Jeffrey Henry v. Farmers Insurance Company, Inc.

In the Missouri Court of Appeals
Western District
JEFFREY HENRY, et al., )
Appellants, )
v. ) WD76953
)
FARMERS INSURANCE COMPANY, ) FILED: July 22, 2014
INC., )
Respondent. )
APPEAL FROM THE CIRCUIT COURT OF PLATTE COUNTY
THE HONORABLE OWENS L. HULL, JR., JUDGE
BEFORE DIVISION ONE: MARK D. PFEIFFER, PRESIDING JUDGE, LISA WHITE
HARDWICK AND KAREN KING MITCHELL, JUDGES
Jeffrey Henry and Elizabeth Edmundson (collectively, "Appellants") appeal from
the summary judgment in favor of Farmers Insurance Company, Inc., ("Farmers") on
their petition for declaratory judgment, attorney's fees, and breach of fiduciary duty.
Appellants contend the circuit court erred in granting Farmers' summary judgment
motion because (1) their declaratory judgment claim was not moot; (2) they
demonstrated special circumstances entitling them to attorney's fees; and (3) they
established the requisite harm to support their breach of fiduciary duty claim.
Appellants further assert that the court erred in denying their motion for summary
judgment and in ruling that Farmers did not have a legal duty to train its agents on the
specific holdings of two Missouri insurance cases. For reasons explained herein, we
affirm.
FACTUAL AND PROCEDURAL HISTORY
In August 2010, Edmundson was involved in a motor vehicle accident with Lucius
Oliver. At the time of the accident, Farmers insured Edmundson and Henry under an
automobile insurance policy. Oliver submitted a claim to Farmers, as Edmundson's
insurer, for the alleged damage to his vehicle. Farmers opened a claims file and
conducted an investigation. Farmers denied Oliver's claim in November 2010, after
determining that Edmundson was not at fault.
In January 2011, Farmers' claims representative, Cory Cannon, notified
Appellants that Oliver had filed an "intercompany arbitration" claiming that Edmundson
was liable for the property damage to his vehicle. Cannon informed Appellants that
Farmers would defend them in the arbitration and that the arbitration would be binding.
Edmundson filed a separate lawsuit against Oliver alleging that his negligence caused
the accident and seeking compensation for the damage to her vehicle.
Over the course of the next several months, Appellants' counsel and Cannon
exchanged letters concerning the evidence presented in the arbitration proceedings.
Appellants' counsel initially sent a letter to Cannon asking for a copy of any documents
presented in the arbitration proceeding by Oliver's insurer, Metropolitan General
Insurance, so that Appellants could "review the evidence and dispute it if necessary." In
response, Cannon informed Appellants' counsel that the evidence in the arbitration
proceeding would be presented either by mail or by being electronically uploaded to the
arbitration forums' website and that each party would submit a written contention along
with their evidence. Cannon further said that each party could read the other's
contention but that neither party would be required to disclose their evidence to the
2
other party. Cannon told Appellants' counsel that Farmers would not receive copies of
Metropolitan General's evidence.
Appellants' counsel sent a letter to Cannon asking that, if he obtained any
arguments or evidence from Metropolitan General, he forward it to Appellants' counsel.
Appellants' counsel also told Cannon that he "would be interested in reviewing
[Cannon's] contentions and the decision of the arbitrator." Cannon responded by telling
Appellants' counsel that he was unable to send a copy of his contentions because
"those are considered work product." He did, however, describe the substance of his
contentions. Additionally, Cannon told Appellants' counsel that he could not send a
copy of the decision because "it contains information about the other party and the
panelist which cannot be shared." Cannon said that, when the arbitration hearing was
concluded, he would send a detailed explanation of the decision.
Appellants' counsel sent a letter to Cannon asserting that the arbitration process
is a part of the "liability claims process/file" and that, under Grewell v. State Farm
Mutual Automobile Insurance Company, 102 S.W.3d 33 (Mo. banc 2003) ("Grewell I"),
the claims file belongs to the insured, there is no work product privilege, and the insurer
must provide free and open access to the entire file. In Grewell I, the insureds brought
a declaratory judgment action against their insurer when their insurer denied their
request for the contents of the claims file on the basis that it was work product. Id. at
34. The circuit court dismissed the cause of action for failure to state a claim. Id. On
appeal, the Missouri Supreme Court reversed, finding that an insurance claims file "is
analogous to the file of a client held by an attorney" and belongs to the insured, and that
the insured "should be provided free and open access to that file." Id. at 37. Appellants'
3
counsel alleged that, based on Grewell I, Cannon had to provide them a copy of the
decision and information about the other party and the panelist.
In March 2011, following the conclusion of the arbitration proceeding, Cannon
notified Appellants' counsel that the arbitrator had ruled in favor of Farmers and had
determined that Edmundson had no fault or liability for the accident. Cannon stated that
the arbitration decision was binding and that Farmers had closed the claim.
Appellants' counsel sent a letter to Cannon asking that he provide "all of the
other party's evidence and contentions." In response, Cannon again stated that
Farmers had not received copies of Metropolitan General's evidence. On March 29,
2011, Appellants' counsel sent another letter stating that "there appears to be a failure
to communicate. To simplify this matter, please send a copy of the entire liability claims
file in Farmers' possession generated as a result of the adverse party's claim."
After Appellants' counsel requested a copy of the entire claims file, Farmers'
Senior Field Claims Representative, Tanya M. Lofquest, contacted Appellants' counsel
by telephone to discuss the file. As a result of this conversation, Lofquest sent
Appellants' counsel "copies of any statements [Farmers] ha[d] taken, the police report,
scene photos and arbitration determination." In response, Appellants' counsel sent
Lofquest a letter noting that he had asked her to provide him "a list of the documents
which [Farmers] would not produce from the liability claims file and the reasons for not
doing so." Appellants' counsel also asked that Lofquest send him certain other
documents. When Lofquest responded by sending Appellants' counsel some, but not
all, of the additional documents he requested, Appellants' counsel sent Lofquest a
certified letter stating, "in light of the lack of response to my previous requests, I am
4
assuming that you are refusing to allow any further access to the liability claims file
generated in the above-referenced matter and will act accordingly." Farmers did not
respond to this letter.
A month later, in June 2011, Appellants filed suit against Farmers asserting
claims based upon Farmers' failure to produce the claims file. In Count I, Appellants
asserted a claim for declaratory judgment, in which they asked that the court order
Farmers to produce the claims file. In Count II, Appellants alleged that Farmers' failure
to produce the claims file constituted a breach of fiduciary duty, which was constructive
fraud, and they requested an award of attorney's fees and costs under Sections
527.080 and 527.100, RSMo 2000,1 of the Declaratory Judgment Act.2 In Count III,
Appellants asserted that Farmers had a duty to train its agents and claims
representatives as to Missouri law governing the relationship between an insurer and its
insured, specifically, the holdings of Grewell I and Grewell v. State Farm Mutual
Automobile Insurance Company, 162 S.W.3d 503 (Mo. App. 2005) ("Grewell II").
Appellants contended that Farmers' failure or refusal to train its employees was in bad
faith, without just cause or excuse, intentional, frivolous, and outrageous, entitling them
to actual and punitive damages.3
1
All statutory references are to the Revised Statutes of Missouri 2000.
2
Appellants also sought attorney's fees under Section 514.205, which defines and provides a remedy for
a "frivolous suit." Because Appellants have not appealed the court's denial of attorney's fees pursuant to
this statute, we will not discuss it further.
3
After the Supreme Court's decision in Grewell I, the insurer in Grewell I allowed the insureds to review
the entire claims file. Grewell II, 162 S.W.3d at 505. When the insureds later requested copies of several
documents, however, the insurer refused to provide copies of some of the documents on the basis that
they were comparable to an attorney's work product. Id. at 505-06. The insureds then filed suit against
the insurer for declaratory judgment, attorney's fees, and punitive damages based on breach of fiduciary
duty. Id. at 506. The circuit court granted summary judgment in favor of the insureds on the declaratory
judgment count, but it granted summary judgment in favor of the insurer on the remaining counts. Id. On
appeal, this court reversed summary judgment on the attorney's fees claim, finding that the insurer's
continuing to assert the same work product privilege that it had asserted in Grewell I without success and
5
In August 2011, Farmers' counsel agreed to produce the entire claims file to
Appellants. In September 2011, three months after Appellants filed their petition and six
months after their counsel initially requested the entire claims file, Farmers produced a
copy of the file to Appellants.
Over a year later, in November 2012, Appellants filed a motion for summary
judgment on Count I, their declaratory judgment claim. In their motion, they asserted
they were entitled to summary judgment in their favor on this count because, in its
answer, Farmers refused to admit certain averments in their petition. Specifically,
Farmers refused to admit that, under Missouri law, including the Grewell cases, the
insurer and the insured have a fiduciary relationship; this fiduciary relationship imposes
a clear and well-settled duty upon the insurer to provide the insured with free and open
access to the insurance claims file and to permit copying of the documents in the file;
and the liability claims file belongs to the insured. Farmers also refused to admit that
there was a fiduciary relationship between Appellants and Farmers; the claims file
belonged to the Appellants; Appellants had a right of free and open access to the file;
and Appellants had a legally protected interest in the file. Lastly, Farmers refused to
admit that a justiciable controversy existed, the question was ripe for judicial decision,
and Appellants had no adequate remedy at law.
that it had already waived by allowing the insureds to review the entire file were circumstances that
reasonably supported the allegation that the insurer's defense was "frivolous, reckless, and without
substantial legal grounds." Id. at 507. We held that these circumstances, combined with the fact that the
insurer's breach of its duty to provide the insureds unimpeded access to the claims file necessitated the
insureds' filing an amended declaratory judgment action, presented a genuine issue of material fact as to
whether there were special circumstances warranting an award of attorney's fees. Id. at 507-08. We also
reversed summary judgment on the breach of fiduciary duty claim, finding that the insurer's conduct was
"directly contrary to the Supreme Court's instruction to provide the insured with unrestricted access to the
file" and, therefore, created "an inference of evil motive and reckless conduct" sufficient to support a claim
for punitive damages based on breach of fiduciary duty. Id. at 509.
6
Appellants argued in their summary judgment motion that these allegations
correctly stated and applied Missouri law and, therefore, were "averments of fact" that
Farmers improperly refused to admit. Appellants contended that, based upon these
averments, they were entitled to summary judgment on their declaratory judgment
claim.
Farmers filed a cross-motion for summary judgment on Count I, asserting that its
production of the claims file rendered Appellants' request for declaratory judgment moot
and subject to dismissal. In March 2013, the circuit court entered an order granting
Farmers' cross-motion for summary judgment. In its order, the court found that
Appellants' declaratory judgment claim was moot and that there was no factual dispute
existing between the parties with regard to that claim. Therefore, the court entered
summary judgment in favor of Farmers and against Appellants on Count I.
In May 2013, Farmers filed a motion for summary judgment on Appellants'
remaining claims. In its motion, Farmers argued that it was entitled to summary
judgment on Appellants' claim for attorney's fees in Count II because the case involved
no circumstances that would justify departing from the rule that each party is to bear its
own attorney's fees. Farmers asserted that it was entitled to summary judgment on
Appellants' breach of fiduciary duty claim in Count III because Appellants admitted that
they suffered no identifiable monetary damages and no medically diagnosable or
significant emotional distress. Farmers further argued that, because a punitive
damages award is dependent upon an actual award of monetary damages, Appellants
could not recover punitive damages on their breach of fiduciary duty claim.
7
Appellants also filed a motion for partial summary judgment as to Counts II and
III of their petition. In their motion, Appellants again argued, as they did in their
summary judgment motion on Count I, that Farmers' refusal to admit the averments in
their petition stating and applying the holdings of the Grewell cases resulted in those
averments being deemed admitted, and the admission of these averments entitled them
to summary judgment.
Following briefing and oral argument, the court granted Farmers' motion for
summary judgment on Counts II and III and denied Appellants' motion for partial
summary judgment. With regard to Count II, the court found that Appellants were not
entitled to attorney's fees under the Declaratory Judgment Act because they were not
granted a declaratory judgment in their favor. The court further found that Appellants
had failed to set forth any unusual or special circumstances justifying their request for
attorney's fees. As to Count III, the court stated that it was unaware of any "legal duty
imposed by the law or otherwise" upon Farmers to train its agents with regard to the
specific holdings in the Grewell cases. Moreover, the court found that, because a
breach of fiduciary duty claim is characterized as fraud, and pecuniary damages are an
intrinsic element of fraud, nominal damages would not support a breach of fiduciary duty
claim. Therefore, the court found that Farmers was entitled to judgment as a matter of
law on Appellants' claims for attorney's fees and breach of fiduciary duty. This appeal
followed.
STANDARD OF REVIEW
Appellate review of a summary judgment is essentially de novo. ITT Commercial
Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). We
8
review the record in the light most favorable to party against whom the judgment was
entered. Wills v. Whitlock, 139 S.W.3d 643, 646 (Mo. App. 2004).
"Summary judgment is appropriate when the moving party has demonstrated, on
the basis of facts as to which there is no genuine dispute, a right to judgment as a
matter of law." Roberts v. BJC Health Sys., 391 S.W.3d 433, 437 (Mo. banc 2013).
The defendant establishes the right to judgment as a matter of law by showing one of
the following:
(1) facts negating any one of the claimant's elements necessary for
judgment; (2) that the claimant, after an adequate period of discovery, has
not been able to--and will not be able to--produce evidence sufficient to
allow the trier of fact to find the existence of one of the claimant's
elements; or (3) facts necessary to support his properly pleaded
affirmative defense.
Id. We will affirm a summary judgment under any theory supported by the record. Id.
ANALYSIS
Appellants raise five points on appeal. For ease of analysis, we address the
points out of order to correspond with the order in which the claims were raised in the
petition.
Point III -- Declaratory Judgment Claim
In Point III, Appellants contend the circuit court erred in granting summary
judgment in favor of Farmers on their declaratory judgment claim. Appellants argue that
the court erroneously determined that the claim was moot at the time of the hearing
because Farmers produced copies of the claims file to Appellants shortly after the
petition was filed. Appellants assert that, while Farmers' producing copies of the claims
file may have mooted their request for coercive relief, the production did not render their
entire declaratory judgment claim moot because they had also requested declaratory
9
relief, namely, a declaration that the liability claims file belonged to them and that
Farmers had a fiduciary duty to provide them free and open access to the entire file.
Courts of this state do not decide moot causes of action. State ex rel. Mo. Parks
Ass'n v. Mo. Dep't of Natural Res., 316 S.W.3d 375, 384 (Mo. App. 2010). "'A cause of
action is moot when the question presented for decision seeks a judgment upon some
matter which, if the judgment was rendered, would not have any practical effect upon
any then existing controversy.'" Id. (citations omitted). "Missouri courts do not issue
opinions that have no practical effect and that are only advisory as to future,
hypothetical situations." Id. To grant a declaratory judgment, "[t]here must be a
'presently existing controversy' for 'specific relief.'" Id. at 385 (citations omitted). "When
an event occurs that makes a court's decision unnecessary or makes granting effectual
relief by the court impossible, the case is moot and generally should be dismissed."
Atteberry v. Mo. Bd. of Prob. & Parole, 193 S.W.3d 444, 446 (Mo. App. 2006) (internal
quotation marks and citations omitted).
Reviewing Appellants' petition, the only specific relief that they requested in their
declaratory judgment claim was a judgment "ordering [Farmers] to produce to
[Appellants] and their attorney all of the documents and other information in the liability
claims files." In pleading that they had no adequate remedy at law, which is a
necessary element of a declaratory judgment action, Grewell I, 102 S.W.3d at 36,
Appellants pled only that they "have no other adequate remedy at law to a declaratory
judgment action to require [Farmers] to produce the said liability claims files."
(Emphasis added.) Although Appellants asserted that they were entitled to the claims
file because it belonged to them and Farmers had a fiduciary duty to provide them free
10
and open access to the entire claims file, they did not ask the court for a judgment
making such declarations. Instead, they asked only for the coercive relief of an order
compelling Farmers to produce the claims file.4
It is undisputed that Farmers produced a copy of the entire claims file to
Appellants approximately three months after Appellants filed their petition. Thus, an
order compelling Farmers to produce the claims file was unnecessary. Indeed,
Appellants have admitted, both in their summary judgment pleadings and in their brief
on appeal, that Farmers' production of the claims file rendered their request for coercive
relief moot. Point III is denied.
Point II -- Attorney's Fees
In Point II, Appellants contend the circuit court erred in granting summary
judgment in favor of Farmers on their attorney's fees claim. They argue that there were
sufficient facts to support an award of attorney's fees based upon "special
circumstances."
With regard to attorney's fees awards, Missouri follows the American Rule, which
provides that, "absent statutory authorization or contractual agreement, with few
exceptions, each litigant must bear his own attorney's fee." David Ranken, Jr. Tech.
Inst. v. Boykins, 816 S.W.2d 189, 193 (Mo. banc 1991) (overruled on other grounds by
Alumax Foils, Inc. v. City of St. Louis, 939 S.W.2d 907, 911 (Mo. banc 1997)).
4
Ex gratia, we note that, even if we were to construe Appellants' petition as seeking such declarations, we
fail to see how such a request would survive a mootness challenge. Appellants admitted that Farmers
provided them a copy of the entire claims file and they did not assert that Farmers was presently denying
them access to anything in the file; therefore, a judgment declaring that they are entitled to the file and
that Farmers has a fiduciary duty to provide them free and open access to their file would not have any
practical effect upon any existing controversy. See Mo. Parks Ass'n, 316 S.W.3d at 384. Although
Appellants assert that they are entitled to the declarations to secure Farmers' "future cooperation" in case
they need to access the claims file, such a judgment would be purely advisory as to only a future,
hypothetical situation. See id.
11
Appellants asserted their claim for attorney's fees under Sections 527.080 and 527.100
of the Declaratory Judgment Act. Section 527.080 provides that the court can grant
"[f]urther relief" based on a declaratory judgment "whenever necessary or proper," while
Section 527.100 authorizes the court to award "costs as may seem equitable and just."
Neither of these statutes mentions attorney's fees, but cases have recognized
that attorney's fees may be awarded as costs in a declaratory judgment action under
Section 527.100 where very unusual or special circumstances have been shown.
Ranken, 816 S.W.2d at 193. The special circumstances exception, however, "is narrow
and must be construed strictly." Goralnik v. United Fire & Cas. Co., 240 S.W.3d 203,
210 (Mo. App. 2007). As the Missouri Supreme Court noted, "courts have rarely found
the very unusual circumstances that permit the award of attorneys' fees" in the absence
of a statutory or contractual provision allowing such fees. Ranken, 816 S.W.2d at 193.
In Ranken, the Court rejected the plaintiff's assertion that the erroneous assessment of
a license fee was frivolous, without substantial legal grounds, reckless, or punitive, and
the Court found no facts indicating the "very unusual circumstances" necessary to justify
an attorney's fees award. Id. at 193-94.
Appellants argue that this court's determination in Grewell II that there was a
genuine issue of material fact regarding whether special circumstances warranting an
attorney's fees award existed disposes of this issue in their favor. They assert that the
facts of Grewell II are "essentially identical" to the facts of this case, except that
Farmers' misconduct is even more "frivolous, without substantial legal grounds,
reckless, or punitive." We disagree.
12
In Grewell II, the insured had already filed a previous action against the same
insurer on the same issues, which the insurer resisted all the way to the Missouri
Supreme Court. 162 S.W.3d at 507. After the Supreme Court expressly concluded that
insurer should provide the insureds with free and open access to their file, the insurer
still refused to do so and continued to assert the same rejected arguments. Id. The
insurer also asserted a privilege that it had already waived. Id. This forced the insured
to file an amended declaratory judgment action on the same issues on which the
plaintiffs had already prevailed in the first action. Id. at 507-08.
Unlike the insurer in Grewell II, Farmers did not violate any court mandate or
order. Farmers did not force Appellants to pursue a claim to the Missouri Supreme
Court or to file a second action on the same issues. Farmers also did not improperly
assert a privilege that it had already waived. In contrast to the insurer in Grewell II,
Farmers voluntarily produced the claims file to Appellants three months after Appellants
filed this action. The facts creating a genuine issue as to whether there were special
circumstances warranting an award of attorney's fees in Grewell II are not present
here.5
Moreover, we note that, under any exception to the American Rule, the litigant
must be the prevailing party to be entitled to an award of attorney's fees. Motor Control
5
Indeed, the Supreme Court in Ranken noted that courts have refused to find very unusual or special
circumstances warranting an award of attorney's fees in seemingly more egregious cases:
Such fees have been denied in cases of an improper tax assessment, when a defendant
tendered a check on insufficient funds with an intent to defraud, when defendants
tortiously conspired and threatened to wrongfully foreclose on notes and deeds of trust,
and when defendants fraudulently concealed the existence of an outstanding deed of
trust on a house.
816 S.W.2d at 193 (internal citations omitted).
13
Specialties, Inc. v. Labor & Indus. Relations Comm'n, 323 S.W.3d 843, 853 (Mo. App.
2010). "'A litigant may be the prevailing party when he "obtain[s] a settlement,6 obtain[s]
a voluntary dismissal of a groundless complaint, or obtain[s] a favorable decision on a
single issue if the issue is one of significance to the underlying case.'" Id. at 854
(quoting Greenbriar Hills Country Club v. Dir. of Revenue, 47 S.W.3d 346, 353 (Mo.
banc 2001)). In this case, the circuit court found that Appellants' declaratory judgment
claim was moot -- a finding that we have affirmed. Appellants were not the prevailing
party on their declaratory judgment claim and, therefore, were not entitled to attorney's
fees. Gebru v. St. Louis County, 136 S.W.3d 89, 93 (Mo. App. 2004). The circuit court
properly granted summary judgment in favor of Farmers on Appellants' attorney's fees
claim. Point II is denied.
Point I -- Breach of Fiduciary Duty
In Point I, Appellants contend the court erred in granting summary judgment in
favor of Farmers on their breach of fiduciary duty claim after finding that, because
damages are an intrinsic element of a breach of fiduciary duty claim, nominal damages
cannot be awarded. Appellants argue that nominal damages may be awarded because
the breach of a fiduciary duty is regarded as a substantial right and, therefore, "the law
places a presumption of resulting damages in every instance." Additionally, Appellants
assert that they should be allowed to recover emotional distress damages.
6
Though we conclude today that Appellants did not prevail on their petition and did not receive any
favorable decisions from the circuit court, Appellants arguably achieved "a settlement" based on Farmers’
production of the claims file after the suit was filed. Thus, it would have been well within the court's
discretion to require Farmers to reimburse Appellants for the cost of filing the lawsuit, because Appellants
partially prevailed on the very issue necessitating the lawsuit -- Farmers' refusal to produce the entire
claims file. That being said, under the circumstances of this case, we do not conclude that the circuit
court's judgment was inequitable or unjust.
14
To establish a claim for breach of a fiduciary duty, a plaintiff must prove: (1) the
existence of a fiduciary duty between the plaintiff and the defending party; (2) "'that the
defending party breached the duty'"; and (3) "'that the breach caused the [plaintiff] to
suffer harm.'" W. Blue Print Co. v. Roberts, 367 S.W.3d 7, 15 (Mo. banc 2012) (citation
omitted). Thus, harm or damages caused by the breach is an essential element of a
breach of fiduciary duty claim. See id. See also Costa v. Allen, 274 S.W.3d 461, 462
(Mo. banc 2008); Klemme v. Best, 941 S.W.2d 493, 496 (Mo. banc 1997); Consol.
Grain & Barge, Co. v. Hobbs, 397 S.W.3d 467, 476 (Mo. App. 2013).
In their response to Farmers' summary judgment motion, Appellants did not
assert that they suffered any pecuniary harm or damages from Farmers' failure to
produce the claims file. In fact, Appellants admitted that Edmundson settled her claim
against Oliver and received full compensation for all of her damages related to the
accident, and they admitted that Henry was not involved in the accident, did not have an
ownership interest in the vehicle, and was not a party to the lawsuit against Oliver.
Rather than assert that they suffered any pecuniary harm or damages,
Appellants argued that they had the right to nominal damages in recognition of Farmers'
alleged breach.7 "The general theory of nominal damages is that they should be
allowed where a legal right has been invaded but no actual damages were suffered or
proven." Tindall v. Holder, 892 S.W.2d 314, 321 (Mo. App. 1994). As the court in
Tindall explained, the principle of nominal damages "developed from the common law
action for trespass for violence to person or property." Id. In those types of cases,
7
On appeal, Appellants argue, for the first time, that they satisfied the pecuniary loss requirement
because they were forced to employ an attorney and file a lawsuit. Because they did not raise this
argument in their response to Farmers' motion for summary judgment, they cannot raise it on appeal.
See Lyon Fin. Serv, Inc. v. Harris Cab Co., 303 S.W.3d 589, 591 (Mo. App. 2010).
15
harm or damages is not an element of the cause of action because "the law simply
presumes that damages are allowed." Id. Thus, nominal damages may be awarded in
such tort actions as nuisance, Burg v. Dampier, 346 S.W.3d 343, 358 (Mo. App. 2011);
trespass, Sterbenz v. Kansas City Power & Light Co., 333 S.W.3d 1, 8 n.7 (Mo. App.
2010); ejectment, Smith v. McClard, 439 S.W.2d 246, 251 (Mo. App. 1969); false arrest,
Blue v. Harrah's North Kansas City, LLC, 170 S.W.3d 466, 475 (Mo. App. 2005); and
assault and battery, A.R.B. v. Elkin, 98 S.W.3d 99, 104 (Mo. App. 2003).
Where pecuniary damage is an element of the tort cause of action, however,
nominal damages cannot be presumed. Tindall, 892 S.W.2d at 321. The court in
Tindall discussed the reason for this distinction:
"As the law of torts expanded by means of the action on the case to cover
wrongs not characterized by violence and breach of the peace but by
fraud, deceit, inattention, carelessness, and the like, more emphasis was
placed upon the plaintiff's loss, and in certain of the wrongs which came to
be remedied by actions on the case it was established that a vital and
necessary element of the plaintiff's case was a showing of actual loss or
detriment to him flowing from defendant's wrongful conduct."
Id. (quoting C. MCCORMICK, HANDBOOK ON THE LAW OF DAMAGES § 22 (1935)). "In
Missouri, pecuniary loss is an intrinsic element of an action sounding in fraud or
deceit[.]" Id. Hence, "'[p]roof of substantial injury and damage is essential to recovery
in an action for fraud and deceit.'" Id. (quoting Dolan v. Rabenberg, 231 S.W.2d 150,
155 (Mo. 1950)).
"A breach of a fiduciary obligation is constructive fraud." Klemme, 941 S.W.2d at
495. Because breach of a fiduciary duty is constructive fraud, it is an "action sounding
in fraud or deceit." Like an actual fraud claim, a breach of fiduciary duty/constructive
fraud claim is not "characterized by violence or breach of the peace" and does not
16
involve "trespass for violence to person or property." See Tindall, 892 S.W.2d at 321.
Pecuniary damage is, therefore, an intrinsic element of a breach of fiduciary duty claim
and is essential to recovery. The circuit court properly determined that nominal
damages could not be awarded to Appellants on their breach of fiduciary duty claim. 8
Appellants next assert that they should be allowed to proceed on their claim for
emotional distress damages. In Bass v. Nooney Co., 646 S.W.2d 765, 772-73 (Mo.
banc 1983), the Missouri Supreme Court held that a plaintiff in a negligent infliction of
emotional distress case, where the emotional distress is unaccompanied by physical
injury, can recover so long as: "(1) the defendant should have realized that his conduct
involved an unreasonable risk of causing the distress; and (2) the emotional distress or
mental injury must be medically diagnosable and must be of sufficient severity so as to
be medically significant." (Footnote omitted.) Thereafter, in Fetick v. Am. Cyanamid
Co., 38 S.W.3d 415, 419 (Mo. banc 2001), the Missouri Supreme Court held that, to be
compensable as damages for willful fraud, emotional distress must meet Bass's
requirement of being "medically diagnosable and significant."
Appellants do not dispute that they cannot meet this requirement. They admit
that they sought no treatment for their emotional distress and that evidence of their
emotional distress consisted only of their deposition testimony that they were "very
frustrated," "upset," and "mad" over Farmers' conduct. Similar evidence was deemed
insufficient to support a claim for emotional distress damages in Fetick, 38 S.W.3d at
419 (plaintiff testified to untreated "distress" and "stress").
8
Although Appellants did not suffer any pecuniary damages in this case, we can conceive of similar
situations where insureds could incur such damages. Consequently, insurers should not read today's
ruling as precedent promoting the refusal to comply with the Supreme Court's mandate in Grewell I. In a
case where the insured suffers pecuniary damages from the insurer's failure to produce the claims file
upon request, the result might well be different from today's ruling.
17
Nevertheless, Appellants argue that Fetick does not apply here because Fetick
addressed the compensability of emotional distress damages in only actual fraud cases
and, therefore, it does not apply to breach of fiduciary claims, which involve constructive
fraud. We disagree. Courts have excused plaintiffs from the Bass requirements for
causes of action such as assault and battery, where "actual injury or damages is not a
required element of proof" and emotional damages "occur as a necessary and natural
consequence of the tortious conduct." A.R.B., 98 S.W.3d at 104. In those cases, the
tortfeasor unquestionably should have realized that the assault and battery involved an
unreasonable risk of causing emotional distress, and the law presumes damage from
the nature of the conduct. See id. In contrast, claims such as fraud, even if willful and
malicious, do not intrinsically involve an unreasonable risk of causing emotional harm,
and the law requires proof of actual damages as an element of the cause of action. See
id.; Fetick, 38 S.W.3d at 418 (noting that "[f]ailing to establish damages defeats a fraud
claim").
As we found supra, a breach of fiduciary duty/constructive fraud claim, like an
actual fraud claim, requires proof of harm or damages as a necessary element of the
cause of action. See Hobbs, 397 S.W.3d at 476 (stating that "fraud, whether actual or
constructive based on a breach of a fiduciary duty, requires an injury caused by the
fraud to be actionable"). Moreover, unlike an assault and battery case, emotional
damages are not a "necessary and natural consequence" of a breach of a fiduciary
duty. See A.R.B., 98 S.W.3d at 104. The law does not presume that every breach of
fiduciary duty will necessarily cause damage, let alone emotional damage. We find no
reason why the Fetick standard for emotional distress damages in a willful fraud case
18
would not apply to emotional distress damages in a breach of fiduciary duty/constructive
fraud case.
Appellants failed to offer any evidence indicating that their emotional distress was
medically diagnosable and significant. As they offered no other evidence of the
necessary element of harm or damages resulting from Farmers' alleged breach, their
breach of fiduciary duty claim fails as a matter of law. The circuit court properly granted
summary judgment in favor of Farmers on Appellants' breach of fiduciary claim. Point I
is denied. 9
CONCLUSION
We affirm the circuit court's judgment.
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LISA WHITE HARDWICK, JUDGE
ALL CONCUR.
9
Because we find that Appellants failed to establish any recoverable damages, we need not address their
claim in Point V that the court erred in finding that Farmers had no duty to train its agents regarding
Missouri case law. Likewise, we need not address Appellants' claim in Point IV that the court erred in
denying their motion for partial summary judgment on Count II (attorney's fees) and Count III (breach of
fiduciary duty), as we have found that those claims fail as a matter of law.
19