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Appellate court can’t rescue City of Monett from legal screw-ups


Appellate courts sometimes seem to make an extra effort to protect small towns and cities from the effects of unwise or unpopular decisions, if the governing body acted in good faith for what the officials believed to be in the public interest. In Inman v. St. Paul Fire & Marine Ins Co, the Southern District of the Missouri Court of Appeals held that the City of Monett’s insurance company would not have to pay a claim made against Monett, after the Monett city attorney failed to inform the insurance company that the papers filed in the lawsuit by Inman had been changed to avoid an exclusion in the City’s insurance policy. Monett is left on its own in working out something with Inman.

Monett’s attempt to solve drainage problems

Monett attempted to solve a stormwater drainage problem in a subdivision by reconfiguring and paving a ditch that ran through part of the Inman property. After a flood while the construction was underway, Monett re-engineered the project and filed a condemnation suit to take and pay for a portion of the Inman property. Inman and Monett entered into a written settlement agreement and the condemnation suit was dismissed.  In the condemnation suit, necessarily, Monett claimed that the drainage project was for public benefit.

Insurance company kept in the dark

After the completion of the project, Inman sued Monett for trespass and damages to Inman’s property. Monett’s attorney contacted Monett’s insurance carrier, St. Paul Fire & Marine, and learned that Monett’s policy didn’t cover damages arising out of the exercise of normal governmental powers, such as taking property for public uses. Ten months later, Monett’s attorney notified St. Paul that a trial would be immediately taking place, not informing St. Paul Fire & Marine that Inman had amended his court papers to characterize the claim as a private taking, not a taking of private property for a public use. Without this critical bit of information, the insurance company did not participate in the trial. Monett and Inman also signed an agreement stating that Inman would not try to collect any judgment against Monett directly from Monett.

Monett’s attorney put on little if any defense at the trial and did not contest the characterization of the taking as a private taking, rather than a taking for public benefit. Nor did Monett’s attorney challenge the amount of damages sought by Inman. The jury awarded Inman nearly a half million dollars.

To collect the judgment, Inman filed a garnishment action against the insurance company. The insurance company claimed that it shouldn’t have to pay, since the damages were not covered by the policy and the policy holder failed to inform the insurance company that Inman had changed its claim, apparently to get around the exclusion. Three years of litigation ensued, mostly over procedural issues, but the insurance company eventually was successful on its motion for summary judgment.

The Court of Appeals affirmed the trial court’s ruling on a procedural issue, the denial of more time for Inman to respond to the insurance company’s motion for summary judgment. This issue was critical, because Inman’s lack of a response amounted to an admission that the judgment awarding damages was invalid. The Court of Appeals also affirmed the trial court’s ruling that the damages were not covered by Monett’s insurance policy.

Monett and Inman left twisting in the wind

Unless the Missouri Supreme Court changes this result, Inman can’t collect from the insurance company. Under the compromise agreement made before the trial, Inman agreed not to collect directly from Monett. It’s difficult to imagine that a court would allow Inman to go around that agreement and any attempt to pursue collection would be met by counterclaims.

The facts of this case, at least as recounted in the appellate opinion, are disgusting. The city attorney appears to have conspired with Inman to make the insurance company pay for damages not covered by the policy. The city attorney made no credible defense, and the insurance company was given no opportunity to defend the case. There must be more to the story. I hope there is.

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About Harry Styron

I'm a lawyer who lives in Branson, Missouri, whose professional interests involve real estate, construction and local government.

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