Joseph P. Caulfield & Associates, Inc. v. Litho Productions, Inc.

• Citation: 155 F.3d 883
• Decision Date: 09 September 1998
• Docket Number: No. 96-4236,96-4236
• Parties: JOSEPH P. CAULFIELD & ASSOCIATES, INC., Plaintiff-Appellant, v. LITHO PRODUCTIONS, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 883

155 F.3d 883

JOSEPH P. CAULFIELD & ASSOCIATES, INC., Plaintiff-Appellant, v. LITHO PRODUCTIONS, INC., et al., Defendants-Appellees.

No. 96-4236.

United States Court of Appeals Seventh Circuit.

Argued Oct. 28, 1997.

Decided Sept. 9, 1998.

Arthur G. Muegler (argued), St. Louis, MO, for Joseph P. Caulfield & Associates, Inc.

Earl H. Munson (argued), Jeffrey Kassel, Lafollette & Sinykin, Madison, WI, for Litho Productions, Inc., Robert A. Steil and Jack D. Walker.

Linda Vogt Meagher (argued), James G. Doyle, Schellinger & Doyle, Brookfield, WI, for William L. Hall.

Philip C. Reid, Robert F. Johnson, Cook & Franke, Milwaukee, WI, for Regent Insurance Company.

Before BAUER, KANNE, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

Joseph P. Caulfield, through his company Joseph P. Caulfield & Associates, Inc. ("Caulfield Inc."), is in the business of helping people present claims to their insurance companies. Intermediaries like Caulfield Inc. sell their experience in adjusting insurance claims to policyholders who fear that, when catastrophe strikes, the insurers may be tempted to minimize allowable claims. This case arose out of Caulfield Inc.'s contract to adjust a fire insurance claim for Litho Productions, Inc., of Madison, Wisconsin ("Litho"). Halfway through the process, Litho fired Caulfield Inc. and finished settling its claim on its own (with the help of its lawyers). Caulfield Inc. sued everyone in sight, including Litho and its president, Robert Steil; Litho's insurer, Regent Insurance Company, and Regent's parent, General Casualty Insurance Company of Wisconsin ("the Insurers"); L.J. Shaw & Co., the adjusting contractor hired by the Insurers, and the individual adjuster, William L. Hall, who worked on the Litho case; and Litho's lawyers, Jack D. Walker and Joseph A. Melli, and their law firm, Melli, Walker, Pease & Ruhly, S.C. ("Melli, Walker firm"). The district court granted summary judgment in the defendants' favor on most of the claims, but allowed contract and quantum meruit claims to proceed against Litho. After a full trial, the jury rejected Caulfield Inc.'s contract theory but awarded it $35,000 in damages on the quantum meruit theory. Caulfield Inc. has raised objections on appeal to almost everything the district court did. Finding no error, we affirm.

I

On January 23, 1994, an accidental fire swept through Litho's commercial printing plant and seriously damaged the building and the inventory and equipment inside. Shortly after the fire, Litho began settlement negotiations with the Insurers. The Insurers retained Shaw & Co. to adjust the claim, which in turn assigned the case to one of its employees, William Hall. Hall was responsible for performing the on-scene estimate of the damages Litho had suffered. The Insurers quickly paid Litho $400,000 in undisputed losses, but significant valuation differences between Litho and the Insurers remained. This led Litho on March 3, 1994, to hire Caulfield Inc. to represent it in the process. Under the contract, Caulfield Inc. was to "negotiate, represent, and speak" on Litho's behalf with the Insurers. In exchange, Litho agreed to pay Caulfield Inc. 10% of "any settlement ... regardless by whomsoever consummated...."

Caulfield Inc. went to work right away. Joe Caulfield prepared his own estimates of the fire damage on Litho's behalf, and in late April 1994 he submitted a partial claim for more than $4.5 million. (He labeled the claim "partial" because it excluded from the total some alleged damage to Litho's printing presses.) With respect to the loss amount, Hall had taken a far more modest view, with an initial estimate of $2.0 million. When he heard of Caulfield Inc.'s figure, Hall informed the Insurers that he regarded Caulfield Inc.'s claim as "borderline fraudulent." The Insurers took Hall's concerns very seriously. In the early summer of 1994, they told Litho that they were worried about the integrity of Caulfield Inc.'s work, and in June 1994 they exercised their right under the insurance contract to demand a "sworn proof of loss" from Litho that "no attempt to deceive" them had taken place. For its part, Litho was also displeased with the progress of its claim. Although in June 1994 it had signed a $4.9 million sworn proof of loss form to submit to the Insurers, around the same time it hired lawyers Jack Walker and Joseph Melli of the Melli, Walker firm to investigate the services Caulfield Inc. was providing. In mid-October 1994, the Insurers and their adjusters met with Litho's representatives and lawyers. Joe Caulfield, by express request of the Insurers, was not invited to the meeting and did not attend. Shortly after that meeting, the Insurers paid Litho $1.0 million for further undisputed claims.

On November 7, 1994, Litho's president, Robert Steil, wrote a three-page letter to Joe Caulfield terminating the arrangement between Caulfield Inc. and Litho. Steil claimed that Caulfield Inc.'s estimates had been "inaccurate and misleading," that Joe Caulfield's "antagonistic and adversarial" interactions with the Insurers had weakened Litho's negotiating position, and that Litho had incurred substantial investigation costs in "trying to determine what parts, if any, of the proof of loss [could] ... be used in an amended" filing with the Insurers. Steil concluded that, under the circumstances, Caulfield Inc. was not entitled to any compensation under the contract and he announced that Litho was terminating the arrangement. In keeping with that position, Litho did not pay Caulfield Inc.'s bill for $140,000, which represented 10% of the total of $1.4 million the Insurers had paid up to that time. Litho has also not paid Caulfield Inc. any commission relating to additional payments from the Insurers, which by the time the summary judgment record was compiled included at least another $475,000. (Significantly, Litho's contract with Caulfield Inc. originally provided that Litho could terminate the agreement for any reason and without penalty within 30 days of signing the contract. A Litho employee testified at trial that when he expressed concern to Caulfield Inc. about the lack of tangible results after 30 days, Caulfield Inc.'s employee, Joseph Hinkson, orally agreed to extend the termination-at-will guarantee indefinitely.)

So matters stood by early 1995. On February 15, 1995, believing that Litho had taken its work product, turned it over to the Melli, Walker firm, and evaded its contractual obligations to pay a commission, Caulfield Inc. sued the defendants described above in the federal district court for the Eastern District of Missouri, invoking the diversity jurisdiction. (Caulfield Inc. is a Missouri corporation with its principal place of business in that state, while the rest of the defendants are either citizens of states other than Missouri or non-Missouri corporations with their principal places of business in either Wisconsin or Illinois. Joe Caulfield did not sue individually.) Some time later, the Missouri court transferred the case to the Western District of Wisconsin under 28 U.S.C. § 1404(a), which is why we now have the appeal.

Caulfield Inc.'s claims fall into five broad legal theories: (1) tortious interference with the Caulfield Inc.-Litho contract, (2) civil conspiracy, (3) fraud, (4) breach of contract, and (5) quantum meruit. The following chart shows which defendants were sued under which theories:

                ----------------------------------------------------------------------------
                :  Claim No.  :  Theory of Liability                  :  Defendant(s)      
                ----------------------------------------------------------------------------
                :  1          :  Tortious interference with contract  :  all except Litho  
                ----------------------------------------------------------------------------
                :  2          :  Civil conspiracy                     :  all defendants    
                ----------------------------------------------------------------------------
                :  3          :  Fraud                                :  Litho and Steil   :
                ----------------------------------------------------------------------------
                :  4          :  Breach of contract                   :  Litho             :
                ----------------------------------------------------------------------------
                :  5          :  Quantum meruit                       :  Litho             :
                ----------------------------------------------------------------------------
                

In an order dated August 26, 1996, the district court granted summary judgment for defendants Litho, Steil, Walker, Melli, and the Melli, Walker firm on Caulfield Inc.'s claims of tortious interference with the contract (# 1), civil conspiracy (# 2), and fraud (# 3). In a later order dated September 4, 1996, it granted summary judgment for Hall, Shaw & Co., and the Insurers on the tortious interference claims (# 1) and the civil conspiracy claims (# 2). (We note in passing that the district court's September 4, 1996, opinion granting partial summary judgment expresses some uncertainty on whether Litho was insured by Regent, its parent General Casualty, or both. Caulfield Inc.'s broadly phrased complaint (and appellate briefing) shed no light on whether it sought to hold General Casualty liable for a wrongful act committed in its own capacity, or merely for Regent's acts. If Caulfield Inc.'s theory of liability were the latter, this would simply provide another basis to support the district court's dismissal of the claims against General Casualty. See IDS Life Ins. Co. v. SunAmerica Life Ins. Co., 136 F.3d 537, 540 (7th Cir.1998) (although parent company necessarily exercises some control over subsidiary's actions, parent cannot be held liable for subsidiary's wrongs unless basis exists for piercing corporate veil).)

This left for trial only Caulfield Inc.'s breach of contract and quantum meruit claims against Litho. At the jury trial, Caulfield Inc. portrayed the Insurers and Hall as determined to...