Liston v. Home Ins. Co.

• Decision Date: 22 July 1986
• Docket Number: Civ. A. No. J85-0766(L).
• Citation: 659 F. Supp. 276
• Parties: William LISTON, Hugh Gibson, Alan D. Lancaster, d/b/a Liston, Gibson and Lancaster, a Partnership, Plaintiffs, v. The HOME INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Mississippi

659 F. Supp. 276

William LISTON, Hugh Gibson, Alan D. Lancaster, d/b/a Liston, Gibson and Lancaster, a Partnership, Plaintiffs, v. The HOME INSURANCE COMPANY, Defendant.

Civ. A. No. J85-0766(L).

United States District Court, S.D. Mississippi, Jackson Division.

July 22, 1986.

Grady F. Tollison, Patterson, Tollison & Alexander, Oxford, Miss., for plaintiffs.

James A. Becker, Jr., Jackson, Miss., for defendant.

MEMORANDUM OPINION

TOM S. LEE, District Judge.

This diversity case came before the court for trial on the complaint of the plaintiffs, William Liston, Hugh Gibson and Alan D. Lancaster, d/b/a Liston, Gibson and Lancaster, a partnership, alleging that actions taken by employees of the defendant, The Home Insurance Company (Home), in settling the personal injury claim of Kathy Stewart, a client of Liston's, constituted tortious interference with a contractual relationship. Based upon the evidence adduced at the bench trial, the court makes the following findings of fact and conclusions of law.

On April 19, 1981, Kathy Stewart and her husband Roy Stewart were involved in an automobile accident at or near the intersection of State Highway 35 and Interstate Highway 55 in Vaiden, Mississippi. The Stewarts' vehicle was totalled as a result of the collision. The other vehicle involved in the accident was driven by Eloise Barclay, a Kentucky resident and an insured of Home. It was undisputed at trial that Barclay was at fault in causing the accident, and Home never contested its liability under Barclay's policy. Also as a result of the accident, Kathy Stewart suffered abrasions to the head, a slight concussion, a chipped or broken tooth and injury to the back and knee areas. She was hospitalized for one day following the accident and made several subsequent visits to physicians complaining of pain in the back and knee. It appears from the record, however, that she has not been treated by a physician for the injuries she sustained in the accident since July 1981.

On May 20, 1981, the Stewarts signed a written "employment agreement" authorizing plaintiff Liston to represent them in their personal injury claims against Eloise Barclay. The agreement was in the form of a standard contingent fee contract pursuant to which Liston would be paid 33 1/3 % of any amount recovered if the case were settled without suit, or 40% of any amount recovered after suit was filed.

Shortly after the accident, the Stewarts were visited at their home by Jo Reynolds,¹ a claims service representative with Home. Reynolds negotiated a property damage settlement with the Stewarts and thereafter mailed to them a "general release" purporting to release the Stewarts' claim for property damage in the amount of $2569.50. Roy Stewart took the release form to plaintiff Liston for his review. Liston modified the release form to more clearly indicate that it covered only the Stewarts' property damage claim, and the release was signed and returned to Home on May 29, 1981. By cover letter also dated May 29, 1981, Liston informed Home that he represented the Stewarts in their claims for personal injuries and that "any further communication concerning the Stewarts' claims for personal injuries should be directed to Liston."

No significant progress was made toward settling Kathy Stewart's claim over the next year. The claim was being administered by the Home office in Madisonville, Kentucky — being the office through which Eloise Barclay obtained her Home policy. William Ford, the manager of the Madisonville office, communicated with Jo Reynolds on several occasions during 1981 regarding the status of the Stewart claim. In October 1981, Ford authorized a raise in the reserve set aside by Home to cover Kathy Stewart's claim from $2000 to $8000. On November 10, 1981, Reynolds wrote Ford that she had discussed the claim with Liston and that Liston had represented that he would send an itemization of Kathy Stewart's medical and incidental expenses, or "specials," to Home by the end of November. No such itemization was sent. On January 15, 1982, Reynolds spoke with Liston by telephone. She thereafter wrote Ford stating that Liston had indicated that he would mail the itemization to her that week, that there was no permanent disability based upon a report from an orthopedist Stewart had visited, and that Liston was ready to settle the claim. Again, no itemization was sent. On March 11, 1982, Hayden Cox, the manager of the Home office in Jackson, Mississippi, wrote Ford that the medicals had not been sent by Liston, that "we are following the attorney every couple of weeks" and that it "appears he is lazy." Reynolds' records reflect that she called Liston's office in April 1982 but received no response. On June 24, 1982, she wrote Liston referring to her previous unanswered phone calls and requesting a status report. No response was received. On August 10, 1982, Reynolds wrote her last letter to Liston again requesting a status report on the Stewart claim and again no response was received.

William Liston is past president of the Mississippi Trial Lawyers Association and a past candidate for the presidency of the Mississippi State Bar. The bulk of his present practice involves representation of plaintiffs in personal injury cases.

At trial, Liston testified that he defined Kathy Stewart's injury as one involving "soft tissue" damage, or one in which there is no objective, x-ray evidence of injury. Liston stated that although such "soft tissue" cases initially produce a negative finding of permanent injury by a physician, they can later become "chronic" and lead to permanent disability in some degree. Therefore, Liston reasoned, it is better for both client and attorney to wait as long as possible before settling or filing suit in a "soft tissue" case. Only by waiting and observing the progress of the injury can the attorney ensure that the client has reached maximum medical recovery, Liston concluded.

Liston further testified that he never sends interim medical bills to insurance adjusters over the course of a plaintiff's recovery from a "soft tissue" injury. Nor does Liston make an effort to communicate the progress of a client's recovery to an insurance adjuster at least until maximum medical recovery is reached. When such recovery is achieved, Liston stated that his practice is to negotiate only with an insurance company employee whose settlement authority equals the limits of the company's coverage under a given policy rather than with an adjuster in the position of Jo Reynolds, whose settlement authority is usually limited.² For those reasons, Liston testified that he did not respond to the various communications of Jo Reynolds after January 1982. Charles Merkel, an attorney with twenty years' trial experience who specializes in a plaintiff personal injury practice in Clarksdale, Mississippi, testified as an expert witness in evaluating personal injury cases, specifically "soft tissue" injury cases. Merkel's opinion was that Liston's actions in handling Kathy Stewart's case substantially conformed with standards utilized by the plaintiffs' bar in Mississippi.

On November 11, 1981, Kathy Stewart wrote Liston regarding the reports sent to Liston by several doctors who had examined her and found no indications of permanent injury. She concluded, "I am not going to anymore sic doctors, as of right now, so go ahead with what you have to get the settlement complete." Liston then called Stewart and urged her to wait a while before settling her claim as it had little settlement value at that time. Stewart agreed and nothing further was done on the case until late summer of 1982. Indeed, Stewart stated that she never visited Liston's office and only spoke to him once or twice in chance meetings during 1982.

Stewart testified that throughout 1982 she was receiving past-due statements from the hospital for her April 19-20, 1981 stay, and that she had received letters threatening to garnish her wages to pay such overdue bills. On August 20, 1982, she wrote the Home office in Jackson, Mississippi requesting that a settlement be made on her claim in the amount of $2577.15.³ Home did not respond to this letter. On September 17, 1982, she reiterated the settlement request in a letter denominated "Second Request!" Reynolds responded by phoning Stewart on October 1, 1982 at Stewart's place of employment at City Hall in Vaiden, Mississippi. The substance of Stewart's communication to Reynolds was as follows: that the Stewarts were still receiving a number of bills owing as a result of the accident; that Liston had made no attempt to settle the case; that Stewart did not know what was going on in the case and that therefore she was going to handle it herself. In response to Reynolds' question regarding whether Liston was still representing her in the claim, Stewart stated that she could not get in touch with him so she had decided to handle it on her own. Reynolds then instructed Stewart to get all her medical bills together, plus documentation of other losses including lost wages, and to send them to the Home office. After receiving all necessary documentation, Reynolds again contacted Stewart on January 6, 1983. The parties negotiated a settlement of the claim for $3575, representing payment of Stewart's medical bills and her claimed lost wages,⁴ plus $1000 in cash. A general release was signed by the Stewarts on January 10, 1983, and a check was remitted to the Stewarts upon receipt of the release.

It was undisputed at trial that Reynolds made no attempt to verify Stewart's vague references to Liston's continuing involvement in the case. She neither called Liston's office nor sent Liston copies of the two settlement request letters from Kathy Stewart. The court specifically finds that Stewart did not represent to Reynolds in the October 1, 1982 phone conversation that Liston was presently relieved or had withdrawn from the case. Even if the court were to...