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Judge: Insurer must pay Mo. convention’s legal fees

KANSAS CITY (BP)–Church Mutual Insurance Company must pay part of the legal fees of the Missouri Baptist Convention (MBC) in the litigation with five agencies, a federal court has ruled.

The insurance company had sued the MBC in federal court in Kansas City, denying that the convention’s insurance policy provided any coverage for the Cole County litigation. U.S. District Judge Scott Wright disagreed. In an order issued the last week of June, Wright held that the insurance policies do provide coverage for the counterclaims filed by the agencies against the MBC, so that the insurer must pay part of the legal fees incurred in defending against those counterclaims.

Church Mutual filed motions for partial summary judgment in the case and also filed a motion for leave to file an amended complaint, in order to join the five agencies as defendants. MBC attorneys had opposed all motions, and had filed their own cross motion for partial summary judgment. The court denied the motion for leave to amend.

“MBC won the critical issue in its case against Church Mutual,” MBC attorney Michael Whitehead said. “The judge has not yet decided the specific amount to be paid, but he has decided that Church Mutual must pay for a part of the MBC legal fees. We will argue for a large percentage of the MBC fees to be paid.”

A later hearing will be held to determine the dollar amount that Church Mutual must pay. A hearing date has not yet been set. Whitehead said it has not yet been determined whether the hearing will be before the judge alone or a federal jury. Discussions with the court and the insurer’s counsel are still underway.

“The court order means we won the heart of the case, that Church Mutual is liable for breach of contract, and the only question remaining is, ‘How much’ or ‘What portion of total past fees should be paid?’ That will make for a much shorter trial,” Whitehead said.

In another portion of the ruling, the trial judge ruled that the insurer may not be liable for “punitive damages” under the MBC’s counterclaim for bad faith. The convention had argued that Church Mutual paid part of the attorneys’ fees for three of the five agencies in the case. Those three agencies also had policies with Church Mutual. Meanwhile, the insurer refused to pay any portion of the fees of the Convention.

“By funding the opposition, Church Mutual has enabled the agency lawyers to protract this litigation,” Whitehead said. “By refusing to pay the MBC’s fee claims, Church Mutual acted in bad faith toward the MBC as its insured.

“We believe a jury should be permitted to award punitive damages for bad faith, as well as actual damages for breach of contract.”

The federal court win marked the second major victory by the MBC in a month in the legal effort to restore the five agencies to the MBC family. On May 30, the state court of appeals ruled in favor of the MBC and ordered the trial court to proceed with the case allowing messengers and the Executive Board to represent the Convention in the remainder of the proceedings. The agencies have appealed that ruling, and a decision is expected from the court of appeals or the Missouri Supreme Court in August or September.

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