Missouri Tort Reform
James L. Stockberger1 |
Brian Kaveney1 |
“The bill protects corporations from being adequately penalized for wrongdoing. Companies out for power and profit sure don’t want any checks or balances.”2
–Ken Suggs, president of the Association of Trial Lawyers of America.
“Missouri has passed one of the most comprehensive legal reform packages in the country, including legislation that keeps people from shopping around the state for the friendliest courts in which to sue.”3
–Tom Donohue, president of the U.S. Chamber of Commerce.
I. Introduction
On March 29, 2005, Governor Matt Blunt signed into law House Bill 393, which applies to causes of action filed after August 28, 2005.4 The new law adds new sections and modifies existing sections of those revised statutes that relate to tort actions in Missouri. In tort cases, some of the changes include: (1) limiting venue to the plaintiff’s place of first injury; (2) changing the required percentage of fault for joint and several liability; (3) limiting punitive damages to the lesser of $500,000 or five times the amount of actual damages; (4) reducing the impact of the collateral source rule; and (5) changing the manner in which pre- and post-judgment interest is calculated. The new and revised statutes directly impact those cases that allege at least one tort. This article examines the act’s impact on venue, joint and several liability, punitive damages, the collateral source rule, and pre- and post-judgment interest awards.
II. Venue
A. Where Is Venue Proper If the Petition Contains At Least One Count Alleging a Tort That Occurred in Missouri?
“Venue refers to the [location] in which a court of competent jurisdiction may adjudicate an action.”5 Formerly, the venue statutes provided various special rules for proper venue based on the defendant’s status—as a motor carrier, a corporation, not-for-profit corporation, or railroad company—or on the defendant’s residency. Under those rules, venue was proper even if the court was located in a county that had little contact with the plaintiff or the plaintiff’s injury.
The amended venue statute narrows the venue rules for tort causes of action in which the plaintiff’s first injury occurred in Missouri.6 If the plaintiff was first injured in Missouri, venue is proper only in the county where the plaintiff was first injured.7
The statute defines the plaintiff’s place of first injury for certain specified torts, and the definition varies according to the type of tort involved. In latent injury cases, the place of first injury is the place “where the trauma or exposure [actually] occurred rather than where symptoms [of injury were] first manifested.”8 In wrongful death actions, venue lies where the decedent suffered his or her first injury because of the alleged wrongful acts or negligent conduct of the defendant, rather than where the decedent died.9 Likewise, in loss of consortium actions, the place of first injury is the place where the physically injured spouse was first injured by the wrongful acts or negligent conduct alleged in the action, regardless of the location of the spouse bringing the consortium claim.10
In medical malpractice cases for personal injury or death arising out of health care services, the place of first injury is the place where the plaintiff first received treatment from a defendant for the medical condition at issue in the case.11 In “action[s] for defamation or for invasion of privacy,”the location of first injury is in the county in which the alleged defamatory statement was first published.12 Under the former venue statutes, the Missouri appellate court determined that a newspaper is first published in the county where the newspaper is “prepared, edited, and disseminated.”13 Thus, it is unlikely that there will be multiple places of first publication, even for widely distributed publications.
B. Where Is Venue Proper If the Petition Contains At Least One Count Alleging a Tort That Occurred Outside Missouri?
If the plaintiff was first injured outside Missouri, venue depends on the nature of the defendant. “If the defendant is an individual” and the location of first injury is outside Missouri, venue is proper either (i) in the “county of the individual defendant’s principal place of residence in Missouri, or [(ii)] if the plaintiff’s principal place of residence was in … Missouri” at the time of the first injury, in the county of “the plaintiff’s principal place of residence.”14
An individual’s “principal place of residence [is] the county which is the main place where an individual resides in the state of Missouri.”15 An individual may “only [have] one principal place of residence.”16 An individual’s principal place of residence is presumed to be the “county of voter registration at the time of injury.”17
If the plaintiff was first injured outside Missouri and the defendant is a corporation, venue is proper (i) “in any county where a defendant[’s] … registered agent is located, or [(ii)] if the plaintiff’s principal place of residence was in … Missouri” at the time of the first injury, “in the county of the plaintiff’s principal place of residence.”18
For example, assume the plaintiff is a Missouri resident whose residence is in Cole County, and the plaintiff alleges a personal injury tort where the first injury occurred in Arkansas. The defendant is a corporation with an office in Warren County and its registered agent in St. Louis County. The plaintiff may sue the defendant in one of two places: (1) St. Louis County, where the defendant’s registered agent is located (location of the office does not affect the venue), or (2) Cole County, where the plaintiff had his residence at the time the first injury occurred.
If the petition contains counts alleging multiple torts, some of which involve first injuries occurring within Missouri and some of which involve first injuries occurring outside of Missouri, it appears that the count alleging the earliest-occurring injury determines venue. Section 508.010.4 governs “in all actions in which there is any count alleging a tort and in which the plaintiff was first injured in the state of Missouri” (emphasis added). Likewise, § 508.010.5 governs “in all actions in which there is any count alleging a tort and in which the plaintiff was first injured outside the State of Missouri” (emphasis added). For example, if the petition alleges two unrelated tort counts against the same defendant—one in which the injury first occurred inside Missouri in May 2006, and one in which the injury first occurred outside Missouri in June 2006—then the petition should qualify as an “action[] . . . in which the plaintiff was first injured in the State of Missouri” in May 2006, and § 508.010.4 governs.
C. May a Corporate Plaintiff Who Was First Injured Outside Missouri Bring One Action Against Both a Corporate and an Individual Defendant in Missouri?
The amended venue statute does not resolve a potential conflict that arises in cases where a corporate plaintiff alleges an out-of-state tort against both individual and corporate defendants. For example, assume a corporate plaintiff brings an action for misappropriation of trade secrets against its former employee. Assume that the first injury to the plaintiff occurred outside Missouri, where the employee took or misappropriated the employer’s trade secrets.19 Because the plaintiff is a corporation, venue would only be proper in the “county of the individual [employee] defendant’s principal place of residence in … Missouri.”20 However, if the plaintiff subsequently adds the former employee’s new corporation to the lawsuit, venue would only be proper in the county where that corporation’s registered agent is located.21 The amended venue statute does not explain how this tie is to be broken.
This conflict does not arise in cases involving plaintiffs who are individuals rather than corporations, and who were resident in Missouri on the date of first injury, because venue is proper in the county of the plaintiff’s residence regardless of the nature of the defendant.22 However, if a plaintiff is not an individual Missouri resident on the date of the first injury, then the plaintiff might not be able to join all defendants in one action in Missouri. Additionally, if the plaintiff is a corporate entity rather than an individual, the new law leaves some ambiguity about the proper venue if the defendant is a foreign corporate entity without a registered agent located in Missouri or an individual without a principal place of residence in Missouri.23
III. What Effect Does the New Law Have on a Motion to Transfer Venue?
If a case is filed in an improper venue, a motion to transfer venue under Rule 51.045 must “be filed within sixty days [after] service on the party seeking transfer” or it is waived.24 If a timely motion is filed, then the objection to venue is preserved, and no other action in the case forfeits the claim of improper venue.25 “If the issue is determined in favor of the movant or if no reply is filed, the court shall … transfer [the case] to a court where venue is proper.”26
The new law places the burden on the plaintiff to obtain a ruling from the court, since a motion to transfer for improper venue is deemed granted if not denied within 90 days of filing the motion unless such time period is waived in writing by all parties.27 However, this provision of the new law, § 508.010.10, may be susceptible to a constitutional challenge because the new law contradicts Rule 51.045. The Missouri Constitution provides that any rule and practice or procedure promulgated by the Supreme Court “may be annulled or amended in whole or in part by a law limited to the purpose.28 Because § 508.010.10 purports to amend Rule 51.045, but H.B. 393 was not limited to the purpose of amending Rule 51.045, Rule 51.045 may prevail over § 508.010.10, which is the provision granting the motion to transfer after 90 days.29
Within 30 days after the motion is filed, the plaintiff may file a reply.30 The reply must state “the basis for venue in the forum,” and the court will not consider any basis for venue not stated in the reply.31 Thus, a valid basis for venue can be waived. In addition, it is possible to forfeit the right to demand proof that the selected venue is improper. In State ex rel. Bierman v. Neill, the defendants moved to transfer, alleging that venue was improper.32 The plaintiff expressly stated in his reply that certain venue sections did not apply and predicated venue on one venue subsection exclusively.33 The Supreme Court found that the plaintiff had forfeited the right to require that the defendants prove venue was improper and ordered the circuit court to transfer the case.34
“If a reply is filed, the court may allow discovery … [to] determine the issue” of venue.35 Particularly in latent injury cases, a defendant may seek discovery on the issue of venue to determine the location of the plaintiff’s first trauma or exposure.36 Thus, the plaintiff in a latent injury case might avoid costly preliminary discovery by pleading the place of first injury with specific facts rather than vague allegations.
Under the new law, “if all of [the] parties agree in writing to a change of venue, [then] the court [is required to] transfer venue to the county within the state unanimously chosen by the parties.”37 “If any parties are added to the cause of action after the date of … transfer who do not consent to [the] transfer” and venue is not otherwise proper in the agreed venue, then the cause of action must be transferred to a county in which venue is appropriate under section 508.010, based upon the amended pleadings.38
A. If an Action Was Filed Before the Effective Date of the New Law, Should the Court Grant a Motion to Transfer for Improper Venue If a Party Is Added to the Case After That Date?
Assume the following facts: A plaintiff filed her petition before August 28, 2005. A few months later, the plaintiff joins a new party by amendment. The newly added defendant moves to transfer for improper venue, arguing that the proper venue is the place of first injury pursuant to the amended venue statutes under the new law. The court’s decision of this issue will depend on interpretation of the word “filed” as used in the new law.
The provisions of the tort reform legislation, except for § 512.099, “shall apply to all causes of action filed after August 28, 2005.”39 It is likely that the addition of a new party by amendment constitutes a “filing” of the plaintiff’s cause of action. Under State ex rel. Linthicum v. Calvin, Missouri courts are required to assess the propriety of a chosen venue each time a defendant is joined in a lawsuit, whether by original or amended petition.40 Indeed, H.B. 393 codifies the Linthicum holding by requiring courts to re-determine venue whenever a defendant is added or removed prior to trial and a motion to transfer for improper venue is filed.41 As the Court stated in Linthicum, re-determining venue at the time each party is “brought” into a case protects all parties equally and gives effect to the legislature’s intent in enacting the venue statutes.42 Further, § 508.010.13 provides that “[i]f any parties are added to the cause of action after the date of said transfer who do not consent to said transfer then the cause of action shall be transferred to such county in which venue is appropriate under this section, based upon the amended pleadings.”43 Therefore, even though the plaintiff’s petition was initially filed before August 28, 2005, the cause of action against the newly added defendant was filed after the effective date of the new law, and thus the amended venue statute governs the plaintiff’s amended petition.
In Rowe Burns v. Chemisphere Corp. and NCH Corporation, the Supreme Court of Missouri recently issued a preliminary writ regarding the definition of “cause of action” as used in § 538.305, RSMo 2005. In that case, the plaintiffs, a husband and wife, filed tort claims in the circuit court of the City of St. Louis on August 22, 2005, prior to the effective date of the new law, alleging that the husband suffered injuries in St. Louis County. The husband died, and the wife amended the petition to drop the tort claims and set forth a statutory claim for wrongful death, based on the same theories of negligence and strict products liability. The defendants filed a motion to transfer to St. Louis County, arguing that the amended petition set forth a new cause of action and that, under § 538.305, venue should be reconsidered. The trial court granted the motion to transfer. As of the date of this article, this writ petition is unresolved.
B. Does the New Law Deny a Party the Right to Change Venue From a County With Populations of 75,000 People Or Less in Cases in Which the Petition Alleges a Tort?
Under Rule 51.03, a party in a tort case triable by a jury may move for an automatic change of venue from a county with 75,000 or fewer inhabitants.44 The movant need not allege any cause for the change.45 The new law purports to change this rule by providing, in § 508.011, that “[t]o the extent that rule 51.03 of the Missouri rules of civil procedure contradicts any provision of this chapter, the provisions of this chapter shall prevail regarding any tort claim.”46
However, the Missouri Constitution likely renders § 508.011 ineffective so that parties in tort actions should still be able to move for automatic change of venue under Rule 51.03. As noted, the Missouri Constitution provides that “[a]ny rule may be annulled or amended in whole or in part by a law limited to the purpose.”47 Since § 508.011 specifically annuls or amends Rule 51.03, but not in “a law limited to the purpose” as required by the Missouri Constitution, parties will probably continue to have the right to an automatic change of venue to another county in a tort action triable by a jury in a county with 75,000 or less inhabitants.48
B. What Will Be the Effect of the New Provisions on Venue?
The new venue provisions should provide more certainty regarding the proper forum for actions with at least one count alleging a tort. The new venue provisions prevent the use of a defendant with remote connections to the forum to establish venue. Instead, the amended venue statutes should limit venue shopping. Counties perceived as plaintiff-friendly, such as the city of St. Louis, have already experienced significant reductions in the number of suits filed. For instance, in May 2005, 602 tort cases were filed in the city of St. Louis. However, in May 2006, nine months after the effective date of the new law, 255 tort cases were filed in the city of St. Louis. Likewise, in Jackson County, plaintiffs filed 277 tort cases in May 2005, but plaintiffs filed only 186 tort cases in May 2006.49 In contrast, the number of civil cases filed in St. Louis County, which has no particular repute as a plaintiff-friendly venue, has only slightly decreased. For example, in May 2005, plaintiffs filed 345 civil cases in St. Louis County, while in May 2006, plaintiffs filed 302 civil cases in St. Louis County.50 Similarly, in St. Louis County in June 2005, plaintiffs filed 306 civil cases compared to 271 civil cases filed in June 2006.51 Therefore, the new law appears to have caused no significant change in the number of cases filed in St. Louis County, while it has been attended by a noticeable drop in the number of cases filed in the City of St. Louis and Jackson County.
IV. Joint and Several Liability
Prior to the enactment of the new law, a plaintiff could recover all or part of his or her damages from any defendant, regardless of the defendant’s proportion of fault.52 The apportionment of fault between defendants had no effect on a plaintiff’s right to collect the full amount of a judgment from any one of the defendants.53 The new law provides that joint and several liability applies to a defendant only if that defendant is at least 51 percent at fault.54 In such circumstances, the defendant is “jointly and severally liable for the amount of the judgment rendered against [all] defendants.”55 The new law eliminates joint and several liability for a defendant found by the trier of fact to be less than 51 percent at fault unless the other defendant is an employee or the party’s liability arises out of the Federal Employer’s Liability Act.56 Thus, if a defendant is found to be less than 51 percent at fault, then that defendant is only required to pay his proportionate share of liability.57
The new joint and several liability provisions will significantly impact cases in which a plaintiff or co-defendant is attributed fault. For example, if a defendant is found 25 percent at fault, and others, including the plaintiff, are found 75 percent at fault, then that defendant is responsible for only 25 percent of the judgment. The joint and several liability provisions of the new law protect deep-pocketed defendants whose proportionate fault is relatively small, and reduces the incentive to join such defendants.
V. Punitive Damages
Under prior law, in order to gain discovery of a defendant’s assets, a plaintiff needed only to pray for punitive damages for such amount as is “fair and reasonable” without stating a specific dollar amount.58 The new law adds an additional hurdle for a plaintiff seeking punitive damages by requiring, prior to any discovery of a defendant’s assets, a preliminary “finding by the … court that it is more likely than not that the plaintiff will be able to present a submissible case to the trier of fact on the plaintiff’s claim of punitive damages.”59 Additionally, the new law limits punitive damages to $500,000 or five times the compensatory damages, whichever is greater, except in certain circumstances.60 A defendant is now only liable for the percentage of punitive damages based on its percentage of fault.61
A. When Can a Plaintiff Discover the Defendant’s Assets?
Formerly, a plaintiff could obtain discovery of a defendant’s assets by simply pleading a claim for punitive damages. Under the new law, a plaintiff may not discover a defendant’s assets until the trial court has made a finding “that it is more likely than not that the plaintiff will be able to present a submissible case to the trier of fact on the plaintiff’s claim of punitive damages.”62 In practice, after conducting discovery for a period of time, a plaintiff seeking punitive damages must move for such a finding.63
As with a similar statute in Illinois related to punitive damages, the new Missouri statute is unclear about the type of “finding” that the trial court must make.64 Defendants may argue that the finding requires an evidentiary hearing in which witnesses testify and their credibility is a factor in the court’s finding, rather than a finding based only upon document submissions. The effect of this provision in practice is not clear, but because the trial court must determine “that it is more likely than not that the plaintiff will be able to present a submissible case,”65 eligible plaintiffs will likely be able to discover a defendant’s assets before trial.
B. What Is the Limit on Punitive Damages?
As in the case of actual damages, a defendant shall only be liable for the percentage of punitive damages that corresponds to the percentage of its fault.66 The new law limits punitive damages to $500,000 or five times the net amount of the compensatory damages awarded to the plaintiff, whichever is greater.67
There are three exceptions: (1) the cap on punitive damages does not apply to cases involving housing discrimination, (2) the cap on punitive damages does not apply to a case in which “the state of Missouri is the plaintiff requesting the award of punitive damages,” and (3) the cap on punitive damages does not apply to cases in which the defendant pled guilty to or was “convicted of a felony arising out of the acts or omissions pled by the plaintiff.”68 The third exception to the cap may provide a powerful incentive for a victim to persuade the prosecutor to pursue a felony conviction or guilty plea. “The prosecutor’s decision may … be vulnerable to inevitable pressures of local politics or other factors unrelated to the merits, yet is wholly immune from review.”69 Accordingly, counsel for defendants must be cautious during depositions, particularly in personal injury cases, where the defendant might be “convicted of a felony arising out of the acts or omissions pled by the plaintiff.”70
The exception to the punitive damages cap for torts that give rise to felony convictions raises questions under the “open courts” provision of Article I, § 14 of the Missouri Constitution. In Kilmer v. Mun, a widow and the children of a man killed in a drunk driving accident brought a wrongful death action against the restaurant that served beer to the driver after he was obviously intoxicated.71 At the time, under Missouri’s “dram shop” law, a plaintiff could not pursue such a civil claim against a liquor licensee unless the licensee had been convicted for serving the visibly drunk patron in violation of § 311.310, RSMo.72 Although the decedent’s family members requested a criminal charge against the restaurant, the prosecutor declined to charge the restaurant.73
The Supreme Court of Missouri held that the statutory restriction requiring a conviction or suspended imposition of sentence violated the “open courts” provision of the Missouri Constitution, which protected the widow and children’s “right to pursue a remedy for a legally recognized injury.”74 The court applied the test of “whether access to [a] court for a recognized injury is subject to an arbitrary or unreasonable barrier.”75 The Court determined that the requirement of a criminal conviction as a procedural requirement “for a plaintiff to proceed with a civil action … [was] arbitrary and unreasonable.76 Therefore, the Court found this requirement unconstitutional since a person “has a constitutional right to a ‘certain remedy.”’77 A procedural “barrier that subjects a recognized injury to the discretion of the prosecuting attorney violates” the open courts provision of the Missouri Constitution.78
In Adams v. Children’s Mercy Hospital, by contrast, the Supreme Court upheld a statutory cap on non-economic damages under the open courts provision of the Missouri Constitution.79 However, in that case, the Court relied on a distinction between statutes that make a substantive change to the common law and those that “erect a condition precedent or any other procedural barrier to access to the courts.”80 Limiting the amount of recoverable damages is a permissible substantive change to the law under Adams, but imposing the requirement of a conviction as condition precedent to recovery of damages is an impermissible procedural barrier under Kilmer.
However, it is questionable whether even a procedural barrier to the recovery of punitive damages, as opposed to compensatory damages, implicates the open courts provision of the constitution at all. Section 14 of article I of the constitution provides that “the courts of justice shall be open to every person, and certain remedy afforded for every injury to person, property or character . . .” (emphasis added). It is well established that the purpose of punitive damages is not to compensate a plaintiff for an injury, but to protect society at large by punishing and deterring flagrant tortfeasors.81 The plaintiff who receives punitive damages in addition to compensatory damages thus receives not a “remedy . . . for [his] injury,”82 but a windfall on behalf of society. In short, punitive damages are exemplary rather than compensatory, and they are not necessarily part of the “certain remedy . . . for every injury”83 that the open courts provision guarantees.
Moreover, even a successful open courts challenge to the punitive damages cap might not benefit plaintiffs. In Missouri, the doctrine of severability for statutes is codified at § 1.140, RSMo 2006, which provides that
[i]f any provision of a statute is found by a court of competent jurisdiction to be unconstitutional, the remaining provisions of the statute are valid unless the court finds the valid provisions of the statute are so essentially and inseparably connected with, and so dependent upon, the void provision that it cannot be presumed that the legislature would have enacted the valid provisions without the void one . . .” (emphasis added).
On this standard, the exception to the punitive damages cap for torts involving a felony conviction is almost certainly severable from the punitive damages cap as a whole. It is overwhelmingly likely that, if it had been aware that the exception was unconstitutional, the legislature would have enacted the cap without the relatively minor exception, rather than no cap at all. Under
Adams, of course, there is no open courts difficulty with a straightforward substantive limit on punitive damages. Therefore, even if the exception for felons is declared unconstitutional, the likely proper result is that
all plaintiffs will be subject to the punitive damages cap.
VI. The New Law Modifies the Collateral Source Rule to Allow the Actual Amount of Paid Medical Expenses to Be Introduced Into Evidence, While Excluding the Amount Billed but Unpaid
Missouri adheres to the common law collateral source rule whereby a defendant is not entitled to a reduction in the claimant’s damages “by proving [the claimant] has received or will receive compensation … for the loss from” a source independent of the defendant such as insurance coverage.84 The new law retains the collateral source rule but significantly modifies it.
The new law provides that “a rebuttable presumption [exists] that the dollar amount necessary to satisfy the [plaintiff’s] financial obligation to the health care provider represents the value of the medical treatment rendered.”85 To rebut the presumption, the court may still hear evidence on an issue raised about the value of the medical treatment rendered.86 Thus, upon motion, the presumption may be overcome by evidence such as “(a) [t]he medical bills incurred by a party; (b) [t]he amount actually paid for medical treatment to a party;” or (c) an estimate of the unpaid medical bills that a party remains obligated to pay in the event of a recovery.87
With respect to the evidence that the jury may hear, “[p]arties may introduce evidence of the value of the medical treatment rendered to a party that was reasonable, necessary, and a proximate result of the negligence of any party.”88 However, defendants will likely argue that the jury may only hear the presumptive amount or the amount determined by the court “outside the hearing of the jury” pursuant to § 490.175.5(2), RSMo 2006. Therefore, a defendant may be able to reduce the value of medical bills by the amount actually paid rather than the full cost of care to the plaintiff before any negotiated health care insurance discounts.89
The new provision requires the trial judge to determine the value of the medical treatment but leaves open the question of when the judge should make the determination.90 Counsel for both plaintiffs and defendants must now be especially aware of the medical treatment provided, the actual amounts billed, any discounts negotiated by an insurance company, and the amount a party is obligated to pay to any entity in the event of a recovery.
VII. Expressions of Sympathy or Benevolence Are Inadmissible as an Admission of Liability
Under a provision of the new law, “statements, writings, or benevolent gestures expressing sympathy or a general sense of benevolence relating to the pain, suffering, or death of a person and made to that person or [his or her] family” are “inadmissible as evidence of an admission of liability in a civil action.”91 “Benevolent gestures” are defined as “actions which convey a sense of compassion or commiseration emanating from humane impulses.”92 “Family” is defined as “the spouse, parent, grandparent, stepmother, stepfather, child, grandchild, brother, sister, half brother, half sister, adopted children of a parent, or spouse’s parents of an injured party.”93
This provision also reminds practitioners that “nothing in this section shall prohibit admission of a statement of a fault.”94 To get a statement into evidence as a party admission, the offering party must establish:
1) a conscious or voluntary acknowledgment by a party-opponent of the existence of certain facts; 2) the matter acknowledged must be relevant to the cause of the party offering the admission; and 3) the matter acknowledged must be unfavorable to, or inconsistent with, the position now taken by the party-opponent.95
VIII. What Are the Requirements for Prejudgment Interest in Tort Actions?
The new law adds requirements for prejudgment interest demand letters. “If a [plaintiff] has made a demand for payment of a claim or an offer of settlement of a claim, to the party, parties, or their representatives, and to such party’s liability insurer if known to the claimant,” then the plaintiff may receive prejudgment interest.96 However, this only applies if “the amount of the judgment or order exceeds the demand for payment or offer of settlement.”97
Moreover, the demand must (1) be written; (2) be sent by certified mail; (3) “[b]e accompanied by an affidavit of the claimant describing” the damages, including “the nature of the claim, the nature of any injuries claimed and a general computation of any category of damages sought by the claimant with supporting documentation, if any is reasonably available;” (4) reference
§ 408.040; and (5) remain open for at least 90 days.98 Additional requirements apply for claims of “wrongful death, personal injury, and bodily injury claims.”99
If the demand or offer is not accepted, then the claimant must file a cause of action in the circuit court within 120 days after the demand or offer was received, unless the parties agree in writing to a longer period of time.100 If the claimant fails to file a lawsuit within 120 days after the demand was received by the respondent, then she cannot receive prejudgment interest.101
Under the new law, a plaintiff’s counsel must now provide far more information to a potential defendant. By giving a defendant 90 days to respond and requiring the claimant to provide more detailed information about damages, medical providers, employment records, and medical records, the statute provides defendants additional time and material to evaluate a potential claim and the settlement proposal.
The new law also changes the calculation period and, in tort cases, the rate for prejudgment interest. The court calculates prejudgment interest from a date 90 days after the demand or offer was received by “certified mail return receipt, or from the date the demand or offer was rejected without counter offer, whichever is earlier.”102 Section 408.040.2, RSMo 2006 is silent with regard to the commencement of the time period if there is a counteroffer.
The court calculates prejudgment interest in tort actions at an interest rate equal to the Federal Funds Rate, which is “established by the Federal Reserve Board, plus three percent.”103 “The judgment shall state the applicable interest rate, which shall not vary once entered.”104
The intended Federal Funds Rate as established by the Federal Reserve Board can be found at http://www.federalreserve.gov/fomc/fundsrate.htm. “[P]unitive damages do not qualify under Section 408.040.2 for prejudgment interest.”105
In tort actions, post-judgment interest accrues from the date of the final judgment.106 Post-judgment “interest shall be allowed on all money due upon any judgment or order of any court from the date of judgment is entered by the trial court until [its] full satisfaction.”107 In such cases, post-judgment interest will be at a rate equal to the Federal Funds Rate plus five percent.108 “The judgment shall state the applicable interest rate, which shall not vary once entered [by the court].”109
VIX. Conclusion
While the effects of the new tort reform law can already be seen in courtrooms when attorneys argue motions to transfer for improper venue, the long-term consequences of tort reform will not be clear for some years. Although insurance companies, businesses, and politicians may anticipate the new legislation will reduce insurance rates and attract businesses to Missouri, it will likely take years to assess the impact of the change in the legal landscape on business interests. Additionally, the plaintiff’s bar anticipates constitutional challenges to some of the provisions of H.B. 393. For now, counsel on both sides must have a heightened awareness of the changes, as they may affect strategy and decision-making long before trial.
Footnotes
1 Jim Stockberger is a partner at the law firm of Armstrong Teasdale LLP in St. Louis. He is the co-chairman of the firm’s Tort Litigation Practice Group and the chairperson of the Product Liability Practice Group. Brian Kaveney is an associate attorney in the litigation department of the law firm of Armstrong Teasdale LLP in St. Louis.
2 Missouri Applauded for Tort Reform, available at http://www.semissourian.com/story/1145720.html.
3 Id.
4 H.B. 393, 93rd Gen. Assem., 1st Reg. Sess. (Mo. 2005).
5 State ex rel. Elson v. Koehr, 856 S.W.2d 57, 59 (Mo. banc 1993).
6 Section 508.010.4, RSMo 2006.
7 Id.
8 Section 508.010.14, RSMo 2006. This will likely lead to litigation as to where and when the plaintiff was first exposed to a product in toxic tort claims, which generally involve latent injuries.
9 Section 508.010.11, RSMo 2006. However, the statute of limitations for wrongful death actions still accrues on the date of the decedent’s death rather than the date of the alleged misconduct or first injury. Sections 537.080, 537.100, RSMo 2006; Gramlich v. Travelers Ins. Co., 640 S.W.2d 180, 186 (Mo. App. E.D. 1982).
10 Section 508.010.11, RSMo 2006.
11 Section 538.232, RSMo 2006.
12 Section 508.010.8, RSMo 2006.
13 Carey v. Pulitzer Pub. Co., 859 S.W.2d 851, 854 (Mo. App. E.D. 1993).
14 Section 508.010.5(2), RSMo 2006.
15 Section 508.010.1, RSMo 2006.
16 Id.
17 Id.
18 Section 508.010.5(1), RSMo 2006. It is noted that in enumerating the statutes that were expressly repealed, the legislature did not mention preexisting
§ 347.069, RSMo 2000, the statute pertaining to LLCs. However, it would seem that § 347.069 would be overruled by implication.
19 H.B. 393 does not define the place of first injury for misappropriation of trade secrets. However, under pre-existing law, venue was appropriate where the wrongful conduct of taking the secrets occurred. State ex rel. Private Nursing Serv., Inc. v. Romines, 130 S.W.3d 28, 30 (Mo. App. E.D. 2004).
20 Section 508.010.5(2), RSMo 2006.
21 Section 505.010.5(1), RSMo 2006.
22 Section 508.010.5(1)-(2), RSMo 2006.
23 See State ex rel. Harper Indus., Inc. v. Sweeney, 190 S.W.3d 541, 544 (Mo. App. S.D. 2006) (finding that “the specific corporation venue statute (§ 508.040) trumps the general venue statute (§ 508.010)” when the only defendant is a non-resident corporation that was not registered to do business in Missouri).
24 Rule 51.045(a).
25 Id.
26 Rule 51.045(c).
27 Section 508.010.10, RSMo 2006.
28 Mo. Const. art. 5, § 5 (emphasis added).
29 See State v. Reese, 920 S.W.2d 94, 95 (Mo. banc 1996) (“Supreme Court rules govern over contradictory statutes in procedural matters unless the General Assembly specifically annuls or amends the rules in a bill limited to that purpose.”) Id.
30 Rule 51.045(b).
31 Id.
32 90 S.W.3d 464, 465 (Mo. banc 2002).
33 Id.
34 Id.
35 Rule 51.045(b).
36 See § 508.010.14, RSMo 2006.
37 Section 508.010.13, RSMo 2006.
38 Id.
39 H.B. 393, 93rd Gen. Assem., 1st Reg. Sess. (Mo. 2005) (codified at § 538.305, RSMo 2006) (emphasis added). One might argue that the effective-date provision of § 538.305, RSMo 2006, applies only to medical-malpractice actions, because it is located in Chapter 538, which is entitled “Tort Actions Based on Improper Health Care.” However, the codification of § 2 of H.B. 393 in the Health Care Chapter does not limit the applicability of H.B. 393’s effective-date provision to tort actions based on improper health care. Instead, § 2 sets forth the effective date of the entire tort reform bill, and the Missouri Revisor of Statutes codified Section 2 in the section immediately following the last amended statute — § 538.399, RSMo 2006.
40 See State ex rel. Linthicum v. Calvin, 57 S.W.3d 855, 858 (Mo. banc 2001).
41 See H.B. 393, 93rd Gen. Assem., 1st Reg. Sess. (Mo. 2005) (codified at § 508.012, RSMo 2006).
42 Linthicum, 57 S.W.3d at 858.
43 Section 508.010.13, RSMo 2006.
44 Rule 51.03(a).
45 Id.
46 Section 508.011, RSMo 2006.
47 Mo. Const. art. V, § 5.
48 Id.
49 These numbers include both associate circuit courts and circuit courts in Jackson County, Missouri.
50 Unlike St. Louis City and Jackson County, St. Louis County does not track the number of tort cases filed. Rather, St. Louis County’s statistics include the following types of civil cases: personal injury – vehicular, personal injury - product liability, personal injury – malpractice, other personal injury – other, property damage, wrongful death, other tort cases, intentional tort, suit on contract, agreement, account, note suit - enforce mechanic’s lien, eminent domain – state, eminent domain – county, eminent domain – other, exception registration of foreign judgment – civil tax action misc. – civil, replevin, will contest, pro forma decree, misc. cv - subpoena/foreign jurisdiction.
51 Additionally, in St. Louis County, the number of equity cases has increased 13% from fiscal year 2005 to fiscal year 2006, which may indicate that more declaratory judgment cases are being filed in St. Louis County rather than other venues.
52 Capell v. Abbick, 123 S.W.3d 193, 195 (Mo. App. W.D. 2003).
53 Id. See also Hollis v. Blevins, 927 S.W.2d 558 (Mo. App. S.D. 1996) (holding that the plaintiff can collect the full amount of the judgment against a defendant who is 2% at fault).
54 Section 537.067.1, RSMo 2006.
55 Id.
56 Section 537.067.1(1)-(2), RSMo 2006.
57 Section 537.067.1, RSMo 2006.
58 Rule 55.19.
59 Section 510.263.8, RSMo 2006.
60 Section 510.265.1, RSMo 2006. The limit does not apply to cases involving housing discrimination, cases in which “the state of Missouri is the plaintiff requesting the award of punitive damages,” or cases in which “the defendant pleads guilty to or is convicted of a felony arising out of the acts or omissions pled by the plaintiff.” Id.
61 Sections 537.067.2, 510.265.1, RSMo 2006.
62 Section 510.263.8, RSMo 2006.
63 Id.
64 735 Ill. Comp. Stat. 5/2-604.1 (2006); See Stojkovich v. Monadnock Bldg., 666 N.E.2d 704, 710-712 (Ill. App. Ct. 1996) (holding that application of “abuse of discretion standard would be appropriate in a review of [a] denial of a pretrial motion to amend” a complaint to add claim for punitive damages “when the trial court conducts an evidentiary hearing at which witnesses testify and their credibility is a factor in the court’s determination”; but also holding that when “the trial court makes its determination based upon documentary submissions only, credibility is not a factor and, on review,” the appellate court will apply de novo standard).
65 H.B. 393, 93rd Gen. Assem., 1st Reg. Sess. (Mo. 2005).
66 Section 537.067.2, RSMo 2006.
67 Section 510.265.1, RSMo 2006. Although § 510.265.1 provides that the cap shall be “[f]ive times the net amount of the judgment awarded to the plaintiff” (emphasis added), the most natural import of this is five times the net amount of compensatory damages awarded to the plaintiff.
68 Section 510.265.1-2, RSMo 2006.
69 Kilmer v. Mun, 17 S.W.3d 545, 552 (Mo. banc 2000).
70 Section 510.265.1, RSMo 2006.
71 17 S.W.3d at 545.
72 Id. at 545-46.
73 Id. at 546.
74 Id. at 546. The Missouri Constitution provides that “the courts of justice shall be open to every person, and certain remedy afforded for every injury to person, property or character, and that right and justice shall be administered without sale, denial or delay.” Mo. Const. art. I, § 14.
75 Id. at 553.
76 Id.
77 Id. at 554.
78 Id.
79 832 S.W.2d 898, 905 (Mo. banc 1992).
80 Id.
81 See, e.g., Vaughan v. Taft Broad. Co., 708 S.W.2d 656, 660 (Mo. banc 1986) (“Punitive damages are never allowable as a matter of right and their award lies wholly within the discretion of the trier of fact. The purpose of punitive damages is to inflict punishment and to serve as an example and deterrent to similar conduct”). Id.
82 Mo. Const., art. I, § 14.
83 Id. (Emphasis added.)
84 Iseminger v. Holden, 544 S.W.2d 550 (Mo. banc 1976).
85 Section 490.715.5(2), RSMo 2006.
86 Id.
87 Id.
88 Section 490.715.5(1), RSMo 2006.
89 Section 490.715.5(2)(b), RSMo 2006.
90 Id.
91 Section 538.229.1, RSMo 2006.
92 Section 538.229.2(1), RSMo 2006.
93 Section 538.229.2(2), RSMo 2006.
94 Section 538.229.1, RSMo 2006.
95 Around the World Importing v. Mercantile Trust Co., 795 S.W.2d 85, 89 (Mo. App. E.D. 1990).
96 Section 408.040.2, RSMo 2006.
97 Id.
98 Section 408.040.2(2) RSMo 2006. “If the claimant is a minor[,] … incompetent or deceased, … any person who reasonably appears to be qualified to act as next friend[,] … conservator or personal representative” may sign the affidavit. Section 408.040.2, RSMo 2006. “If the claim is one for wrongful death, the affidavit may be signed by any person qualified pursuant to section 537.080, RSMo, to make claim for … death.” Id. Such persons qualified pursuant to § 537.080, RSMo 2006, include, in order of preference by the court: (a) “the spouse or children or the surviving lineal descendants of any deceased children, natural or adopted, legitimate or illegitimate, or by the father or mother of the deceased, natural or adoptive;” (b) “the brother or sister of the deceased, or their descendants”; or (c) a plaintiff ad litem “appointed by the court having jurisdiction over the action.” Section 537.080.1, RSMo 2006.
99 Section 408.040.2(3), RSMo 2006. Section 408.040.2(3) states that the demand “[f]or wrongful death, personal injury, and bodily injury claims, [must] be accompanied by a list of the names and addresses of medical providers who have provided treatment to the claimant or decedent for such injuries, copies of all reasonably available medical bills, a list of employers if the claimant is seeking damages for loss of wages or earning, and written authorizations sufficient to allow the party, its representatives, and liability insurer if known to the claimant to obtain records from all employers and medical care providers.” Id.
100 Section 408.040.2(2), RSMo 2006.
101 Id.
102 Section 408.040.2, RSMo 2006.
103 Section 408.040.3, RSMo 2006.
104 Id.
105 Anderson v. Shelter Mut. Ins. Co., 127 S.W.3d 698, 702 (Mo. App. E.D. 2004).
106 Section 408.040.2, RSMo 2006. See Rule 81.05 (addressing how to calculate the final judgment date).
107 Id.
108 Id.
109 Id.