Alpha/Omega Ins. v. Prudential

• Decision Date: 05 November 2001
• Docket Number: No. 00-20746,00-20746
• Citation: 272 F.3d 276
• Parties: (5th Cir. 2001) ALPHA/OMEGA INSURANCE SERVICES, INC., Plaintiff-Appellant, v. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

Page 276

272 F.3d 276 (5th Cir. 2001)

ALPHA/OMEGA INSURANCE SERVICES, INC., Plaintiff-Appellant, v. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant-Appellee.

No. 00-20746

UNITED STATES COURT OF APPEALS,

FIFTH CIRCUIT

November 5, 2001

Appeal from the United States District Court For the Southern District of Texas

Before JONES, SMITH, and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

Plaintiff Alpha/Omega Insurance Services, Inc. appeals the trial court's granting of summary judgment in favor of defendant Prudential Insurance Company of America. For the reasons expressed below, we vacate the trial court's summary judgment and remand to that court for consideration of Alpha/Omega's conversion and tortious-interference claims.

I. BACKGROUND

In July 1991, Prudential appointed Alpha/Omega as a "special agent," authorized to write and sell Prudential's property and casualty insurance.¹ On December 7, 1995, Prudential gave Alpha/Omega notice that it was terminating this agency relationship on December 31, 1995. Alpha/Omega immediately protested Prudential's failure to provide it six months' written notice of termination and continued renewal payments as mandated by the Texas Insurance Code. See Tex. Ins. Code Ann., art. 21.11-1 § 1(a)-(b). In a letter dated December 22, 1995, Prudential acknowledged its "unique relationship" with Alpha/Omega and agreed to comply with article 21.11-1. Accordingly, the termination date was extended to June 30, 1996, and Prudential continued paying Alpha/Omega renewal commissions through December 31, 1996.

In February 1996, Prudential began notifying Alpha/Omega's clients insured by Prudential about the nonrenewal and offering replacement polices with other carriers. Alpha/Omega complained to Prudential about this contact with its clients, and Prudential agreed to stop soliciting these clients.

On June 27, 1997, Alpha/Omega sued Prudential in Texas state court for fraud, misrepresentation, conversion, and tortious interference with existing and prospective contractual relations. Prudential removed the case to federal court on diversity grounds. Central to Alpha/Omega's claims was the theory that Prudential stole its "book of business,"² thereby allowing it to contact and steal Alpha/Omega's customers.

On February 1, 1999, the trial court granted Prudential summary judgment on all claims. It concluded that Alpha/Omega had not introduced facts to support its fraud and misrepresentation claims, and that Prudential owned the book of business, thus rendering conversion and tortious interference impossible. Alpha/Omega filed a timely appeal from this final judgment to this Court. In an unpublished opinion, we affirmed the granting of summary judgment on Alpha/Omega's fraud and misrepresentation claims. However, we reversed the judgment on the conversion and tortious-interference claims because we concluded that "the question of ownership of the book of business is a contested factual issue."³ Accordingly, we vacated that part of the summary judgment and remanded those claims to the trial court.

On January 28, 2000, Prudential filed a motion for panel rehearing, urging that "regardless of who owned the book of property and casualty insurance, the tortious interference and conversion claims fail as a matter of law." We denied the motion without comment.

On remand, Prudential filed a second motion for summary judgment, asserting, as it had in its motion for rehearing, that ownership of the book of business was irrelevant because "Alpha/Omega received all relief that the Texas Insurance Code authorizes it--a terminated insurance agency--to receive for claims that relate to the termination of the relationship with Prudential or that relate to the book of business."

On August 10, 2000, the trial court again granted Prudential summary judgment on Alpha/Omega's conversion and tortious-interference claims. The court acknowledged our opinion that a fact issue existed about ownership of the book of business. But the court agreed with Prudential's assertion that this ownership issue was immaterial. Alpha/Omega timely appealed the trial court's granting of this second summary judgment to this Court.

II. THE PARTIES' CONTENTIONS

Alpha/Omega argues that, because this Court already reversed the trial court's first granting of summary judgment on Alpha/Omega's conversion and tortious interference claims, the trial court was barred by the "law of the case" doctrine from revisiting these issues in its second summary judgment order. In the alternative, Alpha/Omega argues that the trial court erred by concluding that the Texas Insurance Code's termination provisions preempt its common-law conversion and tortious interference claims. Finally, Alpha/Omega argues that summary judgment was improper because Prudential failed to conclusively establish the elements of its affirmative defenses of privilege and justification.

Prudential, on the other hand, argues that the law of the case doctrine does not apply here because no prior ruling exists on the issues the trial court decided in the second summary judgment. Moreover, Prudential contends that summary judgment was proper because it conclusively negated elements of Alpha/Omega's conversion and tortious-interference claims. And, finally, Prudential contends that it conclusively established all the elements of its affirmative defenses.

III. THE LAW OF THE CASE DOCTRINE

"The law of the case doctrine, as formulated in this circuit, generally precludes reexamination of issues of law or fact decided on appeal, either by the district court on remand or by the appellate court itself on a subsequent appeal." Todd Shipyards Corp. v. Auto Transp., 763 F.2d 745, 750 (5th Cir. 1985). As we have noted, it is premised "on the salutary and sound public policy that litigation should come to an end." Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 19 (5th Cir. 1974) (quoting White v. Murtha, 377 F.2d 428, 431 (5th Cir. 1967)).

The doctrine's reach does have its limits. For example, unlike res judicata, the law of the case doctrine applies only to issues that were actually decided, rather than all questions in the case that might have been decided, but were not. Morrow v. Dillard, 580 F.2d 1284, 1290 (5th Cir. 1978). But, the issues need not have been explicitly decided; the doctrine also applies to those issues decided by "necessary implication." In re Felt, 255 F.3d 220, 225 (5th Cir. 2001). In other words, even when issues have not been expressly addressed in a prior decision, if those matters were "fully briefed to the appellate court and . . . necessary predicates to the [court's] ability to address the issue or issues specifically discussed, [those issues] are deemed to have been decided tacitly or implicitly, and their disposition is law of the case." Id.

With these premises in mind, we turn to whether the trial court's second summary judgment was an erroneous revisiting of issues already decided by this Court in Alpha/Omega's prior appeal. In its first summary-judgment order, the trial court specifically noted that its granting summary judgment on Alpha/Omega's conversion and tortious-interference claims was predicated on its conclusion that Prudential owned the book of business.

On appeal of that first summary judgment to this Court, Alpha/Omega argued that a genuine issue of material fact existed about the ownership of the book of business. In part, it reasoned that Prudential's admission that Article 21.11-1 of the Texas Insurance Code applied to its relationship with Alpha/Omega was important because Article 21.11-1 only applies if Alpha/Omega--not Prudential--owns the book of business.⁴

In response, the vast majority of Prudential's brief was dedicated to the argument that its contract with Alpha/Omega unambiguously granted it ownership of the book of business. It also argued that its compliance with Article 21.11-1 was voluntary, not mandatory, because article 21.11-1 does not apply if it owns the book of business. Only two sentences of Prudential's brief were dedicated to the alternative argument that ownership of the book was irrelevant because "even if [Alpha/Omega] had owned the book of business, it received all that it was legally entitled to receive under the law and cannot be heard to complain."

This Court's opinion reversing the first summary judgment on the conversion and tortious-interference claims also focused solely on the trial court's finding that Prudential owned the book of business. And we characterized the parties' arguments as limited to this issue:

Alpha/Omega alleges that Prudential converted Alpha/Omega's book of business and tortiously interfered with Alpha/Omega's contracts with its own clients.

Prudential counters that it owns the book of business and therefore cannot have converted its own property or tortiously interfered with its own contracts.

Because we concluded that "the question of ownership of the book of business is a contested fact issue," we vacated the trial court's judgment as to Alpha/Omega's conversion and tortious-interference claims.

In Prudential's motion for panel rehearing, it focused for the first time on the argument that ownership of the book of business was irrelevant. Specifically, it asserted that it had conclusively established that, regardless of who owned the book of business, (1) its actions were privileged and justified, (2) Alpha/Omega could not establish its conversion claim, and (3) Alpha/Omega was paid all it was due under the Texas Insurance Code. And, for the first time on rehearing, Prudential argued that "the rights of a terminated agency derive solely from statutorily created obligations" under the Texas Insurance Code. In other words, Prudential contended that Alpha/Omega could only claim damages under article 21.11-1, and, because Prudential complied with article 21.11-1, Alpha/Omega has already received the only remedy it could arguably be entitled.

On...