Opinion
No. ED 81198
February 25, 2003
Appeal from the Circuit Court of Perry County, Hon. John Grimm.
Stephen F. Meyerkord, Matthew J. Devoti, One Metropolitan Sq., Suite 3190, St. Louis, MO, 63102, for appellant.
A.M. Spradling III, 1838 Broadway, P.O. Box 1119, Cape Girardeau, MO, 63702, for respondent.
Heather Blair ("Blair"), by and through her next friend Carla Snider, appeals from the grant of summary judgment in favor of Perry County Mutual Insurance Company ("PCMIC") and FMH Mutual Insurance Company ("FMH") on her action for equitable garnishment to collect a judgment entered in her favor. Blair claims that the trial court erred in granting summary judgment in favor of PCMIC and FMH because an assessment notice allegedly mailed to Aileen Fiedler ("Fiedler"), the insured, did not serve as notice of cancellation of the policy for nonpayment of the premium. Blair also argues that the court improperly considered an affidavit filed by PCMIC and FMH offering proof of mailing of an assessment notice to Fiedler in that the affidavit did not comply with Rule 74.04(e). We affirm.
On October 21, 1998, Heather Blair fell from a treehouse at Hilltop Trailer Court, and she suffered injuries. At this time Hilltop Trailer Court was owned, operated and managed by Aileen Fiedler. Prior to October 21, 1998, Fiedler contracted with Perry County Mutual Insurance Company and FMH Mutual Insurance Company for a policy of commercial liability insurance for Hilltop Trailer Court ("the policy"). The policy provided coverage of $300,000.00 per occurrence and was for a one-year term of April 3, 1998 to April 3, 1999. The policy contained an amendatory endorsement, which amended the cancellation provision of the insurance policy. Specifically, the provision stated:
"We may cancel this policy or any of its parts by mailing or delivering to the named insured a written notice before the cancellation is to take effect. The notice must be given:
• Not less than 10 days before the cancellation is to take effect when the cancellation is based upon one or more of the following reasons:
a. Nonpayment of premium . . ."
The provision also required that the notice of cancellation state the reasons for such cancellation. A quarterly installment of Fiedler's insurance premium was due on October 3, 1998. PCMIC and FMH asserted that on September 14, 1998, a Notice for Payment of Premium was sent to Fiedler advising her that her premium payment was due on October 3, 1998 and informing her that the policy would be void if the premium was not paid by the due date. Fiedler did not pay the premium by October 3, 1998. PCMIC and FMH claim that on October 14, 1998, they sent written notice to Fiedler informing her that the coverage had lapsed for failure to pay the premium.
Blair filed suit against Fiedler and the parties contracted to limit Blair's recovery to the policy of insurance issued to Fiedler by PCMIC and FMH. A judgment of $200,000.00 was entered against Fiedler, the collection of which was limited to applicable insurance proceeds. Subsequently, Blair filed a petition for equitable garnishment against PCMIC and FMH alleging that a liability insurance policy was in effect at the time of her fall which insured Fiedler against the loss and damage assessed in the underlying personal injury suit. Each party filed a motion for summary judgment and responses thereto. Each party argued the issue of whether the insurance policy issued to Fiedler by PCMIC and FMH was in full force and effect at the time of Blair's injury. Blair's motion for summary judgment was denied, and PCMIC and FMH's motion for summary judgment was granted. The present appeal followed.
"When considering appeals from summary judgments, the Court will review the record in the light most favorable to the party against whom judgment was entered." ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo.banc 1993). Additionally the non-movant is afforded the benefit of all reasonable inferences contained in the record. Id. Our review is de novo. Id. Because the trial court makes its decision based upon the record submitted and the law, we do not need to defer to the order of the trial court granting summary judgment. Id. Generally, summary judgment allows a trial court to enter judgment for a party where they have demonstrated a right to a judgment as a matter of law based upon facts about which there is no genuine dispute. Id. "The key to summary judgment is the undisputed right to judgment as a matter of law; not simply the absence of a fact question." Id. at 380.
Blair's first two points relied on allege that the trial court erred in granting summary judgment because PCMIC and FMH failed to strictly comply with the cancellation provision in the insurance policy which required written notice at least ten days before the cancellation was to take effect where such cancellation was due to nonpayment of the premium.
First, Blair argues that the assessment notice allegedly mailed to Fiedler on September 14, 1998, was not a notice of cancellation, and therefore, PCMIC and FMH failed to strictly comply with the cancellation provision contained in the policy. Blair claims that the policy provision required failure to pay the premium, issuance of written notice to Fiedler and the lapse of ten days after mailing of the notice. PCMIC and FMH argue that they did, in fact, strictly comply with the cancellation provision by mailing a notice of policy premium to Fiedler on September 14, 1998. This notice stated that the policy would be void if the premium was not paid by the due date, and it was sent more than ten days prior to the due date of October 3, 1998, which effectively became the cancellation date for the policy.
PCMIC and FMH cite to Hyten v. Cape Mutual Insurance Company, 663 S.W.2d 430, 431 (Mo.App. 1983) for the proposition that payment of premiums by an insured is necessary to continue an insurance policy in force. The facts in Hyten are similar to those of the present case.
In Hyten, the plaintiff had purchased a policy for his mobile home and its contents. The agreement allowed Hyten to pay his annual premium in two installments. Prior to the due date for the second installment, a notice that the premium was due was sent to Hyten which included a statement informing Hyten that if the premium was not paid on the due date the policy would be suspended. The premium was not paid by the due date, and subsequently Hyten suffered a fire loss to his mobile home. Hyten demanded payment for the loss and the demand was refused. Hyten filed suit and summary judgment was granted in favor of the insurance company. An affidavit executed by the president of Cape Mutual Insurance Company accompanied the insurance company's motion for summary judgment. Attached to the affidavit were copies of the premium due notice, the notice of lapse, the insurance policy and the bylaw of the company. The court noted that the documents provided that "failure to pay a premium on the due date after notice has been given renders the policy suspended and void as to the interest of the insured until payment of the premium is made, and that `in no case shall the company be liable to the insured for any loss occurring during such suspension.'" Hyten, 663 S.W.2d at 431.
The general rule is that the payment of premiums by an insured is necessary to continue a policy in force. Hyten, 663 S.W.2d at 431. In the present case, Fiedler failed to pay the installment, and in fact, never made a premium payment thereafter. In addition to the cancellation provision, the policy specified that the coverage described in the policy would be provided in return for the insured's payment. No such payment was received.
Blair attempts to distinguish the general rule set out in Hyten on the basis that it fails to consider the presence of a cancellation provision as is contained in the policy at issue here. The court in Hyten determined that the notice of premium due provided to Hyten prior to the due date for the second installment, informing Hyten that if the premium was not paid on the due date the policy would be suspended, was sufficient to cancel his policy. In its decision, the court did not make any reference to whether a cancellation provision existed in Hyten's policy. Such a cancellation provision was present in the policy at issue before us. The provision in the present case required that written notice be given to the insured not less than ten days before the cancellation was to take effect where the cancellation was due to nonpayment of the premium. As in Hyten, here the summary judgment facts show that a premium due notice was sent to Fiedler, which included a statement that the policy would be void if the premium was not paid on the due date. Fiedler was provided with notice of more than ten days that the policy would be cancelled if her payment was not paid by virtue of this premium assessment notice. Such notice was sufficient to satisfy the cancellation provision under the policy at issue. Points denied.
In her third and final point relied on, Blair states that the trial court erred in granting summary judgment in favor of PCMIC and FMH in that it improperly considered evidence regarding proof of mailing of an assessment notice to the insured. Blair argues that PCMIC and FMH failed to provide proof that they mailed a notice to the insured and that the affidavit filed by PCMIC and FMH failed to comply with the requirements of Rule 74.04(e).
Blair relies on Gambill v. Cedar Fork Mut. Aid Soc., 967 S.W.2d 310 (Mo.App. 1998) for the proposition that a genuine issue of material fact exists in the present case as to whether the premium due notice was mailed to Fiedler in September 1998. The court in Gambill determined that a genuine issue as to whether a notice of cancellation had been mailed to the insured existed, barring summary judgment. The only evidence of mailing was from the testimony of a secretary. The secretary could not identify the date the notice was allegedly mailed and could not provide a copy of the notice. Additionally, the insured claimed he did not receive such notice. Based on these facts, the court concluded that a genuine issue of material fact existed concerning whether the notice was mailed; therefore, summary judgment was improper.
The present case is distinguishable from Gambill. Proof of mailing a notice of cancellation to the named insured at the address contained in the policy is sufficient to establish proof of notice. Section 375.005 RSMo (Cum. Supp. 1998). When an insurer seeks to cancel an insurance policy pursuant to a specific provision for cancellation, the insurer must prove that it mailed a notice of cancellation to the insured at the address shown on the insurer's records. Gambill, 967 S.W.2d at 312. Here, evidence of mailing of a notice existed in the form of an affidavit of Ralph Schamburg ("Schamburg"), an agent for PCMIC. In his affidavit, Schamburg stated that he had personal knowledge of the fact that "a Notice for Payment of Premium was mailed to Aileen Fiedler by depositing the same in the U.S. Mail, postage prepaid, at the last known address provided by Aileen Fiedler to this office on September 14, 1998, notifying her that premium payments were due by October 3, 1998 and that the policy would be void if premiums were not paid." Additionally, Schamburg attached a copy of the type of notice, which was sent to Fiedler and a document which verified when the notice was sent. The evidence of mailing in the present case is more substantial than the evidence presented by the secretary in the Gambill case. Here, Schamburg stated that he had personal knowledge that the notice was mailed, the date it was mailed, the content of the notice and the fact that the notice was mailed to the last known address provided by Fiedler. He also attached a document to his affidavit which verified the date the notice was mailed to Fiedler. There is sufficient proof of mailing of the notice in the present case. Because, pursuant to section 375.005, proof of mailing is sufficient proof of notice, there is no genuine issue of material fact concerning notice.
Blair also argues that the trial court improperly considered the documents attached to the affidavit of Schamburg because it did not comply with the requirements of Rule 74.04(e). Rule 74.04(e) provides, in relevant part, that "[s]worn or certified copies of all papers or parts thereto referred to in an affidavit shall be attached thereto or served therewith." Blair claims that the documents attached to Schamburg's affidavit should not have been considered by the trial court because they were not sworn or certified. Attached to the affidavit of Schamburg was a copy of the type of notice sent to Fiedler for premium payment and a document verifying when the notice was sent. Schamburg executed a sworn affidavit personally asserting that the documents attached were a copy of the type of notice sent to Fiedler and a document verifying when the notice was sent. Therefore, the attachment of these sworn documents complied with Rule 74.04(e). Point denied.
The judgment of the trial court is affirmed.
Lawrence E. Mooney, C.J., dissents in separate opinion.
Mary K. Hoff, J., concurs.
The insurance companies' assertion that the policy was effectively cancelled has a superficial appeal. But, when this claim is scrutinized under the critical lens of our standard of review, this initial allure vanishes as its underlying legal contortions are unmasked.
Because this is an appeal from a grant of summary judgment to the defendant insurance companies, the record must be scrutinized in the light most favorable to the plaintiff, granting the plaintiff the benefit of all reasonable inferences. ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo.banc 1993). A policy provision allowing for unilateral cancellation must be strictly complied with in order to effectively cancel the policy. MFA Mutual Insurance Company v. Southwest Baptist College, Inc., 381 S.W.2d 797, 801 (Mo. 1964); Safeco Insurance Company of America v. Stone Sons, Inc., 822 S.W.2d 565, 568 (Mo.App.E.D. 1992). And, it is widely held that "any ambiguity or provision relating to cancellation is to be construed strictly against the insurer." 2 Lee R. Russ Thomas F. Segalla, Couch on Insurance 3d § 30:16 (1997) and cases cited therein.
The policy here provided that it may be cancelled if the insured was given a written notice not less than 10 days before the cancellation is to take effect when the cancellation is based upon nonpayment of premiums.
The insurance companies claim they gave such notice of cancellation. However, the document they claim as notice is not labeled as such. It bears no prominent banner proclaiming it a "notice of cancellation." Rather, the proffered document is captioned as a "NOTICE OF PAYMENT DUE." To be sufficient, a notice of cancellation must be clear, definite, unconditional, and unequivocal. 45 C.J.S. Insurance § 497, at 252 (1993) and cases cited therein; 2 Couch, supra § 32:31; E.g.,Dairyland Insurance Co. v. Neuman, 338 N.W.2d 37, 41 (Minn. 1983); Staley v. Municipal Mutual Ins. Co. of W. Va., 282 S.E.2d 56 (W.Va. 1981). Here, the word `cancellation' is nowhere to be found on the document — a factor considered significant by some courts. See, e.g.,Dairyland, 338 N.W.2d at 41; Staley, 282 S.E.2d at 58. This "NOTICE OF PAYMENT DUE," if read by the policyholder, does also recite that the policy is to be "void if not paid by due date." A void policy, however, is hardly the same as a cancelled policy; a void policy would be of no legal effect; a cancelled policy would offer no coverage after the effective date of its cancellation. Moreover, courts have reasoned that such language, as an incidental part of a premium-due notice, is ineffective as a notice of cancellation. See, e.g., Dairyland, 338 N.W.2d at 41;Martinson v. Iowa Kemper Insurance Company, 390 N.W.2d 447, 450 (Minn.Ct.App. 1986). No amount of artful alchemy can convert this carelessly worded payment-due notice into the promised notice of cancellation.
More importantly, this payment-due notice — the purported notice of cancellation — gives notice of cancellation before the cause for cancellation, nonpayment of premiums, has even occurred. In our sister states, courts have held that a notice, sent prior to a premium-due date, which states the policy will be cancelled unless the premium is paid by a certain date, is insufficient as a cancellation notice.Pennsylvania National Mutual Casualty Insurance Company v. Person, 297 S.E.2d 80 (Ga.Ct.App. 1982); See also, Timely Entertainment International, Inc. v. State Farm Fire Casualty Company, 430 S.E.2d 844 (Ga.Ct.App. 1993); Accord State Farm Mutual Automobile Insurance Company v. Villneuve, 747 So.2d 777 (La.Ct.App. 1999);Dairyland Insurance Company v. Marks, 468 So.2d 841 (La.Ct.App. 1985). Here in Missouri, our Supreme Court has stated that there must be an "unequivocal, unmistakable act of cancellation, not dependent upon some future event, . . ." for there to be an effective cancellation. MFA Mut. Ins. Co., 381 S.W.2d at 801(emphasis added). Further, a notice of cancellation "must be a present cancellation as distinguished from an intention to cancel at a future day." Malin v. Netherlands Ins. Co., 219 S.W. 143, 144 (Mo.App. 1920) (emphasis added); See also 2 Couch, supra § 32:31 (" a mere expression of a purpose or intention to cancel in the future is not sufficient; that is, it must be one of actual cancellation, not of future conditional cancellation ."); 45 C.J.S., supra § 497, at 252 ("the notice must clearly and unequivocally show a present cancellation, which will take effect at the expiration of the period of notice prescribed by the policy "). As cogently stated in Couch, when notice is given to cancel for nonpayment of premiums, "it necessarily follows that such notice can not be given until the time for making payment of the premium has expired." 2 Couch, supra § 31:5.
If a notice of cancellation could be given before the cause for cancellation even existed, how much earlier might it be given? At oral argument, counsel for the insurance companies opined that such "notice" might be given months and years in advance of the potential cause for cancellation. The truth is laid bare by this jaw-dropping assertion. If a notice given months and years in advance of the cause for cancellation suffices, why would the insurance policy promise the giving of any notice? Of course, an insurance policy might by its own terms simply provide for cancellation upon nonpayment. But, in promising the policyholder that he would receive notice when the cancellation is based upon nonpayment, the insurance companies were bound to give notice after the cause for cancellation, nonpayment, had occurred. Notice given weeks, months, or years in advance of the cause for cancellation is illusory notice. It should also be observed that requiring insurers to notify policyholders that a cause for cancellation exists before such cancellation can take effect has the salutary effect of allowing a policyholder an opportunity to cure any default on his part.
The document that the insurance companies proffers in satisfaction of their contractual duty to notify the policyholder is not labeled as a notice of cancellation, is not worded to effect a present, unconditional cancellation, and was given before cause for cancellation existed. What the insurance companies claim as their notice is woefully insufficient, and thus, the companies have hardly "strictly complied with" their cancellation provision entitling them to be awarded judgment as a matter of law. I respectfully dissent.