Blog Archives

  • Missouri Court of Appeals Reverses Administrative Decision Requiring Special Use Conditions

    The case revolved around a request by MLB Holdings, a lessee of Curry Investment Company, for a special use permit to operate a pawn shop on a building and parking lot leased by Curry Investment to MLB. At a hearing on the request, the Kansas City Board of Zoning Adjustment staff determined that all requisite criteria for a special use permit were met with the MLB application. However, there were two existing outdoor advertising signs, which were nonconforming uses, located on the property in question. As a result, based on a general policy of removal of existing outdoor billboards as part of property development, the Board of Zoning Adjustment approved the special use permit, subject to removal of the two outdoor advertising signs. Curry Investment objected, and ultimately filed a petition with the circuit court, which found that the Board of Zoning Adjustment had exceeded its authority, and proceeded to modify the Board decision by striking the conditions requiring removal of the advertising signs. That decision was appealed.

    The Court of Appeals rejected the Board of Zoning Adjustment’s position and required the issuance of the special use permit to MLB without the condition for removal of the outdoor advertising signs. In doing so, the Court recognized these principles:

    • The Board of Zoning Adjustment’s ruling, rather than that of the circuit court, was reviewable. The scope of review was limited to determination as to whether the Board’s judgment was arbitrary, capricious, unreasonable, unlawful or in excess of its jurisdiction, with the evidence and reasonable inferences viewed in the light most favorable to the decision.

     

    • Under the nonconforming use doctrine, zoning restrictions adopted by a municipality may not be applied so as to require removal or cessation of an established use of land – a use which does not conform with a use authorized by the zoning restriction.

     

    • The issuing of a permit is a ministerial act, not a discretionary act, which may not be refused if the requirements of the applicable ordinance have been met.

     

    • Once the Board of Zoning Adjustment determined that all the criteria for the special use permit were met, the Board was unreasonable to require the removal of the nonconforming signs as a special use permit condition, since the Board proved no relation to sign removal with the special use criteria set out in the zoning code.

    The Court of Appeals accordingly concluded that the Board of Zoning Adjustment erred by conditioning its approval of the special use permit for the pawn shop on the removal of the two nonconforming, lawfully existing, outdoor advertising signs. The principles which the Court of Appeals relied upon may need to be considered in situations involving zoning requirements, permit applications and related conforming and nonconforming uses of property.

  • Missouri Appellate Court Allows Imputed Liability Claims Against Employer Even After Admitting Agency When Punitive Damages Are At Issue

    In 1995, the Missouri Supreme Court adopted the majority view “that once an employer has admitted respondeat superior liability for a driver’s negligence, it is improper to allow a plaintiff to proceed against the employer on any other theory of imputed liability.” McHaffie v. Bunch, 891 S.W.2d 822, 826 (Mo. banc 1995). The Missouri Supreme Court qualified its holding, however, noting that:

    it may be possible that an employer or entrustor may be held liable on a theory of negligence that does not derive from and is not dependent on the negligence of an entrustee or employee…. [I]t is also possible that an employer or an entrustor may be liable for punitive damages [that] would not be assessed against the employee/entrustee. See Clooney v. Geeting, 352 So.2d [1216,] 1220 [ (Fla.Dist.Ct.App.1977) ]. Finally, it is conceivable that in a contribution action between an employer and employee, the relative fault of those two parties may be relevant. However, none of those circumstances exist here. Those issues await another day.

    Id. Recently, in Wilson v. Image Flooring, LLC, Nos. WD75141, WD 75142, 2013 WL 1110878, 2 (Mo. App. W.D. Mar 19, 2013), the Missouri Appellate Court for the Western District took up the issue of whether a “punitive damages exception” to the general rule barring direct negligence claims against an employer who had already admitted vicarious liability. While many federal courts in Missouri have addressed the question of whether there exists a punitive damages exception to the general rule under Missouri law, no Missouri court had yet addressed this issue. See Kwiatkowski v. Teton Transp., Inc., No. 11–1302–CV–W–ODS, 2012 WL 1413154, at 3–4 (W.D.Mo. Apr. 23, 2012). The Wilson court found that “if faced with the issue now, [the Missouri] Supreme Court would determine that such an exception exists.” Wilson,  2013 WL 1110878, 2. The Wilson Court explained:

    The rationale for the [the Missouri Supreme] Court’s holding in McHaffie was that, where vicarious liability was admitted and none of the direct liability theories could prevail in the absence of proof of the employee’s negligence, the employer’s liability was necessarily fixed by the negligence of the employee. McHaffie, 891 S.W.2d at 826. Thus, any additional evidence supporting direct liability claims could serve only to waste time and possibly prejudice the defendants. Id.

    The same cannot be said, however, when a claim for punitive damages based upon the direct liability theories is raised. If an employer’s hiring, training, supervision, or entrustment practices can be characterized as demonstrating complete indifference or a conscious disregard for the safety of others, then the plaintiff would be required to present additional evidence, above and beyond demonstrating the employee’s negligence, to support a claim for punitive damages. Unlike in the McHaffie scenario, this evidence would have a relevant, non-prejudicial purpose. And because the primary concern in McHaffie was the introduction of extraneous, potentially prejudicial evidence, we believe that the rule announced in McHaffie does not apply where punitive damages are claimed against the employer, thus making the additional evidence both relevant and material.

    Id.

     Wilson v. Image Flooring, LLC

  • Missouri Courts Examining Possible Exceptions to When a Plaintiff Can Pursue Other Imputed Theories of Liability Against an Employer Even After Respondeat Superior Liability is Admitted

    Missouri follows the majority rule that a jury cannot generally assess a defendant employer’s fault based on imputed theories of liability, such as “negligent entrustment” or “negligent hiring,” after an employer has admitted the wrongdoer was its agent acting within the scope of his/her agency at the time of the accident. McHaffie v. Bunch, 891 S.W.2d 822, 826–27 (Mo. banc 1995). In other words, in cases where respondeat superior liability is admitted, it is generally improper to allow a plaintiff to proceed against the employer on any other theory of imputed or derivative liability. The rationale is that allowing other theories of imputed liability “serves no real purpose,” wastes the time and energy of the court and litigants because the employer’s liability “is fixed by the amount of liability of the employee,” and opens the door to potentially inflammatory and irrelevant evidence. McHaffie, 891 S.W.2d at 826. Importantly, however, the Missouri Supreme Court in McHaffie left open the possibility for several exceptions to the general rule. Id. at 826. For instance, “an employer or entrustor may be held liable on a theory of negligence that does not derive from and is not dependent on the negligence of an entrustee or employee,” or “an employer or an entrustor may be liable for punitive damages which would not be assessed against the employee/entrustee.” Id.. The contours of these possible exceptions to the general rule are the subject to recent appeals in Missouri.

    First, in Coomer v. Kansas City Royals Baseball Corp., WD73984, 2013 WL 150838 (Mo. App. W.D. Jan. 15, 2013), the Missouri Western District Appellate Court held that negligent supervision and training claims, like negligent hiring and negligent entrustment claims, are based on theories of imputed liability. Imputed liability claims involve those which there is no evidence that the “employer’s lack of care” caused a plaintiff’s injuries “in the absence of the negligence by the employee.” Id. Therefore, negligent supervision and training claims, like negligent hiring and negligent entrustment claims, are generally barred when the issue of agency is admitted.

    Second, whether there is a so-called “punitive damages exception” to the general rule is currently before the Missouri Western Appellate Court. See Wilson v. Image Flooring, LLC, et al., WD 751412012 (Mo. App. W.D. 2012). Although never before formally recognized by a Missouri appellate court, many jurisdictions allow a plaintiff to proceed under other imputed negligence theories after respondeat superior liability is admitted when punitive damages are at issue. Likewise, several federal district courts while applying Missouri law have recognized a “punitive damages exception.” See e.g., Jackson v. Wiersema Charter Serv., Inc., 2009 WL 1310064 (E.D.Mo. 2009); Miller v. Crete Carrier Corp., 2003 WL 25694930 (E.D.Mo. 2003); Burroughs v. Mackie Moving Systems Corp.,  2010 WL 576799 (E.D.Mo. 2010); Kwiatkowski v. Teton Transp., Inc.,  2012 WL 1413154, 4 (W.D.Mo. 2012). These federal decisions, though persuasive and authoritative, are not of course binding on Missouri state courts. The ruling in the Wilson case, which is expected this spring or summer, will likely help resolve whether Missouri allows for a “punitive damages exception.”

  • No Coverage for Penalties Under the Telephone Consumer Protection Act

    Karen S. Little, L.L.C. brought a class action against HIAR Holdings for violation of the Telephone Consumer Protection Act (“TCPA”) alleging that HIAR violated the act by sending “junk faxes.”  Pursuant to the TCPA, HIAR was potentially liable for statutory damages of $500.00 per fax sent.  Ultimately, Little settled the claim for five million dollars. 

    Columbia Casualty Company refused to defend or indemnify HIAR and filed a declaratory judgment action seeking a judgment holding that it had no obligation to do so.  The trial court, however, found against Columbia and it appealed. 

    On appeal, the Missouri Eastern District Court of Appeals found that there was no coverage.  First, statutory damages under the TCPA are penal in nature and, as penalties, do not constitute “damages” covered by an insurance policy.  The Columbia Casualty policy obligated it to “pay those sums that the insured becomes legally obligated to pay as damages because of [property damage or advertising injury] to which this insurance applies.”  Because the statutory damages under the TCPA were penal in nature they were not “damages” as defined under Missouri law and, therefore, there was no obligation to defend or indemnify HIAR for the claim.

    HIAR argued, however, that it had reached a settlement for somewhere less than the total liability and, therefore, the five million dollars constituted something other than a penalty (the total potential exposure was 6.25 million dollars).  However, even if that was so, the Eastern District Court noted that the exclusion providing that “this insurance does not apply to [property damage or advertising injury] for which the insured has assumed liability in a contract or agreement” and would exclude coverage.  Because HIAR assumed the liability through settlement, this exclusion applied and there was no coverage.

    The case is pertinent to any defendants exposed to statutory penalties imposed under state or federal law.  Depending upon the facts of the case and the statutory language, these statutory awards may well fall outside the definition of damages under Missouri law and, therefore, not fall within the coverage of an insurance policy.

    Columbia Casualty Company v. Little, et al.

  • Attorneys’ Fees Counted as Damages For Purposes of Punitive Damages Cap

    The Missouri Supreme Court again analyzed portions of the State of Missouri’s 2005 Tort Reform Bill in a recent employment discrimination decision.  In that decision, the Missouri Supreme Court found that attorneys’ fees should be included in the determination of the “net amount of judgment” that is used to calculate the maximum amount of punitive damages pursuant to Section 510.265, RSMo. 

    Section 510.265 limits the amount of punitive damages in most civil cases to the greater of $500,000 or 5 times the net amount of the judgment awarded to the plaintiff against the defendant.  The Missouri Supreme Court ruled that in determining the net amount of the judgment against the defendant, attorneys’ fees should be included.  In other words, actual damages plus any awarded attorneys fees are added together and any appropriate reductions then applied.  This amount is then multiplied by 5 in order to determine the total amount of punitive damages awardable. 

    While punitive damages may not play a significant role in the majority of cases, including attorneys’ fees in the net amount of judgment certainly has the potential to significantly raise the floor on the amount of punitive damages awardable in such cases. 

     Hervey v. Missouri Department of Corrections

  • The Temporary Worker Exception to the Employee Exclusion: In Missouri Referring An Employee Means Furnishing an Employee

    In May 2006, Len Mendenhall interviewed for a job with the Family Center of Farmington, Inc. (“Family Center”).  The Family Center did not hire Mr. Mendenhall, but the Family Center employee who interviewed Mr. Mendenhall informed Jay Walker, the owner of the Family Center, that Mr. Mendenhall would be a good candidate for a job.  Based upon on this recommendation, Mr. Walker hired Mr. Mendenhall to work for him personally at the cattle farm Mr. Walker co-owned with his wife.  Mr. Mendenhall worked at the farm on an as-needed basis and, although he was always paid by the farm, Mr. Walker occasionally asked Mr. Mendenhall to perform tasks for the Family Center.  Mr. Walker also permitted Mr. Mendenhall to use a truck and trailer owned by the Family Center.  This truck and trailer was covered under a Business Automobile Liability Policy (“The Hartford Policy”) provided by Property and Casualty Insurance Company of Hartford and issued to the Family Center.  On March 8, 2007, Mr. Mendenhall was using the Family Center’s truck to haul rock at the farm when the vehicle overturned and he was killed. 

    Mrs. Mendenhall filed a wrongful death suit against the Family Center and the Walkers.  Mrs. Mendenhall dismissed her claim against Mrs. Walker and obtained an $840,000 judgment against Mr. Walker and a $50,000 judgment against the Family Center.  Prior to the judgment, Mr. Walker and Mrs. Mendenhall entered into an agreement pursuant to Section 537.065, RSMo., which provided that any judgment against Mr. Walker would be collected from the proceeds of the Hartford Policy.  Hartford denied any obligation to indemnify Mr. Walker for the claims resulting from Mr. Mendenhall’s death.

    Mrs. Mendenhall subsequently filed an action for equitable garnishment in an attempt to satisfy the $840,000 judgment under the Harford Policy.  The Hartford Policy contained an exclusion from liability coverage for employees of the insured.  The definition of employee specifically included a leased worker, but did not include a temporary worker.  Of importance to the decision is that a “temporary worker” was defined as “a person who is furnished to you to substitute for a permanent ‘employee’ on leave or to meet seasonal or short-term workload conditions.”  The trial court entered summary judgment for Hartford and Mrs. Mendenhall appealed.

    In reversing the decision of the trial court, the Missouri Supreme Court found that the Family Center furnished Mr. Mendenhall to the Walkers for employment.  Therefore, Mr. Mendenhall qualified as a temporary worker and was not considered an “employee” for purposes of the exclusion from liability coverage for employees of the insured.  The Court noted that, in order to furnish an employee, it was not necessary for the Family Center to have an employment or agency relationship with Mr. Mendenhall.  The Court focused on the fact that Mr. Walker did not interview Mr. Mendenhall and relied solely on the Family Center’s referral in making his decision to hire Mr. Mendenhall.  “The Family Center’s referral supplied and provided Mr. Walker with the information he used to hire Mr. Mendenhall on an as-needed basis.  Without the information furnished by the Family Center, a business owned solely by Mr. Walker, Mr. Walker would not have hired Mr. Mendenhall.  It was through the Family Center’s referral that Mr. Mendenhall was ‘furnished to’ Walker as a temporary worker.” 

    As the dissent in this matter noted, this decision has potentially wide-ranging consequences.  First, there is the issue of the Court’s equating the term “refer” with the term “furnish.”  Interpreted broadly, the decision could mean that any time an employee is referred to his or her employer, that employee may qualify as a temporary worker and fall outside of the employee exclusion in a liability policy.  The second issue that arises is whether or not this will inhibit an employee’s ability to obtain a referral from a current or former employer.  Current and former employers may be hesitant to refer employees for fear that they will be deemed to have furnished an employee to another. 

    Finally, under the Missouri Workers’ Compensation Act, “temporary workers” are not covered by their employers’ workers’ compensation insurance.  The finding that employees in situations such as Mr. Mendenhall’s are considered temporary workers for purposes of a liability policy may allow courts to find that they are also temporary workers for purposes of the Missouri Workers’ Compensation Act.  This would mean that they would fall outside the Act and not be eligible for worker’s compensation remedies.  If they are not covered by the Missouri Workers’ Compensation Act, employers may be exposed to tort claims from their “temporary workers.”

    Mendenhall v. Property and Casualty Insurance of Hartford

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