In a significant ruling for Missouri insurers, the Missouri Supreme Court in McCrackin v. Mullen addressed the rights of insurers to intervene in underlying tort actions pursuant to Missouri Rule 52.12(a)(2). The Court held insurers can intervene in the underlying tort action to seek a stay while a declaratory judgment proceeding regarding insurance coverage is pending, thereby addressing the insurer’s dilemma of potentially waiving control of the defense.
The McCrackin case arose from a wrongful death action filed by Jeromy McCrackin against Tynan Mullen, following the death of McCrackin’s son. Safeco Insurance Company had issued a homeowners policy to Mullen’s grandmother, and sought to intervene in the wrongful death action for the limited purpose of staying proceedings pending resolution of Safeco’s federal declaratory judgment action seeking a determination of Safeco’s duty to defend or indemnify Mullen. The circuit court initially denied Safeco’s motion to intervene, prompting an appeal.
The Missouri Supreme Court’s decision vacated the circuit court’s judgment, emphasizing insurers have a right to intervene in tort actions for the limited purpose of seeking a stay while coverage issues are litigated separately. This ruling squarely aligns with the intervention-and-stay procedure first recognized in State ex rel. Mid-Century Insurance Co. v. McKelvey, which allows insurers to protect their interest without waiving their right to defend.
The Court’s opinion also overruled previous Missouri cases suggesting insurers had no such right to intervene. By doing so, the Court reinforced the principle that insurers should not be forced to choose between refusing coverage and losing control over the defense of a tort action. Thus, this ruling is a pivotal development in Missouri insurance law, offering insurers a clear path to managing their defense obligations without prematurely conceding coverage issues. It further underscores the importance of strategically using declaratory judgment actions to resolve coverage disputes.
