Employers Preferred Insurance Company, a Florida Corporation, Plaintiff - Appellee,
Hartford Accident and Indemnity Company, a Connecticut Corporation, Defendant-Appellant.
Submitted: September 28, 2018
from United States District Court for the Eastern District of
Missouri - Cape Girardeau
COLLOTON, GRUENDER, and GRASZ, Circuit Judges.
COLLOTON, Circuit Judge.
Accident and Indemnity Company appeals the district
court's grant of summary judgment in favor of
Employers Preferred Insurance Company. Employers filed this
action for declaratory judgment to clarify whether Hartford
had a duty to pay half of the expenses related to an
underlying workers' compensation claim. We conclude that
Hartford's purported cancellation of an insurance policy,
after a workers' compensation claim had arisen, is void
under Missouri law. We therefore affirm the judgment.
appeal arises from a workers' compensation claim at
Hoeckele's Bakery in Perryville, Missouri. Paul and
Angela Hoeckele operate the bakery. In the summer of 2013,
the Hoeckeles set out to purchase the Bakery's
workers' compensation insurance for the coming year. The
Bakery had an existing policy with Hartford, and Angela
completed a renewal application and paid the premium for a
new policy to run from July 20, 2013, to July 20, 2014. A few
weeks later, on August 9, 2013, Paul submitted an application
and paid the premium for a policy from Employers, also to run
from July 20, 2013, to July 20, 2014. The reason for this
double coverage is unclear, but by mid-August 2013, the
Bakery had acquired two workers' compensation insurance
policies, one from Hartford and one from Employers.
2014, an employee of the Bakery died in an automobile
accident in the course of his employment. Employers covered
the legal costs and attorney fees associated with the
subsequent workers' compensation claim and paid benefits
to the employee's widow. Employers then sought equitable
contribution from Hartford, on the ground that both policies
were in effect on the date of the accident and both policies
contained language guaranteeing an equal division of costs in
the event of concurrent coverage.
Hartford declined to contribute, Employers brought this
action. The district court granted summary judgment for
Employers, and we review the judgment de novo. As a
federal court with jurisdiction based upon diversity of
citizenship, we apply the substantive law of Missouri.
See St. Paul Fire & Marine Ins. Co. v. Bldg. Constr.
Enters., Inc., 526 F.3d 1166, 1168-69 (8th Cir. 2008).
maintains that it does not owe any contribution because the
Hoeckeles never intended to carry two policies for the Bakery
and terminated the redundant coverage with Hartford. When a
Hartford agent told Paul after the accident that the Hartford
policy was active, Paul first expressed confusion, thinking
that the premium had never been paid, and then filed a
cancellation request on July 8, 2014. Hartford retroactively
cancelled the policy, effective July 20, 2013, and issued the
Hoeckeles a full refund of their premium. By its telling,
Hartford owes no contribution because the Hoeckeles never
wanted the Hartford policy in the first place, and Hartford
never would have issued the policy if it had known that the
Hoeckeles did not want the coverage.
argument fails because Missouri law bars Hartford from
cancelling a policy, and eliminating its duty to defend and
indemnify, after an insured has become liable for a
workers' compensation claim. The governing statute
provides that "[n]o such contract of insurance shall be
cancelled or annulled by any agreement between the insurance
company and the assured after the said assured has become
responsible for such loss or damage, and any such
cancellation or annulment shall be void." Mo. Rev. Stat.
§ 379.195.2. Hartford's cancellation of the
Bakery's policy on July 8, 2014, almost two months after
the Bakery employee's fatal accident, is therefore void.
contends that the statute was designed to protect individuals
from their insurers and is inapplicable in cases where an
insurance company seeks contribution from another insurer.
The company notes that § 379.195 was part of a larger
act designed to facilitate payments of casualty insurance:
"An Act to regulate the payment under contracts of
casualty insurance occasioned by losses on account of bodily
injury or death or damage to property, and providing for the
manner and form of remedy." The second part of the act,
now codified separately, concerned the rights of injured
parties as judgment creditors to proceed against tortfeasors
and their insurers.
arguments do not overcome the clear statutory text, for under
Missouri law, "the primary rule of statutory
interpretation is to give effect to legislative intent as
reflected in the plain language of the statute."
Akins v. Dir. of Revenue, 303 S.W.3d 563, 565 (Mo.
2010). The plain language of § 379.195.2 makes
"void" any cancellation of an insurance policy
after "loss or damage," with no exceptions. A
legislature's words sometimes sweep more broadly than the
specific purpose that motivated individual legislators, but
it is the text, not the intentions, that constitute law.
There is no ambiguity in the text that justifies resort to
the statute's title to ascertain meaning. Cf. In re
Graves, 30 S.W.2d 149, 152 (Mo. 1930). And there is no
absurdity here that justifies judicial revision of the text;
Hartford was paid to provide coverage, and a reasonable
legislature might well seek to avoid competing efforts to
cancel by concurrent insurers.
also raises an affirmative defense that the Bakery's
purchase of the Hartford policy was a mutual mistake. "A
mutual mistake occurs when both parties, at the time of
contracting, share a misconception about a basic assumption
or vital fact upon which they based their bargain." 27
Richard A. Lord, Williston on Contracts § 70:107, at 536
(4th ed. 2003). Under Missouri law, when two parties make a
mistake about a material aspect of the contract, there is no
mutual assent, and no real agreement is formed. Fulton v.
Bailey, 413 S.W.2d 514, 518 (Mo. 1967). Citing Great
Atlantic Insurance v. Liberty Mutual Insurance, 576
F.Supp. 561 (E.D. Mo. 1983), Hartford argues that §
379.195.2 is inapplicable because cancellation of the policy
was not based on "a subsequent agreement, but
rather on the pre-existing agreement and intention of the
parties as of the time the policy was issued." Great
Atl. Ins., 576 F.Supp. at 565.
for the sake of analysis that the defense was properly
pleaded, Hartford identifies no mutual mistake during the
formation of the insurance contract. Angela's submission
of the Hartford application and payment of the premium to
Hartford created a binding contract. Whatever Paul might have
believed later when he submitted an application for insurance
with Employers could not demonstrate a mistake at the time
when the Bakery, through Angela, contracted with Hartford.
Unlike in Great Atlantic Insurance, where a clerical
error led the contract to deviate from the intent of the
parties, id. at 564, the Bakery received what it
contracted for on July 17, 2013-a workers' compensation
insurance policy from Hartford. The Hoeckeles may never have
wanted the Bakery to take on double ...