Missouri Supreme Court Expands Insurers' Right to Intervene in Tort Actions

Background on McCrackin v. Mullen

In Jeromy McCrackin v. Tynan Mullen, et al., the Supreme Court was tasked with determining whether a circuit court wrongfully overruled Safeco Insurance Company of America’s (“Safeco”) motion to intervene in a wrongful death action for the limited purpose of seeking to stay the wrongful death action until a separate declaratory judgment action filed in federal court could be resolved. McCrackin v. Mullen, et al., No. SC100578, 701 S.W.3d 868 (Mo. banc 2024).

In the circuit court matter, Jeromy McCrackin (“McCrackin”) filed a wrongful death action against Tynan Mullen (“Mullen”) for the death of McCrackin’s son, who was shot and killed by Mullen and several others outside a pool hall in 2019. Although Mullen never requested that Safeco defend him in the wrongful death action, McCrackin sent several letters to Safeco, identifying Mullen as an insured under a homeowners policy issued to Mullen’s grandmother and requesting that Safeco settle the wrongful death claim against Mullen in exchange for payment of the liability limits.

Safeco declined McCrackin’s demands pursuant to an intentional act exclusion in the homeowners policy and filed a declaratory judgment action in federal court, seeking a declaration that Safeco’s policy did not cover McCrackin’s claims against Mullen. After Mullen and McCrackin moved to stay the declaratory judgment action until Mullen’s criminal case reached its conclusion, Safeco moved to intervene in the wrongful death action as a matter of right “for the limited purpose of staying the proceedings in [the] action until final resolution of its declaratory judgment action.”

The circuit court denied Safeco’s Motion to Intervene, and the wrongful death action proceeded to a bench trial resulting in a $16.5 million judgment against Mullen. Safeco appealed the circuit court’s denial of its Motion to Intervene.

Missouri Supreme Court’s Ruling

Although Missouri’s appellate courts have previously confirmed an insurer’s right to intervene for the sole purpose of seeking a stay while coverage is litigated in a separate declaratory judgment action, McCrackin is the first time the Missouri Supreme Court weighed in directly on this issue. In McCrackin, the Supreme Court held that Rule 52.12(a) “should be construed liberally to permit broad intervention” as “insurers situated like Safeco have an interest in protecting their right to defend the underlying tort action pursuant to Rule 52.12(a)(2), which creates the right to intervene for the limited purpose of seeking a stay in the tort action while coverage questions are litigated in a separate declaratory judgment action.” Id. at 876. Furthermore, McCrackin held that to the extent other cases suggest an insurer does not have a right to intervene for the sole purpose of seeking a stay so that coverage can be litigated in a separate declaratory judgment action, “such cases should no longer be followed.” Id. at 876, fn. 10.

Implications for Insurers

Although the Court recognized that it is unsuitable for an insurer to “have its cake and eat it too by both refusing coverage and at the same time continuing to control the terms of settlement in defense of an action it had refused to defend,” this was not what Safeco sought. Id. at 876. Rather, the Supreme Court concluded that Safeco’s conduct was appropriate as “disposition of the tort action may, as a practical matter, impair or impede Safeco’s ability to protect its interest because, if the tort action concludes prior to the declaratory judgment action, there is no longer a tort action to defend, even if the federal court determines Safeco had a duty to defend.” Id.

When faced with a coverage question, insurers should protect their interests and ensure they have an opportunity to control and manage the underlying litigation. Missouri insurers can and should lean on the intervention and stay procedure addressed in McCrackin. Given the disposition of the Missouri Supreme Court, it is clear that “[i]nsurers with good faith coverage questions should file a declaratory judgment action simultaneous with the underlying tort action and seek a stay of the tort action until the declaratory judgment action is resolved.” Id.