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Emerson Electric Co. v. Aetna Casualty and Surety Co.8/30/2004
nsel to represent their interests, hired consultants to perform analyses and evaluations at the site, and conducted investigations and interviews with current and former employees, thereby incurring most or all of the costs they claim against Republic. Republic argues that it has suffered prejudice from plaintiffs' late notice as a matter of law because all of the costs that plaintiffs seek to recover from Republic consist of defense and investigation costs, and with respect to those costs Republic alleges that it could have investigated the loss and possibly settled it for an amount less than what plaintiffs now seek.
Republic similarly contends that plaintiffs breached the voluntary payments provision of the policy by incurring defense and investigation costs without first obtaining Republic's acquiescence and consent. Republic claims that as a result, it was denied the opportunity to investigate the facts, to settle the loss early on, and to oversee and dispute the amount of defense and investigation costs incurred by plaintiffs.
Plaintiffs dispute that their notice was untimely and argue that the voluntary payments clause does not apply to prenotice conduct. They further argue that Republic cannot prevail on its late notice or breach of voluntary payments clause defenses unless it proves that it suffered actual and substantial prejudice as a result, and that mere speculation and conclusory allegations are insufficient for the purposes of establishing prejudice. Plaintiffs further cast doubt on the viability of Republic's claim of prejudice by pointing out that excess carriers, such as Republic, generally do not investigate claims and, in fact, once plaintiffs provided notice, Republic chose not to conduct any investigation.
We note that Missouri courts historically have been reluctant to excuse an insurer from its contractual obligations because of an insured's breach of notice or similar policy provisions that do not prejudice the insurer, and the burden of showing prejudice is on the insurer. See Tresner v. State Farm Insurance Co., 913 S.W.2d 7, 11 (Mo. 1995) (en banc). Thus, we need not examine whether plaintiffs had, in fact, breached the notice and voluntary payment provisions because Republic cannot prevail on these defenses unless it proves that it suffered prejudice as a result. The presence of prejudice in such a context is a question of fact to be determined on the particular facts of each case. Tresner, 913 S.W.2d at 11. Mere speculation and conclusory allegations are insufficient for purposes of establishing prejudice. See Hendrix v. Jones, 580 S.W.2d 740, 743-45 (Mo. 1979) (en banc). We thus agree with plaintiffs that there exists, at a minimum, a triable question of fact as to whether Republic suffered prejudice. Accordingly, the grant of summary judgment in favor of Republic as to the Hatfield site cannot be sustained on the alternative grounds of breach of notice and voluntary payment provisions.
For the reasons set forth above, we reverse, in part, the judgment of the trial court granting summary judgment in favor of Republic with respect to the Vernon, Alabama; Shreveport, Louisiana; Philadelphia, Mississippi; Melville, New York; and Hatfield, Pennsylvania, owned sites as to coverage under the 1983-84 policy. We also reverse the grants of summary judgment in favor of Republic with respect to the Vernon, Alabama, and Shreveport, Louisiana, owned sites as to coverage under the 1984-85 policy. Lastly, we reverse the grant of summary judgment in favor of Republic with respect to the Dixiana, South Carolina, third-party site. In accordance with the foregoing, the cause is remanded for further proceedings consistent with this opinion.
We af
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