The Missouri Court of Appeals for the Western District provided further clarification for insurers when there are coverage disputes. The Missouri Supreme Court previously ruled in McCrackin v. Mullen that insurers had the right to intervene and seek a stay of underlying tort actions while simultaneously seeking a declaration of coverage rights.¹ In Lyda v. Allstate Fire & Cas. Ins. Co.,² the court ruled insurers have a substantive right to intervene and contest the merits of a case, up to and including the right to a jury trial. This further expands insurers’ abilities to intervene should coverage defenses fail, and the insurer needs to provide a defense. 

In Lyda, Connie Lyda sued Mark Northcott, alleging she had sustained severe injuries after Northcott lost control of a golf cart in which Lyda was a passenger on September 22, 2019. Lyda alleged that Northcott was intoxicated and impaired at the time of the accident and that her injuries required multiple surgeries and skin grafting. At the time of the accident, Northcott was insured under an auto policy issued by Allstate Fire and Casualty Insurance Company and a homeowner's policy issued by Allstate Vehicle and Property Insurance Company.

After being served with Lyda's petition, Northcott notified Allstate and requested a defense, but Allstate refused to defend without a reservation of rights and subsequently denied coverage entirely. Allstate then filed a declaratory judgment action in the United States District Court for the Eastern District of Missouri, seeking confirmation it had no obligation to defend or indemnify Northcott under either policy. 

With Allstate having denied coverage, Lyda and Northcott entered into an agreement pursuant to § 537.065.1, under which Lyda agreed to forgo collecting any judgment from Northcott's personal assets and instead pursue recovery solely from Allstate or any other insurer. In return, Northcott agreed to pursue claims against his insurers for indemnity, breach of contract, bad faith, and breach of fiduciary duty, and to pay Lyda 90 percent of any net recovery.

Upon being notified of the § 537.065 agreement, Allstate moved to intervene as of right in Lyda's personal injury lawsuit pursuant to § 537.065.4, and the circuit court granted the motion. After intervening, Allstate filed an answer denying the substantive allegations of Lyda's petition, including allegations that Northcott was intoxicated, that his negligence caused the accident, and that Lyda suffered severe injuries. Allstate also raised affirmative defenses of comparative fault and assumption of risk. Northcott, by contrast, admitted all factual allegations in Lyda's amended petition and sought judgment to be entered in Lyda's favor. He did, however, deny her claim that an award of punitive damages was warranted. Northcott also filed cross-claims against Allstate for indemnity, breach of contract, and breach of fiduciary duty.

Northcott and Allstate both filed motions for summary judgment on the insurance coverage issues for the homeowner’s policy about a year after their answers were filed. Lyda and Northcott subsequently filed a joint motion for entry of judgment on Lyda's negligence claim, relying on a settlement agreement under which Lyda elected to settle her claims for US$6,140,000, and Northcott consented to entry of judgment in that amount. 

Allstate opposed the motion, arguing that the settlement between Lyda and Northcott could not bind Allstate or deprive it of its right under § 537.065.4 to defend Lyda's claim, including the right to a jury trial. Despite Allstate's objections, the circuit court entered judgment in favor of Lyda for the full $6,140,000. Allstate filed a motion to vacate the judgment, requesting a modification stating it did not apply to Allstate. The circuit court denied Allstate’s motion and granted Northcott's motion for partial summary judgment against Allstate Vehicle and Property on the homeowner's insurance policy coverage question. Northcott dismissed his claim against Allstate on the auto policy, and the circuit court entered two separate judgments. 

The Western District reversed. Central to the court's analysis was the legislative history of § 537.065, which authorizes injured parties and tortfeasors to enter into contracts that provide the injured party will only seek to execute on a judgment against specific assets or insurance of the tortfeasor. The court traced the statute's evolution from its original 1959 enactment, which did not require that insurers even be notified of § 537.065 agreements—through the 2017 amendments, which granted insurers a limited right of intervention. Under the 2017 version, however, insured tortfeasors and injured parties could easily nullify an insurer's intervention rights by strategically timing when the insurer was notified, or by dismissing and refiling lawsuits after intervention and then waiting until the intervention rights expired to refile.³ The 2017 amendments also did not guarantee intervening insurers the right to relitigate the merits of the underlying tort claim.⁴

The 2021 amendments, the court explained, “were plainly intended to address the shortcomings of the 2017 legislation, and to give intervening insurers greater rights than typical intervenors."⁵ The 2021 amendments required that notice must now be given at a time that allows an insurer a meaningful opportunity to intervene in litigation, which will determine the insured’s liability. The insurer was not bound by agreements entered into before its intervention and also guaranteed an intervening insurer’s right to contest the insured’s liability. 

Applying this framework, the court held Allstate was not bound by any stipulations entered into before its intervention. The court also held that Lyda and Northcott could not, after Allstate's intervention, reach a stipulation or settlement that had the effect of fully and finally resolving Lyda's negligence claim without Allstate's consent. The court reasoned that if post-intervention settlements could extinguish an insurer's litigation rights, it would completely nullify the expanded intervention rights created by the 2021 amendments. The Western District declined to moot the legislature’s 2021 amendments because the legislature is never presumed to have committed a useless act.

The court also rejected Lyda's argument that § 537.065.4 permits insurer intervention solely to litigate insurance coverage questions. The court observed that insurers already had the right to bring declaratory judgment actions to litigate coverage obligations with respect to pending tort claims⁶—indeed, Allstate had already done so in federal court. Furthermore, the court noted that because of the wide variety of insuring clauses, definitions, conditions, and exclusions, a liability policy may contain any fact litigated in an underlying tort action that could be relevant to the coverage afforded by a liability insurance policy. This would render Lyda's proposed limitation to “coverage facts” unworkable. The Western District held “§ 537.065.4 gave Allstate the right to defend Lyda's negligence claim on the merits, including the right to a jury trial on that claim” and reversed the circuit court’s judgment on Lyda’s negligence claim.⁷

IMPLICATIONS AND OPPORTUNITIES
Lyda represents a significant victory for Missouri insurers and a clarification of the rights conferred by the 2021 amendments to § 537.065.4. The decision confirms that an insurer's right to intervene under the statute is not merely procedural but substantive: once an insurer intervenes, it has a right to defend the underlying tort claim on the merits, including the right to a jury trial that cannot be circumvented by a post-intervention settlement between the injured party and the insured tortfeasor. 

This new decision, when combined with the Missouri Supreme Court’s recent decision in McCrackin, clarifies insurers’ roles if they lose the underlying coverage action. If the insurer loses the coverage action, it can control the defense (and likely the settlement) of the underlying dispute, once again. The insurer will have the choice to defend the case on the merits or seek an early settlement. 

The court acknowledged, however, that the rights granted to intervening insurers under the current statute may raise procedural issues at the trial level, including how to manage a trial in which two parties defend a single negligence claim where one concedes liability and the other contests it. Thus, it is likely there will be novel procedural issues to explore as parties and judges wrestle with these implications. As this law continues to develop in Missouri, insurers will want to carefully balance the considerations of the available coverage defenses, defenses of the underlying action, and the costs to pursue the different options open to them. 
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^{1 See McCrackin v. Mullen, 701 S.W.3d 868, 874-75 (Mo. banc 2024).
2 Lyda v. Allstate Fire & Cas. Ins. Co., Nos. WD87901, WD87902), 2026 Mo. App. LEXIS 211, at *1 (App. W.D. Mar. 24, 2026). 
3 See, e.g., Barnett v. Columbia Maint. Co., 632 S.W.3d 396, 402-03 (Mo. App. E.D. 2021); Loveland v. Austin, 626 S.W.3d 716, 724-26 (Mo. App. E.D. 2021); Aguilar v. GEICO Cas. Co., 588 S.W.3d 195, 198 & n.7 (Mo. App. W.D. 2019); Britt v. Otto, 577 S.W.3d 133, 140 (Mo. App. W.D. 2019).
4 Knight v. Knight, 609 S.W.3d 813, 827 (Mo. App. W.D. 2020). 
5 Lyda, 2026 Mo. App. LEXIS 211, at *23-24. 
6 See McCrackin, 701 S.W.3d at 874-75. 
7 In a separate ruling, the court dismissed Allstate Vehicle’s appeal of the circuit court's grant of partial summary judgment to Northcott on his indemnity cross-claim, finding that the partial summary judgment did not resolve a distinct judicial unit and was therefore not eligible for certification for immediate appeal under Rule 74.01(b). Lyda, 2026 Mo. App. LEXIS 211, at *31-39.}