Cincinnati Insurance Company v. Jacob Rieger & Co., LLC

United States Court of Appeals
For the Eighth Circuit
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No. 21-3192
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Cincinnati Insurance Company
Plaintiff - Appellee
v.
Jacob Rieger & Co., LLC
Defendant - Appellant
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No. 21-3298
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Cincinnati Insurance Company
Plaintiff - Appellant
v.
Jacob Rieger & Co., LLC
Defendant - Appellee
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Appeal from United States District Court
for the Western District of Missouri - Kansas City
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Submitted: September 22, 2022
Filed: January 19, 2023
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Before LOKEN, BENTON, and KOBES, Circuit Judges.
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KOBES, Circuit Judge.
Five months after being sued in Oregon for trademark infringement, Jacob
Rieger & Co., LLC provided notice to its liability insurer, Cincinnati Insurance
Company. Due to Rieger’s delay, Cincinnati refused to reimburse Rieger’s legal
fees for the five months that Cincinnati was unaware of the lawsuit. The Oregon
case was ultimately dismissed for lack of jurisdiction. Instead of waiting to be sued
in a court that did have jurisdiction, Rieger’s parent company, GSP Licensing LLC,
filed a new suit in Missouri as the plaintiff. GSP was not named under Rieger’s
insurance policy, so Cincinnati denied coverage for the Missouri case.
Cincinnati then filed this lawsuit, seeking a declaration of coverage. The
district court granted summary judgment to Cincinnati. We agree that Cincinnati is
not liable for fees incurred by GSP in Missouri. As to the pre-notice fees in Oregon,
because the district court did not treat prejudice as an affirmative defense, we reverse
in part and remand the case for further proceedings. We also affirm two earlier
district court rulings dismissing Rieger’s tort claims and sanctioning Cincinnati for
a discovery violation.
I.
Rieger bought an insurance policy from Cincinnati for personal and
advertising injury liability. Rieger was the only named party under the policy. The
policy required Rieger to notify Cincinnati “as soon as practicable” of a “claim,”
“suit,” “occurrence,” or an “offense which may result in a claim.” The policy also
had a voluntary payments clause, stating that “[n]o insured will, except at that
insured’s own cost, voluntarily make a payment, assume any obligation, or incur any
expense, other than for first aid, without our consent.”

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Domaine Serene Vineyards and Winery, Inc. filed a complaint against Rieger
in Oregon for trademark infringement. Rieger was aware of a potential trademark
issue with Domaine at least seven months before Domaine filed the complaint.
Rieger hired counsel and moved to dismiss the complaint for lack of jurisdiction.
Five months after Domaine filed the initial complaint, Rieger notified
Cincinnati of the Oregon lawsuit. Cincinnati began investigating the claims to
determine coverage. The Oregon suit was later dismissed.
Cincinnati’s and Rieger’s representatives met to assess coverage. Because the
Oregon suit was dismissed for lack of jurisdiction, Rieger explained that Domaine
would likely re-file in a different court. Rieger asked if it could file as a plaintiff
instead to secure a favorable venue in Missouri. Cincinnati, through its
representative, said:
I’m not going to be able to provide you guys a whole bunch of answers right
now . . . . I don’t think it’s going to matter whether you are going to be the
Defendant or the Plaintiff. This is still going to be handled as the same
claim . . . . So, I would tell you as we’re investigating this on our side, I would
strategically do what you feel you need to do on your side independently of
us. . . . I certainly, if you’re thinking about filing in Jackson County,
[Missouri] . . . at whatever point that trigger you know is pulled that would
make you say it’s time to do it, I would do it. I wouldn’t want to miss that
opportunity either. . . . [B]ut as far as I . . . can say with all of the you know
experience that I have, that’s not going to change anything for us.
App. 352.
Rieger’s parent company, GSP, then filed for declaratory judgment against
Domaine in the Western District of Missouri. GSP later settled with Domaine.
After assessing coverage, Cincinnati told Rieger that it would cover attorney’s
fees in Oregon starting from the date it was notified but would not cover any fees
incurred in Missouri.

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Cincinnati filed this action against Rieger, seeking a declaration that
Cincinnati was not liable for pre-notice fees in Oregon or any fees in Missouri.
Rieger made several counterclaims, including a breach of contract claim and tort
claims for fraudulent inducement and negligent misrepresentation. The district court
granted Cincinnati’s motion to dismiss Rieger’s tort claims, holding that they were
not distinct from Rieger’s contract claim. Later in the litigation, the district court
granted Cincinnati’s motion for summary judgment. The district court also granted
Rieger’s motion for sanctions due to Cincinnati’s violation of a discovery order.
II.
We first address the district court’s grant of summary judgment. Specifically,
whether Cincinnati was required to reimburse Rieger for (1) pre-notice fees in the
Oregon lawsuit and (2) all fees in the Missouri lawsuit. Summary judgment is only
appropriate if “there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). We review the
district court’s grant of summary judgment and its interpretation of Missouri law de
novo. See Washburn v. Soper, 319 F.3d 338, 340 (8th Cir. 2003).
A.
We first consider whether Cincinnati was required to reimburse Rieger for
pre-notice fees in Oregon. Missouri law requires us to consider whether the insurer
was prejudiced by the insured’s untimely notice. See Weaver v. State Farm Mut.
Auto. Ins. Co., 936 S.W.2d 818, 821 (Mo. banc 1997); Tresner v. State Farm Ins.
Co., 913 S.W.2d 7, 11 (Mo. banc 1995). Prejudice exists when the insurer is denied
“the opportunity to protect its interests.” Johnston v. Sweany, 68 S.W.3d 398, 402
(Mo. banc 2002). Thus, an insurer may suffer prejudice when it is “denied the
opportunity to manage and attempt to reach an early and relatively inexpensive
resolution of [the insured’s] claim.” Wittner, Poger, Rosenblum & Spewak, P.C. v.
Bar Plan Mut. Ins. Co., 969 S.W.2d 749, 755 (Mo. banc 1998).

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The parties dispute how we should factor prejudice into our analysis.
Cincinnati urges us to presume prejudice and place the burden on Rieger to rebut
that presumption.1 In contrast, Rieger argues that prejudice is an affirmative
defense, meaning we should place the burden on Cincinnati to prove that it was
prejudiced by Rieger’s delay in providing notice. To settle this dispute, we must
“predict how the state supreme court would resolve the issue.” United Fire & Cas.
Ins. Co. v. Garvey, 328 F.3d 411, 413 (8th Cir. 2013).
This is not a difficult prediction: “Missouri treats the failure of an insured to
provide timely notice to the insurer as an affirmative defense,” Weaver, 936 S.W.2d
at 821, and “[p]rejudice to the insurer will not be presumed from the mere fact of an
insured’s delay in giving notice,” Tresner, 913 S.W.2d at 11. See also Johnston, 68
S.W.3d at 402 (“[A]n insured . . . will not be barred from recovery . . . unless the
insurer can show that it has been prejudiced by the insured’s non-compliance with
such policy provisions.”).
Cincinnati points only to intermediate appellate decisions applying a
presumption of prejudice.2 But “decisions of the . . . intermediate appellate court[s]
are not binding” and must be followed only “when they are the best evidence” of
Missouri law. Bureau of Engraving, Inc. v. Fed. Ins. Co., 5 F.3d 1175, 1176 (8th
Cir. 1993) (cleaned up). Under Missouri law, the district court should have treated
prejudice as an affirmative defense. Because it did not, we reverse the grant of
summary judgment and remand.
1 Cincinnati also argues that, under the policy’s voluntary payments clause,
Rieger was not permitted to voluntarily make a payment, assume any obligation, or
incur any expense without Cincinnati’s consent. Cincinnati did not make this
argument below and therefore cannot raise it for the first time on appeal. See
Sanzone v. Mercy Health, 954 F.3d 1031, 1045 (8th Cir. 2020). However, we do not
preclude the district court from considering this issue on remand. Cf. United States
v. Castellanos, 608 F.3d 1010, 1019–20 (8th Cir. 2010).
2See, e.g., Billings Mut. Ins. Co. v. Cameron Mut. Ins. Co., 229 S.W.3d 138,
152–53 (Mo. Ct. App. 2007); Rocha v. Metro. Prop. & Cas. Ins. Co., 14 S.W.3d
242, 248 (Mo. Ct. App. 2000).

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B.
We now address whether Cincinnati was required to reimburse Rieger for fees
incurred by GSP in Missouri. Simply put, GSP was not insured under the policy, so
Cincinnati was not liable for its actions. Rieger asserts that Cincinnati should
provide coverage anyway because Cincinnati encouraged Rieger to file in Missouri.
But Cincinnati did not encourage Rieger to file the suit under a company that it did
not insure; Cincinnati did not know that GSP would file instead of Rieger.
Rieger’s other arguments are equally unavailing. Rieger argues that
Cincinnati should provide coverage because GSP only filed in Missouri to defend
the trademark claim against Rieger. And Rieger paid for the Missouri lawsuit, not
GSP. But these links between the companies do not negate the fact that Rieger is
covered by Cincinnati and GSP is not.
An “application of the policy to losses suffered by a party other than the
named insured would have the effect of providing coverage where none existed
under the policy’s own terms.” Taylor v. Com. Union Ins. Co., 614 F.2d 160, 163
(8th Cir. 1980). Because Cincinnati is not liable for the actions of a company it has
not insured, we affirm the district court’s holding on this issue.
III.
Finally, we address two earlier district court rulings. First, the district court
dismissed Rieger’s tort claims because they were not independent of Rieger’s
contract claim. We review the district court’s order granting a motion to dismiss de
novo. Jacobson Warehouse Co. v. Schnuck Markets, Inc., 13 F.4th 659, 668 (8th
Cir. 2021). Second, the district court sanctioned Cincinnati for attorney’s fees
because Cincinnati did not comply with the court’s discovery order. We review the
district court’s issuance of sanctions for an abuse of discretion. See C.H. Robinson
Worldwide, Inc. v. Lobrano, 695 F.3d 758, 763 (8th Cir. 2012).

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A.
In Missouri, “an insured with a dispute against its insurance company cannot
substitute a tort claim when a contract remedy is available.” Ryann Spencer Grp.,
Inc. v. Assurance Co. of Am., 275 S.W.3d 284, 290 (Mo. Ct. App. 2008) (emphasis
omitted). “The mere failure to perform a contract cannot serve as the basis of tort
liability unless the breach itself is an independent tort.” Id. Rieger argues that its
tort claims are independent of any contractual promise and not based on a mere
failure to perform the contract. We disagree.
Under Missouri law, a tort claim is independent of a contract claim if the tort
claim can succeed without regard to the outcome of the contract claim. See Overcast
v. Billings Mut. Ins. Co., 11 S.W.3d 62, 68 (Mo. banc 2000). In Overcast, the court
held that a defamation claim was independent of a breach of contract claim because
the insurance company could defame the insured even if it had paid the insured’s
claim. Id. In other words, the tort claim could succeed regardless of the outcome of
the contract claim. Here, Rieger admits that its tort claims would fail if its contract
claim succeeded.3 By Rieger’s own admission, we find that the district court
properly dismissed Rieger’s tort claims.
B.
“Rule 37(b) authorizes sanctions for failure to comply with discovery orders.”
Comiskey v. JFTJ Corp., 989 F.2d 1007, 1011 (8th Cir. 1993); see Fed. R. Civ. P.
37(b). “A district court [has] wide discretion to impose sanctions for a party’s failure
to comply with discovery requests.” United States v. Big D Enters., Inc., 184 F.3d
924, 936 (8th Cir. 1999). The court is allowed “to treat such failure as contempt of
3 Rieger states that “[i]f the policy provides coverage for the filing of the
lawsuit in Missouri,” i.e., if Rieger’s breach of contract claim succeeds, “the tort
claims fail on their merits.” Rieger Br. 53. Rieger further states that for its “[tort]
claims to succeed, the claim for post-notice defense costs must fail as a matter of
contract.” Id. at 54.

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court, [and] require the payment of reasonable attorney fees.” Gleghorn v. Melton,
195 F. App’x 535, 537 (8th Cir. 2006) (cleaned up).
The district court ordered Cincinnati to supplement its discovery by January
17, 2021. It is undisputed that Cincinnati did not do so until February 12, 2021.
Because Cincinnati failed to comply with the discovery order, the district court did
not abuse its discretion in finding Cincinnati in contempt of court and liable for
Rieger’s attorney’s fees.
IV.
As to the pre-notice fees in Oregon, we reverse the district court’s grant of
summary judgment to Cincinnati. Regarding GSP’s fees in Missouri, the dismissal
of Rieger’s tort claims, and the imposition of sanctions, we affirm.
Remanded for proceedings consistent with this opinion.
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