Yousuf v. Cohlmia

• Decision Date: 21 January 2014
• Docket Number: Nos. 12–5034,12–5038.,s. 12–5034
• Citation: 741 F.3d 31
• Parties: Arshad YOUSUF, M.D., Plaintiff, Physicians Liability Insurance Company, Intervenor–Plaintiff–Appellee/Cross–Appellant, v. George COHLMIA, M.D.; Cardiovascular Surgical Specialists Corp., Defendants. American National Property and Casualty Company, Garnishee–Appellant/Cross–Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

741 F.3d 31

Arshad YOUSUF, M.D., Plaintiff,Physicians Liability Insurance Company, Intervenor–Plaintiff–Appellee/Cross–Appellant,

v. George COHLMIA, M.D.; Cardiovascular Surgical Specialists Corp., Defendants.American National Property and Casualty Company, Garnishee–Appellant/Cross–Appellee.

Nos. 12–5034, 12–5038.

United States Court of Appeals, Tenth Circuit.

Jan. 21, 2014.

Nevin R. Kirkland (David H. Cole with him on the briefs) of Edmonds Cole Law Firm, PC, Oklahoma City, OH, for Appellant/Cross–Appellee.

Robert N. Naifeh, Jr. (Sarah Lee Gossett Parrish with him on the briefs) of Derryberry & Naifeh, LLP, Oklahoma City, OH, for Appellee/Cross–Appellant.

Before TYMKOVICH, SEYMOUR, and GORSUCH, Circuit Judges.

SEYMOUR, Circuit Judge.

American National Property and Casualty Company (ANPAC) appeals from the district court's grant of summary judgment in favor of Physicians Liability Insurance Company (PLICO) in a dispute regarding ANPAC's breach of its duty to defend a co-insured. PLICO cross-appeals the district court's denial of its motion for prejudgment interest. We AFFIRM.

I

In November 2004, Dr. Ashard Yousuf sued Dr. George Cohlmia and Cardiovascular Surgical Specialists Corporation (CVSS) in Oklahoma state court for defamation, tortious interference with business relations/contract, intentional infliction of emotional distress/outrage, negligence, and breach of contract. Dr. Yousuf alleged that Dr. Cohlmia made a series of false statements to local media disparaging Dr. Yousuf's professional reputation. Dr. Cohlmia denied that the statements he made were false.

Dr. Yousuf and Dr. Cohlmia were both board certified surgeons in Tulsa, Oklahoma, who were granted privileges by Hillcrest Medical Center (HMC) to practice cardio-thoracic surgery. Dr. Yousuf alleged that Dr. Cohlmia wrote a defamatory letter about him to the Board of Directors of the hospital, that the contents of the letter were false or made with reckless disregard of whether or not they were false, and that Dr. Cohlmia intentionally disseminated the contents of the letter to the news media in order to damage Dr. Yousuf's reputation and occupation as a surgeon. He further alleged that even after the HMC Professional Affairs Committee determined that Dr. Cohlmia's allegations were unfounded, Dr. Cohlmia continued to repeat the defamatory statements to the media with reckless disregard for their truth, and that Dr. Cohlmia's conduct damaged Dr. Yousuf's professional reputation and caused a decline in referrals to him.

CVSS held a professional liability policy with PLICO and two identical general commercial liability policies with ANPAC (one for each business location), each of which covered Dr. Cohlmia as an additional insured. Dr. Cohlmia demanded that both insurers provide for his defense, pursuantto their respective policies. PLICO agreed to defend the lawsuit under a reservation of rights and requested ANPAC to share in the defense. ANPAC refused, contending its policy did not cover the alleged wrongdoing and that it owed no duty to defend. ANPAC further claimed that even if it erred in refusing to defend Dr. Cohlmia, PLICO had no right to indemnification or contribution for the defense costs it incurred.

Before trial, Dr. Yousuf abandoned his claim for defamation and later withdrew his claims for breach of contract and intentional infliction of emotional distress, leaving the jury to consider only his allegations of negligence and intentional interference with business relations. Although Dr. Cohlmia's counsel requested special verdict forms, Dr. Yousuf objected and the court instead provided a general verdict form that did not allow for the jury to allocate the verdict between Dr. Yousuf's two theories of recovery. In February 2006, the jury returned a general verdict against Dr. Cohlmia in the amount of $5,000,000. Despite finding that Dr. Cohlmia acted intentionally and with malice, the jury declined to award punitive damages.

Upon entry of the judgment, Dr. Yousuf commenced a garnishment action against PLICO in state court to collect the judgment against Dr. Cohlmia, and Dr. Cohlmia commenced an action to compel PLICO to pay the judgment rendered against him. The court granted summary judgment to PLICO in both actions, holding that PLICO's policy did not cover the torts inflicted on Dr. Yousuf and that PLICO therefore had no obligation to pay the judgment.¹ PLICO continued to defend the action on appeal, subject to a reservation of rights, and it again demanded that ANPAC share in the defense. It also requested ANPAC to reimburse it for one-half of the defense costs incurred during the trial. ANPAC again refused.

The matter now before us stems from the subsequent garnishment action brought in state court by Dr. Yousuf against ANPAC, contending that his judgment against Dr. Cohlmia was covered by ANPAC's policy because it covered intentional acts. ANPAC removed the action to federal district court. PLICO thereafter filed a motion to intervene, which was granted by the district court. Seeking to recover its defense costs from ANPAC, PLICO asked the district court to find, as a matter of law, that ANPAC's policies provide coverage for the underlying judgment against Dr. Cohlmia. ANPAC, for its part, maintained that the damages awarded to Dr. Yousuf were not covered by its policy and that it had no duty to defend Dr. Cohlmia in the underlying action.

Both parties moved for summary judgment. In the meantime, Dr. Cohlmia's appeal from the underlying jury verdict was consolidated in the Oklahoma Court of Civil Appeals with his appeal from the determination that PLICO was not obligated to pay the judgment against him, as well as Dr. Yousuf's related appeal. After briefs were submitted in the present action, the Oklahoma Court of Civil Appeals reversed the underlying state court judgment due to an erroneous jury instruction on intentional interference with business relations, and remanded the matter for a new trial. In the consolidated appeals, it vacated the determinations that PLICO's policy did not cover Dr. Cohlmia's torts against Dr. Yousuf. The Oklahoma Supreme Court denied certiorari review. The district court in this case then correctly determined that it could no longer decide Dr. Yousuf's garnishment claim against ANPAC, which hinged on the now-vacated judgment against Dr. Cohlmia, but that it could still decide whether ANPAC had breached its duty to defend Dr. Cohlmia and whether PLICO could recover from ANPAC all or a portion of the costs it had already incurred in Dr. Cohlmia's defense.

The district court granted summary judgment in favor of PLICO, concluding that under Oklahoma law ANPAC had a duty to defend Dr. Cohlmia in the underlying action and that ANPAC was liable for fifty percent of PLICO's costs of defending Dr. Cohlmia thus far, under a theory of subrogation. The court held that while PLICO's policy provided coverage for negligence but not for intentional torts, it nevertheless specifically committed PLICO to defend “any claim for damages if said damages are in consequence of the performance of a criminal act or willful tort or sexual act,” Aplt.App., vol. II at 328, even though any losses from such conduct would not be indemnified under the policy. With respect to ANPAC's policy, the district court held that it provided primary coverage for intentional torts, including intentional interference with business relations, but that it provided only excess coverage for negligence. It further held that both insurers had an equal duty to defend Dr. Cohlmia against Dr. Yousuf's allegations.

Regarding whether ANPAC could be held liable to reimburse PLICO for its share of Dr. Cohlmia's defense costs, the district court concluded that the doctrines of both contractual and equitable subrogation support PLICO's claim. The court determined that because PLICO's claim “rests primarily on contractual subrogation,” Oklahoma's five-year statute of limitations for written contracts applied, rather than the three-year statute of limitations for equitable subrogation. Yousuf v. Cohlmia, 718 F.Supp.2d 1279, 1298 (N.D.Okla.2010). Since both insurers had a duty to defend Dr. Cohlmia and the jury did not indicate the basis of the verdict, the court concluded that defense costs should be evenly divided between the insurers.

Once summary judgment for PLICO was granted, PLICO and ANPAC negotiated an agreement regarding the costs and fees PLICO had incurred defending Dr. Cohlmia, stipulating that ANPAC's portion was $206,698.78. This amount represents one-half of the total attorney fees and costs, less an agreed five-percent reduction. PLICO then moved for prejudgment interest in the amount of $149,110.57, contending that the district court was required to include prejudgment interest of fifteen percent per year from the date of the judgment pursuant to title 36, section 3629(B) of the Oklahoma Statutes. ANPAC opposed the motion and the matter was submitted to a magistrate judge for a report and recommendation. The magistrate judge recommended prejudgment interest be denied on two grounds. First, he considered himself bound by Regional Air, Inc. v. Canal Insurance Co., 639 F.3d 1229 (10th Cir.2011), in which we held that prejudgment interest under section 3629 applies only to “verdicts” rendered by juries, not to summary judgments entered by the court. Second, he concluded that the attorney's fees at issue were not liquidated, certain, or reasonably ascertainable, precluding prejudgment interest under Oklahoma law. The district court affirmed, denying PLICO's motion for prejudgment interest.

On appeal, ANPAC asserts that it had no duty to defend Dr. Cohlmia because the district court erred in concluding ANPAC's policy covers the claims alleged by Dr. Yousuf in the underlying action. ANPAC also contends that an equitable subrogation claim is untimely and, in any event, PLICO's contractual subrogation claim for defense costs...