John N. Parke v. Progressive Casualty Insurance Company

In the Missouri Court of Appeals
Eastern District
DIVISION FOUR
JOHN N. PARKE, ) No. ED108358
)
Appellant, ) Appeal from the Circuit Court
) of St. Louis County
v. ) 19SL-CC00661
)
)
PROGRESSIVE CASUALTY )
INSURANCE COMPANY, ) Honorable Stanley J. Wallach
)
Respondent. ) FILED: June 16, 2020
OPINION
John N. Parke (“Parke”) appeals from the judgment of the trial court granting summary
judgment in favor of Progressive Casualty Insurance Company (“Progressive”) in Parke’s suit
for fraudulent misrepresentation. On appeal, Parke asserts that there remained genuine issues of
disputed material fact, and also that the trial court erred in finding Parke had no private right of
action under the Registration and Licensing of Motor Vehicles Chapter of the Missouri Revised
Statutes (“the salvage statutes”). We reverse and remand for further proceedings in accordance
with this opinion.
Background
In November 2018, Parke purchased a 2013 Nissan Sentra (“the Sentra”) from Doxa
Auto, LLC (“Doxa”). Parke subsequently noticed damage to the vehicle and obtained an
AutoCheck report, which revealed the Sentra had been reported in an accident in August 2018,
and that after the accident, Progressive had purchased the Sentra. The AutoCheck report
indicated, as relevant to the issues raised on appeal, that the Sentra had been reported as an
“insurance loss or probable total loss record” following a “major damage incident,” but that it
had “no salvage or salvage auction record.”
Parke obtained counsel and sent a letter to Progressive, requesting information about the
extent of the damage to the Sentra. Parke informed Progressive that if it had declared the Sentra
a “salvage” vehicle, Progressive was required to apply for a salvage certificate of title. Parke
notified Progressive that if Progressive did not respond to the letter, Parke would assume the
Sentra was a salvage vehicle and that Progressive should have applied for a salvage title.
Progressive did not respond to Parke’s letter.
Parke filed suit against Doxa and Progressive. As to Progressive, Parke alleged
fraudulent misrepresentation. Parke asserted that Progressive had declared the Sentra to be a
salvage vehicle, which it had purchased from the insured as a result of a settlement resulting
from the August 2018 accident, and thus Progressive had breached its duty under Section
301.227, RSMo., 1 to obtain a negotiable salvage certificate of title from the Director of Revenue
(“DOR”). Parke further claimed that as a result of Progressive’s actions, Parke sustained
damage.
Progressive filed a motion to dismiss Parke’s claim of fraudulent misrepresentation
against Progressive, asserting that Parke had not pled a basis upon which Progressive owed him a
duty, in that the statute does not create a private right of action, but rather that Section 301.229
provides for enforcement only by the DOR. Progressive submitted an affidavit from its manager
of claims attesting that Progressive had not declared the Sentra to be a salvage vehicle. Because
1
All statutory references are to RSMo. (cum. supp. 2018), unless otherwise indicated.
2
Progressive’s memorandum in support of its motion to dismiss included matters outside the
pleadings, the trial court converted Progressive’s motion to dismiss into one for summary
judgment pursuant to Rule 55.27(a). Parke responded there was a genuine issue of material fact
whether Progressive had declared the Sentra to be a salvage vehicle before applying for a non-
salvage certificate of title from the DOR.
The trial court granted Progressive’s motion for summary judgment, concluding that
Parke could not maintain an action against Progressive because the salvage statutes created
neither an express nor an implied private right of action; rather, the statute’s language providing
for enforcement by the DOR and criminal punishment was penal and thus contrary to an
individual right of action. After concluding Parke had no private right of action, the trial court
decided it need not reach the issue of whether there existed a dispute of material fact regarding
whether Progressive had declared the Sentra a salvage. The trial court entered judgment against
Parke and in favor of Progressive. This appeal follows.
Standard of Review
Appellate courts review de novo a trial court’s grant of summary judgment. ITT
Commercial Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993).
We will affirm the grant of summary judgment if no genuine issues of material fact exist, and the
movant is entitled to judgment as a matter of law. Id. at 377. We review the record in the light
most favorable to the party against whom judgment was entered. Id. at 376.
Discussion
Parke raises two points on appeal. First, he argues the trial court erred in granting
summary judgment to Progressive because there was a genuine issue as to whether Progressive’s
description of the Sentra in its internal claims file as a “total loss” and a “salvage” constituted a
3
declaration that the Sentra was a “salvage vehicle” as defined by Section 301.010(53), 2 thereby
triggering Progressive’s mandatory obligation to apply for a salvage title under Section
301.227.1. Second, he argues the trial court erred in granting summary judgment to Progressive
after concluding Parke had no private right of action against Progressive under Section
301.227.1. We address the points out of order, for ease of analysis.
Point II
In Parke’s second point on appeal, he argues the trial court erred in granting summary
judgment to Progressive when it held that Parke’s action sought to directly enforce Section
301.227.1, for which there was no private right of action; instead, Parke contends his action was
based on the common law claim of fraudulent misrepresentation, for which the duty element was
triggered by Progressive’s violation of Section 301.227.1. We agree.
Parke here asserted a common law claim against Progressive for fraudulent non-
disclosure, which in Missouri falls under the rubric of fraudulent misrepresentation. Hess v.
Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 765 (Mo. banc 2007); Richards v. ABN
AMRO Mortgage Group, Inc., 261 S.W.3d 603, 607 (Mo. App. W.D. 2008). For a claim of
fraudulent non-disclosure, liability arises from a party’s silence “where the law imposes a duty to
speak.” Hess, 220 S.W.3d at 765. Whether or not there exists a duty to disclose is determined
by the facts of each individual case. Id.
Parke asserted as the basis for Progressive’s liability that it remained silent about the
Sentra’s status as a salvage vehicle in the face of its statutory duty to disclose this status imposed
by Section 301.227.1. Section 301.227.1 provides that:
2
We use the statute in effect at the time the petition was filed. See Walsh v. Walsh, 184 S.W.3d 156, 157 (Mo. App.
E.D. 2006). When Parke commenced this action, the salvage vehicle definition was found in Section 301.010(53),
RSMo. (cum supp. 2018).
4
Whenever a vehicle is sold for salvage …, the purchaser shall forward to the
director of revenue within ten days the certificate of ownership of salvage
certificate of title … and the director shall issue a negotiable salvage certificate
of title to the purchaser of the salvaged vehicle. On vehicles purchased during
a year that is no more than six years after the manufacture’s model year
designation for such vehicle, it shall be mandatory that the purchaser apply for
a salvage title.
Parke claimed that the Sentra met the definition of a salvage vehicle as provided in Section
301.010(53)(c), in that it was “declared salvage by an insurance company as the result of
settlement of a claim.” In support, he pointed to Progressive’s internal claim file, in which
Progressive characterized the Sentra as a “total loss” and a “salvage,” settled the claim with the
prior owner, applied for a non-salvage certificate of title for the Sentra from the DOR in its own
name, and then sold the Sentra at auction through a company specializing in the sale of salvage
vehicles.
For the purposes of Point II on appeal, we do not consider whether Progressive’s actions
constituted a “declaration” of salvage under the statutes; rather, we consider solely the issue of
whether a common law claim can arise in part from a violation of Section 301.227. We find that
it can.
In general, when a statute includes measures establishing enforcement of its provisions,
courts will not recognize a private right of action for the violation of that statute, except where
the statute indicates legislative intent to establish a private cause of action. See Dierkes v. Blue
Cross and Blue Shield, 991 S.W.2d 662, 667 (Mo. banc 1999); Johnson v. Kraft Gen. Foods,
Inc., 885 S.W.2d 334, 336 (Mo. banc 1994). Separately, when a plaintiff sues not for the
defendant’s violation of the statute itself, but instead for a common law claim existing
independently of the statute, such as fraud or negligence, then the action may proceed even
though violation of the statute is an element of the common law claim. See Dierkes, 991 S.W.2d
5
at 668. “[A] statutory right of action shall not be deemed to supersede and displace remedies
otherwise available at common law in the absence of language to that effect unless the statutory
remedy fully comprehends and envelopes the remedies provided at common law.” Id. (citation
omitted). Common law remedies are intended to enforce individual rights stemming from
individual misconduct, even where that misconduct originated in the tortfeasor’s failure to follow
its statutory duties. See id.
Thus, the key issue here is whether the statutory remedy in the salvage statutes fully
comprehended and enveloped the remedies provided at common law, foreclosing a common law
claim. We find it did not, leaving space for an action in common law claiming harm from
private misconduct. Here, Section 301.229 provides that “[t]he director of revenue or his or her
representative, including … designated employees of the Missouri highway patrol shall
administer and enforce the provisions of 301.217 to 301.229.” Section 301.229.2. Likewise,
Section 301.229 provides that a violation of Section 301.227 constitutes a class A misdemeanor,
subject to criminal penalties as provided by law. Section 301.229.1.
Parke did not bring suit claiming a private right of action under the statute itself. Rather,
Parke here sought remedy for fraudulent non-disclosure, which falls under the common law
claim of fraudulent misrepresentation, asserting Progressive failed to disclose the Sentra’s status
as a salvage vehicle despite its statutory obligation to do so under Section 301.227.1, resulting in
damages to Parke. To make a submissible claim of fraudulent non-disclosure, Parke had to
prove, inter alia, Progressive remained knowingly silent about something it had a duty to
disclose. See Hess, 220 S.W.3d at 765. Section 301.227 here imposed a duty upon any
purchaser of a salvage vehicle to apply for a salvage certificate of title, and thus if Progressive
purchased a savage vehicle and then knowingly failed to apply for a salvage title, this statutory
6
violation supplied the duty element for the fraudulent misrepresentation claim made by Parke.
See id. (liability for fraudulent non-disclosure arises from party’s silence “where the law imposes
a duty to speak”).
The language of Section 301.229 does not explicitly prohibit common law remedies
stemming from violations of Section 301.227, nor does Section 301.229 set forth any civil
remedies that “fully comprehend[] and envelope[] the remedies provided at common law.”
Compare Dierkes, 991 S.W.2d at 668 (allowing common law action for breach of contract and
fraud stemming from insurance company’s violation of statute prohibiting changing rates
without approval from Missouri Department of Insurance where prescribed statutory penalties
allowed for suspension of insurer’s license) with Johnson, 885 S.W.2d at 336 (finding prescribed
statutory penalties of reinstatement and back wages adequately protected interests of employee
harmed by employer’s violation of statute prohibiting discharge due to wage-withholding
orders). Similar to Dierkes, the penalty set forth here in Section 301.229 provides only criminal
penalties and is not adequate to address the civil interests of individuals harmed by a purchaser’s
failure to comply with the salvage statutes.
Moreover, Missouri courts have already determined that the failure to comply with
Section 301.227.1 can form the basis for liability in a subsequent suit for negligence. See
O’Brien v. B.L.C. Ins. Co., 768 S.W.2d 64, 67-69 (Mo. banc 1989). In O’Brien, the Missouri
Supreme Court held that common law negligence liability could attach from an insurance
company’s failure to comply with the relevant statutory salvage requirements. Id. at 67.
Specifically, the court noted that when an insurance company fails to comply with salvage and
odometer statutes, improper conduct by a person who may later come into possession of the
certificate of title is foreseeable. Id. at 68-69. The purpose of the salvage title requirements is to
7
inform subsequent purchasers of the vehicle’s title history and, more broadly, to prevent
damaged vehicles from ending up in the hands of unsuspecting downstream consumers. See id.
at 67; see also Baugus v. Dir. of Revenue, 878 S.W.2d 39, 41 (Mo. banc 1994). Salvage title
requirements are intended to prevent exactly what Parke asserted occurred here: Progressive
failed to comply with the salvage title requirements, allowing Doxa to sell Parke a damaged
vehicle without disclosing its salvage history. 3 Under precedent established in O’Brien, Parke
can pursue a common law claim against Progressive for its failure to act in the manner it was
required to by law, which opened the door for Doxa’s foreseeable improper conduct. See
O’Brien, 768 S.W.2d at 67-69. Therefore, we find the trial court erred in granting Progressive’s
motion for summary judgment.
Point II is granted.
Point I
In his first point on appeal, Parke argues the trial court erred in granting summary
judgment in favor of Progressive because there was a genuine issue as to whether Progressive’s
description of the Sentra in its internal claim file as a “total loss” and a “salvage” constituted a
declaration that the Sentra was a “salvage vehicle” as defined by Section 301.010(53), thereby
triggering Progressive’s mandatory obligation to apply for a salvage title under Section
301.227.1. We agree.
Section 301.227.1 provides that “[w]henever a vehicle is sold for salvage …, the
purchaser shall forward to the director of revenue within ten days the certificate of ownership or
salvage certificate of title … and the director shall issue a negotiable salvage certificate of title to
the purchaser of the salvaged vehicle.” A vehicle is salvage for purposes of the statute when it
3
Parke asserted in his petition that Doxa’s advertisement represented the Sentra was “well maintained” and had “no
issues whatsoever.” Based upon these and other representations, Parke purchased the Sentra.
8
meets one of the five definitions set forth in Section 301.010(53). Parke claimed the Sentra met
the definition of a salvage vehicle under subsection (c): namely, when the vehicle “has been
declared salvage by an insurance company as a result of a settlement claim.” Section
301.010(53)(c).
This Court is limited to the record presented on appeal. In his petition, Parke claimed
Progressive had declared the Sentra a salvage vehicle as a result of an accident and had
purchased the Sentra to settle the claim, but did not then apply for a salvage certificate of title.
Progressive filed a motion to dismiss, which the trial court converted into a motion for summary
judgment, based in relevant part on an affidavit from James Kimmel (“Kimmel”), its manager of
claims, attesting Progressive had not declared the Sentra to be a salvage vehicle. Parke
responded with exhibits, attaching Progressive’s claim file, in which Progressive referred to the
Sentra as a “salvage” and a “total loss.” Progressive’s claim file also indicated it had forwarded
the Sentra to the salvage unit for processing, which had labeled the title as clean, not salvage or
junk. Progressive countered with a second affidavit from Kimmel attesting that the terms
“salvage” and “total loss” were terms of art in the insurance industry, and that by using those
terms, Progressive had not “declared” the Sentra a salvage vehicle within the meaning of the
salvage statutes.
On these facts, there is a genuine dispute over the material fact of whether Progressive
“declared” the Sentra a salvage or a total loss, and thus Progressive was not entitled to judgment
as a matter of law. See Hargis v. JLB Corp., 357 S.W.3d 574, 581 (Mo. banc 2011). Parke
requests that this Court determine on the limited facts before us whether Progressive’s internal
notations that the Sentra was a salvage and a total loss constituted a “declaration.” However,
Progressive has attested through affidavit that the terms “salvage” and “total loss” are terms of
9
art within the insurance community with specific meanings: namely, a “salvage” is damaged
property an insurer receives to reduce its loss after paying a claim, and “total loss” refers to the
insurer’s decision to pay the total value of the vehicle. We decline to decide the veracity of
Progressive’s defense, leaving to the finder of fact a decision on the credibility of Progressive’s
averments. While we acknowledge Parke’s concerns of judicial economy, a decision on the
limited facts here would be premature.
Because we find here that Parke could pursue a common law claim against Progressive
for harm stemming from Progressive’s alleged failure to follow its statutory obligation, the trial
court erred in granting summary judgment in favor of Progressive. Progressive was not entitled
to summary judgment as a matter of law, and we remand to the trial court for further
proceedings.
Point I is granted.
Conclusion
We reverse the trial court’s grant of summary judgment in favor of Progressive and
remand for further proceedings in accordance with this opinion.
_____________________
Robin Ransom, Judge
James M. Dowd, P.J., and Gary M. Gaertner, Jr., J., concur.
10