaneous to the underlying personal injury action
and seek a stay of the personal injury lawsuit proceedings until the declaratory judgment action is decided. See Ballmer
v. Ballmer, 923 S.W.2d 365, 369-70 (Mo. App. W.D. 1996); State ex rel. Mid-Century Ins. Co., Inc. v. McKelvey, 666
S.W.2d 457, 459 (Mo. App. W.D. 1984); see also Allen v. Bryers, 512 S.W.3d 17, 41 (Mo. banc 2016) (Wilson, J.
concurring). This advice from Missouri’s appellate courts rings hollow when insurers follow such advice and they are
denied the remedy we have recommended to them.


                                                           4
Wilson-Finister $30,729.26, Wilson $16,559.12, Knight $56,117, and Williams $34,606.18. The

judgment was not appealed.

        In September 2017, Respondents filed a motion for summary judgment in the declaratory

judgment action, which was opposed by U-Haul and ARCOA.5 Respondents asserted that U-Haul

and ARCOA were collaterally estopped from litigating whether Carter’s conduct was intentional

because it had been determined in the personal injury lawsuit that Carter had negligently caused

the collision and that, based on that finding alone, they were entitled to judgment in their favor.

        The trial court granted Respondents’ motion for summary judgment based on its finding

that U-Haul and ARCOA were collaterally estopped “from re-litigating the issue of liability.”

        This appeal followed.

                                             Standard of Review

        An appeal from the grant of summary judgment is reviewed de novo. James v. Paul, 49

S.W.3d 678, 682 (Mo. banc 2001). “The propriety of summary judgment is purely an issue of law,

and this Court need not defer to the trial court’s ruling.” Id. We review the record in the light most

favorable to the party against whom judgment was entered, and uphold the ruling if no genuine

issues of material fact exist and the movant is entitled to judgment as a matter of law. Id. “The

movant bears the burden of establishing a legal right to judgment and the absence of any genuine

issue as to any material fact required to support the claimed right to judgment.” Allen v. Bryers,

512 S.W.3d 17, 30 (Mo. banc 2016).




5
  U-Haul and ARCOA also filed motions for default judgment against Carter and Dawson, who had failed to answer
or otherwise respond to the amended petition for declaratory judgment. The trial court denied these motions based on
the same collateral estoppel theory relied upon to grant Respondents’ motion for summary judgment.


                                                         5
                                             Discussion

       Respondents’ motion for summary judgment is simple and straightforward. They argue

that U-Haul and ARCOA are bound under principles of collateral estoppel to the finding made in

the personal injury lawsuit that Carter negligently caused the collision that allegedly injured

Respondents and that this finding alone legally entitles them to a judgment in their favor in this

declaratory judgment action. The success of this theory is reliant on Respondents establishing that

U-Haul and ARCOA are in fact precluded from relitigating the nature of Carter’s liability in the

collision and, if successful on that point, then establishing that the negligence finding – by itself –

entitles them to a finding that U-Haul and ARCOA had a duty to defend and a duty to indemnify

Carter under the terms of the Rental Contract and the Excess Rental Liability Policy. Because we

find that Respondents have failed to establish an uncontroverted factual basis to support a legal

right to either of these necessary conclusions, we reverse the trial court’s grant of summary

judgment and remand for further proceedings.

                                 Principles of Collateral Estoppel

       Collateral estoppel precludes the same parties (or those in privity with them) from

relitigating an issue that was previously adjudicated. Oates v. Safeco Ins. Co. of Am., 583 S.W.2d

713, 719 (Mo. banc 1979). Before a prior adjudication can be given preclusive effect, four elements

must be shown: (1) the issue decided in the prior action was identical to the issue presented in the

later action; (2) the prior action resulted in a judgment on the merits; (3) the party against whom

estoppel is asserted was a party or was in privity with a party to the prior action; and (4) the party

against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in

the prior action. James, 49 S.W.3d at 682. All elements must be established before collateral

estoppel applies. See Xiaoyan Gu v. Da Hua Hu, 447 S.W.3d 680, 686 (Mo. App. E.D. 2014). In



                                                  6
determining the applicability of collateral estoppel, “[f]airness is the overriding consideration.”

Cox v. Steck, 992 S.W.2d 221, 224 (Mo. App. E.D. 1999); see also James, 49 S.W.3d at 683 (“The

doctrine of collateral estoppel will not be applied where to do so would be inequitable.”).

       Collateral estoppel “does not prevent a party from litigating issues that were never argued

or decided as essential to the judgment in the previous proceeding.” Shores v. Express Lending

Servs., Inc., 998 S.W.2d 122, 126 (Mo. App. E.D. 1999). Collateral estoppel is triggered when

“the issue decided in the prior case was identical to that in the present action[.]” Spath v. Norris,

281 S.W.3d 346, 351 (Mo App. W.D. 2009) (emphasis in original). It is not enough that two claims

share common facts if the prior action does not “necessarily and unambiguously” resolve the same

question presented in the second proceeding. Id. at 351-52.

                                          Duty to Defend

       In this declaratory judgment action, U-Haul and ARCOA allege that there existed no duty

to defend Carter in the underlying personal injury lawsuit under the terms of the Rental Contract

and Excess Rental Liability Policy. They rely on Carter’s admissions and other misrepresentations

made after the collision to support their decision that Carter was not entitled to coverage under the

relevant policies.

       A central issue raised in this declaratory judgment action is whether the refusal to defend

was justified. The answer to this question is critical to Respondents’ collateral estoppel argument

because, as explained below, the underlying negligence finding against Carter is not binding on

U-Haul and ARCOA if the refusal to defend Carter is determined to have been justified. See Allen,

512 S.W.3d at 32. Despite the significance of this determination to the success of Respondents’

theory, their motion for summary judgment contains no assertion that the refusal to defend Carter




                                                 7
was unjustified, let alone attempts to establish the uncontroverted factual predicate necessary to

show the refusal was wrongful.6

         It is well-settled that an insurer’s duty to defend is broader than its duty to indemnify.

Piatt v. Ind. Lumbermen’s Mut. Ins. Co., 461 S.W.3d 788, 792 (Mo. banc 2015). “An insurer may

have a duty to defend claims falling within the policy even if it may not ultimately be obligated to

indemnify the insured.” Arch Ins. Co. v. Sunset Fin. Servs., Inc., 475 S.W.3d 730, 733 (Mo. App.

W.D. 2015) (quoting Lumber Mut. Ins. Co. v. Reload, Inc., 113 S.W.3d 250, 253 (Mo. App. E.D.

2003). “The duty to defend arises from the potential liability to pay based on the facts as they

appear at the outset of the case.” Id. “To extricate itself from a duty to defend the insured, the

insurance company must prove that there is no possibility of coverage.” Truck Ins. Exch. v. Prairie

Framing, LLC, 162 S.W.3d 64, 79 (Mo. App. W.D. 2005) (emphasis in original). “The duty to

defend is determined by comparing the insurance policy language with facts: ‘(1) alleged in the

petition; (2) the insurer knows at the outset of the case; or (3) that are reasonably apparent to the

insurer at the outset of the case.’” Allen, 512 S.W.3d at 31 (quoting Allen v. Cont’l W. Ins. Co.,

436 S.W.3d 548, 553 (Mo. banc 2014)).

         “An insurer may refuse to defend its insured on the basis that there is no coverage, but the

insurer does so at its own risk.” Assurance Co. of Am. v. Secura Ins. Co., 384 S.W.3d 224, 233

(Mo. App. E.D. 2012). “Where the insurer had the opportunity to defend the insured but wrongfully

refused to do so, ‘[t]he insurer is precluded from relitigating any facts that actually were

determined in the underlying case and were necessary to the judgment.’” Id.; see also Allen, 512

S.W.3d at 32 (“By filing a declaratory judgment action, the insurer’s decision is treated as a refusal


6
  Respondents argue that the claims raised in the declaratory judgment action do “not hinge on contract interpretation”
and that the negligence determination in the personal injury lawsuit alone is dispositive. We disagree. The declaratory
judgment action “hinges” on whether U-Haul and ARCOA had a duty to defend and/or duty to indemnify under the
“express terms” of the Rental Contract and the Excess Rental Liability Policy.

                                                          8
to defend, and, if determined to be ‘unjustified, the insurer is treated as if it waived any control of

the defense of the underlying tort action.’”).

        The underlying personal injury lawsuit addressed only the narrow issue of Carter’s liability.

There is nothing inherent in that finding that independently mandates a conclusion that the refusal

to defend Carter was wrongful. Instead, a comparison is required of the factual allegations made

in the underlying suit brought by Respondents against Carter and the facts known to U-Haul and

ARCOA at the time they made the decision to refuse to defend – including the signed admission

by Carter that the collision was part of a fraudulent scheme to defraud the insurance companies –

to the terms of the policies. It is only after the terms of the policies are considered in light of these

other facts that it can be determined whether U-Haul and ARCOA’s refusal to defend was justified

and then, depending on the outcome of that analysis, whether they are bound by the negligence

finding in the personal injury case. See generally Allen, 512 S.W.3d at 31-33.

        Respondents have failed to establish an uncontroverted factual record entitling them to a

finding that U-Haul and ARCOA’s refusal to defend was not justified under the terms of the

policies. This deficiency is fatal to the success of their motion for summary judgment. As

previously noted, Respondents never assert in their motion that the refusal to defend was wrongful

and provide no factual basis from which to make such a determination. Respondents failed to

attach the relevant policies to their motion and, in fact, never reference the policies in their

summary judgment papers. Resolution of the question of whether U-Haul and ARCOA’s refusal

to defend Carter was justified under the terms of the respective policies plainly requires

consideration of the terms of those policies. Pursuit of summary judgment under these facts absent

the policies requires our finding that Respondents have failed to sustain their burden of establishing

a legal right to a judgment that U-Haul and ARCOA’s refusal to defend Carter was unjustified and



                                                   9
the related finding that U-Haul and ARCOA are bound by the negligence finding made in the

personal injury lawsuit.

                                                Duty to Indemnify
         Respondents’ theory that the negligence finding in the personal injury lawsuit (without

consideration of the terms of the relevant policies) compels a disposition in their favor on U-Haul

and ARCOA’s duty to indemnify must also fail. First, it requires that U-Haul and ARCOA are

bound by the underlying negligence determination – and we have concluded above that

Respondents have failed to establish a factual record entitling them to a favorable finding on that

point. Second, and more fundamental, regardless of the preclusive effect ultimately given the prior

negligence finding, an examination of the terms of the policies is necessary to resolve the

indemnification issue.

         The failing in Respondents’ singular reliance on the prior negligence finding and their

dogged indifference to the terms in the policies is aptly revealed by U-Haul and ARCOA. U-Haul

and ARCOA assert that, even if the underlying negligence determination is found to be binding on

them, the coverage questions raised in this declaratory judgment action can still be resolved in

their favor without disturbing that finding.7 In other words, they argue the negligence finding made

in the personal injury lawsuit would not preclude a finding of no coverage under the terms of the

policies. They posit that Carter can be found to have engaged in conduct of a nature that excluded

coverage under either or both of the policies while also having negligently caused the collision.

While this path may be narrow, U-Haul and ARCOA are correct that they are not mutually



7
  U-Haul and ARCOA argue on appeal, as they did below, that “[t]he petition in [the declaratory judgment action]
does not seek to relitigate or disturb the prior finding of negligence [in the personal injury judgment]….[However, the
judgment] in the personal injury action did not address (and the finding of negligence does not resolve) the question
of whether Carter’s negligence in conjunction with the fraud committed by Carter…renders the Appellants’ obligation
to…indemnify Carter pursuant to the [insurance policies] invalid.”


                                                          10
exclusive propositions.8 Thus, even if Respondents are able to establish that the refusal to defend

Carter in the underlying personal injury lawsuit was not justified and principles of estoppel are

properly found to bar relitigation of the underlying negligence finding, that negligence finding

alone would not entitle Respondents to summary judgment on the question of whether U-Haul and

ARCOA have a duty to indemnify Carter. See Allen, 512 S.W.3d at 33 (the underlying judgment

is only conclusive in a later action as to those facts and issues actually litigated and necessarily

determined). Instead, specific examination of the terms of the Rental Contract and Excess Rental

Liability Policy would be necessary – an exercise that (we repeat) Respondents wholly ignore in

their motion for summary judgment. As a result, Respondents’ motion for summary judgment does

not establish a legal right to a judgment that U-Haul and ARCOA have a duty to indemnify under

the terms of the specific policies.

         For the foregoing reasons, we find the trial court erred in granting summary judgment.

                          U-Haul and ARCOA’s Motions for Default Judgment

         Given our conclusion that the summary judgment record does not support application of

the doctrine of collateral estoppel against U-Haul and ARCOA, it follows that collateral estoppel

cannot serve as the basis for denying U-Haul and ARCOA’s motions for default judgment against

Carter and Dawson. On remand, the trial court may revisit U-Haul and ARCOA’s motions for

default judgment against Carter and Dawson in light of this opinion.




8
 For example, Carter could be shown to have made a false or fraudulent claim (an exclusion under the Rental Contract)
or intentionally concealed or misrepresented a material fact (an exclusion under the Excess Rental Liability Policy)
and have “negligently operated the motor vehicle he was driving on or about April 28, 2014, and such negligence
directly resulted in bodily injury to” Respondents. And, unlike Respondents, U-Haul and ARCOA rely on provisions
in the policies to support their theory.


                                                         11
                                            Conclusion

       We reverse the trial court’s judgment granting summary judgment and denying U-Haul

and ARCOA’s motions for default judgment on collateral estoppel grounds, and remand for further

proceedings consistent with this opinion.




                                             __________________________________________
                                             EDWARD R. ARDINI, JR., JUDGE
All concur.




                                               12
