In the Missouri Court of Appeals
Eastern District
DIVISION TWO
KENNETH E. STOREY, TRUSTEE OF ) No. ED101817
THE KENNETH E. STOREY )
REVOCABLE TRUST DATED )
NOVEMBER 13, 1998, ) Appeal from the Circuit Court
) of Cape Girardeau County
Plaintiff/Appellant, )
)
v. )
)
RGIS INVENTORY SPECIALISTS, LLC ) Honorable Benjamin F. Lewis
and NYRA CAMPBELL, )
)
Defendants/Respondents. ) Filed: May 12, 2015
Introduction
Kenneth E. Storey, Trustee of the Kenneth E. Storey Revocable Trust Dated
November 13, 1998 (Storey) appeals from the trial court’s grant of summary judgment in
favor of RGIS Inventory Specialists, LLC (RGIS) and Nyra Campbell (Campbell) on
Storey’s claims for breach of contract and negligent retention and hiring. We affirm.
Factual and Procedural Background
On November 21, 2011, Mark Carleton (Carleton), an employee of RGIS, started
a fire in the RGIS offices in a building owned by Storey and leased by RGIS.
On November 19, 2012, Storey brought suit for damages to the building arising
from the fire, alleging breach of contract against RGIS (Count I), negligent hiring and
retention against RGIS and former RGIS employee Campbell (Count II), and intentional
tort against Carleton (Count III). RGIS and Campbell filed separate motions for
summary judgment.
Facts related to the claims against RGIS
Prior to this incident, in April 2006, RGIS and Storey entered into a Lease
Agreement (Lease) for the leasing of office space at 1707 Mount Auburn in Cape
Girardeau, Missouri (Premises). On March 25, 2008, the Lease was extended pursuant to
an Extension of Lease entered into between Storey and RGIS. The Lease was still in
effect under the Extension of Lease at the time of the fire. The Lease included the
following provisions:
7. MAINTENANCE AND REPAIRS BY LESSEE: LESSEE
shall, at its own expense, repair any damages to the Premises, both interior
and exterior, caused by the negligence or intentional acts or omissions of
LESSEE, its agents, servants, or employees, ordinary wear and tear
excepted.
…
9. FIRE AND CASUALTY INSURANCE: LESSOR, at its costs,
shall obtain and maintain at all times during the term of this Lease with a
reasonable insurance company, for the benefit of LESSOR and LESSEE
as their respective interests may appear, Insurance on the Premises and
any and all improvements which are now on or are to be erected or
remodeled on the Premises, Insuring against loss or damage by fire and
other hazards, casualties, contingencies and risks embraced with the term
“extended coverage” in an amount equal to the estimated replacement cost
of said improvements. LESSEE will carry Business Owners coverage to
cover leasehold improvements made by LESSEE in the interior of the
building along with fixtures and equipment at LESSEE’s sole cost and
expense.
…
25. SURRENDER: Upon the expiration or sooner termination of
the Lease, LESSEE, at its sole expense shall remove from the Premises all
merchandise, furniture, furnishings, equipment and other personal
property belonging to it not affixed or attached to any part of the Premises
and shall quietly and peaceably surrender possession of the Premises in
good order and repair and in clean and sanitary condition, reasonable wear
and tear and damage by fire, other casualty or the elements excepted….
Facts related to the claim against Campbell
Storey alleged in his Petition that Campbell was negligent in hiring and/or
retaining Carleton as an employee of RGIS. Campbell worked for RGIS between June
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19, 2009 and October 14, 2012. In her affidavit, Campbell asserted that during her
employment with RGIS she never hired or fired any employee with RGIS and she did not
have the authority to hire or fire employees. Cynthia M. Myers, acting Vice President of
Human Resources for RGIS, asserted in her affidavit that Campbell never possessed the
authority to hire or fire RGIS employees and was not involved in the process of hiring
Carleton.
In response, Storey denied that Campbell did not hire Carleton and did not have
the authority to terminate Carleton’s employment and attached his affidavit asserting
Campbell was his “local contact person at RGIS…and was held out as being the main
supervisor over inventory and employees at the Cape Girardeau office.”
On May 15, 2014, the trial court entered summary judgment in favor of RGIS and
Campbell on all counts, finding there were no genuine issues of material fact and that
they were entitled to judgment as a matter of law. On July 30, 2014, Storey dismissed his
claims against Carleton without prejudice. This appeal follows.
Points Relied On
In his first point on appeal, Storey contends the trial court erred in entering
judgment in favor of RGIS because RGIS breached the Lease by failing to pay for
damages caused by Carleton, in that the Lease required RGIS to pay for damages
intentionally caused by its employees and Carleton pled guilty to arson for setting the fire
on November 21, 2011.
In his second point on appeal, Storey argues the trial court erred in entering
summary judgment in favor of Campbell because there was a genuine issue of material
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fact as to whether she, on behalf of RGIS, negligently hired or retained Carleton in that
Carleton had a significant criminal history of property destruction prior to being hired.1
Standard of Review
We review the circuit court’s grant of summary judgment de novo. ITT Comm.
Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993).
Whether to grant summary judgment is purely an issue of law. Ashford Condo., Inc. v.
Horner & Shifrin, Inc., 328 S.W.3d 714, 717 (Mo. App. E.D. 2010). We will uphold
summary judgment on appeal only where there is no genuine issue of material fact and
the movant is entitled to judgment as a matter of law. ITT Comm. Fin. Corp., 854
S.W.2d at 376; Rule 74.04(c).2 The record is viewed in the light most favorable to the
party against whom judgment was entered. Citibrook II, L.L.C. v. Morgan’s Foods of
Missouri, Inc., 239 S.W.3d 631, 634 (Mo. App. E.D. 2007).
A defendant, as the movant, can establish a prima facie case for summary
judgment by showing any of the following: (1) facts that negate any one of the elements
of a claimant’s cause of action; (2) that the non-movant, after an adequate period of
discovery, has not been able to produce, and will not be able to produce, evidence
sufficient to allow the trier of fact to find the existence of any one of the claimant’s
elements; or (3) that there is no genuine dispute as to the existence of each of the facts
necessary to support movant’s properly pleaded affirmative defense. Sloss v. Gerstner,
98 S.W.3d 893, 896 (Mo. App. W.D. 2003).
1
RGIS sought summary judgment on both the breach of contract and negligent hiring and retention claims
against it. The trial court granted such. Storey does not challenge the trial court’s grant of summary
judgment in favor of RGIS on his claim for negligent hiring and/or retention.
2
All rule references are to Mo. R. Civ. P 2014.
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Once the movant has established a right to judgment as a matter of law, the non-
movant must demonstrate that one or more of the material facts asserted by the movant as
not in dispute is, in fact, genuinely disputed. Crow v. Crawford & Co., 259 S.W.3d 104,
113 (Mo. App. E.D. 2008). The non-movant may not rest upon mere allegations and
denials of the pleadings, but must use affidavits, depositions, answers to interrogatories,
or admissions on file to show the existence of a genuine issue for trial. Id. “Facts
contained in affidavits or otherwise in support of a party’s motion are accepted as true
unless contradicted by the non-moving party’s response to the summary judgment
motion.” Premier Golf Missouri, LLC v. Staley Land Co., LLC, 282 S.W.3d 866, 871
(Mo. App. W.D. 2009). We will affirm the trial court’s judgment if it is sustainable on
any theory. Citibrook, 239 S.W.3d at 634.
Discussion
Point I
In his first point, Storey argues the trial court’s judgment finding in favor of RGIS
failed to give effect to all of the Lease provisions and effectively nullified the Lease’s
indemnification clause.
The interpretation of a contract is a question of law. Nodaway Valley Bank v.
E.L. Crawford Const., Inc., 126 S.W.3d 820, 825 (Mo. App. W.D. 2004). The primary
rule in interpreting a contract is to ascertain the parties’ intent and give effect to that
intent. Id. The court is to rely on the plain and ordinary meaning of the words in the
contract and to consider the document as a whole. Id. The clauses must be read in the
context of the entire contract. Id. at 827. Interpretations that render provisions
meaningless should be avoided. Id. It is preferable to attribute a reasonable meaning to
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each clause and harmonize all provisions, rather than leave some provisions non-
functional or nonsensical. Id.
Paragraph 9 of the Lease is an insurance procurement clause requiring Storey to
“obtain and maintain at all times during the term of this Lease…for the benefit of
LESSOR and LESSEE as their respective interests may appear, Insurance on the
Premises and any and all improvements which are now on or are to be erected or
remodeled on the Premises, Insuring against loss or damage by fire and other hazards,
casualties, contingencies and risks embraced with the term ‘extended coverage’ in an
amount equal to the estimated replacement cost of said improvements.”
The plain language of this provision obligated Storey to procure insurance on the
Premises and all improvements for the benefit of Storey and RGIS against loss or damage
by fire and other hazards, casualties, and contingencies in an amount equal to the
estimated replacement cost. Pursuant to the insurance procurement clause, Storey was
contractually obligated to RGIS to carry insurance on the property to the mutual benefit
of both parties. See Monsanto Chem. Co. v. Am. Bitumuls Co., 249 S.W.2d 428, 431
(Mo. 1952). Storey’s agreement to procure insurance in an amount equal to the estimated
replacement cost for the benefit of both parties satisfies in full any claim for fire damage
Storey may have had against RGIS. Id.
This interpretation is further supported by paragraph 25, the surrender clause,
which provides that upon expiration or termination of the lease, RGIS would “surrender
possession of the Premises in good order and repair and in clean and sanitary condition,
reasonable wear and tear and damage by fire, other casualty or the elements excepted
[emphasis added].” The combination of the insurance procurement clause and the
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surrender clause demonstrates the parties’ intent to exempt RGIS from liability for loss
from fire.
Storey’s assertion that this interpretation nullifies paragraph 7, an
indemnification clause requiring RGIS to repair any damage to the Premises caused by
the negligence or intentional acts or omissions of RGIS or its employees, is without
merit. The insurance procurement and surrender clauses only protect RGIS from liability
for damage from “fire and other hazards, casualties, contingencies and risks embraced
with the term ‘extended coverage’” or from “fire, other casualty or the elements
expected.” Under the indemnification clause, RGIS was still liable for damage from
other sources caused by the negligent and intentional acts of its employees.
Missouri courts have repeatedly recognized that such insurance procurement
clauses require one party to maintain the prescribed insurance and prohibit the parties
from filing suit against each other for damages required to be covered by the prescribed
insurance. See Monsanto Chem. Co., 249 S.W.2d at 432 (Missouri Supreme Court held
an insurance procurement provision in contract requiring Monsanto to carry adequate
insurance to cover materials held by Cal-Spray satisfied Monsanto’s claims for
compensation for negligence against Cal-Spray when materials were destroyed by fire);
Rock Springs Realty, Inc. v. Waid, 392 S.W.2d 270, 278 (Mo. 1965) (Missouri Supreme
Court held that a contract requiring the lessor to maintain insurance, coupled with a
surrender clause that exempted loss by fire, prevented the lessor from recovering against
lessee for loss from fire).
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In Nodaway Valley Bank, 126 S.W.3d at 828, the court noted that an insurance
procurement clause alone could evidence the parties’ intent to shift the risk of property
loss from each other to the insurance company. The court found:
“[W]here parties to a business transaction mutually agree that insurance
will be provided as a part of the bargain, such agreement must be
construed as providing mutual exculpation to the bargaining parties who
must be deemed to have agreed to look solely to the insurance in the event
of loss and not to liability on the part of the opposing party.”
Acadia Ins. Co. v. Buck Constr. Co., 756 A.2d 515, 519 (Me.2000)
(quoting Gen. Cigar Co. v. Lancaster Leaf Tobacco Co., 323 F. Supp. 931,
941 (D.Md.1971) (emphasis added)).
Nodaway Valley Bank, 126 S.W.3d at 828-29. The court held that a reasonable
interpretation of the indemnification clause, when read in harmony with the contract’s
insurance procurement and waiver of subrogation clauses, was that the indemnification
clause referred to compensation and liability for losses not covered by the property
insurance policy. Id. at 829-30.
Storey further contends that remand is necessary because there is a dispute of fact
as to whether his insurance was adequate to cover the damage caused by the fire. We
disagree. Per the terms of the contract, Storey was obligated to obtain and maintain
insurance on the Premises and its improvements in an amount equal to the estimated
replacement cost. RGIS was permitted to rely on Storey’s contractual obligation to do so,
and if Storey chose not to carry sufficient insurance on the property, he did so at his own
risk. See Rock Springs Realty, Inc., 392 S.W.2d at 278 (if lessor chooses to carry
insurance for less than the full value of the property, any detriment so resulting to lessor
is due to its own fault); Monsanto Chem. Co., 249 S.W.2d at 432 (one party’s obligation
to carry ‘adequate’ insurance for the benefit of both parties satisfies in full that party’s
claim against the other party).
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We also reject Storey’s assertion that these cases are distinguishable from the case
sub judice because they involve negligent acts and not intentional acts like arson. In
Rock Springs Realty, Inc., 392 S.W.2d at 278, the court concluded that the intent of the
parties was that fire insurance would be maintained by the lessor for the benefit of both
parties and that an exemption from “loss of fire” would cover all fires including those
caused by negligence, but not those caused by arson. However, with regard to insurance
contracts, exceptions for coverage for fires caused by arson generally only apply when it
is the insured or someone acting on behalf of the insured that commits the arson.
McClelland v. Progressive Cas. Ins. Co., 790 S.W.2d 490, 494 (Mo. App. S.D. 1990).
Arson does not defeat recovery under an insurance contract when the insured is not
implicated in the act. Id. Here, Storey alleges that it was Carleton that intentionally
started the fire, but nothing in the record indicates that damage was not covered under the
usual insurance fire policy because neither Storey nor RGIS started the fire.
Because Storey’s claims were barred by the terms of the Lease, RGIS is entitled
to judgment as a matter of law. Storey’s Point I is denied.
Point II
In his second point, Storey argues the trial court erred in granting summary
judgment in favor of Campbell on his claim of negligent hiring and retention of Carleton
because there is a genuine issue of material fact as to whether Campbell hired or retained
Carleton, and a suit for negligent hiring and retention is not confined to employers but
may also be brought against a supervisor or co-employee.
To establish a claim for negligent hiring or retention, a plaintiff must show: (1)
the employer knew or should have known of the employee’s dangerous proclivities, and
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(2) the employer’s negligence was the proximate cause of the plaintiff’s injuries. Reed v.
Kelly, 37 S.W.3d 274, 277 (Mo. App. E.D. 2000); Gibson v. Brewer, 952 S.W.2d 239,
246 (Mo. banc 1997). To sustain a claim based on the theory of negligent hiring and
retention, the plaintiff must plead and prove that an employer-employee relationship
existed. Moreland v. Farren-Davis, 995 S.W.2d 512, 517 (Mo. App. W.D. 1999).
Here, there exist uncontested statements of fact that Campbell did not have the
authority to hire or fire any employee of RGIS and that Campbell was not involved in the
process of hiring Carleton. Storey’s assertion that Campbell “was held out as being the
main supervisor over inventory and employees at the Cape Girardeau office” does not
support a finding that Campbell played any part in RGIS hiring or retaining Carleton as
an employee. As such, Campbell cannot be said to have committed any act of negligence
that was the proximate cause of Storey’s alleged damages. Furthermore, an employer-
employee relationship is necessary to sustain a claim for negligent hiring and retention,
Moreland, 995 S.W.2d at 517, and Storey has failed to present any relevant authority
supporting his assertion that such an action may be brought against a co-employee.
Because Campbell showed facts negating an element of Storey’s negligent hiring
and retention claims, Campbell is entitled to judgment as a matter of law. Storey’s Point
II is denied.
Conclusion
The trial court’s judgment granting RGIS’s and Campbell’s Motions for Summary
Judgment is affirmed.
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Sherri B. Sullivan, P.J.
Mary K. Hoff, J., and
Philip M. Hess, J., concur.
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