Ellen Keisker, et al., Appellants, and Trinity Universal Insurance Company, Respondent, v. Beatrice Farmer, et al., Respondents.

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court. Opinion

Case Style: Ellen Keisker, et al., Appellants, and Trinity Universal Insurance Company, Respondent, v. Beatrice Farmer, et al., Respondents. Case Number: SC84290 Handdown Date: 11/26/2002 Appeal From: Circuit Court of the City of St. Louis, Hon. Jimmie Edwards Counsel for Appellant: Michael F. Merritt Counsel for Respondent: Andrew D. Ryan Opinion Summary: Trinity Universal Insurance Company insured the Super Sandwich Shop, Inc., subject to certain limits on the building, personal property and business-income loss. In December 1997, two vehicles, one driven by a deputy sheriff, crashed into the Shop. In April 1998, Trinity paid the Shop more than $141,600, including the maximum $15,000 allowable for business-income loss. In January 1998, the Shop and its owner, Ellen Keisker, sued the city of St. Louis and the drivers of both vehicles for lost income and profits. One driver paid a $6,000 settlement, and the city paid $100,000 into a court fund. Trinity intervened, claiming it was owed the total amount it paid to the Shop because the Shop had assigned all causes of action to Trinity. The court awarded Trinity $100,000, and the Shop appeals. REVERSED AND REMANDED. Court en banc holds: Assignment of a claim is different than subrogation to a claim. In an assignment, the insurer receives legal title to all claims, including the exclusive right to sue under those claims. In a subrogation, the insured party retains legal title to the claims and the exclusive right to sue, although by paying the insured, the insurer has a right to seek the proceeds of the claim from the insured. Here, there was no intent by the Shop to assign its rights to Trinity. The language of the policy is ambiguous as to when the Shop can waive its rights after Trinity pays a loss. That ambiguity must be construed against Trinity, leaving Trinity with a right of subrogation, which exists to prevent unjust enrichment. The Shop already has been paid $21,000 in lost profits -- $15,000 by Trinity and $6,000 by the second driver.

Trinity is entitled to get back the $15,000 payment it made, and assuming the Shop can prove it lost at least $106,000 in profits, the Shop is entitled to the $85,000 that would remain in the court fund. Trinity's subrogation recovery must be reduced, however, by its share of litigation expenses in the proportion that its recovery bears to the total cash recovery by both Trinity and the Shop. Citation: Opinion Author: Duane Benton, Judge Opinion Vote: REVERSED AND REMANDED. Limbaugh, C.J., White, Wolff, Stith and Price, JJ., and Ulrich, Sp.J., concur. Teitelman, J., not participating. Opinion: The circuit court ruled that Trinity Universal Insurance Company -- by an "assignment" in its policy -- was entitled to an interpled fund, to the exclusion of the policyholder Super Sandwich Shop, Inc. After opinion by the Court of Appeals, this Court granted transfer. Mo. Const. art. V, sec. 10. Reversed and remanded. I. Trinity insured the Shop, subject to limits of $125,000 on the building, $50,000 on personal property, and $15,000 for business-income loss. The "Commercial Property Conditions" of the policy stated (emphasis added): TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US If any person or organization to or for whom we make payment under this Coverage Part has rights to recover damages from another, those rights are transferred to us to the extent of our payment. That person or organization must do everything necessary to secure our rights and must do nothing after loss to impair them. But you may waive your rights against another party in writing: 1.Prior to a loss to your Covered Property or Covered Income. 2.After a loss to your Covered Property or Covered Income only if, at time of loss, that party is one of the following: a. Someone insured by this insurance; b. A business firm: (1) Owned or controlled by you; or (2) That owns or controls you; or c. Your tenant. This will not restrict your insurance. On December 11, 1997, two vehicles -- one driven by a deputy sheriff -- crashed into the Shop. On April 9, 1998,

after subtracting a $500 deductible, Trinity paid the Shop $141,609.49 by three separate checks: $94,665.96 for damage to the building; $32,443.53 for damage to personal property; and $15,000 for business-income loss (not subject to a deductible). On January 10, 1998, the Shop had sued the City and both drivers for loss of income and profits. The Shop received $6,000 from settling with the second driver for policy limits. The City counterclaimed for interpleader, paying the $100,000 statutory limit into court. See sec. 537.610.2 RSMo 1994. Trinity intervened, claiming the total amount "up to and including ... the amount that Trinity paid to ... Shop ... for structural damage, contents damage, and business interruption damage" because the Shop "assigned all causes of action" to Trinity. Finding an assignment, the circuit judge awarded Trinity all $100,000. The Shop appeals. II. The threshold issue is whether the policy gave Trinity an assignment, or a right of subrogation. Interpretation of an insurance policy is a question of law, which this Court reviews de novo. See McCormick Baron Management Services, Inc. v. American Guarantee & Liability Ins. Co., 989 S.W.2d 168, 171 (Mo. banc 1999). Assignment of a claim differs from subrogation to a claim. Holt v. Myers, 494 S.W.2d 430, 437 (Mo. App. 1973). In assignment, the assignor gives all rights to the assignee. Id. By an assignment, the insurer receives legal title to the claim, and the exclusive right to pursue the tortfeasor. See State Farm Mut. Auto Ins. Co. v. Jessee, 523 S.W.2d 832, 834 (Mo. App. 1975); Kroeker v. State Farm Mut. Auto. Ins. Co., 466 S.W.2d 105, 109-10 (Mo. App. 1971). In subrogation, the insured retains legal title to the claim. Hagar v. Wright Tire & Appliance, Inc., 33 S.W.3d 605, 610 (Mo. App. 2000). By paying the insured, the insurer has a right to subrogation. Id. The exclusive right to pursue the tortfeasor remains with the insured, which holds the proceeds for the insurer. Farmers Insurance Co., Inc. v. Effertz, 795 S.W.2d 424, 426 (Mo. App. 1975). Trinity contends that the Shop assigned its claim against the City. According to Trinity, the policy's words "transfer" and "transferred" unambiguously create an assignment. This is inaccurate because while an assignment "transfers" rights, a right of subrogation can also be "transferred." See Hagar, 33 S.W.3d at 610-11. "No particular form of words is necessary to accomplish an assignment, so long as there appears from the circumstances an intention on the one side to assign ... and on the other side to receive." Effertz, 795 S.W.2d at 425. In this case, there is no intent to assign. The phrase "to the extent of our payment" limits Trinity's rights. True, this limit can appear in an assignment. See Steele v. Goosen, 329 S.W.2d 703, 711-12 (Mo. 1959); Hoorman v. White, 349 S.W.2d 379, 380 (Mo. App. 1961). The

key is the context in which the limit appears. Here, the policy permits the Shop to waive its rights prior to a loss against anyone and after a loss against co- insureds, related parties, and tenants. Again, this language limits Trinity's rights, contrary to an assignment. See Holt, 494 S.W.2d at 437. Trinity asserts that the Shop cannot waive its rights after Trinity pays the loss. The policy does provide: "[The Shop] must do everything necessary to secure [Trinity's] rights and must do nothing after loss to impair them." However, the next words of the policy say: "But [the Shop] may waive [its] rights against another party in writing:...After a loss...." On the one hand, the Shop cannot impair Trinity's rights. On the other, the Shop may waive its rights, which impairs Trinity's rights. These sentences create an ambiguity -- a duplicity, indistinctness, or uncertainty in the meaning of the language in the policy. See Martin v. U.S. Fidelity and Guar. Co., 996 S.W.2d 506, 508 (Mo. banc 1999). When policy language is ambiguous, it must be construed against the insurer. Krombach v. Mayflower Insurance Co., Ltd., 827 S.W.2d 208, 210-11 (Mo. banc 1992). By the policy, the Shop does not give all rights to Trinity. Further, the alleged assignment is ambiguous and must be construed against Trinity. There is no clear intent to create an assignment. Rather, the policy leaves Trinity with a right of subrogation. See Hagar, 33 S.W.3d at 610-11. III. Subrogation exists to prevent unjust enrichment. Tucker v. Holder, 225 S.W.2d 123, 126 (Mo. 1949). Trinity claims all $100,000 of the interpled funds in order to avoid unjust enrichment of the Shop. The Shop's petition seeks to recover only lost income and profits, not damage to the building or personal property. The Shop concedes that it would be unjustly enriched if it recovered its first $15,000 in lost profits from both Trinity and the City. In addition to the $15,000 from Trinity, the Shop received $6,000 from the second driver -- for a total of $21,000. Assuming the Shop can prove lost profits of at least $106,000, the Shop is not unjustly enriched in receiving the remaining $85,000 of the interpled funds. See Coonis v. Rogers, 429 S.W.2d 709, 713-14 (Mo. 1968); Meridian Enterprises Corp. v. KCBS, Inc., 910 S.W.2d 329, 331-32 (Mo. App. 1995). Trinity objects that the Shop -- by suing only for lost income and profits -- violates the rule against splitting a cause of action, citing General Exch. Ins. Corp. v. Young, 212 S.W.2d 396 (Mo. 1948), and State ex rel. Home Serv. Oil Co. v. Hess, 485 S.W.2d 616 (Mo. App. 1972). This rule exists to prevent harassing a defendant with multiple lawsuits. Young, 212 S.W.2d at 400; Hess, 485 S.W.2d 619. Trinity assumes that after the Shop sues for lost profits, Trinity can later sue for damage to the building and personal property. To the contrary, Trinity cannot sue the City in its own name. See Oates v. Safeco Ins. Co. of America, 583 S.W.2d 713, 717 (Mo. banc 1979); Hagar, 33 S.W.3d at 610-11.

Finally, Trinity's subrogation recovery must be reduced by its share of litigation expenses. Where one litigates to create a fund for others, those sharing must contribute a proportional part of the expenses. Jourdan v. Gilmore, 638 S.W.2d 763, 768-69 (Mo. App. 1982); Leggett v. Missouri State Life Insurance Co., 342 S.W.2d 833, 936 (Mo. banc 1960). Trinity -- by a deduction from its recovery -- must pay its share of litigation expenses in the proportion that its recovery bears to the total cash recovery by both Trinity and the Shop. IV. The judgment is reversed and the case remanded. Separate Opinion: None This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.