On October 29, 2019, the Supreme Court of Missouri, in State ex rel. Key Insurance Company v. Roldan, held Missouri courts may exercise personal jurisdiction over a foreign corporation when the corporation has made at least one contact with Missouri and Plaintiff’s tortious cause of action arises out of that contact.
Plaintiff Phillip Nash, a resident of Missouri, was involved in a motor vehicle collision with Josiah Wright in Jackson County, Missouri. Defendant Key Insurance Company, a Kansas corporation, insured Nash’s vehicle, through its policy issued to Nash’s daughter, a Kansas resident. Key Insurance denied Nash’s claim for coverage. Wright sued Nash in Jackson County and was later awarded $4.5 million in arbitration. Jackson County Circuit Court confirmed the award as a final judgment. Nash then sued Key Insurance in Jackson County Circuit Court to collect insurance proceeds in a classic § 537.065 agreement. (See our July 2017 blog on amendments to § 537.065, and how these agreements work.) Nash specifically alleged that Key Insurance committed the tort of bad faith refusal to settle. Key Insurance moved to dismiss Nash’s claim for lack of personal jurisdiction. The trial court denied the Motion to Dismiss. Key Insurance thereafter petitioned the Missouri Court of Appeals for a Writ of Prohibition, which was denied. But in January 2019, Key Insurance petitioned the Supreme Court of Missouri, and the Supreme Court surprisingly issued a Preliminary Writ of Prohibition, agreeing to hear defendant’s claim of lack of jurisdiction.
Key Insurance argued that the Circuit Court usurped its jurisdiction on two grounds: (1) Key
Insurance’s alleged conduct did not fall within Missouri’s long-arm statute, and (2) Key Insurance did not have sufficient minimum contacts with Missouri to satisfy the requirements and protections of the Due Process Clause.
The Missouri Supreme Court held that Missouri’s long-arm statute gives Missouri courts personal jurisdiction over a foreign corporation that commits a tortious act within Missouri. The Court found that Nash made a prima facie showing as to his tort claim against Key Insurance. In so finding, Key Insurance’s alleged conduct – its alleged bad faith refusal to settle – did fall within Missouri’s long-arm statute. The Court reasoned that because Nash’s cause of action arose out of a contract to insure property at risk in Missouri, Nash’s claim was proper under Missouri’s long-arm statute. Additionally, Nash resided in Jackson County, Missouri, and the $4.5 million judgment against Nash was confirmed by the Jackson County Circuit Court.
The Supreme Court also held that one contact with Missouri – the contact being the tortious act itself – is sufficient to satisfy constitutional due process protections. The Court reasoned that because Nash’s claim arose out of Key Insurance’s tortious contact with Missouri, Key Insurance’s contact was sufficient alone to satisfy constitutional due process.
The Supreme Court of Missouri therefore concluded that Key Insurance was not entitled to a Writ of Prohibition, and that the trial court had personal jurisdiction over the Kansas insurer. The Supreme Court quashed its preliminary writ of prohibition, allowing Nash to proceed to trial, and pursue damages against Key Insurance for bad faith refusal to settle.
Insurers and insureds alike take notice of these cases and the protections and pitfalls afforded under RSMo. § 537.065. Even with the recent statutory changes and additional requirements of a valid § 537.065 agreement, insurers should be wary and cautious in coverage determinations and any cases where § 537.065 could be properly exercised by the insured defendant.