Missouri’s Court of Appeals for the Western District has re‑centered § 537.065 practice. In Lyda v. Allstate, the court reversed a $6.14M agreed judgment and held that intervening insurers must be allowed to contest liability and damages—including conducting discovery, filing motions, and demanding a jury—rather than being confined to post‑judgment coverage disputes.
For carriers and defense counsel in Missouri insurance law, this decision affects strategy: timely intervention and a merits‑based trial plan are now essential to mitigate inflated or collusive agreements and to preserve leverage.
Case Snapshot: Lyda v. Allstate
The case began after Connie Lyda sued Mark Northcott for injuries allegedly caused by Northcott’s negligence when he crashed a golf cart in which she was a passenger. The incident took place in Boone County. Northcott was insured under auto and homeowner’s policies issued by Allstate. After Allstate refused to defend Northcott without a reservation of rights and denied coverage, Lyda and Northcott entered into a § 537.065 agreement limiting recovery to available insurance coverage. Under the agreement, Northcott agreed to pursue claims against Allstate.
Allstate Intervenes After Receiving Statutory Notice
After receiving the required statutory notice of the § 537.065 agreement, Allstate intervened in the lawsuit. Northcott’s answer admitted that he consumed alcohol before operating the golf cart, that he tested at a BAC of .114, that he caused the crash, and that Lyda suffered injuries as a result. His answer included a crossclaim against Allstate for indemnity, breach of contract, and breach of fiduciary duty.
Allstate also filed an answer to Lyda’s petition, denying the allegations admitted by Northcott.
Trial Court Enters Agreed Judgment Despite Insurer’s Objections
Lyda and Northcott eventually filed a joint motion for entry of judgment on Lyda’s negligence claim. Allstate opposed the motion, citing its rights under § 537.065.4, including the right to a jury trial. Despite Allstate’s objections, the trial court entered judgment in the amount agreed upon by Lyda and Northcott.
On appeal, however, the Western District concluded that the judgment improperly deprived the insurer of rights created by the legislature’s 2021 amendments to § 537.065, which allow insurers to intervene and contest claims on the merits.
Appellate Court Interprets 2021 Amendments to § 537.065
Writing for the court, Judge Alok Ahuja emphasized that the amended statute grants intervening insurers the right to participate in the litigation on the merits, including contesting liability and damages, rather than merely challenging coverage issues after judgment. The appellate court recognized that the trial court’s approach would effectively nullify the statutory protections provided by the 2021 amendments.
Legislative History of § 537.065
The court’s decision examined in detail the statute’s legislative history and its significance. Originally, § 537.065 permitted an alleged tortfeasor to limit the injured party’s recovery to particular assets and insurance policies without notifying its insurer of such an agreement.
In 2017, the General Assembly repealed and reenacted § 537.065 requiring that a tortfeasor notify its insurer of the agreement’s execution before any judgment could be entered against such tortfeasor. The insurer also had the right to intervene in any pending litigation within 30 days of receiving notice from the tortfeasor/insured. However, the statute failed to specify what rights an insurer had once it intervened.
Expanded Rights for Intervening Insurers Under the 2021 Amendments
The 2021 amendments to § 537.065 were intended to address these shortcomings and give intervening insurers clarity on what they were entitled to do once allowed to intervene. Specifically, under the 2021 amendments, an insured is required to provide sufficient notice to an insurer so it may intervene, even if litigation is not pending at the time the agreement is executed. § 537.065.2.
Moreover, an intervening insurer may contest the insured’s liability and the extent of the injured party’s damages, including a right to conduct discovery, engage in motion practice, demand a jury trial, and receive sufficient time to prepare for trial. Importantly, an intervening insurer is not bound by any agreements of the parties, or any orders of the court, entered before the insurer’s intervention. § 537.065.4.
The 2021 amendment also amended the Uniform Arbitration Act to specify that arbitration awards entered in personal injury cases are generally not binding against an insurer, unless the insurer has agreed in writing to the arbitration. § 435.415.2, RSMo.
Potential Impact on Missouri Insurance Litigation
The Lyda court recognized that “the current version of § 537.065.4 may raise a host of novel procedural questions during the proceedings on remand. For example, difficult issues may arise concerning the management of a trial in which two separate parties are defending a single negligence claim asserted against a single defendant – particularly where one of the defending parties concedes liability, while the other contests it.” Lyda, at *10 n.3.
Missouri insurers can:
- Confirm statutory notice and calendar intervention under § 537.065.2.
- Intervene fast; assert merits rights; demand a jury; secure prep time under § 537.065.4.
- Launch targeted discovery and motions to contest liability and damages, or move to stay the action while simultaneously filing a declaratory judgment action on the coverage questions. (McCrackin v. Mullen, 701 S.W.3d 868 (Mo. banc 2024))
- Oppose any agreed judgment that sidelines insurer participation.
- Coordinate trial when the insured concedes liability; plan instructions, evidence, and potential bifurcation.
- Set arbitration posture early; personal injury awards are not binding absent written insurer consent (§ 435.415.2).
- Preserve objections and offers of proof for appeal; cite the Western District’s reversal in
Our guidance: treat § 537.065 notices as the starting point. Intervene promptly, file a jury demand, set early discovery to test liability and damages, and use motion practice to narrow disputed issues. Coordinate defense where the insured concedes liability while the insurer contests it to avoid procedural pitfalls flagged by the court.
The Lyda decision is likely to be closely watched by Missouri coverage and defense practitioners. While it reinforces the expanded procedural protections afforded by the 2021 amendments and provides greater protection from inflated and collusive § 537.065 agreements, it is likely to be met with significant opposition by insureds and plaintiffs’ counsel.
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