Great Am. E & S Ins. Co. v. Quintairos, Prieto, Wood & Boyer, P.A.

• Decision Date: 31 January 2012
• Docket Number: No. 2009–CA–01063–COA.,2009–CA–01063–COA.
• Citation: 100 So.3d 453
• Parties: GREAT AMERICAN E & S INSURANCE COMPANY, Appellant v. QUINTAIROS, PRIETO, WOOD & BOYER, P.A., Appellee.
• Court: Mississippi Court of Appeals

100 So.3d 453

GREAT AMERICAN E & S INSURANCE COMPANY, Appellant

v.QUINTAIROS, PRIETO, WOOD & BOYER, P.A., Appellee.

No. 2009–CA–01063–COA.

Court of Appeals of Mississippi.

Jan. 31, 2012.

Michael A. Heilman, John William Nisbett, Jackson, Christopher Thomas Graham, attorneys for appellant.

David A. Barfield, Steven Lloyd Lacey, Madison, attorneys for appellee.

EN BANC.

MODIFIED OPINION ON REHEARING

GRIFFIS, P.J., for the Court:

¶ 1. The motion for rehearing is denied. The Court's original opinion is withdrawn, and this opinion is substituted in lieu thereof.

¶ 2. This case considers whether the trial court properly dismissed, under Mississippi Rule of Civil Procedure 12(b)(6), the claims made by an excess insurance carrier against the law firm that was hired to defend the insured. This is a case of first impression in Mississippi.

STANDARD OF REVIEW

¶ 3. In an appeal of a dismissal of a case under Rule 12(b)(6), we apply a de novo standard of review. Ralph Walker, Inc. v. Gallagher, 926 So.2d 890, 893 (¶ 3) (Miss.2006). This Court is “not required to defer to the trial court's judgment or ruling.” Id. at (¶ 5). “A Rule 12(b)(6) motion to dismiss for failure to state a claim tests the legal sufficiency of the complaint.” Rose v. Tullos, 994 So.2d 734, 737 (¶ 11) (Miss.2008). “[T]he allegations in the complaint must be taken as true[,] and the motion should not be granted unless it appears beyond reasonable doubt that the plaintiff will be unable to prove any set of facts in support of her claim.” State v. Bayer Corp., 32 So.3d 496, 502 (¶ 21) (Miss.2010).

FACTS ¹

A. The Insurance Policies

¶ 4. Shady Lawn Nursing Home and Vicksburg Convalescent Home (collectively, “Shady Lawn”) ² purchased a Commercial General Liability policy and a Resident Health Care Facility Professional Policy (the “primary policy”) from Royal Indemnity Company (“Royal”).³ The primary policy limited coverage to $1,000,000 per occurrence and $3,000,000 in the aggregate.

¶ 5. Shady Lawn also purchased an Umbrella Liability Policy (the “excess policy”) from Great American E & S Insurance Services Inc. (“Great American”). ⁴ The excess policy provided coverage of $8,000,000 per occurrence and $16,000,000 in the aggregate. The excess policy provided that it would not be implicated until the primary policy was exhausted for each claim.

B. The Underlying Lawsuits

¶ 6. On August 29, 2002, a lawsuit styled, The Estate of Huldah Chase, et al. v. International Healthcare Properties, et al., Civil Action No. 02–0133CI, was filed in the Circuit Court of Warren County, Mississippi (the “ Chase lawsuit”). The Chase lawsuit alleged that Huldah Chase, a patient at Shady Lawn, received inadequate and negligent care while a resident at Shady Lawn and sought to recover damages.

¶ 7. The Chase lawsuit implicated coverage under both policies. Royal, as the primary insurance carrier, hired defense counsel to defend Shady Lawn, its insured. Great American was notified of the lawsuit, but it did not have a contractual duty to defend Shady Lawn until the Royal policy limits were exhausted. Great American was to be informed of the status of the case until it was resolved.

¶ 8. Great American requested evaluations and assessments of the claim from defense counsel. The defense counsel Royal had retained to defend Shady Lawn provided Great American with status reports. The status reports opined that the settlement value of the case was between $150,000 and $400,000, based on the initial evaluation of the nursing home's chart and medical records. The reports also stated that experts needed to be designated and that a physician expert had been contacted, but no experts had been retained.

¶ 9. In November 2003, Royal reassigned the defense of the Chase lawsuit to the law firm of Quintairos, Prieto, Wood & Boyer P.A. (“Quintairos”). At that time, a scheduling order was in place that set the deadline for designation of the defendant's experts for December 15, 2003. In November, the plaintiff designated two expert witnesses; one expert was a physician. The designation included an expert report on how the negligent care of Chase had caused her injuries and death. Quintairos did not designate experts prior to the deadline for the defendant to designate an expert witness.

¶ 10. In January 2004, Quintairos sent a status report to Royal on the Chase lawsuit, which stated that experts had not been retained but that a physician expert would be necessary to offer expert testimony as to the cause of the medical conditions, injuries, and death. The report stated, “based on known facts, this case could have the value of $250,000 in compensatory damages. If punitive damages are rewarded, the case value would be significantly higher. However, at this time[,] there does not seem to be a basis for awarding of damages.... At this time, the trial value of this case is approximately $500,000.”

¶ 11. Shady Lawn began to write Royal to express its concern with Quintairos and Quintairos's defense of the case. Shady Lawn noted its concern that none of Quintairos's partners or trial attorneys were licensed to practice law in Mississippi. Royal determined that Quintairos was its choice of defense counsel, and Quintairos would appropriately defend the Chase lawsuit.

¶ 12. In February 2004, Quintairos attempted to designate a physician as an expert witness. The designation was offered to rebut the plaintiff's expert witness's opinion as to causation, injuries, damages, and death. The plaintiff filed a motion to strike the late designation of an expert witness. On March 18, 2004, the trial court granted the motion and struck the designation of Shady Lawn's expert witness. As a result, Shady Lawn would not be able to offer expert witness testimony at the trial of the Chase lawsuit.

¶ 13. The next day, on March 19, 2004, Quintairos sent an “updated lawsuit evaluation” and increased the settlement value of the case from a maximum of $500,000 to a range of $3,000,000 to $4,000,000. This was the first indication Great American received that its excess policy may be necessary to satisfy the claims alleged in the Chase lawsuit. Great American immediately retained counsel to protect its interests and the interests of the insureds.

¶ 14. Just two days earlier, on March 17, 2004, Great American had learned that Quintairos had not retained local counsel and that none of the Quintairos partners or trial attorneys had been admitted to practice law in Mississippi. Thus, Royal had hired no attorneys who could represent the insureds at the trial of the Chase lawsuit.

¶ 15. Upon receipt of the March 19th evaluation, Royal immediately tendered the limits of its policy. Great American's excess policy became responsible for any verdict returned. Thereafter, Great American settled the Chase lawsuit for a significant sum, which was not disclosed in the amended complaint.

¶ 16. In addition to the Chase lawsuit, there were three other cases where Royal hired Quintairos to defend Shady Lawn. Great American alleged that it was damaged by Quintairos's mishandling of each of these cases.

C. The Instant Lawsuit

¶ 17. On November 15, 2006, Great American filed its complaint and commenced this litigation. The complaint was amended, and the proper parties were substituted. In the amended complaint, Great American asserted claims against Royal ⁵ and Quintairos. The claims against Quintairos are for equitable subrogation, legal malpractice, negligence, gross negligence, negligent misrepresentation, and negligent supervision.

¶ 18. On September 2, 2008, Quintairos filed a motion to dismiss under Mississippi Rule of Civil Procedure 12(b)(6). The motion asserted that the amended complaint failed to state a claim against Quintairos upon which relief can be granted. The motion further argued that Great American cannot prevail on any of the claims asserted against Quintairos, and it is entitled to no relief under any set of facts that could be proved in support of its claims. Quintairos argued that Great American lacked standing to file suit because there was no attorney-client relationship between Great American and Quintairos.

¶ 19. On May 28, 2009, the trial court granted Quintairos's motion. In the order, the trial court ruled:

[Quintairos] sets forth that it was hired by the primary insurance carrier, Royal Indemnity Company, to represent the insured in the underlying litigation and that Plaintiff, Great American E & S Insurance Company, as excess insurer, has no standing to assert a cause of action for malpractice against it.

Numerous authorities of law have been cited[,] and the parties at the hearing acknowledged that the matter is unsettled in Mississippi [l]aw and that it is a matter of first impression for Mississippi [c]ourts. The Court has reviewed the authorities and public policy considerations set forth in the briefs as to whether Mississippi [l]aw should chart a course one way or the other. This Court concludes that because of the different interest and goals of the primary carrier and excess carrier particularly as to varying risks of recovery with potential damages, it is unwise to require the same counsel to be responsible and liable to both at the same time. To do so would put counsel in a conflict of loyalty and interest. Therefore, the Court declines to extend the doctrine of equitable subrogation and legal malpractice, negligence, gross negligence [,] and negligent misrepresentation to claims of an excess carrier against counsel hired by the primary carrier.

¶ 20. On May 29, 2009, the trial court entered a “Final Order of Dismissal” and found that the previous order “concluded [that] the claims only related to this party, and there are other remaining claims in the case[;] there is no just reason for delay in entering a final order as to the claims against Quintairos....” Thus, the court certified the final judgment as final under Mississippi Rule of Civil Procedure 54(b).⁶

¶ 21. Great American timely...