Ronald C. Prater, Deann Rae Thompson, Gwendalyn Gonzales, and Lucille Curtman vs. United Services Automobile Association, USAA General Indemnity Company, Dakota Ball, by and through his Mother and Guardian, Patricia Ball, Stacy Ball, and Christiana Gruendler Ball

RONALD C. PRATER, DEANN RAE THOMPSON, GWENDALYN GONZALES, and LUCILLE CURTMAN, Appellants, v.

UNITED SERVICES AUTOMOBILE ASSOCIATION, USAA GENERAL INDEMNITY COMPANY, DAKOTA BALL, by and through his Mother and Guardian, PATRICIA BALL, STACY BALL, and CHRISTIANA GRUENDLER BALL, Respondents. ) ) ) ) ) ) ) ) ) ) ) ) ) )

WD84049

APPEAL FROM THE CIRCUIT COURT OF JOHNSON COUNTY THE HONORABLE WILLIAM B. COLLINS, JUDGE

BEFORE DIVISION ONE: ALOK AHUJA, PRESIDING JUDGE, LISA WHITE HARDWICK, AND ANTHONY REX GABBERT, JUDGES

Ronald C. Prater, Deann Rae Thompson, Gwendalyn Gonzales, and Lucille Curtman (collectively, "Appellants") appeal from the judgment dismissing their equitable garnishment claim against United Services Automobile Association ("USAA"). Appellants contend the circuit court erred in dismissing their claim with prejudice because their petition stated a cause of action upon which relief Modified August 31, 2021

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can be granted. Appellants also argue that the court erred in denying them leave to file a second amended petition. For reasons explained herein, we affirm. FACTUAL AND PROCEDURAL HISTORY On February 6, 2011, Dakota Ball ("Dakota") 1 was involved in a car accident in Pulaski County that resulted in injuries to Ronald Prater ("Ronald") and the death of his wife, Juanita Prater ("Juanita"). At the time of the accident, Dakota lived with his father, Stacy Ball ("Stacy"), and stepmother, Christiana Gruendler Ball ("Christiana"). Stacy maintained an automotive insurance policy from USAA that listed the car Dakota was driving at the time of the accident as a covered vehicle and Dakota as an additional covered driver. Stacy's policy provided bodily injury coverage up to $25,000 per person and $50,000 per accident. Christiana maintained a separate automotive insurance policy through USAA General Indemnity Company ("GIC") that listed a different vehicle as the covered vehicle and no additional covered drivers. Christiana's policy provided bodily injury coverage up to $25,000 per person and $50,000 per accident. Ronald brought suit against Dakota in Pulaski County to recover damages for his personal injuries, while Gonzales, Thompson, and Curtman filed a separate lawsuit, also in Pulaski County, against Dakota for the wrongful death of Juanita. USAA provided Dakota with an attorney to represent him in these lawsuits. The

1 Where multiple people have the same last name, we will refer to them by their first names. No familiarity or disrespect is intended.

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cases were removed to federal court, remanded to state court, and transferred pursuant to a change of venue to Greene County, where they were consolidated. In December 2017, the court entered a consent judgment against Dakota and (1) in favor of Ronald for his personal injuries in the amount of $578,851.72 ($500,001.00 in damages plus $78,850.72 in prejudgment interest), plus post- judgment interest at the rate of 6.42% per annum; (2) in favor of Gonzales, Thompson, and Curtman for Juanita's wrongful death in the amount of $578,851.72 ($500,001 in damages plus $78,850.72 in prejudgment interest), plus post-judgment interest at the rate of 6.42% per annum; and (3) in favor of all Appellants for statutory court costs in the amount of $6,968.35. The court also approved the Section 537.065 2 agreement that Appellants and Dakota had entered into with USAA's expressed approval. After the consent judgment was entered, USAA paid $19,468.35 ($12,500.00 plus $6,968.35 in court costs) to Ronald and $12,500 to Gonzales, Thompson, and Curtman. 3

Meanwhile, in October 2017, GIC filed a lawsuit in Greene County against Appellants requesting a declaratory judgment stating that Christiana's insurance policy did not require GIC to indemnify Dakota for any judgment entered against him. USAA was not a party to GIC's declaratory judgment lawsuit, as it concerned coverage provided by only Christiana's GIC policy and not Stacy's USAA policy.

2 All statutory references are to the Revised Statutes of Missouri 2016.

3 The parties' Section 537.065 agreement indicates that USAA had already paid, under Stacy's policy, $12,500.00 to the Praters' daughter, Olivia, who was in the car at the time of the accident, and $12,500.00 to the parents of Corey Parker, another person who died in the accident.

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While GIC's declaratory judgment action was pending in Greene County, Appellants filed the present action in Johnson County against USAA and GIC on March 1, 2018. In their initial petition, Appellants stated that they were asserting claims of equitable garnishment and declaratory judgment. Appellants alleged that USAA and GIC had "not paid the supplementary payments coverages for the prejudgment interest, the post judgment interest, and all of the court costs due and owing on [Appellants]' final judgments." They further alleged that USAA and GIC had "not paid [Appellants] all that is owed and covered by the Ball USAA and [GIC] auto policies at issue including the liability coverages at issue." In their prayer for relief, they also requested first aid coverage. As part of their declaratory judgment claim, Appellants asked that the court declare whether USAA and GIC "acted in bad faith and breached their fiduciary duties owed to the Ball Defendants." On March 16, 2018, GIC filed a motion to dismiss the Johnson County case and to transfer venue. In its motion to transfer venue, GIC alleged that no parties resided in Johnson County, the injury did not occur in Johnson County, and Appellants had included a claim for the tort of bad faith, which GIC asserted would require the action to be in Greene County. In its motion to dismiss, GIC asserted five grounds for dismissal: (1) in Dakota's Section 537.065 agreement with Appellants, he assigned any claim he had or may have had against USAA, including a breach of contract claim, to Appellants and, because a breach of contract claim is an adequate legal remedy, Appellants cannot not maintain an

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equitable garnishment action or a declaratory judgment action against USAA; (2) Appellants failed to state a claim upon which relief can be granted because they did not recite the portions of the insurance policy under which they were seeking coverage or attach a copy of the insurance policy to the petition in violation of Rule 55.22, 4 and they did not plead facts demonstrating "coverage under the policy," which is an essential element of an equitable garnishment claim; (3) Appellants violated pleading rules prohibiting prolix allegations; (4) abatement, as GIC's declaratory judgment action against Appellants was pending in Greene County and many of the same parties were present in both cases for an identical claim; and (5) Appellants' request for the award of court costs was moot because the $6,968.35 award of costs was paid in full following the entry of the consent judgment in Greene County, and any request for additional costs was unripe because no additional costs had been taxed. Appellants responded to GIC's motion to dismiss by filing a first amended petition on March 21, 2018. In their first amended petition, Appellants removed their request for a declaration as to whether USAA and GIC acted in bad faith. Their equitable garnishment claim remained the same. USAA filed a motion to transfer venue in which they incorporated GIC's motion to transfer venue, arguing that no parties resided in Johnson County, the accident occurred in Pulaski County, and the suit was based on a Greene County

4 All rule citations are to Missouri Supreme Court Rules (2020), unless otherwise indicated.

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consent judgment. On April 9, 2018, USAA and GIC also filed a joint motion to dismiss Appellants' first amended petition. In their motion, USAA and GIC incorporated all of the grounds from GIC's prior motion to dismiss and noted that, in GIC's declaratory judgment action that was pending in Greene County, the court entered an order finding that Appellants' Johnson County equitable garnishment action "should be viewed as [a] compulsory counterclaim in the instant action and sought to be re-asserted here." Meanwhile, GIC's Greene County declaratory judgment action against Appellants was ultimately transferred to Phelps County, where the court entered judgment in favor of GIC, declaring that GIC had no duty to defend or indemnify Dakota under Christiana's policy. The Southern District of this court affirmed the judgment in USAA General Indemnity Co. v. Prater, 612 S.W.3d 215 (Mo. App. 2020), and our Supreme Court denied transfer. Based on the holding in GIC's declaratory judgment action that Christiana's policy provided no coverage to Dakota, GIC moved for summary judgment on Appellants' equitable garnishment and declaratory judgment claims in this case. The court granted summary judgment in favor of GIC, and Appellants filed an appeal in this court. We affirmed the grant of summary judgment in favor of GIC in Prater v. USAA, No. WD83922 (Mo. App. July 27, 2021). After the circuit court granted summary judgment in favor of GIC, USAA noticed up its motion to dismiss Appellants' first amended petition for hearing on September 14, 2020. Ten days before the hearing, Appellants filed a motion for

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leave to file a second amended petition. Appellants' proposed second amended petition added a claim of bad faith settlement practices against USAA, asserting that Dakota had assigned this claim to Appellants as part of the Section 537.065 agreement. USAA filed suggestions in opposition to Appellants' motion for leave to file the second amended petition. The circuit court held a hearing on September 14, 2020, on Appellants' motion for leave to amend and USAA's motion to dismiss. At the end of the hearing, the court stated, "I'm going to grant Defense's. [sic] Send me an order, [USAA's counsel], and then that way everybody can get up to the Court of Appeals on everything. They'll take care of it all." The clerk made a docket entry that stated only, "Motion Hearing Held." Later that day, USAA's counsel filed a proposed judgment that granted USAA's motion to dismiss Appellants' petition with prejudice and denied Appellants' motion for leave to amend. The next day, at 9:17 a.m., the text of the September 14, 2020 "Motion Hearing Held" docket entry was edited to state, "CASE CALLED. [PLAINTIFFS] APPEAR[ ] BY ATTORNEY SAM GONZALEZ. [USAA] APPEARS BY MICHEAL BELANCIO. [USAA'S] MOTION TO DISMISS IS GRANTED. [APPELLANTS'] MOTION TO FILE AMENDED PETITION IS GRANTED. /S/ WBC amm." Two minutes after this docket entry was made, Appellants electronically filed their second amended petition. Later that day, however, at 12:51 p.m., the September 14, 2020 "Motion Hearing Held" docket entry was again edited to state, "CASE CALLED. [PLAINTIFFS] APPEAR[ ] BY ATTORNEY SAM GONZALEZ. [USAA]

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APPEARS BY MICHEAL BELANCIO. [USAA'S] MOTION TO DISMISS IS GRANTED. [APPELLANTS'] MOTION TO FILE AMENDED PETITION IS DENIED. /S/ WBC amm." The court also filed its signed written judgment granting USAA's motion to dismiss and denying Appellants' motion for leave to amend. Appellants filed this appeal. After the appeal was filed, USAA filed a motion to strike Appellants' second amended petition. The circuit court did not rule on the motion to strike. ANALYSIS The Operative Petition Before addressing the merits of Appellants' appeal, we must first determine which version of their petition the court dismissed. Appellants argue that, based upon the docket entry for the September 14, 2020 hearing that was made at 9:17 a.m. on September 15, 2020, the court granted them leave to file their second amended petition, they properly filed their second amended petition and, therefore, their second amended petition was the petition that the court dismissed. Additionally, they assert that the court's failure to grant USAA's motion to strike their second amended petition constitutes further evidence that the second amended petition was the operative petition. The record before us clearly indicates that the 9:17 a.m. docket entry stating that Appellants' motion for leave to file their second amended petition was granted was nothing more than an erroneous docket entry. The court's statements directing USAA's counsel to prepare an order "and then that way everybody can get up to the Court of Appeals on everything" indicates that it

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intended to dispose of all pending matters by granting the motion to dismiss and denying the motion for leave to amend. The erroneous docket entry was not a judgment under Rule 74.01(a) because it was not denominated a "judgment" or "decree." The court entered a corrected docket entry denying the motion for leave to amend within hours of the erroneous docket entry and, more importantly, contemporaneously electronically filed its written judgment stating that the Appellants' motion for leave to amend was denied. The reason the circuit court did not grant USAA's motion to strike Appellants' second amended petition was because it had no jurisdiction to do so. "When a notice of appeal is filed, the trial court loses jurisdiction of the case and may only exercise purely ministerial or executive functions." In re E.F.B.D., 166 S.W.3d 143, 145 (Mo. App. 2005). Appellants filed their notice of appeal on September 17, 2020. USAA filed its motion to strike Appellants' second amended petition on September 22, 2020. The circuit court had no jurisdiction to rule on the motion to strike; therefore, its failure to grant the motion to strike Appellants' second amended petition has no bearing on the determination of which petition was operative. The first amended petition was the operative petition. Dismissal of Equitable Garnishment Claim In Point I, Appellants contend the circuit court erred in dismissing their equitable garnishment claim against USAA. 5 We review the grant of a motion to

5 Although their point relied on alleges that the court erred in dismissing their "claims" against USAA, the only claim from their first amended petition that Appellants discuss in their argument is their equitable garnishment claim. They do not address the dismissal of their declaratory

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dismiss de novo and will consider only whether the grounds stated in the motion supported the dismissal. Aldridge v. Francis, 503 S.W.3d 314, 316 (Mo. App. 2016). The ground for dismissal that is dispositive in this case is that Appellants' first amended petition failed to state a claim upon which relief can be granted. "A motion to dismiss for failure to state a claim on which relief can be granted is an attack on the plaintiff's pleadings." R.M.A. by Appleberry v. Blue Springs R-IV Sch. Dist., 568 S.W.3d 420, 424 (Mo. banc 2019) (citation omitted). It is "only a test of the sufficiency of the plaintiff's petition." Id. (citation omitted). We accept the allegations in the petition as true and grant the plaintiffs all reasonable inferences therefrom. Campbell v. Cty. Comm'n of Franklin Cty., 453 S.W.3d 762, 767 (Mo. banc 2015). We do not weigh the factual allegations to determine their credibility or persuasiveness. Bromwell v. Nixon, 361 S.W.3d 393, 398 (Mo. banc 2012). "The petition is reviewed in an almost academic manner, to determine if the facts alleged meet the elements of a recognized cause of action or of a cause that might be adopted in that case." Keveney v. Mo. Military Acad., 304 S.W.3d 98, 101 (Mo. banc 2010). "To determine the propriety of a dismissal for failure to state a claim, we must first consider the elements of each of the causes of action to determine what facts needed to be alleged in order to sufficiently state a claim." McConnell v. W. Bend Mut. Ins. Co., 606 S.W.3d 181, 189 (Mo. App. 2020). Appellants' first

judgment claim; therefore, we will not address it either. "We need not address an issue that is raised in a point but abandoned in argument." In Interest of M.T.E.H., 468 S.W.3d 383, 396 (Mo. App. 2015).

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amended petition sought equitable garnishment under Section 379.200 against USAA. To establish an equitable garnishment claim, judgment creditors must prove: "(1) that they obtained a judgment in their favor against the insured; (2) that the insurer's policies were in effect when the incident occurred; and (3) that the insurer's policies covered the damages awarded in the underlying judgment against the insured." Id. (quoting Kretsinger Real Estate Co. v. Amerisure Ins. Co., 498 S.W.3d 506, 510-11 (Mo. App. 2016)) (internal quotation marks omitted). Thus, in their first amended petition, Appellants needed to allege factual allegations demonstrating (1) that they had a judgment in their favor against Dakota; (2) that USAA's policy was in effect when they suffered their injuries; and (3) that USAA's policy covered the damages awarded against Dakota. See id. In its motion to dismiss, USAA alleged that Appellants failed to sufficiently plead the third element. Specifically, USAA first argued that Appellants did not recite verbatim the portions of the insurance policy under which they were asserting coverage or attach a copy of the insurance policy to the petition as required by Rule 55.22(a). Appellants acknowledge that they did not comply with this requirement but argue that it did not warrant dismissal with prejudice. We agree that Appellants' noncompliance with Rule 55.22(a) alone did not warrant dismissal with prejudice, particularly in light of the Supreme Court's recent amendment to Rule 55.22 providing that the "court may, upon motion of a party or of its own accord, dismiss a cause of action without prejudice for failure to comply" with the rule. Rule 55.22(d) (2021) (emphasis added). Appellants'

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noncompliance with Rule 55.22(a), however, only compounded the problem created by the other pleading deficiency that USAA asserted, which was that Appellants failed to plead facts, not conclusions, demonstrating coverage under the policy for the damages awarded against Dakota. In McConnell, this court explained the requirement that plaintiffs plead ultimate facts and not conclusory allegations of fact or legal conclusions: "As is often said, Missouri is a fact-pleading state." R.M.A. by Appleberry, 568 S.W.3d at 425. And, though the facts that must be pleaded need not be evidentiary facts, they must, at a minimum, be ultimate facts. Id. "Ultimate facts are . . . issuable, constitutive, or traversable facts essential to the statement of the cause of action. . . ." Musser v. Musser, 281 Mo. 649, 221 S.W. 46, 50 (1920). In other words, "ultimate facts are those the jury must find to return a verdict for the plaintiff." R.M.A. by Appleberry, 568 S.W.3d at 425.

"Although we treat all of the factual allegations in a petition as true, and liberally grant to plaintiffs all reasonable inferences therefrom, 'conclusory allegations of fact and legal conclusions are not considered in determining whether a petition states a claim upon which relief can be granted.'" Hendricks v. Curators of Univ. of Mo., 308 S.W.3d 740, 747 (Mo. App. 2010) (quoting Willamette Indus., Inc. v. Clean Water Comm'n, 34 S.W.3d 197, 200 (Mo. App. 2000)). "It is axiomatic that legal conclusions cannot be pleaded as ultimate facts." Musser, 221 S.W. at 50.

606 S.W.3d at 190. Appellants argue that their allegations that USAA had not paid prejudgment or post-judgment interest and their request in their prayer for first aid expenses constituted sufficient factual allegations to plead that coverage under those provisions in the policy existed for the damages awarded against Dakota. These

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were not factual allegations, however, but were merely conclusory allegations of coverage. Appellants pleaded no facts to establish what the policy's provisions for prejudgment interest, post-judgment interest, and first aid coverage actually allowed, nor did they plead any facts establishing how those provisions applied to the damages awarded against Dakota. For example, the first amended petition contained no factual allegations whatsoever regarding the incurrence of first aid expenses, let alone how much of the damages awarded against Dakota were for first aid expenses. A "bare allegation of coverage is plainly a legal conclusion, wholly lacking in supporting facts, and is insufficient to preclude dismissal." Id. at

1. Notably, Appellants were aware of both the insufficiency of their allegations

and their noncompliance with Rule 55.22(a), as GIC asserted these as grounds for dismissing Appellants' original petition, yet Appellants chose not to correct these deficiencies when they filed their first amended petition. Appellants' first amended petition failed to provide sufficient factual support for the essential element that USAA's policy covered the damages awarded against Dakota; therefore, the circuit court did not err in dismissing the petition with prejudice. Because we find dismissal on this ground was appropriate, we need not address Appellants' challenges to the remaining grounds asserted in USAA's motion to dismiss. Point I is denied. Denial of Leave to Amend Petition In Point II, Appellants contend the circuit court erred in denying their motion for leave to file their second amended petition to add a claim for bad faith

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settlement practices. 6 They argue that justice requires the amendment and that the amendment would cause no injustice or prejudice to USAA. Rule 55.33(a) states that leave to amend a pleading "shall be freely given when justice so requires." While this rule provides for liberally allowing amendments to pleadings, it does "not confer an absolute right to file even a first amended petition." Sheffield v. Matlock, 587 S.W.3d 723, 731 (Mo. App. 2019) (citation omitted). The circuit court has discretion to deny leave to amend, and we will not disturb its decision unless the appellant demonstrates that the court "palpably and obviously abused its discretion." Id. (citation omitted). "Judicial discretion is abused when the court's ruling is clearly against the logic of the circumstances presented to the court and is so unreasonable and arbitrary that it shocks the sense of justice and indicates a lack of careful, deliberate consideration." Id. (citation omitted). In our review of the circuit court's decision to deny leave to amend, "we look to see whether justice is furthered or subverted by the course taken." Eckel v. Eckel, 540 S.W.3d 476, 488 (Mo. App. 2018) (quoting Tisch v. DST Sys., Inc., 368 S.W.3d 245, 257 (Mo. App. 2012)). Factors the court considers to determine whether the court erred in denying leave to amend include: "(1) the hardship to

6 In their argument under Point II, Appellants also assert that the court should have allowed it to file the second amended petition to correct the pleading deficiencies raised in USAA's motion to dismiss. Because this argument is not fairly encompassed by the point relied on, we will not address it. Geiler v. Liberty Ins. Corp., 621 S.W.3d 536, 549 (Mo. App. 2021). Gratuitously, we note that Appellants' proposed second amended petition did not, in fact, correct the pleading deficiencies that warranted dismissal of their equitable garnishment claim.

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the moving party if leave to amend is denied; (2) the moving party's reasons for omitting the matter from the original pleading; and (3) any injustice that would result to the nonmoving party were leave to amend granted." Id. (quoting Tisch, 368 S.W.3d at 257). In applying these factors, we keep in mind that "[o]ur liberal amendment rules are not meant to be employed as a stratagem of litigation. Rather, the purpose of the grant of an amendment is to allow a party to assert a matter unknown or neglected from inadvertence at the time of the original pleading." Tisch, 368 S.W.3d at 258 (quoting Kenley v. J.E. Jones Constr. Co., 870 S.W.2d 494, 498 (Mo. App. 1994)). "There is no abuse of discretion in denying the amended pleadings of parties who fail to show the pleadings include any facts that were unknown when the original pleading was filed." Id. In this case, Appellants have failed to show that the facts supporting their claim for bad faith settlement practices were unknown to them when they filed either their original or first amended petitions in March 2018. Appellants contend that they decided to pursue a cause of action for bad faith settlement practices after they gained information through discovery for their equitable garnishment claim, but they do not specify what that information was or through what discovery it was obtained. In fact, the docket sheet does not indicate any discovery was conducted on the equitable garnishment claim. 7 While Appellants

7 In their reply brief, Appellants acknowledge that no discovery had been conducted on the equitable garnishment claim and use that lack of discovery to argue that the amendment should have been allowed because the case was "in the early stages of litigation."

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assert that one allegation in their second amended petition alleged a bad faith act that was purportedly ongoing until after Appellants filed their equitable garnishment action, USAA correctly notes that an exhibit that Appellants attached to their second amended petition shows that the date that this purported bad faith act ended was actually two years earlier than the date alleged in the second amended petition. 8 Therefore, this fact was known to Appellants when they filed their original and first amended petitions, and Appellants cannot use their own typographical error to argue otherwise. Additionally, Appellants' bare contention that "many other allegations . . . certainly indicate continuing bad faith after the equitable garnishment lawsuit was initially filed" is insufficient to demonstrate that facts supporting their bad faith claim were unknown to them when they filed their equitable garnishment action. Moreover, Appellants' early awareness of their bad faith claim is further evidenced by the fact that they included allegations of bad faith in their original petition. After GIC moved to transfer venue to Greene County based upon those allegations, however, Appellants filed their first amended petition omitting them. 9

The circuit court could have reasonably believed that, in omitting the bad faith

8 Specifically, Appellants alleged in their second amended petition that USAA evidenced bad faith because it "refused to allow Dakota Ball to accept any of [Appellants]' settlement offers until February 23, 2019." An exhibit that Appellants attached to their second amended petition shows, however, that USAA's consent to Dakota's accepting Appellants' settlement offer was given on February 23, 2017.

9 GIC alleged that, because Appellants' bad faith claim was a tort, and damages in the tort of bad faith customarily occur by the entry of judgment, Section 508.010.4 required that venue be in Greene County, where the consent judgment was entered.

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allegations to avoid a transfer of venue and then seeking to reassert a bad faith claim two and a half years later, Appellants were attempting to employ our liberal amendment rules as an improper stratagem of litigation. Under these circumstances, the circuit court did not palpably and obviously abuse its discretion in denying Appellants leave to file their second amended petition. Point II is denied. CONCLUSION The judgment is affirmed.

____________________________________ LISA WHITE HARDWICK, JUDGE ALL CONCUR.