In the
Missouri Court of Appeals
Western District
AMY LEIGH SAUVAIN, ET AL., )
)
Appellants, ) WD79198
)
v. ) OPINION FILED: October 4, 2016
)
ACCEPTANCE INDEMNITY )
INSURANCE COMPANY, )
)
Respondent. )
Appeal from the Circuit Court of Clay County, Missouri
The Honorable Janet L. Sutton, Judge
Before Division Two: Karen King Mitchell, Presiding Judge, Cynthia L. Martin, Judge
and Gary D. Witt, Judge
Appellants Amy Sauvain, Ericka Sauvain, and Bonnie Hughes (collectively
"Plaintiffs") appeal from the Circuit Court of Clay County's granting of Acceptance
Indemnity Insurance Company's ("Acceptance") Motion to Quash a garnishment sought by
the Plaintiffs. We affirm.
Factual and Procedural Background
In a separate underlying lawsuit that preceded the present case, Plaintiffs brought
suit alleging that David Bowman, Jr.'s ("Bowman, Jr.") negligence caused a head-on
collision with a vehicle operated by John Sauvain, III ("Sauvain") in Barry County,
Missouri on April 30, 2005. Bowman, Jr. was driving a 1998 Ford Contour when he
crossed the center line and struck Sauvain's 1998 Ford Escort ("the Collision"). Bonnie S.
Hughes ("Hughes") was a passenger in Sauvain's vehicle at the time of the accident.
Sauvain was killed, and Hughes suffered serious injuries in the accident. The circuit court
ultimately entered judgment against Bowman, Jr., awarding to Ericka Sauvain and Amy
Sauvain $2,000,000 for the wrongful death of Sauvain and $4,000,000 to Hughes for her
injuries (the "Judgment"). Bowman, Jr.'s personal auto insurer, USAA, agreed to pay the
sum of $50,000. In addition, Plaintiffs entered into a settlement agreement, pursuant to
Section 537.0651, with Bowman, Jr.
On July 14, 2008, following the Judgment and the Section 537.065 settlement, the
Plaintiffs filed an equitable garnishment action against Acceptance, alleging that Bowman,
Jr. was an insured under a policy issued by Acceptance ("Policy") and that the Policy
provided coverage for the Collision. This case has previously been before this court twice
during the equitable garnishment action. Sauvain v. Acceptance Indem. Ins. Co., 339
S.W.3d 555 (Mo. App. W.D. 2011) ("Sauvain I"); Sauvain v. Acceptance Indem. Ins. Co.,
437 S.W.3d 296 (Mo. App. W.D. 2014) ("Sauvain II").2 In Sauvain I, Acceptance
challenged the circuit court's finding that its Policy covered Bowman, Jr. at the time of the
accident. This Court concluded that the undisputed facts of this case were not sufficient
for either party to be entitled to summary judgment; hence, we remanded the case for a
1
All statutory references are to RSMo 2000 cumulative as currently supplemented, unless otherwise noted.
2
For a complete recitation of the arguments and facts surrounding the Policy and Acceptance's denial of
coverage to Bowman, Jr., see Sauvain I and Sauvain II.
2
trial. Upon remand, the parties waived their right to trial by jury and proceeded with a
bench trial. On January 21, 2013, the trial court found that the Plaintiffs were entitled to
judgment against Acceptance on their claim for equitable garnishment in the amount of the
policy limits of $100,000 ("Equitable Garnishment Judgment").
Acceptance appealed this Equitable Garnishment Judgment in Sauvain II, arguing
that there was substantial evidence to find the vehicle was not covered under the Policy.
This Court found that, although there was substantial evidence in the record that would
have supported Acceptance's position, the trial court's finding that Bowman, Jr. was
covered by the Policy was also supported by substantial evidence and was not against the
great weight of the evidence. We affirmed the Equitable Garnishment Judgment against
Acceptance for the limits of the Policy of $100,000.
Plaintiffs collected the $100,000 from Acceptance but then filed a garnishment
action under Chapter 525 and Rule 903, seeking to garnish from Acceptance the remaining
$5,900,0004 of the Judgment against Bowman, Jr. ("Garnishment"). As a factual basis of
support for the Garnishment, Plaintiffs contended that Acceptance had a duty to defend
Bowman, Jr. in the negligence case and, in refusing to do so, Acceptance breached its
contractual duty. In Missouri, if an insurer is found to have breached its duty to defend, it
may be liable for all resultant damages (the amount of the judgment)--even beyond the
policy limits. See Schmitz v. Great Am. Assurance Co., 337 S.W.3d 700, 708-09 (Mo. banc
3
All rule references are to Missouri Supreme Court Rules (2016).
4
The total amount of the garnishment was for $5,900,030. $5,900,000 for the Judgment and $30 for the
fees associated with the garnishment.
3
2011). Thus, Plaintiffs claimed that they were entitled to recover the full remaining
judgment against Bowman, Jr. from Acceptance.
Acceptance filed a Motion to Quash Garnishment on May 29, 2015 ("Motion to
Quash"). Acceptance argued that a court lacks authority in a garnishment action under
Chapter 525 and Rule 90 to enter an award for the full Judgment. Chapter 525 and Rule
90 garnishment actions are traditional "garnishment in aid of execution" actions that are
ancillary in rem proceedings. In such garnishment in aid of execution actions, the merits
of an underlying action--in this case Acceptance's alleged breach of its duty to defend--are
an improper subject matter for the court. Acceptance contended that the circuit court was
limited to issuing a garnishment order for the limits of the Policy because that was the sole
issue that had been previously decided. Acceptance argued that outstanding questions
regarding Acceptance's duty to defend and any liability stemming from that duty were not
before the court for consideration.
The trial court agreed and granted Acceptance's Motion to Quash on December 2,
2015. This appeal followed.
Standard of Review
"Appellate review of a trial court's decision on a motion to quash requires that the
judgment be affirmed unless there is not substantial evidence to support it, the judgment is
against the weight of the evidence, or it erroneously declares or applies the law." Keipp v.
Keipp, 385 S.W.3d 470, 473 (Mo. App. W.D. 2012).
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Discussion
Plaintiffs' sole point on appeal contends that the trial court erred in quashing
Plaintiffs' Garnishment because the court erroneously found that Plaintiffs were not entitled
to recover in excess of the judgment against an insurer in a garnishment proceeding brought
under Chapter 525.
This case must necessarily begin with an explanation of Missouri's garnishment
proceedings. Missouri recognizes two types of garnishment actions against insurers.
Chapter 525 and Rule 90 recognize what is known as "a garnishment in aid of execution"
or a "traditional garnishment." State ex rel. Koster v. Cain, 383 S.W.3d 105, 112 (Mo.
App. W.D. 2012). It assists in the recovery of an existing judgment. Id. A garnishment
action pursuant to section 379.200 is a direct garnishment action known as an "equitable
garnishment proceeding," in which a plaintiff, in a separate lawsuit, is attempting to assert
an independent claim or claims directly against an insurer. McDonald v. Ins. Co. of State
of Pa., 460 S.W.3d 58, 67 (Mo. App. W.D. 2015). An equitable garnishment action results
in a new judgment against an insurer. Johnston v. Sweany, 68 S.W.3d 398, 403 (Mo. banc
2002).
A traditional garnishment or garnishment in aid of execution is a statutory creation
in derogation of the common law. Moore Auto. Grp., Inc. v. Goffstein, 301 S.W.3d 49, 53
(Mo. banc 2009). Such an action "'is a proceeding in rem that brings within the jurisdiction
and power of the court a debt or chose in action and impresses it with the lien of the
judgment in aid of execution.'" McGathey v. Matthew K. Davis Trust, 457 S.W.3d 867,
873 (Mo. App. W.D. 2015) (quoting Div. of Emp't Sec. v. Cusumano, 785 S.W.2d 310, 312
5
(Mo. App. E.D. 1990)). A garnishment proceeding governed generally by Chapter 525
and Rule 90 is an ancillary proceeding growing out of, and dependent on, an underlying
original or primary action or proceeding. Moore Auto. Grp., Inc., 301 S.W.3d at 53.
"Garnishment in aid of execution is an incidental remedy by which a judgment creditor
may collect [upon an existing] judgment by reaching the judgment debtor's property in the
hands of a third party." State ex rel. Koster, 383 S.W.3d at 112 (internal quotations
omitted). "Because garnishment represents a means by which a judgment creditor seeks to
enforce or collect a judgment, it is axiomatic that [a] valid judgment . . . [is an]
indispensable prerequisite[] to a valid garnishment." Id. (internal quotations omitted). In
a garnishment in aid of execution action, the garnishment action is styled with the same
case style and has the same case number as the original suit; the insurer is not indicated as
a party but as a garnishee. Johnston, 68 S.W.3d at 404.
The procedure for garnishment in aid of execution is set forth in Rule 90.07.
Interrogatories are served on the garnishee simultaneously with the summons and writ of
garnishment. Rule 90.07(a). The garnishee is required to file and serve verified answers
to the interrogatories. Rule 90.07(b). The garnishor then files any exceptions to the
interrogatory answers, asserting any objections to the answers and all grounds upon which
recovery is sought against the garnishee. Rule 90.07(c). The garnishee may file a response
to the exceptions. Rule 90.07(d).
In garnishment actions governed by Rule 90 and Chapter 525:
the summoning of the garnishee, and the propounding of the interrogatories
to [it] and [its] answer thereto, are merely the preliminaries to the making of
the issues between plaintiff and the garnishee. When the latter answers
6
saying [it] has no money or property of the defendant, the denial [or
exceptions] of the plaintiff is the foundational pleading on which its cause of
action against the garnishee rests. The issues are made up, not by the
interrogatories and answer, but by the denial [or exceptions] and reply [or
response].
Landmark Bank of Ladue v. Gen. Grocer Co., 680 S.W.2d 949, 953 (Mo. App. E.D. 1984)
(quoting Rees v. Peck-King Mortg.. Co., 230 S.W. 666, 667 (Mo. App. 1921)); see also
Wayland v. Nationsbank, N.A., 46 S.W.3d 21, 24 (Mo. App. E.D. 2001). The exceptions
to interrogatory answers stand in place of a petition and must contain the grounds upon
which recovery is sought. Landmark Bank of Ladue, 680 S.W.2d at 953.
By contrast, although called an equitable garnishment, section 379.200 is a direct
cause of action against an insurance company and, in reality, "is no garnishment at all."
Zink v. Emp'rs Mut. Liab. Ins. Co., 724 S.W.2d 561, 564 (Mo. App. W.D. 1986) (overruled
on other grounds by Johnston v. Sweany, 86 S.W.3d 398, 403 (Mo. banc 2002)). "An
equitable garnishment action is a suit in equity against the insurance company to seek
satisfaction of one's judgment under an insurance policy." McDonald, 460 S.W.3d at 67
(internal quotation omitted). "[Section] 379.200 did not create an exclusive, specific
statutory remedy." Cronin v. State Farm Fire & Cas. Co., 958 S.W.2d 583, 587 (Mo. App.
W.D. 1997). It may be used in conjunction with a Rule 90 garnishment. Johnston, 68
S.W.3d at 403-04.
"In an equitable garnishment action brought directly against an insurer, the plaintiff
must prove that a judgment was obtained against an insurance company's insured during
the policy period and that the injury is covered by the policy." Taylor v. Bar Plan Mut.
Ins. Co., 457 S.W.3d 340, 344 (Mo. banc 2015); section 379.200. The insurer may assert
7
any defense against the judgment creditor which it might have asserted as a defense in an
action brought against it by its insured, including the defense of "no coverage", by
providing that the accident fell under a policy exclusion and was, therefore, outside the
insurance contract's coverage. Adams v. Manchester Ins. & Indem. Co., 385 S.W.2d 359,
363 (Mo. App. 1964).
Thus, whereas an equitable garnishment action asserts a separate and distinct claim
or claims against an insurer and seeks judgment directly against the insurer, a garnishment
in aid of execution is used to collect upon rights that have been adjudicated in an existing
judgment. The question that is posed by the Plaintiffs, and left to this Court to consider, is
whether a garnishment in aid of execution may be used to decide a separate and distinct
claim related to the judgment sought to be garnished, despite historically not being used in
such a way.5 Specifically in this case, may the circuit court decide whether Acceptance
breached its duty to defend under the Policy within the confines of a garnishment in aid of
execution proceeding, thus allowing for collection of damages (the Judgment) beyond
policy limits?
Whether a party may recover damages for breach of duty to defend under a
garnishment in aid of execution proceeding is a two-part question. First is whether, under
Rule 90, damages for a breach of a duty to defend are "property subject to garnishment."
Rule 90.01 defines "[p]roperty subject to garnishment" to include "all goods, personal
5
This issue is currently being considered by the Supreme Court. See Allen v. Bryers, WD 77905, 2015 WL
5439944 (Mo. App. W.D. Sept. 15, 2015) ordered transferred March 1, 2016, argued and submitted May 4, 2016.
8
property, money, credits, bonds, bills, notes, checks, choses in action, or other effects of
debtors and all debts owed to debtor . . . ." See also, section 525.040. "Chose in action" is
defined as:
1. A proprietary right in personam, such as a debt owed by another
person, a share in joint-stock company, or a claim for damages in tort. 2.
The right to bring an action to recover a debt, money, or thing. 3. Personal
property that one person owns but another person possesses, the owner
being able to regain possession through a lawsuit.
BLACK'S LAW DICTIONARY, p. 258 (8th ed. 2004) (internal citations omitted). Under this
definition of "chose in action," a claim for damages in tort would be property subject to
attachment in a garnishment in aid of execution proceeding. However, a garnishment
action cannot reach a contingent liability, because a contingent liability is not currently
due. See Raithel v. Hamilton-Schmidt Surgical Co., 48 S.W.2d 79, 81-82 (Mo. App. 1932).
"Debts not yet due to the defendant may be attached, but no execution shall be awarded
against the garnishee for debts until they shall become due." Section 525.260. The question
is whether a debt for which the garnishee can currently sue--such as an insurer's breach of
a duty to defend--constitutes a present debt as a "chose in action" that is subject to
garnishment. It is clear that garnishment cannot occur until a debt is "due," which
fundamentally requires a court deciding that such a debt exists. We find that, although it
may appear that this type of debt could potentially be collected in a garnishment in aid of
execution action, the court lacked authority within such an action to make the
determination that the debt was due.
"As a general rule, [in a garnishment in aid of execution] the garnishee cannot
dispute the merits of [the] plaintiff's claim against the defendant, and cannot go outside the
9
record to make a collateral attack on the judgment." Thompson v. B&G Wrecking & Supply
Co., 346 S.W.2d 65, 68 (Mo. 1961) (internal citation omitted). "Garnishment in aid of
execution is an incidental remedy whereby a plaintiff seeks to collect the judgment by
reaching the defendant's property in the hands of a third party." Landmark Bank of Ladue,
680 S.W.2d at 953. "As an incidental remedy, garnishment [in aid of execution] was never
intended to enable [an insured or the insured's assign] to enforce claims held by him directly
against the garnishee." Id.
The only issue in a garnishment in aid of execution is whether "the garnishee is
possessed of property or effects of the defendant, or is indebted to the defendant." Section
525.220. At trial:
[i]f . . . it shall appear that property, effects or money of the defendant are
found in the hands of the garnishee, the court or jury shall find what property
or effects, and the value thereof, or what money are in his hands, . . . then the
court shall enter up judgment against the garnishee for the proper amount or
value as found in money, and execution may issue forthwith to enforce such
judgment.
Section 525.200.
Accordingly, the only question in a garnishment in aid of execution proceeding is
whether the insurer/garnishee furnished coverage under the insurance policy so that a
garnishor may garnish that coverage to pay for the underlying judgment already determined
in a separate proceeding. This is because a garnishment in aid of execution proceeding is
an in rem ancillary action designed to enforce rights and obligations set forth in an
underlying judgment. This is not a proceeding in which separate and independent tort
claims that might exist against the insurer/garnishee may be pursued. In this case, any
10
alleged breach of duty to defend by Acceptance is not ancillary to any adjudication
contained within the Judgment or the Garnishment Execution Judgment filed with this
Garnishment. Neither judgment makes a determination as to Acceptance's duty to defend
Bowman, Jr. nor has a breach of such a duty been adjudicated. Such a claim is a fiduciary
and, arguably, punitive claim against an insurer that simply is not permissible in this
procedural setting.
In the present case, it is evident that garnishor has attempted to bring a
separate and independent action against garnishee for an alleged breach of
fiduciary duty within the narrow confines of a garnishment in aid of
execution. Garnishor's action requires a proceeding more elastic and
comprehensive than a garnishment. Neither Chapter 525 . . . nor Rule 90
provide[s][sic] for an action by a garnishor against a garnishee for punitive
damages. We cannot permit garnishor to substitute the purely incidental
remedy of garnishment for an action alleging breach of fiduciary duty and
requesting punitive damages.
Landmark Bank of Ladue, 680 S.W.2d at 954.
As noted by Acceptance, the cases primarily relied on by Plaintiffs, Columbia
Casualty Company v. HIAR Holding, LLC, 411 S.W.3d 258 (Mo. banc 2013) and Schmitz
v. Great American Assurance Company, 337 S.W.3d 700 (Mo. banc 2011), do not address
the question of whether extra contractual damages may be considered and determined by a
court in a garnishment in aid of execution action. Both cases were direct action cases
brought against an insurer. The obligations of the insurer and the damages owed resulting
from a breach of those obligations were determined in declaratory actions separate from
the garnishment proceedings. In the present action, it has not been conclusively established
that the Acceptance Policy did in fact cover the accident at issue and the total unpaid
damages are $5,900,000.00. The only issues that remain to be decided are (1) whether the
11
facts as known to Acceptance at the beginning of the case indicated there was a possibility
that it would be required to indemnify Bowman, Jr. and (2) was Acceptance provided
notice and the opportunity to defend the underlying lawsuit. McCormack Baron Mgmt.
Servs., Inc. v. Am. Guarantee & Liab. Ins. Co., 989 S.W.2d 168, 170 (Mo. banc 1999);
State Farm Fire & Cas. Co. v. Metcalf, 861 S.W.2d 751, 756 (Mo. App. S.D. 1993). In
essence, whether Acceptance had a duty to defend and whether Acceptance breached that
duty remain to be decided.
In Columbia, HIAR Holding, L.L.C. was insured by Columbia Casualty Insurance.
441 S.W.3d at 262. HIAR was sued in a class action lawsuit and instructed Columbia to
defend the suit. Id. After Columbia refused, HIAR defended the suit at its own expense
and ultimately settled the suit for an amount beyond policy limits. Id. The class sought to
collect on the settlement judgment by bringing a garnishment action against Columbia. Id.
at 263. Columbia objected to the applicability of its coverage and sought a declaratory
judgment clarifying its duties to defend and indemnify the class's claims under HIAR's
policy. Id. The garnishment action was stayed pending the resolution of the declaratory
action. Id. The court granted the class the right to garnish the full amount of the settlement
only after the declaratory judgment proceeding found that Columbia had a duty to
indemnify HIAR for the full settlement. Id.
Schmitz too was an equitable garnishment action brought directly against the insurer
rather than the garnishment in aid of execution action brought here. Schmitz, 337 S.W.3d
at 710. Plaintiffs are correct that Schmitz supports long-standing Missouri law that an
insurer can be liable for the entirety of a judgment if it breaches its duty to defend. Id. It
12
does not, however, support Plaintiff's proposition that whether a duty has been breached
can be decided in a garnishment in aid of execution action--a type of action not even at
issue in Schmitz.
Beyond supporting the undisputed contention that an insurer may be liable for the
entire amount of a judgment if it breaches its duty to defend an insured, these cases are not
instructive as to the current issues before this Court.
Conclusion
The circuit court was not authorized to consider whether Acceptance is liable for
the entire amount of the Judgment based on an alleged breach of a duty to defend Bowman,
Jr. Nor was the circuit court authorized to grant a garnishment for damages for such an
alleged breach. Neither question was a proper consideration for the court in a garnishment
in aid of execution proceeding. As such, the circuit court did not error in quashing
Plaintiff's Garnishment for the full $5,900,000 Judgment.
__________________________________
Gary D. Witt, Judge
All concur
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Amy Leigh Sauvain v. Acceptance Indemnity Insurance Company
Combined Opinion