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<\/a><\/div>\n\u00a0 Dontcha just love how the press\/media reports insurance coverage stories?\u00a0 Almost immediately I heard via text messages and emails about this decision from (1) the SIU director of a NY auto insurer, (2) the claims manager of a NY property and casualty insurer, (3) my eldest son, who is an SIU field investigator, and (4) one of my office’s legal assistants.\u00a0\u00a0<\/p>\n For their benefit and yours I offer the following context.\u00a0\u00a0<\/p>\n<\/div>\n No, GEICO was not<\/u>\u00a0ordered to pay $5.2 million to a woman who claimed she contracted HPV after having sex in her ex-boyfriend\u2019s GEICO-insured car.\u00a0 And no, the Missouri appellate court most certainly did not<\/u> rule GEICO “must cover” that the woman’s allegedly related “injuries and losses”.\u00a0\u00a0<\/p>\n Government Employees Insurance Company and GEICO General Insurance Company\u00a0(collectively \u201cGEICO\u201d) appeal the judgment of the Circuit Court of Jackson County confirming\u00a0an arbitration award finding against GEICO\u2019s insured<\/b>\u2014M.B. (\u201cInsured\u201d)\u2014and in favor of M.O.\u00a0 Insured and M.O. were in a romantic relationship. After M.O. contracted anogenital human\u00a0papillomavirus (\u201cHPV\u201d), she submitted a settlement offer to GEICO, asserting Insured negligently\u00a0infected her with the disease during sexual encounters in his automobile, and that Insured\u2019s\u00a0GEICO-issued automobile\u00a0 insurance policy provided coverage for her injuries and losses. GEICO\u00a0denied coverage and rejected her settlement offer.<\/p>\n Insured and M.O. entered into an agreement pursuant to section 537.065, RSMo,1 and\u00a0agreed to arbitrate M.O.\u2019s claims. The arbitrator found Insured negligently infected M.O. with\u00a0HPV and awarded her $5.2 million in damages.<\/b> Thereafter, M.O. filed this action in the trial court.\u00a0GEICO moved to intervene and M.O. moved to confirm the arbitration award. The trial court\u00a0granted both motions on the same date and entered judgment in favor of M.O. consistent with the\u00a0arbitration award. GEICO appeals, asserting the trial court erred in confirming the arbitration\u00a0award without giving GEICO a meaningful opportunity to defend its interests. For the reasons\u00a0stated below, we affirm.<\/b><\/p>\n<\/blockquote>\n The MO Court of Appeal’s decision provides the factual and procedural background to the arbitration award and GEICO’s appeal to that court:<\/p>\n<\/div>\n \u00a0\u00a0 \u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>In November of 2017, M.O. and Insured began a romantic relationship. Effective at that\u00a0time was an automobile insurance policy issued by GEICO to Insured.<\/p>\n<\/blockquote>\n \u00a0 \u00a0\u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>On February 25, 2021, M.O. submitted to GEICO a copy of a petition she intended to file\u00a0against Insured, and made a final settlement offer to resolve her \u201cclaims against [Insured] for the\u00a0applicable limits of $1m.\u201d2\u00a0\u00a0<\/span>The petition attached to the settlement offer alleged that during\u00a0\u201cNovember and early December of 2017,\u201d Insured and M.O. engaged in unprotected sexual\u00a0activities in Insured\u2019s vehicle, and during those sexual encounters, Insured \u201cnegligently caused or\u00a0contributed to cause [M.O.] to be infected with HPV by not taking proper precautions and\u00a0neglecting to inform and\/or disclose his diagnosis,\u201d despite \u201chaving knowledge of his condition.\u201d M.O. alleged that as a result of Insured\u2019s negligence, she incurred, and will incur, \u201cpast and future\u00a0medical expenses,\u201d as well as \u201cpast and future mental and physical pain and suffering.\u201d On\u00a0 April\u00a07, 2021, GEICO denied coverage and refused M.O.\u2019s settlement offer. GEICO also initiated a\u00a0declaratory judgment action in federal court to establish the parties\u2019 rights and obligations under\u00a0the insurance policy.<\/p>\n 2\u00a0 It is unclear from the record when M.O. first submitted her claim to GEICO. However, in January 2021, GEICO\u00a0informed M.O. via letter that it had \u201ccompleted [its] coverage investigation\u201d and\u00a0 determined \u201cthere was no coverage\u201d\u00a0because the\u00a0 damages claimed did not arise out of the normal use of the vehicle.\u201d GEICO \u201cdisclaim[ed] any and all\u00a0liability or obligation to [M.O.] and to others under\u201d Insured\u2019s automobile policy and advised that it would \u201ctake no\u00a0further action with respect to any claim . . . and hereby withdraws from the matter entirely.\u201d\u00a0<\/span><\/p>\n \u00a0\u00a0 \u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>Meanwhile, on March 11, 2021, M.O. and Insured entered into a Contract to Limit\u00a0Recovery to Specified Assets and Arbitration Agreement Pursuant to Section 537.065 RSMo (\u201c065\u00a0Agreement\u201d).3<\/span> On May 17, 2021, M.O. and Insured arbitrated M.O.\u2019s claims, and the arbitrator\u00a0thereafter issued his \u201cFindings, Conclusions, and Award.\u201d<\/p>\n 3\u00a0 The 065\u00a0 agreement was not made part of the record on appeal, nor was it presented to the trial court. Any reference\u00a0to the title or the contents of the 065 Agreement we take from filings that were included in the\u00a0 record.\u00a0Section 537.065,\u00a0which will be discussed extensively in our analysis, allows an injured party and tortfeasor to enter into an agreement\u00a0to limit the injured party\u2019s recovery to the tortfeasor\u2019s applicable insurance limits if the insurer has refused to defend\u00a0the tortfeasor.<\/span><\/p>\n<\/div>\n \u00a0 \u00a0 \u00a0 \u00a0 The award first described procedural aspects of the arbitration proceeding, including that:\u00a0(1) Prior to the arbitration, Insured submitted an Arbitration Statement detailing his defense; (2)\u00a0Both parties presented opening statements at the arbitration; (3) Insured was given the opportunity\u00a0to cross-examine M.O.\u2019s witnesses and elicit testimony for Insured\u2019s defense; (4) Insured\u00a0submitted as exhibits three internet articles discussing HPV; (5) M.O. requested an award of $9.9 million in damages in her closing argument; and (6) In his closing argument, Insured disputed that\u00a0he was aware he could transmit HPV to M.O., M.O. received HPV from him, he had a duty to\u00a0disclose such diagnosis to M.O., and the amount of damages.<\/p>\n \u00a0 \u00a0\u00a0\u00a0\u00a0 \u00a0As to his substantive findings, the arbitrator determined that: (1) \u201cthere was sexual activity\u00a0in [Insured\u2019s] automobile in November\/December of 2017 which occurred in Jackson County,\u00a0Missouri\u201d; (2) the sexual activity in Insured\u2019s vehicle \u201cdirectly caused, or directly contributed to cause, M.O. to be infected with HPV\u201d; (3) Insured knew he had \u201cbeen told that his throat cancer tumor was diagnosed as HPV positive\u201d; (4) Insured should have disclosed his diagnosis to M.O. prior to the sexual activity that occurred, but he did not; and (5) Insured \u201cwas negligent and is liable for causing M.O. to contract HPV.\u201d The arbitrator found that \u201can amount that would fairly and justly compensate Plaintiff, M.O., for all of her damages and injuries is $5,200,000,\u201d and entered an award in that amount \u201cin favor of Plaintiff M.O. and against the Defendant [Insured].\u201d<\/p>\n <\/span><\/div>\n \u00a0\u00a0 \u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>On May 24, 2021, M.O. provided written notice to GEICO that she and Insured had entered\u00a0into an agreement pursuant to section 537.065. The following day, M.O. initiated this action by\u00a0filing her Petition for Damages in the trial court.4 On June 10, 2021, GEICO discovered the\u00a0existence of this lawsuit by monitoring Case.net (Missouri state courts\u2019 automated case\u00a0management system). On June 18th, GEICO filed a motion to intervene.<\/p>\n \u00a0 \u00a0\u00a0\u00a0\u00a0 \u00a0On June 22nd, M.O. filed a response to GEICO\u2019s motion to intervene and a motion to\u00a0confirm the arbitration award. In her motion to confirm the award, M.O. asserted she and Insured\u00a0had agreed \u201cthat after an arbitration award is issued, [M.O.] will immediately seek to have the\u00a0award confirmed . . . and reduced to judgment . . . and that neither party will seek judicial review\u00a0of the award or attempt to have the award set aside, modified, amended or changed in any way\u00a0unless by express written agreement of each party.\u201d On June 29th, GEICO filed a reply in support\u00a0of its motion to intervene. On July 2nd, the trial court granted M.O.\u2019s motion to confirm the\u00a0arbitration award and entered judgment in favor of M.O. and against Insured in the amount of\u00a0$5,200,000. The trial court adopted and incorporated the findings and conclusions of the arbitration\u00a0award, and stated the award was attached to the judgment as Exhibit A. No exhibit was attached to the judgment. Also on July 2nd, after entering judgment, the trial court entered an order granting GEICO\u2019s motion to intervene.<\/p>\n <\/span><\/div>\n \u00a0\u00a0 \u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>On July 30th, GEICO filed a motion for leave to conduct discovery, a motion for new trial,\u00a0and a motion to vacate the arbitration award. In the latter two motions, GEICO asserted that the\u00a0arbitration award and judgment confirming it should be vacated because the award \u201cwas procured\u00a0by collusion, fraud, [and] undue means,\u201d it was \u201ccontrary to public policy and \u00a7\u00a7 537.065 and\u00a0435.350,\u201d it was the result of an invalid and unenforceable arbitration agreement, and it violated\u00a0GEICO\u2019s due process rights and right to access the courts. The parties submitted additional\u00a0briefing on GEICO\u2019s motions. On September 8, 2021, the trial court summarily denied all of the\u00a0motions and entered a \u201cJudgment Nunc Pro Tunc,\u201d attaching the arbitration award that was\u00a0inadvertently omitted from the original judgment.<\/p>\n \u00a0 \u00a0\u00a0\u00a0\u00a0 \u00a0GEICO appeals, asserting three claims of error relating to the trial court\u2019s confirmation of\u00a0the arbitration award\u2014specifically, to the timing of the trial court\u2019s confirmation.5 GEICO asserts\u00a0that by confirming the arbitration award without giving GEICO a meaningful opportunity to\u00a0defend its interests and develop facts and arguments pre-judgment, the trial court acted in\u00a0contravention of section 537.065 and Rule 52.12 (Point I), section 435.405 (Point II), and state\u00a0and federal constitutional provisions guaranteeing due process and access to the courts (Point III).<\/p>\n <\/span><\/div>\n<\/blockquote>\n \u00a0\u00a0 \u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>2.\u00a0\u00a0 \u00a0<\/span>GEICO seeks a declaration that it has no duty under the Policies to defend or indemnify Brauner for the third party bodily injury liability claim asserted by M.O. (\u201cthe subject claim\u201d).<\/p>\n<\/blockquote>\n \u00a0\u00a0 \u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>3.\u00a0\u00a0 \u00a0<\/span>On February 25, 2021, M.O. demanded that GEICO pay $1,000,000 to resolve\u00a0 her \u201cclaims against [GEICO\u2019s] insured\u201d (i.e., Brauner). She included in her demand letter a proposed state court petition and indicated intent to file it should GEICO not satisfy her demand.<\/p>\n<\/blockquote>\n \u00a0\u00a0 \u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>4.\u00a0\u00a0 \u00a0<\/span>GEICO denies the existence of coverage under the Policies for the subject claim.<\/p>\n<\/blockquote>\n \u00a0\u00a0 \u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>5.\u00a0\u00a0 \u00a0<\/span>There is an actual, immediate controversy among the Parties as to whether coverage for the subject claim exists under the Policies.<\/p>\n<\/blockquote>\n \u00a0\u00a0 \u00a0<\/span>\u00a0\u00a0 \u00a0<\/span>6.\u00a0\u00a0 \u00a0<\/span>All necessary and proper parties are before the Court with respect to the matters in controversy as set forth herein.\u00a0<\/p>\n<\/blockquote>\n \u00a0\u00a0 \u00a0\u00a0\u00a0 \u00a0<\/span><\/span>7.\u00a0\u00a0 \u00a0<\/span>GEICO has no adequate remedy at law.\u00a0<\/p>\n<\/blockquote>\n Footnote #1 to GEICO’s Second Amended Complaint that for reasons not disclosed, the “Court\u2019s October 20, 2021 order dismissed (previous defendant) M.O. from the case. Dkt. 52.”<\/p>\n GEICO’s Second Amended Complaint adds some factual context for the claimant’s allegations:\u00a0\u00a0<\/p>\n M.O.\u2019s Threatened Tort Lawsuit Against M.B.<\/u><\/p><\/blockquote>\n<\/div>\n \u00a0\u00a0 \u00a0<\/span>14.\u00a0\u00a0 \u00a0<\/span>On February 25, 2021, M.O. sent GEICO a demand letter. The body of the letter stated, in its entirety:<\/p><\/blockquote>\n Here\u2019s the Petition that will be filed against your insured, [M.B.]. Before doing so, we have\u00a0been authorized to make one final attempt to resolve [M.O.\u2019s] claims against your insured\u00a0for the applicable limits of $1m. Let me know.<\/p><\/blockquote>\n \u00a0\u00a0 \u00a0<\/span>15.\u00a0\u00a0 \u00a0<\/span>M.O.\u2019s proposed state court petition sought from M.B. damages for negligence and\u00a0negligent infliction of emotional distress.<\/p>\n \u00a0\u00a0 \u00a0<\/span>16.\u00a0\u00a0 \u00a0<\/span>In it, M.O. alleges M.B. and M.O. entered into a sexual relationship in November\u00a0 2017 and early December 2017, including that the two \u201cengaged in unprotected sexual\u00a0 activities, including intercourse, in Defendant [M.B.\u2019s] home and in his 2014 Hyundai Genesis car.\u201d<\/p>\n \u00a0\u00a0 \u00a0<\/span>17.\u00a0\u00a0 \u00a0<\/span>M.O. further alleges that M.B. negligently failed to tell M.O. that he was infected\u00a0 with anogenital human papillomavirus (HPV), and that he failed to use adequate protection and take proper precautions to prevent its transmission to her.<\/p>\n<\/blockquote>\n The first phase of discovery in this action shall conclude August 15, 2022. Phase I discovery will include discovery of all issues relating to the parties\u2019 anticipated dispositive motions directed to the threshold coverage issue. Phase II discovery will involve discovery relating to bad faith or extra-contractual claims, as well as any other merits issues. To the extent that issues overlap, the Court directs the parties to undertake discovery within Phase I.<\/p><\/blockquote>\n<\/div>\n You can mark your calendars as follows:\u00a0<\/p>\n July 15, 2022 — Status report<\/p>\n July 29, 2022 — Motion to join additional parties\u00a0<\/p>\n July 29, 2022 — Motion to amend pleadings\u00a0<\/p>\n August 15, 2022 — Close of Phase I discovery<\/p>\n August 31, 2022 — Motions for Summary Judgment On Coverage Issue\u00a0<\/p>\n September 21, 2022 — Motions Responses\u00a0\u00a0<\/p>\n October 5, 2022 — Motions Replies<\/p><\/blockquote>\n<\/div>\n I’ve got a Court Listener alert set up for GEICO’s DJ action, and I’ll post again when the MSJs are filed.\u00a0 That should be some interesting reading, there.\u00a0 Meanwhile, I’m predicting that the Missouri District Court will ultimately find in favor of GEICO and rule that M.O.’s contraction of HPV did not arise out of the ownership, maintenance or use of Brauner’s 2014 Hyundai Genesis.\u00a0\u00a0<\/p>\n What I can guarantee <\/i>is that this case will be in next semester’s insurance law course syllabuses in law schools across the country.\u00a0 \u00a0\u00a0\u00a0<\/p>\n Fun facts to know and tell for coverage nerds (like me):<\/p>\n![\"\"](\"https:\/\/blogger.googleusercontent.com\/img\/a\/AVvXsEiuZcRcbE6wk3lF-KN7VxYNXkDIN1gCyRelonF-1ErQ7serlu81oMb6ZbkXs4JTT2j8f-XJD0_L0z4R4k4xPifHdFUkh79Th-c10gsBeJPKVKY5mFugNXMU5pN3Nh8TYr3IQQEA_pBV4Wzh7IZtJzLmSPb02nVbCE2-i4rXqfdmtR7b5iqwZRSakcXY=w531-h135\")
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