<\/p>\n\r\nTop<\/a> | Part 2<\/a> | Part 3 & Conclusion<\/a>\r\n ATTACKING THE REASONABLENESS OF THE SETTLEMENT<\/b><\/p>\r\n Before 1997, no Missouri appellate court had applied a reasonableness requirement to the 065 agreements.\u00a0\u00a0However, the Southern District Court of Appeals in 1990 brought up reasonableness when it explained in\u00a0Cologna v. Farmers & Merchants Ins. Co.<\/em>\u00a0that the insured is free to make a \u201creasonable settlement.\u201d[72]<\/sup><\/a>\u00a0\u00a0Both the Southern and Western districts of the Missouri Court of Appeals then endorsed such agreements so long as the agreements were \u201cfree of collusion or fraud.\u201d[73]<\/sup><\/a><\/p>\r\n\r\n Building on these two decisions, the Missouri Supreme Court in 1997 declared that the enforceability of settlements through 065 agreements must be considered under \u201ca reasonableness standard.\u201d[74]<\/sup><\/a>\u00a0\u00a0\u201cRequiring a settlement to be reasonable strikes an appropriate balance between the interests of the insured and the interests of the insurer.\u201d[75]<\/sup><\/a>\u00a0\u00a0While the insurer in such situations has refused to defend and left the insured to fend for himself, the court noted that the ensured \u201cmay act in a self-interested way in an attempt to protect himself from personal liability.\u201d[76]<\/sup><\/a>\u00a0\u00a0These agreements, even absent any collusion or fraud, occur under unusual circumstances, as the\u00a0Gulf<\/em>\u00a0Court noted.\u00a0\u00a0The insured may agree to a large settlement in exchange for his release from liability because he has \u201cnothing to lose\u201d and \u201che will never be obligated to pay.\u201d[77]<\/sup><\/a>\u00a0\u00a0In these circumstances, the settlement \u201cmay have very little relationship to the strength of the plaintiff\u2019s claim.\u201d[78]<\/sup><\/a><\/p>\r\n\r\n In\u00a0Gulf<\/em>, the Court continued on to define this reasonableness standard.\u00a0\u00a0\u201cThe test of whether the settlement amount is reasonable is what a reasonably prudent person in the position of the defendant would have settled for on the merit of the plaintiff\u2019s claim.\u201d[79]<\/sup><\/a>\u00a0\u00a0This analysis includes \u201ca consideration of the facts bearing on the liability and damage aspects of the plaintiff\u2019s claim, as well as the risks of going to trial.\u201d[80]<\/sup><\/a>\u00a0\u00a0The insurer bears the burden of proving the reasonableness \u2014 or the unreasonableness, depending on the perspective \u2014 of the 065 agreement.[81]<\/sup><\/a><\/p>\r\n\r\n Finally, the Court in\u00a0Gulf<\/em>\u00a0determined that a \u201creasonableness\u201d ruling against the insured\u2019s agreement does not release the insurer from all liability.\u00a0\u00a0Instead, upon a finding that a 065 agreement is unreasonable, the trial court is tasked with determining a \u201creasonable settlement amount for which the insurer should be held liable.\u201d[82]<\/sup><\/a>\u00a0Consequently, the Missouri Supreme Court in\u00a0Gulf<\/em> established a reasonableness standard for the enforceability of 065 agreements and outlined the procedure for the analysis of these agreements.<\/p>\r\n\r\n BENCH TRIAL JUDGMENT CANNOT BE ATTACKED AS UNREASONABLE<\/b><\/p>\r\n\r\n The\u00a0Gulf<\/em>\u00a0ruling set a reasonableness standard for settlements reached under 537.065, but the Missouri Supreme Court declined to extend this analysis of reasonableness to bench trial judgments in which the plaintiff and accused tortfeasor (the insured) cooperate.[83]<\/sup><\/a>\u00a0\u00a0In\u00a0Schmitz v. Great American Insurance Co.<\/em>, there was no settlement.\u00a0\u00a0Rather, when two insurance companies refused to defend their insured (CPB), the insured entered into an 065 agreement with the plaintiffs in which the plaintiffs agreed that if a judgment was entered against the insured, the plaintiffs \u201cwould limit any recovery to the insurance policies.\u201d[84]<\/sup><\/a>\u00a0\u00a0The plaintiffs took the insured to a bench trial, where \u201cthe [plaintiffs] introduced evidence regarding their damages and [the insured\u2019s] liability.\u00a0\u00a0[The insured] neither objected to the entry of evidence nor offered any defense.\u201d[85]<\/sup><\/a>\u00a0\u00a0At the conclusion of the bench trial, the court declared the insured liable and awarded $4,580,076 in damages to the plaintiffs. None of the parties appealed.[86]<\/sup><\/a><\/p>\r\n\r\n The plaintiffs then filed an equitable garnishment action under Mo. Rev. Stat. \u00a7 379.200 against the two insurance companies to recover the damage award under the insured\u2019s policies.[87]<\/sup><\/a>\u00a0The plaintiffs argued that the policy exclusions claimed by the insurance companies did not apply.[88]<\/sup><\/a>\u00a0\u00a0While one of the two insurance companies settled, the remaining insurer, Great American Assurance Co., fought the equitable garnishment.[89]<\/sup><\/a>\u00a0\u00a0The trial court held an evidentiary hearing on the equitable garnishment action, and it ruled that the underlying judgment was unreasonable and that reasonable damages were $2,200,000.[90]<\/sup><\/a><\/p>\r\n\r\n The Missouri Supreme Court overruled the trial court and said that the\u00a0Gulf<\/em>\u00a0reasonableness test only applies to settlements reached under 065.[91]<\/sup><\/a>\u00a0\u00a0The insurer, Great American, argued that the trial \u201clacked any semblance of an adversarial proceeding because [the insured] did not present a defense.\u201d[92]<\/sup><\/a>\u00a0\u00a0However, the Supreme Court pointed out that the insurer had an opportunity to defend but refused.[93]<\/sup><\/a>\u00a0\u00a0The insured turned to the 065 agreement to limit its exposure to liability, but that agreement \u201cdid not admit liability or damages; instead, it simply limited the collection of any judgment against [the insured] to insurance policies.\u201d[94]<\/sup><\/a>\u00a0\u00a0Further, the Supreme Court said that the plaintiffs, regardless of the 065 agreement, still had to prove liability and damages at the bench trial.\u00a0\u00a0\u201cAlthough the trial court found [the insured] liable . . . , it could have found that [the insured] was not liable or that no damages were suffered.\u201d[95]<\/sup><\/a><\/p>\r\n\r\n The Supreme Court explained that allowing insurers to attack bench judgments after the fact would \u201cencourage insurers to refuse to defend on behalf of insureds.\u201d[96]<\/sup><\/a>\u00a0\u00a0The court explained that this policy was \u201cinconsistent with the doctrine of collateral estoppel\u201d because:<\/p>\r\n\r\n Thus, adopting a policy of questioning the reasonableness of a bench trial verdict would give insurers \u201ctwo bites of the apple \u2014\u00a0once when the trial court determines liability and damages and once when the equitable garnishment court determines reasonableness.\u201d[98]<\/sup><\/a>\u00a0Consequently, the Supreme Court refused to extend the reasonableness test it had applied to 537.065 settlements to bench trial judgments where the plaintiff and insured cooperated under similar agreements.[99]<\/sup><\/a><\/p>\r\n\r\n BOUND BY THE RESULT OF THE LITIGATION<\/b><\/p>\r\n\r\n The concept of collateral estoppel also works to bind insurance companies to the results of 065 litigation.\u00a0\u00a0This issue arises when insurers argue that in order to be bound by a 065 agreement and the litigation, the insurer must have unjustifiably refused to defend or provide coverage before the insured resorted to the 065 agreement.[100]<\/sup><\/a>\u00a0\u00a0If the refusal to defend or provide coverage is not unjustified, then the insurer is not bound by the 065 agreement.<\/p>\r\n\r\n The courts, however, have articulated a clear standard defining when insurers are bound by the 065 judgments.\u00a0\u00a0First, the courts note that once an insurance company unjustifiably refuses to defend or provide coverage, the insured is free to enter into a settlement that releases it from liability.[101]<\/sup><\/a>\u00a0\u00a0The standard then becomes \u201cwhether the insurer had the\u00a0opportunity<\/em>\u00a0to control and manage the litigation, not whether the insurer had the\u00a0duty<\/em>\u00a0to control and manage the litigation.\u201d[102]<\/sup><\/a>\u00a0\u00a0Therefore, \u201c[w]here one is bound to protect another from liability, he is bound\u00a0by the result of the litigation<\/em>\u00a0to which such other is a party, provided he had an opportunity to control and manage it.\u201d[103]<\/sup><\/a>\u00a0\u00a0Based on this, when one party has secured a judgment against another and attempts to satisfy it through an action for equitable garnishment, \u201cthe underlying judgment may not be collaterally attacked as long as the court issuing the judgment had personal and subject[-]matter jurisdiction and the judgment is not void on its face.\u2019\u201d[104]<\/sup><\/a><\/p>\r\n\r\n This result is true \u2014 the insurer remains bound \u2014 even if the insurer\u2019s refusal to defend or provide coverage is an \u201chonest mistake,\u201d as it \u201cnevertheless constitutes an unjustified refusal and renders the insurer liable to the insured for all resultant damages from that breach of contract.\u201d[105]<\/sup><\/a>\u00a0\u00a0Essentially, as the court in\u00a0Rinehart v. Anderson<\/em>\u00a0stated, \u201c[the insurer] cannot have its cake and eat it too by both refusing coverage and at the same time continuing to control the terms of the settlement in defense of an action it had refused to defend.\u201d[106]<\/sup><\/a><\/p>\r\n\r\n This doctrine also means that the insurer is \u201cprecluded from relitigating any facts that actually were determined in the underlying case and were necessary to the judgment.\u201d[107]<\/sup><\/a>\u00a0\u00a0Further, the facts decided in the underlying action will most often \u201cdetermine whether there is a duty to indemnify.\u201d[108]<\/sup><\/a>\u00a0\u00a0Simply put, the facts as determined in the 065 litigation generally are used to determine the coverage issues in subsequent equitable garnishment actions.<\/p>\r\n\r\n BAD FAITH REFUSAL TO SETTLE<\/b><\/p>\r\n\r\n When insurers unjustifiably refuse to defend, they potentially face significant consequences.\u00a0\u00a0As noted above, the insurer may be liable for the full amount of coverage under an 065 agreement settlement or related trial.\u00a0\u00a0Further, the insurer may face liability after surrendering any ability to control or influence a defense to the substantive action.<\/p>\r\n\r\n But an insurer who refuses to defend may face even greater exposure: a judgment for bad faith refusal to settle.\u00a0The\u00a0Truck Insurance Exchange v. Prairie Framing<\/em>\u00a0decision by the Western District Court of Appeals demonstrates this risk.[109]<\/sup><\/a>\u00a0\u00a0In fact, the\u00a0Truck Insurance Exchange<\/em>\u00a0decision \u201cillustrates the risks to which an insurer may be exposed if the insurer elects to defend its insured under a reservation of rights.\u201d[110]<\/sup><\/a>\u00a0\u00a0Along with the risk of having to satisfy a judgment \u201cthat bears little relationship to the plaintiff\u2019s actual damages, the liability issues, or the insurer\u2019s policy limits,\u201d the insurer may have to pay interest on that judgment \u201cas well as possible liability for bad faith in the event the insurer is unsuccessful in litigating its coverage defenses.\u201d[111]<\/sup><\/a><\/p>\r\n\r\n Because of this risk, it is important to understand the Western District Court of Appeals\u2019 holding in\u00a0Truck Insurance Exchange<\/em>.\u00a0\u00a0Eugene Rolfe was killed when his vehicle was struck by a truck driven by Robert Winger.[112]<\/sup><\/a>\u00a0\u00a0Rolfe\u2019s family filed suit against Winger and his employer, Prairie Framing, which was insured by Truck Insurance Exchange (TIE).[113]<\/sup><\/a>\u00a0\u00a0TIE refused to defend. Prairie Framing executed an 065 agreement with the Rolfes and stipulated to its liability for negligent supervision.[114]<\/sup><\/a>\u00a0\u00a0The Rolfes tried the issue of damages, and the trial court entered a judgment of $4 million against Prairie Framing.[115]<\/sup><\/a><\/p>\r\n\r\n The trial court also found that TIE violated its duty to settle in good faith.[116]<\/sup><\/a>\u00a0\u00a0Based on this, it ordered TIE to pay the full $4 million judgment against Prairie Framing, even though the policy limit was $1 million.[117]<\/sup><\/a>\u00a0\u00a0Further, the trial court ordered TIE to pay 9 percent interest per annum plus legal fees and expenses in defense of the underlying suit.[118]<\/sup><\/a><\/p>\r\n\r\n On appeal, TIE argued against the bad faith refusal to settle ruling.\u00a0\u00a0TIE claimed it was liable only for the amount Prairie Framing was \u201cforced to pay, and Prairie Framing was only forced to pay a nominal amount.\u201d[119]<\/sup><\/a>\u00a0\u00a0In its decision, the Western District explained an insurer\u2019s duty in settlement negotiations.\u00a0\u00a0\u201cInherent in a policy of insurance is the insurer\u2019s obligation to act in good faith regarding settlement of a claim.\u00a0\u00a0This obligation is part of what the insured pays for.\u201d[120]<\/sup><\/a>\u00a0\u00a0The court further explained its reasoning for holding insurance companies to the standard of good faith in negotiations:<\/p>\r\n\r\n We find no attraction to a rule that rewards bad faith by relieving the insurer of excess\u00a0liability if it forces harsh choices onto an insured facing a huge judgment.\u00a0\u00a0When the\u00a0insurer refuses to settle, the insured loses the benefit of an important obligation owed by\u00a0the insurer.\u00a0An insurer\u2019s \u2018mere payment\u2019 of a judgment up to the policy limits does not\u00a0make the insured whole or put the insured into the same position as if the company had\u00a0performed its obligations under the policy.[121]<\/sup><\/a><\/p>\r\n\r\n Requiring the insured to pay before the insurer is held to its obligations because of the insurer\u2019s bad faith refusal to settle would impose \u201cthe very burden on the insured that the requirement of good faith seeks to avoid.\u201d[122]<\/sup><\/a>\u00a0\u00a0On the broader issue of an insurer\u2019s bad faith, the court said that if an insurer has assumed control of its right to settle claims against the insured, it must exercise good faith in \u201cconsidering offers to compromise the claim for an amount within policy limits.\u201d[123]<\/sup><\/a>\u00a0\u00a0If the insurer fails in this, it \u201cmay become liable in excess of its undertaking under the policy provisions.\u201d[124]<\/sup><\/a>\u00a0\u00a0The obligation of good faith in settlement negotiations continues even after an insurer denies coverage and refuses to defend.[125]<\/sup><\/a>\u00a0\u00a0If the insurer refuses to consider settlement offers in good faith, the insured is free to reach a reasonable settlement that can be enforced against the insurer.[126]<\/sup><\/a>\r\n\r\n The courts look to the facts of the case to determine whether the insurer acted in bad faith.\u00a0\u00a0\u201cBad faith is, of course, a state of mind, indicated by acts and circumstances, and is provable by circumstantial as well as direct evidence.\u00a0\u00a0Each case must stand and be determined upon its particular state of facts.\u201d[127]<\/sup><\/a>\u00a0\u00a0The court has found bad faith based on an insurer\u2019s \u201cintentional disregard of the financial interest of [its] insured in hope of escaping the responsibility imposed upon it by its policy.\u201d[128]<\/sup><\/a>\u00a0\u00a0\u201cThe law requires the insurer to \u2018act honestly to effectually indemnify and save the insured harmless as it has contracted to do \u2014 to the extent, if necessary, that it must make whatever payment and settlement an honest judgment and discretion dictate, within the limits of the policy.\u2019\u201d[129]<\/sup><\/a><\/p>\r\n\r\n The court in\u00a0Truck Insurance Exchange<\/em>\u00a0remanded the case to the trial court because no trial on the merits had been held on the issue of bad faith and the record did not provide enough facts for it to make a clear determination on the issue on appeal.\u00a0\u00a0Nonetheless, the\u00a0Truck Insurance Exchange<\/em>\u00a0court laid out a clear standard where insurance companies may be held liable for attorneys fees and court costs, as well as damage amounts over the policy limits, when the insurers do not act in good faith regarding settlements.<\/p>\r\n FRAUD, COLLUSION AND INSURERS\u2019 DEFENSES<\/b><\/p>\r\n\r\n When facing litigation about 065 agreements, courts must also consider the issues of fraud and collusion between the plaintiffs and insureds.\u00a0\u00a0\u201cCollusion is a secret concert of action between two or more people for the promotion of a fraudulent purpose.\u201d[130]<\/sup><\/a>\u00a0\u201c[A] key element of collusion is promoting a fraudulent purpose.\u201d[131]<\/sup><\/a>\u00a0\u00a0\u201cMissouri courts recognize two types of fraud: extrinsic and intrinsic.\u201d[132]<\/sup><\/a>\u00a0\u00a0\u201cFraud is extrinsic when it induces a party to default or to consent to a judgment.\u201d[133]<\/sup><\/a>\u00a0\u00a0\u201cIt is intrinsic when a party knowingly uses perjured testimony or otherwise fabricates evidence.\u201d[134]<\/sup><\/a>\u00a0\u00a0When contesting 065 agreements, insurers are \u201ctalking about a fraud upon the court or extrinsic fraud.\u201d[135]<\/sup><\/a>\u00a0\u00a0\u201cExtrinsic fraud has been defined as a fraud that induced a party to default or consent to judgment against him.\u201d[136]<\/sup><\/a>\u00a0\u00a0\u201c[F]raud is a positive act resulting from a willful intent to deceive.\u201d[137]<\/sup><\/a>\u00a0\u00a0However, \u201c[a]n insured, \u2018although not engaging in collusive conduct for fraudulent or deceitful purpose, may act in a self-interested way in an attempt to protect himself from personal liability.\u2019\u201d[138]<\/sup><\/a><\/p>\r\n\r\n In\u00a0Cologna v. Farmers and Merchants Insurance Co<\/em>, the Southern District Court of Appeals addressed the issues of fraud and collusion in 065 agreements, and ultimately resulted in\u00a0a benchmark ruling on the question of fraud in these agreements.[139]<\/sup><\/a>\u00a0\u00a0The case arose when Eugene Cologna died after a shotgun, held by his ex-wife Rita Cologna, discharged while he was at her residence.[140]<\/sup><\/a>\u00a0\u00a0Paulette, Gene\u2019s wife at the time of the incident, sued Rita.[141]<\/sup><\/a>\u00a0\u00a0Rita\u2019s insurer, with whom she had a homeowner\u2019s policy, offered a defense under a reservation of rights.[142]<\/sup><\/a>\u00a0\u00a0Rita refused her insurer\u2019s qualified defense and entered into an 065 agreement with Paulette.[143]<\/sup><\/a><\/p>\r\n\r\n Farmers responded with a declaratory action that alleged, among other things, fraud and collusion by Rita and Paulette.\u00a0\u00a0Farmers\u2019 collusion argument was that \u201cRita had \u2018failed to cooperate\u2019 with Farmers in the defense of the civil action as required by the policy [and] had \u2018colluded\u2019 with Paulette\u201d in a manner that would \u201cexpose Farmers to a substantial loss.\u201d[144]<\/sup><\/a>\u00a0\u00a0Farmers said Rita had \u201ccolluded and conspired\u201d with Paulette by writing a letter to Farmers counsel demanding that he either withdraw or defend without a reservation of rights, by stipulating \u201cto the effect that Rita carelessly and negligently caused the death of Gene Cologna and that his death was not an intentional act,\u201d and other unnamed collusive acts.[145]<\/sup><\/a>\u00a0\u00a0The Southern District noted that Farmers, in offering the defense under a reservation of rights, never admitted liability on its policy, but \u201c[a]t the same time it was never willing to let the insured manage her defense as she saw fit.\u201d[146]<\/sup><\/a>\u00a0\u00a0The court emphasized that once Farmers offered to defend only under a reservation of rights, Rita was not obligated to accept the defense.\u00a0\u00a0Further, the court discounted the insurer\u2019s arguments of collusion and fraud based on the insured\u2019s failure to cooperate \u201cby waiving a jury trial, failing to contest liability, failing to contest damages and by failing to offer evidence at the trial of the wrongful death action.\u201d[147]<\/sup><\/a><\/p>\r\n\r\n On these accusations of collusion, the\u00a0Cologna<\/em>\u00a0court examined both the 065 agreement and the trial proceedings, concluding that no fraud existed.\u00a0The court stated:<\/p>\r\n\r\n It could not fairly be said that the judgment in the wrongful death action was collusive or\u00a0fraudulent; the trial court made extensive findings of fact in connection with Paulette\u2019s\u00a0claim for damages because of Gene\u2019s death...\u00a0Farmers\u2019 characterization of the\u00a0proceeding as a species of confession of judgment is unwarranted.[148]<\/sup><\/a><\/p>\r\n\r\n Consequently, the court declared that the argument that the insured breached the duty to cooperate or acted collusively was without merit.[149]<\/sup><\/a><\/p>\r\n\r\n In\u00a0Cologna<\/em>, Farmers essentially asked the court to reconsider what constitutes collusion in such agreements, arguing that the insured \u2014 even those who execute 065 agreements \u2014 must meet certain standards of the insurer in defending the suit (even though the insurer refused to defend).\u00a0\u00a0This argument basically asked for a reconsideration of precedent on 065 agreements, the\u00a0Cologna<\/em> court noted.[150]<\/sup><\/a>\u00a0\u00a0Rather, the Missouri courts have held consistently that once the insurer refuses to defend, the insured is released from its obligations to the insurer. In an early answer to insurers\u2019 claims of collusion in such agreements, the Missouri Supreme Court said that insureds may agree to dispense \u201cwith the necessity of defendant making a defense to plaintiffs\u2019 claims.\u201d[151]<\/sup><\/a>\u00a0\u00a0This is not fraud or collusion \u201c[s]ince the parties were authorized by law to enter into the contract, we hold that their conduct in doing so was not wrongful.\u201d[152]<\/sup><\/a>\u00a0\u00a0Even if the insured does not contest plaintiff\u2019s claims, this does not \u201cindicate that the judgments were obtained by fraud or collusion.\u201d[153]<\/sup><\/a><\/p>\r\n\r\n The standard for fraud and collusion in the setting of 537.065 agreements has not been well defined,[154]<\/sup><\/a>\u00a0but it is a high bar for insurers to reach.\u00a0\u00a0The analysis for such a fraud defense turns on the pleading requirements explained in Missouri Rule of Civil Procedure 55.15.\u00a0\u00a0The rule states that \u201c[in] all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.\u201d[155]<\/sup><\/a>\u00a0\u00a0The party alleging fraud \u201cmust plead every essential element of fraud, and failure to plead any element renders the claim defective and subject to dismissal,\u201d and those allegations of fraud must rest on statements of fact and not mere conclusions.[156]<\/sup><\/a>\u00a0\u00a0The elements of fraud are: 1. a representation; 2. its falsity; 3. its materiality; 4. the speaker\u2019s knowledge of its falsity; 5. the speaker\u2019s intent [that] the representation be acted upon by the other party; 6. the other party\u2019s ignorance of its falsity and right to rely on its truth; and 7. proximately caused injury.[157]<\/sup><\/a>\u00a0If the insurer fails to plead even one of these seven elements, then the fraud defense to an 065 agreement fails.\u00a0\u00a0This creates such a high burden on the insurer that each and every court that has addressed the fraud defense has entirely rejected it in the context of 065 agreements.[158]<\/sup><\/a><\/p>\r\n\r\n One of the first cases on the issue of fraud and collusion as a defense to 065 agreements,\u00a0U.S. Fidelity & Guaranty Co. v. Safeco Insurance\u00a0\u00a0Company of America<\/em>, illustrated the difficulty for the insurers to successfully plead the fraud argument.[159]<\/sup><\/a>\u00a0\u00a0In\u00a0U.S. Fidelity<\/em>, the insured, Roy Chapman, entered into an 065 agreement with the plaintiffs, the Alonzos.\u00a0\u00a0As part of the agreement, Chapman made an admission of liability.[160]<\/sup><\/a>\u00a0\u00a0Safeco, the insurer, on appeal argued that \u201cunder the agreement the proceedings were not adversary in nature and since [the insured\u2019s attorney] sat silent while the attorney for the Alonzos made improper statements in argument, the verdicts and judgments obtained were \u2018tainted with collusion and fraud\u2019 and should not be permitted to stand.\u201d[161]<\/sup><\/a>\u00a0\u00a0The plaintiffs\u2019 lawyer even told the jury not to consider where the money was going to come from because \u201cthere were \u2018substantial sources\u2019 from which the money will come,\u201d and the insured\u2019s attorney raised no objection to the allusion to insurance coverage made in front of the jury.[162]<\/sup><\/a>\u00a0\u00a0As to \u201csitting in silence\u201d during the plaintiffs\u2019\u00a0\u00a0attorney\u2019s statement about \u201csubstantial sources\u201d of money to cover the verdict, the Missouri Supreme Court noted there \u201cwas no claim or evidence that he agreed in advance as to the improper closing argument or that he knew it was coming.[163]<\/sup><\/a>\u00a0\u00a0Moreover, the court ruled there was no collusion or fraud as the agreement was executed as the statute intended.[164]<\/sup><\/a>\u00a0\u00a0The court explained that \u201c[t]here is no question but that an insurer which has elected for what it considers valid reasons not to defend a pending damage suit can be placed in a difficult position by those acting under the statute, but infirmities of this sort in the statute, if so, can be corrected by the general assembly.\u201d[165]<\/sup><\/a><\/p>\r\n\r\n Consequently, the insurer\u2019s options to challenge 065 agreements are limited.\u00a0\u00a0In fact, \u201c[a]bsent fraud or collusion between the claimant and the insured, a Section 537.065 agreement does not provide the insurer with a defense to liability on the policy.\u201d[166]<\/sup><\/a>\u00a0\u00a0And, as the above cases show, the courts routinely have rejected insurers\u2019 defenses based on fraud or collusion.<\/p>\r\n A FEW LIMITS ON 065 AGREEMENTS<\/b><\/p>\r\n\r\n While Mo. Rev. Stat. \u00a7 065 largely is structured to benefit the insured parties, the courts have carved out limitations to protect insurers, too.\u00a0\u00a0For one, 065 agreement settlements may not create greater liability for the insurer than what is covered under the policy.\u00a0\u00a0\u201c[A]n insurer\u2019s liability when the insured has settled the underlying action may not exceed the policy coverages.\u201d[167]<\/sup><\/a>\u00a0Consequently, where a tortfeasor and insured settle under an 065 agreement and the settlement encompasses both covered and noncovered claims, the \u201csettlement must be fairly apportioned between the two.\u201d[168]<\/sup><\/a>\u00a0\u00a0The insurer is then only liable for the portion of the settlement apportioned to covered claims.<\/p>\r\n\r\n Further, 065 agreements apply to contracts of insurance but not to contracts of indemnification.\u00a0\u00a0For instance, in\u00a0Holiday Inns, Inc. v. Thirteen-Fifty Investment Co<\/em>.\u00a0a hotel franchisee \u2014 Thirteen-Fifty Investment Co. \u2014 attempted to execute an 065 agreement with a hotel occupant injured on the property.The insured, unwilling to expose itself to liability beyond the insurance policy, will enter\u00a0into a section 537.065 agreement limiting any collection of damages.\u00a0Once the trial court renders its judgment and the plaintiff files an equitable garnishment lawsuit against the\u00a0insurer, the insurer will challenge the trial court\u2019s finding of liability and damages.\u00a0\u00a0Then, the plaintiff will be forced to re-litigate the entire case for the equitable garnishment court so that it can determine whether the judgment was reasonable.[97]<\/sup><\/a><\/blockquote>\r\n\r\n