CFM Insurance, Inc. v. Charles Rick Hudson and Lynette Hudson

• Court: Missouri Court of Appeals
• Decided: June 3, 2014
• Docket: WD76882
• Status: Published

Opinion

IN THE MISSOURI COURT OF APPEALS WESTERN DISTRICT CFM INSURANCE, INC., ) ) Appellant, ) ) v. ) WD76882 ) CHARLES RICK HUDSON and ) Opinion filed: June 3, 2014 LYNETTE HUDSON, ) ) Respondents. )

APPEAL FROM THE CIRCUIT COURT OF BENTON COUNTY, MISSOURI The Honorable John C. Porter, Judge

Before Division One: Joseph M. Ellis, Presiding, Judge, Karen King Mitchell, Judge and Anthony Rex Gabbert, Judge

Appellant CFM Insurance, Inc. appeals from a judgment entered by the Circuit

Court of Benton County granting Respondents Charles and Lynette Hudson's motions

for partial summary judgment and judgment on the pleadings. For the following

reasons, the judgment is affirmed in part and reversed and remanded in part.

In March 2012, Appellant filed a petition for rescission against Respondents

alleging that Respondents made misrepresentations in their April 2010 application for

homeowner's insurance. Appellant further alleged that it relied on those

misrepresentations in issuing Respondents a homeowner's policy in April 2010; thus, the misrepresentations were material, and the policy should be rescinded ab initio. The

misrepresentations allegedly made in the insurance application include whether any

member of the household had been convicted of a felony, had filed bankruptcy, or had

conducted any business pursuits other than farming on the premises. In their answer,

Respondents denied that they made misrepresentations in the April 2010 insurance

application and counterclaimed for amounts due under the policy for a fire that occurred

on the insured property in September 2011.

On May 17, 2013, Respondents filed a motion for partial summary judgment on

the issue of whether Respondent Charles Hudson had ever been convicted of a felony.

Respondents contended that Hudson had not been convicted of a felony because,

although he pleaded guilty to the felony of criminal nonsupport, the trial court

suspended imposition of sentence and placed him on probation. Thus, Respondents

contended that, under Missouri law, Hudson had not been convicted of a felony and,

therefore, made no misrepresentation regarding a felony conviction on the insurance

application. Appellant opposed the motion, alleging that, for purposes of the insurance

application, conviction means that a person has been charged with a crime and found

guilty of it. Thus, Appellant averred that Respondents misrepresented that no one in the

household had been convicted of a felony on the insurance application. The trial court

subsequently concluded that a suspended imposition of sentence does not constitute a

felony conviction under Missouri law and, thus, granted partial summary judgment in

Respondents' favor.

2 On June 26, 2013, Appellant filed its motion for summary judgment in which it

contended that it was entitled to rescission as a matter of law. In opposing Appellant's

summary judgment motion, Respondents asserted that there was a factual dispute as to

whether Appellant issued a new policy to them in November 2010 that was not based

upon the representations made in the April 2010 insurance application. In particular,

Respondents explained that they submitted the insurance application containing the

alleged misrepresentations in the process of obtaining a homeowner's policy in April

2010 ("the April 2010 Policy"). However, in October 2010, Appellant cancelled the April

2010 Policy due to Respondents' non-payment of premiums. In November 2010,

Appellant reinstated Respondents' homeowner's policy ("the November 2010 Policy"),

which was in effect at the time of the fire. Respondents averred that, under such

circumstances, the November 2010 Policy constituted a new contract that was not

based upon the representations made in the April 2010 insurance application.

The parties subsequently filed additional responses discussing the differences

between the April 2010 Policy and the November 2010 Policy. At the conclusion of their

sur-reply, Respondents requested that the trial court make a finding of "undisputed fact"

that the November 2010 Policy constituted a new contract that was not based on the

representations made in the April 2010 insurance application.

On August 6, 2013, the trial court entered an order denying Appellant's motion for

summary judgment. In doing so, the trial court also stated that it was addressing

Respondents' "request that the Court find as an undisputed fact that the policy issued

November 15, 2010 was a new policy not conditioned on representations contained in 3 the application of 2010." The trial court analyzed whether, under the facts and

circumstances of the case, the parties intended the November 2010 Policy to constitute

a new contract or a continuation of the April 2010 Policy. Ultimately, the court

concluded:

[F]rom the facts contained in the various motions and replies, as well as the argument of counsel, the Court declares that [Appellant] has failed to demonstrate that the parties intended the November policy to be a continuation of the April policy. Consistent with controlling case law, the November policy is hereby deemed and declared a new contract.

Respondents subsequently filed a motion for judgment on the pleadings. In their

motion, Respondents averred that the November 2010 Policy could not be rescinded

based upon alleged misrepresentations made in the April 2010 application due to the

trial court's finding that the November 2010 Policy constituted a new contract. The trial

court subsequently granted Respondents' motion for judgment on the pleadings. In

doing so, the trial court explained that "[t]he basis of [Appellant's] claim is that its policy

was issued because of alleged misrepresentations made in an application to obtain

coverage." The trial court further explained:

It . . . was determined and is the law of this case based on this court's findings with respect to [Appellant's] Motion for Summary Judgment and [Respondents'] Response thereto, and [Appellant's] Reply and [Respondents'] Sur-reply that it is an undisputed fact that the April, 2010 policy was voided by [Appellant] in October, 2010 due to non-payment of premium by [Respondents]; and further, that the November, 2010 policy is a new contract of insurance, not a continuation of the preceding policy.

4 Thus, the trial court concluded that, based on the pleadings, Appellant had no claim for

rescission as a matter of law.1

Appellant now raises three points on appeal. In its first point, Appellant contends

that the trial court erred in granting partial summary judgment in favor of Respondents

because "convicted," as used in the insurance application, must be interpreted in the

common law context to mean an adjudication of guilt and, thus, includes Hudson's

suspended imposition of sentence. We review a grant of summary judgment de novo.

Farrow v. Saint Francis Med. Ctr., 407 S.W.3d 579, 587 (Mo. banc 2013) (citing ITT

Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo.

banc 1993)). "Summary judgment is appropriate when the record demonstrates there

are no genuine issues of material fact and the moving party is entitled to judgment as a

matter of law." Id. at 587-88.

In its petition, Appellant alleged that Respondent Charles Hudson had been

convicted of a felony and, thus, misrepresented on the insurance application that no one

in the household had ever been convicted of a felony. 2 Respondents subsequently filed

a motion for partial summary judgment contending that Hudson's 1996 guilty plea to

criminal nonsupport charges resulted in a suspended imposition of sentence and,

therefore, did not, as a matter of law, constitute a conviction. The trial court granted

1 The trial court certified its judgment as final for purposes of appeal pursuant to Rule 74.01(b), finding no just reason for delay. 2 The insurance application contained the following question: "Have you or any member of your household, ever been convicted of a felony?" The "No" box is checked on Respondents' application. 5 partial summary judgment in favor of Respondents, finding that "a suspended imposition

of sentence is not, as a matter of law, a conviction."

There is no genuine issue of material fact regarding Hudson's 1996 guilty plea

that resulted in a suspended imposition of sentence. Thus, the issue on appeal is

whether, as a matter of law, Hudson's suspended imposition of sentence constituted a

conviction for purposes of the insurance application.

Appellant contends that the term "conviction" must be interpreted within the

context in which it is used and that conviction, as used in an insurance application,

takes on the common law meaning of an adjudication of guilt and, thus includes

suspended impositions of sentence. Respondents aver that the term "conviction,"

standing alone, does not include a suspended imposition of sentence. Both parties cite

to Yale v. City of Independence, 846 S.W.2d 193 (Mo. banc 1993), in support of their

arguments.

In Yale, the plaintiff filed a wrongful discharge action after his employer, the City,

fired him for pleading guilty to a felony and receiving a suspended imposition of

sentence. Id. at 193-94. The trial court granted summary judgment in favor of the City

finding that the plaintiff's plea of guilty and the resulting suspended imposition of

sentence constituted a conviction for purposes of the City's personnel manual, which did

not define the term "conviction." Id. at 194. In reversing the trial court's grant of

summary judgment, the Supreme Court did acknowledge that Missouri courts have

recognized "that the term 'conviction' is subject to more than one meaning depending

upon the context in which it is used." Id. (citing Meyer v. Mo. Real Estate Comm'n, 6 183 S.W.2d 342 (Mo. App. 1944)). However, the Court went on to explain that "a

suspended imposition of sentence is not a final judgment" and "that the term 'conviction'

requires a final judgment when the context of the situation involves some collateral

adverse consequences such as the loss of privileges or the imposition of a disability."

Id. (internal quotation omitted). It further emphasized that "[t]he obvious legislative

purpose of the sentencing alternative of suspended imposition of sentence is to allow a

defendant to avoid the stigma of a lifetime conviction and the punitive collateral

consequences that follow." Id. at 195. Thus, the Court concluded that "[t]he word

'conviction,' standing alone, does not include the disposition of a 'suspended imposition

of sentence' either in the [City's] personnel manual or, for that matter, in legislative

enactments where it may be used as a predicate for punitive action in a collateral

proceeding." Id. at 196.

Since Yale, Missouri courts have routinely recognized that the term "conviction,"

standing alone, does not include a suspended imposition of sentence, 3 and Appellant

cites no cases to the contrary.4 Instead, Appellant relies upon the language in Yale that

3 See Roe v. Replogle, 408 S.W.3d 759, 762 n.2 (Mo. banc 2013) (noting that a suspended imposition of sentence is not considered a conviction under Missouri law); M.A.B. v. Nicely, 909 S.W.2d 669, 671 (Mo. banc 1995) (noting that the term "conviction," standing alone, does not include a finding of guilty where imposition of sentence is suspended); Doe v. Keathley, 344 S.W.3d 759, 766 n.5 (Mo. App. W.D. 2011) (indicating that a suspended imposition of sentence does not constitute a conviction under Missouri law); Carr v. Sheriff of Clay Cnty., 210 S.W.3d 414, 416 (Mo. App. W.D. 2006) (recognizing that the Missouri Supreme Court has held that a suspended imposition of sentence does not constitute a conviction); Uxa ex rel. Uxa v. Marconi, 128 S.W.3d 121, 134 (Mo. App. E.D. 2003) (explaining that "[t]he term 'conviction,' by itself, does not include a plea or finding of guilt where imposition of sentence is suspended and that such a disposition is not one to which collateral consequences attach") (internal quotation omitted). 4 In its brief, Appellant states that "[t]he Missouri Supreme Court has recognized that the term 'conviction,' with regard to a civil matter, relates to a finding of guilty, not the imposition of a sentence." In support of this proposition, Appellant cites to In re McBride, 938 S.W.2d 905 (Mo. banc 1997). The Court in 7 the term "conviction" is subject to more than one meaning depending upon the context

in which it is used. Appellant contends that, under the facts of this case, the term

"conviction" includes Hudson's guilty plea because the term is being used in the context

of a private insurance contract between private parties and, thus, is distinguishable from

cases interpreting the term in a criminal or municipal context. We disagree.

Like the personnel manual in Yale, the present case involves a situation in which

the term "convicted" stood alone with no definition of the term provided. And despite

Appellant's contentions to the contrary, this is a situation involving adverse collateral

consequences. Appellant alleges in its petition that it would not have issued

Respondents an insurance policy had it known of Hudson's suspended imposition of

sentence. Thus, collateral consequences would attach if Hudson's suspended

imposition of sentence constituted a conviction for purposes of the insurance

application. Under such circumstances, the term "convicted," standing alone in the

insurance application, cannot be deemed to include a suspended imposition of

sentence. Accordingly, the trial court did not err in entering partial summary judgment in

Respondents' favor. Point denied.

In its second point, Appellant contends that the trial court erred in declaring that

the November 2010 Policy constituted a new contract following the trial court's denial of

McBride, however, discussed suspended impositions of sentences in the context of a disciplinary rule that permitted the suspension of an attorney that has "been found guilty of any felony . . . whether sentence is imposed or not." Id. at 906 (interpreting Rule 5.20 (1995)) (internal quotation omitted and emphasis added). In fact, the rule interpreted in McBride did not even contain the term "conviction." See Rule 5.20 (1995). Accordingly, McBride does not support Appellant's argument that the term "conviction," with regard to civil matters, must be interpreted to mean a finding of guilt as opposed to the imposition of sentence. 8 Appellant's summary judgment motion. Typically, "[t]he denial of a summary judgment

motion is not an appealable order." Betts-Lucas v. Hanson, 31 S.W.3d 484, 485 (Mo.

App. W.D. 2000). However, here we have a situation in which the trial court made a

finding of "undisputed fact" in its order denying Appellant's summary judgment motion.

In opposing Appellant's summary judgment motion, Respondents contended that

summary judgment was improper, at least in part, because "[t]here are disputed facts as

to whether [Appellant] issued a new policy to [Respondents] not based on any

representations made in the [April 2010] application to [Appellant]." In making their

argument, Respondents contended that the November 2010 Policy constituted a new

contract not based on the representations made in the April 2010 application because

"[t]he 'renewal' of an insurance policy is a separate and distinct contract for the period of

time covered by the renewal unless it is apparent that the parties merely intended the

renewal to constitute a continuation of the old policy." Hammond v. Mo. Prop. Ins.

Placement Facility, 731 S.W.2d 360, 364 (Mo. App. E.D. 1987). Respondents averred

that, because the November 2010 Policy had different coverage dates, premium

amounts, and endorsements, a factual dispute existed as to whether the parties

intended the November 2010 Policy to constitute a continuation of the April 2010 Policy.

Appellant subsequently filed a reply5 to Respondents' suggestions in opposition

in which it averred that the November 2010 Policy was merely a continuation of the April

5 Appellant's reply and Respondents' sur-reply were filed following a hearing regarding Appellant's summary judgment motion. At the hearing, the parties and the trial court discussed the issue of whether the November 2010 Policy constituted a new contract not premised upon the alleged misrepresentations made in the April 2010 application. The transcript from the hearing reflects that the trial court felt the issue must be resolved before it could decide Appellant's summary judgment motion. There is no 9 2010 Policy because the policies bore the same policy number and contained only

subtle differences in terms and provisions. Respondents filed a sur-reply reiterating the

arguments made in their suggestions in opposition and requesting "that Court find as an

undisputed fact that the policy issued November 15, 2010 was a new policy not

conditioned on representations in the application of April, 2010."

On August 6, 2013, the trial court denied Appellant's motion for summary

judgment. Nevertheless, it went on to state that it would address Respondents' "request

that the Court find as undisputed fact that the policy issued November 15, 2010 was a

new policy not conditioned on representations contained in the application of 2010."

After setting forth the parties' evidence and arguments, the trial court concluded that

"from the facts [Appellant] has failed to demonstrate that the parties intended the

November policy to be a continuation of the April policy. Consistent with controlling

case law, the November policy is hereby deemed and declared a new contract."

Thus, the record reflects that, in the process of denying Appellant's summary

judgment motion, the trial court granted Respondents' request for a finding of

"undisputed fact." Nothing in Rule 74.04, however, permits such a finding. Rule

74.04(c)(6) provides that summary judgment is proper "[i]f the motion, the response, the

reply and the sur-reply show that there is no genuine issue as to any material fact and

that the moving party is entitled to judgment as a matter of law." "The purpose of

summary judgment . . . is to identify cases (1) in which there is no genuine dispute as to

indication, however, as to whether the parties' additional responses were filed to remedy the situation, as such discussions were held off the record. 10

0 the facts and (2) the facts as admitted show a legal right to judgment for the movant."

Back Ventures, L.L.C. Series D v. Safeway, Inc., 410 S.W.3d 245, 250 (Mo. App.

W.D. 2013) (internal quotation omitted). Therefore, while summary judgment "may be

entered on any issue," Rule 74.04(c)(6), a summary judgment motion does not

constitute a proper forum for seeking solely declarations of undisputed fact; rather,

summary judgment procedure is reserved for "cases in which the movant can establish

that there are no genuine issues of material fact and that the movant is entitled to

judgment as a matter of law." ITT Commercial Fin. Corp., 854 S.W.2d at 377 (Mo.

banc 1993) (emphasis added). Accordingly, the trial court erred by making a factual

determination in the context of denying Appellant's summary judgment motion.6

Moreover, to the extent Respondents contend on appeal that they were entitled

to summary judgment on the issue, a circuit court has no authority "to enter summary

judgment for a non-moving party when the non-moving party does not file a cross-

motion for summary judgment." Betts-Lucas, 31 S.W.3d at 485. Rather, summary

judgment should be granted only when the "moving party is entitled to a judgment as a

matter of law." Id. at 486 (citing Rule 74.04) (emphasis in the original). Respondents

never filed a motion for summary judgment on the issue of whether the November 2010

Policy constituted a new contract. Accordingly, they were never the moving party, and

6 We further note that the trial court's own analysis of the issue indicates that the parties' intent regarding the November 2010 Policy is not a matter of undisputed fact. A trial court "is not allowed to make credibility determinations when considering summary-judgment motions." Young v. Tri-State Water Treatment, Inc., 343 S.W.3d 695, 698 (Mo. App. E.D. 2011). "[S]uch matters are for the trier of fact." Id. Nevertheless, the trial court weighed the parties' evidence, and the inferences therefrom, in reaching its conclusion that Appellant "failed to demonstrate that the parties intended the November policy to be a continuation of the April policy." Such an analysis is inappropriate at the summary judgment stage. 11

1 the trial court had no authority to grant summary judgment in Respondents' favor. Thus,

we must reverse the trial court's finding that the November 2010 Policy constituted a

new contract. Point granted.

In its third point, Appellant asserts that the trial court erred in granting

Respondents' motion for judgment on the pleadings. In granting Respondents' motion,

the trial court stated:

It further was determined and is the law of this case based on this court's findings with respect to [Appellant's] Motion for Summary Judgment and [Respondents'] Response thereto, and [Appellant's] Reply and [Respondents'] Sur-reply that it is an undisputed fact that the April, 2010 Policy was voided by [Appellant] in October, 2010 due to non-payment of premium by [Respondents]; and further, that the November, 2010 policy is a new contract of insurance, not a continuation of the preceding policy. The pleadings therefore establish that the application upon which [Appellant's] claim is based is the application for the original policy that was cancelled and voided by [Appellant]. Therefore, based on the pleadings, as a matter of law, [Appellant] has no claim for relief based upon rescission.

The trial court, therefore, based its judgment on the pleadings upon its impermissible

finding that the November 2010 Policy constituted a new contract. Thus, because we

found the trial court's finding was procedurally improper, we must also reverse the trial

court's grant of judgment on the pleadings premised on that same erroneous finding.

Point granted.

In sum, we affirm the trial court's grant of partial summary judgment in favor of

Respondents. However, the trial court's finding that the November 2010 Policy

constituted a new contract is reversed as is the trial court's grant of judgment on the

2 pleadings. The case is remanded for further proceedings not inconsistent with this

opinion.

________________________________ Joseph M. Ellis, Judge All concur.