Boulevard RE Holdings, LLC v. Mixon Insurance Agency, Inc. ( 2023 )

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 22-1895
___________________________
Boulevard RE Holdings, LLC
lllllllllllllllllllllPlaintiff - Appellant
v.
Mixon Insurance Agency, Inc.
lllllllllllllllllllllDefendant - Appellee
____________
Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
____________
Submitted: January 10, 2023
Filed: July 20, 2023
____________
Before SMITH, Chief Judge, WOLLMAN and LOKEN, Circuit Judges.
____________
SMITH, Chief Judge.
Boulevard RE Holdings, LLC, (Boulevard) sued Mixon Insurance Agency,
Inc., (Mixon), alleging breach of contract and negligent procurement of insurance.
Mixon moved for summary judgment. The district court1 granted Mixon’s motion.
Boulevard now appeals that order. For the following reasons, we affirm.
I. Background
A. Factual History
Boulevard owned commercial property in which BMG Service Group, LLC,
(BMG) operated a bar (Property). Boulevard entered into a contract for deed with
BMG for the sale of the Property for $1,275,000. Under the contract, Boulevard
retained the Property’s legal title until BMG paid the purchase price in full. The
contract also obligated BMG to obtain, at its own expense, fire insurance in the
amount of the purchase price. The insurance was to be issued in Boulevard’s name.
BMG approached Mixon, an insurance broker, and requested coverage equal
to the purchase price of the Property. BMG also requested to have Boulevard listed
as a “named insured, loss payee, additional insured, and mortgagee” on the insurance
policy. Boulevard RE Holdings v. Mixon Ins. Agency, No. 4:20-cv-01288-SEP, 2022
WL 950820, at *1 (E.D. Mo. Mar. 30, 2022) (quoting R. Doc. 40, at ¶ 4). Mixon
procured the policy from Berkley Assurance Co. The policy was issued in Mixon’s
name and contained an endorsement called the Fire Protective Safeguard
Endorsement (Endorsement). The Endorsement required the insured to maintain a
working automatic sprinkler system on the Property. The Endorsement also excluded
all coverage for loss or damage by fire if the sprinkler system was inoperative.
However, the policy, as issued, did not list Boulevard as a “named insured, loss
payee, additional insured, and mortgagee.” Id. (quoting R. Doc. 40, at ¶ 4). Mixon did
not inform Boulevard or BMG that Boulevard was not listed.
1
The Honorable Sarah E. Pitlyk, United States District Judge for the Eastern
District of Missouri.
-2-
Approximately one year later, the Property was destroyed by fire. At the time
of the fire, the sprinkler system was inoperative.
B. Procedural History
1. The Berkley Lawsuit
Boulevard submitted a proof of loss to Berkley Assurance, claiming to have an
interest in the property as a “lender.” Id. at *2 (quoting R. Doc. 35, at ¶ 8). In
response to the claim, Berkley Assurance filed a declaratory action (Berkley
Lawsuit),2 seeking an order that Boulevard had no coverage under the policy and that
Berkley Assurance thus had no obligation under the policy to pay Boulevard.
Boulevard then filed a third-party complaint against Mixon, alleging breach of
contract and negligent procurement of insurance. Boulevard contended that it was an
intended third-party beneficiary of BMG’s insurance purchase through Mixon.
Boulevard’s complaint alleged that it was “foreseeably damaged” in the amount of
$1,275,000, as a direct result of both Mixon’s negligent procurement of the policy
and Mixon’s breach of the contract to procure the policy. Appellant’s App. at 6, 8.
Berkley Assurance moved for summary judgment against Boulevard. The
district court granted Berkley Assurance’s motion. It held that Boulevard was not
entitled to recover as a mortgagee because sellers in a contract for deed are not
mortgagees under Missouri law. The district court concluded that including
Boulevard in the policy as a mortgagee would be a material misrepresentation and
would void the policy as a result. The district court also concluded that Boulevard
was not an additional insured and that, even if it were, noncompliance with the
Endorsement barred recovery.
2
Berkley Assurance Co. v. BMG Service Gr., et al., No. 4:18-cv-02082-SEP,
2020 WL 5632440 (E.D. Mo. Sept. 21, 2020).
-3-
Additionally, Mixon moved to sever Boulevard’s third-party complaint against
it. The district court granted Mixon’s motion to sever. Thus, only Boulevard’s third-
party complaint against Mixon remained.
2. Boulevard’s Complaint Against Mixon
Mixon moved for summary judgment against Boulevard. It argued that
Boulevard was collaterally estopped from relitigating the issues decided in the
Berkley Lawsuit. Mixon also argued that Boulevard did not suffer any damages
because Boulevard could not have been included as a mortgagee to the policy under
Missouri law and “because . . . had Boulevard . . . been included as an additional
insured, the . . . Endorsement would nonetheless have barred Boulevard[’s] . . .
recovery.” Boulevard RE, 2022 WL 950820, at *2.
Boulevard, in opposition, argued that the Berkley Lawsuit did not address the
issues underlying its claims against Mixon and, thus, did not have preclusive effect.
Specifically, Boulevard argued, among other things, that the Berkley Lawsuit “did not
reach whether Mixon was negligent when it . . . failed to discover and inform BMG
or Boulevard . . . that Boulevard was not actually a mortgagee and the policy was not
obtained in the manner requested.” Id. at *3. Boulevard argued that such failure
caused its damages, not noncompliance with the Endorsement. Boulevard asserted
that Mixon’s failure prevented Boulevard from looking for alternatives to protect its
interest in the Property and caused it to suffer losses it may not have otherwise
incurred. In support, Boulevard relied on Bell v. O’Leary, 744 F.2d 1370, 1372–73
(8th Cir. 1984). Bell held that an insurance broker’s failure to inform the insureds that
their insurance policies were erroneously issued caused damages by “foreclos[ing]
the opportunity to consider other options.” Id. at 1373.
The district court granted Mixon’s summary judgment motion. It agreed that
Boulevard was collaterally estopped from relitigating the issues decided in the
Berkley Lawsuit. The district court concluded that Boulevard could not prove that
-4-
Mixon caused Boulevard any damages because Boulevard’s alleged damages were
“caused by its exclusion from coverage under the . . . Endorsement.” Boulevard RE,
2022 WL 950820, at *6.
The district court also distinguished Bell and held that “Mixon had no duty to
know or find out whether Boulevard . . . was a mortgagee under applicable state
laws.” Id. at *8. It concluded that the insurance agent in Bell could be charged with
knowing “relevant insurance-related federal regulations” and that such information
was readily accessible to the agent. Id. The court contrasted that with the information
at issue in this case: whether Boulevard could be listed as a mortgagee on the policy.
This, according to the district court, was a legal question that required examination
of “complex legal issues” under Missouri law. Id. The district court held that the
answer to this question was not something an insurance professional could be
reasonably expected to know or discover. The court concluded that “Mixon had no
duty to know or find out whether Boulevard . . . was a mortgagee under applicable
state laws.” Id. This appeal followed.
II. Discussion
On appeal, Boulevard challenges the district court’s conclusions that Mixon
had no duty to know or discover whether Boulevard was a mortgagee under Missouri
law and that Mixon’s actions did not cause Boulevard’s alleged damages.
A. Standard of Review
We review the district court’s grant of summary judgment de novo. Purscell
v. Tico Ins., 790 F.3d 842, 846 (8th Cir. 2015). “When reviewing a grant or denial of
summary judgment, this Court considers the evidence in the light most favorable to
the nonmoving party and draws all reasonable inferences in that party’s favor.” PHL
Variable Ins. v. Fulbright McNeill, Inc., 519 F.3d 825, 828 (8th Cir. 2008) (internal
quotation marks omitted). We will affirm “only if there is no genuine dispute as to
-5-
any material fact and the moving party is entitled to judgment as a matter of law.”
Gunter v. Farmers Ins. Co., 736 F.3d 768, 773 (8th Cir. 2013).
B. Analysis
Even assuming that the district court erred in concluding that Mixon did not
have a duty to know or discover whether Boulevard was a mortgagee, summary
judgment in favor of Mixon was proper because Boulevard cannot show Mixon
caused its alleged damages.
The operative complaint raises two causes of action against Mixon: negligent
failure to procure insurance and breach of contract. Under Missouri law, both causes
of action require showing that the defendant caused the plaintiff to suffer damages.
Busey Truck Equip., Inc. v. Am. Fam. Mut. Ins. Co., 299 S.W.3d 735, 738 (Mo. Ct.
App. 2009) (“To prevail on a claim of negligent failure to procure insurance, the
plaintiff must plead and prove that (1) the agent agreed to procure, for compensation,
insurance from the insurance company, (2) the agent failed to procure the agreed
upon insurance and, in so doing, failed to exercise reasonable care and diligence, and
(3) as a result, the plaintiff suffered damages.” (emphasis added)); Moore v. Firstar
Bank, 96 S.W.3d 898, 902 (Mo. Ct. App. 2003) (“In breach of contract actions, a
party must show (1) the existence of an enforceable contract between the parties to
the action; (2) that mutual obligations had arisen under its terms; (3) that the party
being sued had not performed obligations imposed by the contract; and (4) that the
party seeking recovery was damaged as a result.” (emphasis added)).
Missouri applies “the ‘but for’ test for causation . . . in all cases except those
involving two independent torts, either of which is sufficient in and of itself to cause
the injury.” Callahan v. Cardinal Glennon Hosp., 863 S.W.2d 852, 862–63 (Mo.
1993) (en banc). Under the “but for” test, “‘the defendant’s conduct is a cause’ of the
event if the event would not have occurred ‘but for’ that conduct.” Id. at 860–61
(quoting Prosser and Keeton on Torts, § 41 at 266 (5th ed. 1984)). Missouri has
-6-
applied a similar analysis to breach-of-contract claims. See Newell Rubbermaid, Inc.
v. Efficient Sols., Inc., 252 S.W.3d 164, 177–78 (Mo. Ct. App. 2007) (applying the
same causation analysis to plaintiff’s breach-of-contract and negligence claims); see
also Essex Contracting, Inc. v. Jefferson Cnty., No. ED89269, 2008 WL 1957532, at
*13 (Mo. Ct. App. May 6, 2008) (affirming award of damages in breach-of-contract
claim because damages would not have occurred “but for [defendants’] breach of
contract”), rev’d on other grounds, 277 S.W.3d 647 (Mo. 2009).
Here, both causes of action are based on Boulevard’s claims that Mixon agreed
but failed to have Boulevard named as a mortgagee on the policy and that Mixon
failed to notify Boulevard of this. On the record facts, even if Boulevard had been
named as a mortgagee, coverage would still be barred because of the Endorsement.
The Endorsement required the Property to have a working sprinkler system. The
Property was destroyed by a fire that occurred while the Property lacked a working
sprinkler system. Indeed,
[h]ad Mixon procured the Policy in precisely the manner requested by
BMG, and had the Policy issued with Boulevard . . . listed as a
mortgagee or other additional insured, Boulevard . . . would nonetheless
be in the same position in which it now finds itself—without available
coverage under the Policy, due to the exclusion under the Endorsement.
Boulevard RE Holdings, 2022 WL 950820, at *7.
Boulevard concedes this point. However, it argues causation is met because
Mixon’s actions prevented it from seeking other options to protect its interest in the
Property. In other words, “[Mixon] lulled Boulevard[] into believing that no further
actions were necessary when urgent action was needed and thus Mixon’s negligence
caused Boulevard[]’s damages.” Appellant’s Br. at 30. Boulevard relies on Bell in
support.
-7-
Bell dealt with an insurance broker’s failure to notify the insured that the flood
insurance policies procured for their mobile homes were erroneously issued because
the homes were located in an unincoporated area that was not eligible for flood
insurance, despite the policies being renewed multiple times. 744 F.2d at 1371–72.
A flood destroyed the mobile homes, and the insureds sued the broker. Id. at 1372.
The broker argued that because flood insurance was not obtainable from any other
source, the plaintiffs would have suffered the monetary losses caused by the flood
regardless of his negligence. Id. at 1373. We noted that if the insureds had been
advised of the location problem, they might have moved the mobile homes to an
eligible location. Id. at 1374.
We rejected the broker’s argument. Id. at 1373–74. We concluded that the lack
of alternative insurance “did not relieve [the broker] of the obligation to the plaintiffs
to pursue their applications with diligence, and to inform his clients that the insurance
was unobtainable.” Id. 1373. We found that the broker’s actions “lulled the plaintiffs
into believing that no further actions were necessary.” Id. We held that “whether the
plaintiffs would have pursued other options is not the point. The point is that [the
broker]’s negligence precluded the necessity of considering options.” Id. at 1374.
This is distinguishable from the present case. In Bell, there was only one
potential barrier to recovery: the broker’s failure to notify the insureds that their
policy was issued erroneously. Id. at 1371. Noncompliance with the policy was not
at issue. Likewise, Missouri courts find broker liability in cases where coverage was
denied as a result of the broker’s failure to procure insurance as requested and failure
to so inform the insured; broker liability is not premised on noncompliance with the
policy. See Busey Truck Equip., Inc., 299 S.W.3d at 737 (holding broker liable where
insured denied coverage for damage to contents of facilities because, despite
requesting coverage for such contents, the policy did not cover them); see also
Bucksaw Resort, LLC v. Mehrtens, 414 S.W.3d 39, 44–45 (Mo. Ct. App. 2013)
(holding broker liable where insured denied coverage for damage to “parking lot,
-8-
fencing, and riprap” because policy that was requested to cover “all the property,
including the parking lot, fencing, and riprap” did not cover such property). Thus, in
the instances where a broker was found liable, a defect in either the issuance or the
terms of the policy, as requested, barred recovery—not any failure to comply with the
terms of the policy. Here, if the policy had issued listing Boulevard as requested, the
Endorsement would still have barred coverage.
Noncompliance with the policy, not Mixon’s failure to notify, barred recovery.
Therefore, Bell is inapplicable. The district court did not err in granting Mixon’s
motion for summary judgment.
III. Conclusion
We affirm.
______________________________
-9-