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Insurance Shake-Up: Eighth Circuit Upholds Limitations on Policy Coverage for "Additional Named Insured" Parties

03 Jul 2025

ABSTRACT: The Court of Appeals affirms Missouri federal court opinion limiting the scope of coverage for “Additional Named Insured,” holding they cannot recover lost rental income and “soft costs” under the policy.

On June 9, 2025, the United States Court of Appeals for the Eighth Circuit affirmed the decision of the U.S. District Court for the Eastern District of Missouri, holding that “Additional Named Insured[s]” under an insurance policy were not covered for lost rental income, and “soft costs” (indirect expenses not directly related to the physical construction process).

BCC Partners, LLC contracted with Ben F. Blanton Construction, Inc. to build an apartment complex in Creve Coeur, Missouri. The contract required the general contractor to obtain insurance. Blanton subsequently purchased an insurance policy. The policy listed Blanton as the “Named Insured” and BCC as an “Additional Named Insured.”

In the ensuing months, a key retaining wall failed during construction causing damage and delay to the project. Multiple insurance claims were filed with the insurer, which paid $1.3 million out to an escrow account and was divided between the recipients. The following year, BCC filed another claim with the insurer under the same original policy for damages of alleged loss of rental income and “soft costs” resulting from the failed retaining wall and claimed to be covered as an “Additional Named Insured” in the policy. The insurer investigated the claim and denied BCC coverage as an “Additional Named Insured” and reserved the right to recover the initial advancement.

BCC sued the insurer for breach of contract and vexatious refusal to pay under Missouri law. Both parties filed summary judgment motions. The district court found in favor of the insurer on both claims, stating that as a matter of law, BCC was not entitled to the payments under the terms of the policy. BCC timely appealed.

On appeal the court addressed the breach of contract claim. The policy stated that coverage extends to “the actual loss of rental value ‘you’ sustain” and “‘your’ soft costs” that result from certain construction delay. The court ruled that although BCC argued that the terms “you” and “your” applied to “Additional Named Insured,” under the Common Policy Declaration of the policy those terms only refer to “Named Insured” which was Blanton, not BCC.

BCC argued that the language of the policy was ambiguous and that under Missouri law, “If language in an insurance policy is ambiguous, the court resolves the ambiguity against the insurer-drafter.” The court rejected this argument, holding that the plain language of the policy did not conform to BCC’s preferred reading, nor was it ambiguous. The court pointed out that under BCC’s interpretation of the policy, there would be no difference between “Named Insured” and “Additional Named Insured”— an interpretation it deemed implausible.

According to the court of appeals, under the clear and unambiguous policy language, BCC was an “Additional Named Insured,” which is distinct from a “Named Insured.” An “Additional Named Insured” is not covered for lost rental value and soft costs. Accordingly, the policy did not cover BCC for rental income lost and soft costs incurred following the construction delays at the Vue Project. Thus, the insurer did not breach the policy by declining to make the $1.4 million payment to BCC.

Practical Considerations:

When an insurance policy is ambiguous, Missouri courts will resolve the ambiguity against the insurance drafter. But when the plain meaning of policy language is clear and unambiguous, the policy must be enforced as written. Here, the court of appeals had little trouble concluding that under the plain meaning of the policy an “Additional Named Insured” is not covered for the same type of damages as the “Named Insured.” This case should provide useful precedent for the interpretation of insurance policies that cover and distinguish between named insured and additional named insured parties.

Guardianship Preserved in Pro Bono Matter

03 Jul 2025

Baker Sterchi attorneys successfully resolved a guardianship matter referred through the Legal Aid of Western Missouri Volunteer Attorney Project. The client, a paternal grandmother, had served as guardian of the minor child since shortly after his birth. In recent years, several maternal relatives filed actions seeking to terminate the guardianship. The firm’s attorneys represented the client through multiple proceedings, ultimately securing a resolution that preserves her role as guardian.

Amy Nevad Promoted to Director of Office Operations

02 Jul 2025

Baker Sterchi is pleased to announce the promotion of Amy Nevad to Director of Office Operations. She brings 16 years of operations experience, including the past five years guiding the firm’s St. Louis and Belleville offices.

In her expanded role, Nevad is responsible for the day-to-day operations of the firm’s branch offices in St. Louis, Belleville, Edwardsville, Seattle and Portland. Her responsibilities include supervising staff, implementing firm policies and procedures, and ensuring each office meets the needs of employees, clients and stakeholders. She is also involved in strategic planning, budgeting, facility management and project management.

Nevad serves on the firm’s Attorney Training and Development Committee and is secretary of the Association of Legal Administrators’ Gateway Chapter Executive Board.

Charniece Rollie Promoted to Director of Administration

01 Jul 2025

Baker Sterchi is pleased to announce the recent promotion of Charniece Rollie to Director of Administration. With 25 years of experience in the legal industry, including the past 10 at the firm, Rollie brings strong institutional knowledge and leadership to the role.

As Director of Administration, she oversees firmwide operations in several key areas, including conflicts and resolution, records management, facilities, reception and office services in the firm’s Kansas City office.

She holds a Certificate of Mastery in Inclusive Leadership from Authentico and the Greater Kansas City Chamber of Commerce. She serves on the Diversity, Equity and Inclusion Committees for both Baker Sterchi and ALFA International, a global network of independent law firms of which the firm’s Kansas City and Overland Park offices are members. Rollie is also a past president of the National Association for Legal Support Professionals of Missouri.

Courtney Ragland Joins Baker Sterchi in Belleville

30 Jun 2025

Courtney Ragland joins Baker Sterchi as an associate in the firm’s Belleville office. Her practice focuses on defending premises liability, products liability and personal injury matters on behalf of Illinois municipalities, as well as individual and corporate clients.

Ragland earned her law degree from Southern Illinois University School of Law and holds an undergraduate degree from Webster University. She is admitted to practice in Illinois and Colorado.

Washington makes it easier for employees to sue their employers for toxic exposure

27 Jun 2025

ABSTRACT: The Washington Supreme Court has made it easier for employees to sue their employers for exposure causing latent diseases like asbestosis, notwithstanding that employers are generally immune from tort suits by their employees under Washington’s Industrial Insurance Act.

On May 29, 2025, the Washington Supreme Court in Cockrum v. C.H. Murphy/Clark-Ullman Inc. made it easier for employees to sue their employers under an exception to the Washington Industrial Insurance Act (IIA), which generally holds an employer immune from personal injury lawsuits by its employees as part of the state workers’ comp. insurance framework. Overruling prior precedent, the Washington Supreme Court recently held that in “latent disease” cases like asbestos exposure causing illness many years later, employees can recover in a personal injury lawsuit if they show that their employer had actual knowledge that they were exposed at work to a toxin or substance “virtually certain” to cause a disease.

Under the IIA, employers are immune from injury suits by their employees. Employer negligence is not enough to sue, because the enactment of workers’ compensation more than a century ago rested on an agreement that in exchange for certainty of compensation for injured workers (and employers paying into the industrial insurance fund) employers would not be sued for accidents on the job. There is a narrow exception, however, where an injury resulted from the employer’s “deliberate intention to produce such an injury.” To show deliberate intention, a long line of Washington cases held that employees must make a two prong showing: 1) that the employer had actual knowledge that an injury was certain to occur; and 2) willfully disregarded that knowledge.

This led to relatively harsh results in cases alleging that an employee contracted a “latent disease” because he or she was exposed to toxic material like asbestos by the employer, and later developed a disease like mesothelioma. For asbestos (and any carcinogen) it is impossible to ever know with absolute certainty that any individual person exposed to a carcinogen will develop cancer. Thus, in 2014, the Washington Supreme Court in Walston v. Boeing Co. held that Boeing, the employer, was entitled to summary judgment because the plaintiff employee could not demonstrate that Boeing had actual knowledge he was certain to develop mesothelioma.

In Cockrum, the Court granted review of a case that turned on virtually identical facts to Walston, in which the plaintiff was repeatedly exposed to asbestos without protective equipment, and the evidence showed that the employer was aware asbestos could cause a “latent disease” like cancer many years after exposure. Rather than distinguishing the facts in Walston, the Supreme Court took the somewhat rare step of overturning its prior precedent and creating a new test specific to such “latent disease” cases, holding that virtual certainty, rather than absolute certainty, is enough to show deliberate intent. Thus, when an employee alleges that toxic exposure caused a latent disease (including but not limited to cancer), the employee must show that the employer had actual knowledge that an injury was virtually certain to occur, and willfully disregarded that knowledge.

The Court also provided future guidance for courts and litigants by describing four non-exclusive factors that can show “virtual certainty.” These are 1) the employer’s knowledge of ongoing, repeated development of symptoms of latent diseases over time, 2) the employer’s knowledge that other employees similar to the plaintiff developed symptoms, 3) whether those symptoms developed prior to the plaintiff employee being exposed to the toxin, and 4) “whether the exposure arises from a common major cause within the employer’s control.” Stated simply, the first factor asks whether the employer generally knows a substance causes a disease, while the second and third factors ask whether the employer knew that some of its other employees have gotten disease symptoms before the plaintiff got exposed to the toxin. The fourth factor is about whether the exposure was something the employer could control.

The Court justified its decision in Cockrum to overturn prior precedent by looking to the IIA itself. The IIA expressly includes disease in the range of injuries for which an employee may be compensated. Moreover, the word “certainty” does not appear in the text of the IIA statute enacted by Washington’s legislature, but rather in judicial decisions intended to give substance to the legislature’s “deliberate intention” to cause injury exception. In latent disease cases, however, the “certainty” requirement effectively made it impossible for any plaintiff to bring a lawsuit, which is contrary to the legislature’s intent to allow plaintiffs to recover when their employer injures them through causing them to develop a disease. Since the Walston decision was contrary to legislative intent, the Court reasoned it should be overturned.

In dissent, Justice Madsen (joined by Justice Johnson) argued that the “certainty” rule had been in place for more than a hundred years since early decisions interpreting the IIA. In that entire time, the legislature had not seen fit to carve out a special, more lenient rule for latent diseases as opposed to other kinds of injuries. By altering longstanding precedent, Justice Madsen said that the majority was making policy decisions best left to the legislature.

Ultimately, this decision will require lower courts to grapple with what “virtual certainty” means in latent disease cases. While the Court was careful to note that a plaintiff would still have to show that the employer willfully disregarded a known risk, employers are likely to face more lawsuits by plaintiffs alleging latent diseases caused by toxic exposure. Lower courts will have to police the boundaries of this new standard, and may consider other factors besides the four “virtual certainty” factors above.

Summary Judgment Secured for Building Materials Supplier in $26 Million Asbestos Suit

26 Jun 2025

Baker Sterchi obtained summary judgment for a regional building materials supplier in a product liability case filed in Multnomah County Circuit Court in Oregon. The plaintiff sought $26 million in damages for alleged exposure to asbestos-containing construction materials and various other sources. Our client was one of dozens of defendants and was accused of supplying harmful materials during home remodels. The court granted our motion, resulting in dismissal of all claims and avoiding the need for trial or settlement.

Litigation Challenging CFPB's Medical Debt Rule Hits a Speed Bump

25 Jun 2025

ABSTRACT: The Eastern District of Texas asked for supplemental briefing on the issue of intervening defendants’ opposition to a joint motion for entry of a consent judgment and whether vacatur was a proper remedy regarding the Consumer Financial Services Protection Bureau Rule prohibiting collection and reporting of consumer medical debt information.

The litigation filed by Cornerstone Credit Union League (“Cornerstone”) and the Consumer Data Industry Association (“CDIA”) against the Consumer Financial Protection Bureau (“CFPB”) and former Director Rohit Chopra regarding the CFPB’s Rule prohibiting collection and reporting of consumer medical debt information has not concluded as we expected. Plaintiffs and the CFPB filed a joint motion for entry of a consent judgment.

The Eastern District of Texas requested supplemental briefing on the implication of intervening defendants’ refusal to consent to the proposed judgment; the Court also asked the parties to address whether vacatur was the proper remedy.

The Court extended the stay of the Rule through August 11, 2025, as discussed in a prior blog post, found here and here and here, regarding the Medical Debt Rule.

The enacted rule seeks to preclude Consumer Reporting Agencies (“CRA”) from collecting and reporting consumer data related to medical debts.

Intervening Defendants oppose the joint motion on two bases. First, they contend that a consent judgment between two parties is impermissible when it impacts the rights of a third-party to the litigation; i.e. two parties can only resolve the disputes at issue amongst themselves and cannot deny the third party its legal right to have its case resolved through the litigation process. Second, they contend the proposed joint motion is an improper attempt to avoid the public comment period for rulemaking under the Administrative Procedure Act.

Intervening Defendants also contend that Vacatur is an improper remedy because the Rule enacted by Director Chopra’s CFPB had a severability clause for portions of the Rule deemed unlawful. Intervening Defendants contend that any unlawful provisions of the Rule should be stricken from the Rule rather than vacating the entire Rule.

Cornerstone, CDIA, and the CFPB ask the Court to enter the consent judgment or alternatively grant summary judgment to Plaintiffs in the litigation. Their primary position is that intervening defendants do not have a cognizable legal right at issue in the litigation and therefore no rights would be impacted by entry of the consent judgment. They also contend that vacatur is a proper remedy when a court determines a Rule violates the governing statute of an administrative agency.

We expect a ruling from the Eastern District of Texas before the end of the current stay of the Rule.

We will continue to keep our eye on this litigation and its potential impact on all administrative agencies. Contact our Financial Services Practice Group for more information regarding how this case could impact you or your business.

Heather Shore Profiled in AAA Construction Panel Spotlight

25 Jun 2025

Baker Sterchi Member Heather Shore is featured in a Construction Panel spotlight on the American Arbitration Association (AAA) website. The feature highlights her background in construction law and the types of disputes she handles as an arbitrator and mediator.

Shore says she grew up in a family of carpenters and developed an early interest in construction litigation that has lasted throughout her career. As an arbitrator and mediator, she has handled mechanic’s lien disputes, cases involving multi-family residential and mixed-use projects, and complex matters related to federal contracts and large commercial construction projects.

Based in Kansas City, Shore has nearly 30 years of experience in construction, surety and commercial litigation. She serves on the AAA’s panel of construction, commercial and consumer arbitrators, is president of the Kansas Bar Association’s Construction Law Section and is a member and committee leader of the American Bar Association’s Construction and Surety sections.

Shore frequently presents for national and local organizations, including the ABA, Construction Super Conference and Defense Research Institute, on topics such as managing and litigating construction delay claims, contract drafting, dispute resolution and surety claims handling. She is licensed to practice in Missouri, Kansas, Colorado and Texas.

Founded in 1926, the not-for-profit AAA promotes fair, efficient, respectful and collaborative conflict resolution accessible to all.

View the full panelist spotlight here.

Gregorio Silva Shares Insights on Consumer Protection Law at KCMBA CLE

24 Jun 2025

On June 24, Baker Sterchi Member Gregorio Silva presented the Kansas City Metropolitan Bar Association (KCMBA) CLE course, “Current Consumer Protection: A Look at the Current State of the CFPB and Local Consumer Protection Laws.” The program addressed the current state of the Consumer Financial Protection Bureau and local consumer protection issues.

Silva co-chairs the firm’s Financial Services Practice Group. His civil litigation practice includes defending clients in the financial services, transportation and propane industries. He is a Leadership Counsel on Legal Diversity (LCLD) Fellow alumnus, a mentor in the LCLD Success in Law School Program and a member of organization’s Alumni Leadership Symposium Committee. He also serves on the board of the Hispanic Bar Association of Greater Kansas City as social media coordinator.

Based in the firm’s Kansas City office, Silva earned his law degree from the University of Nevada, Las Vegas William S. Boyd School of Law. He is admitted to practice in Missouri, Kansas, Alaska, Arizona, California and Nevada.

The Kansas City Metropolitan Bar Association serves legal professionals across a nine-county region in Missouri and Kansas through continuing education, networking and professional development opportunities.