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Wireco Worldgroup, Inc. v. Liberty Mutual Fire Insurance Co.

United States Court of Appeals, Eighth Circuit

July 31, 2018

WireCo WorldGroup, Inc., Plaintiff- Appellant,
v.
Liberty Mutual Fire Insurance Company; The First Liberty Insurance Corporation, Defendants - Appellees.

          Submitted: November 15, 2017

          Appeal from United States District Court for the Western District of Missouri - St. Joseph

          Before COLLOTON and GRUENDER, Circuit Judges, and HOLMES, [1] District Judge.

          COLLOTON, CIRCUIT JUDGE.

         WireCo WorldGroup, Inc. brought a five-count action against its workers' compensation insurance carriers, Liberty Mutual Fire Insurance Company and The First Liberty Insurance Corporation (collectively, "Liberty"). The lawsuit sought damages for excess premiums that WireCo allegedly paid on three of Liberty's insurance policies.

         The district court, [2] at the pleading stage, dismissed a claim for vexatious refusal to pay under Mo. Rev. Stat. § 375.420. The district court then granted summary judgment for Liberty on WireCo's remaining breach of contract claims. WireCo appeals the dismissal of all counts. Although our reasoning differs from that of the district court in some respects, we ultimately affirm the judgment.

         I.

         WireCo is a wire and cable company that operates in many States, including Texas and Missouri. In 2009, WireCo purchased a workers' compensation insurance policy from Liberty. The 2009 policy was in effect from June 30, 2009, to June 30, 2010. WireCo purchased renewal policies from Liberty in 2010, 2011, and 2012, respectively. Each policy contained an "Information Page," endorsements, and terms and conditions.

         The policies specified that Liberty would calculate the premium for each policy twice. Before the policy went into effect, Liberty would calculate an estimated premium, and WireCo agreed to pay this amount before the policy expired. After the policy expired, Liberty would calculate an actual premium in light of developments during the term. If the actual premium differed from the estimate, then the policy provided that WireCo would make an additional payment or receive a refund, as the case may be.

         Each policy had two sections that explained how premiums would be calculated. Both sections identified "rating plans" as an element in the calculation. Item 4 of each policy's Information Page read: "Premium: The premium for this policy will be determined by our Manuals of Rules, Classifications, Rates and Rating Plans." (Emphasis added). Part Five of each policy's "General Section" read: "All premium for this policy will be determined by our manuals of rules, rates, rating plans and classifications." (Emphasis added). According to WireCo, the references to "rating plans" meant the "schedule rating plans" that Liberty had filed with each State. One point of dispute is whether two particular schedule rating plans from Missouri and Texas were incorporated by reference into the renewal policies.

         Schedule rating is a method of adjusting the premium on workers' compensation insurance to account for risk characteristics that affect the probability or severity of future losses. When an insurance policy covers the insured company's operations in multiple States, the carrier must calculate a schedule rating factor for each State in accordance with the schedule rating plan it filed with the State. A schedule rating factor can take the form of a credit, which lowers the premium on the policy, or a debit, which increases the premium on the policy.

         In its complaint, WireCo alleged that Liberty breached the 2010, 2011, and 2012 renewal policies because it modified the Missouri and Texas schedule rating factors without complying with the procedures laid out in the Missouri and Texas schedule rating plans. In relevant part, the Missouri Schedule Rating Plan stated:

2. No Schedule debit or credit can take effect until the evidence supporting the modification is in our files.
. . . .
5. The customer will be informed in writing within ninety (90) days of the policy inception or renewal date, of the basis for any schedule debit or credit applied. If the policy is subject to any changes in its schedule debits ...

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