Moeller v. American Guar. and Liability Ins. Co.
| Decision Date | 05 September 1996 |
| Docket Number | No. 92-CA-00829-SCT,92-CA-00829-SCT |
| Citation | 707 So.2d 1062 |
| Parties | Armin J. MOELLER, Jr. and Fuselier, Ott & McKee, P.A., Louis Fuselier, Emile C. Ott and Curtiss McKee, individually v. AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY. |
| Court | Mississippi Supreme Court |
C. York Craig, Jr., Ricky G. Luke, Watkins Ludlam & Stennis, Luke Dove, Dove Chill & Calhoun, Jackson, H.D. Granberry, III, Atlanta, GA, for Appellants.
Pamela E. Gunter, Forrest W. Stringfellow, Daniel Coker Horton & Bell, Jackson, for Appellee.
En Banc.
PREAMBLE
The law firm of Fuselier, Ott and McKee, operating as a professional corporation, has appealed the denial by the Chancery Court of the First Judicial District of Hinds County of attorney's fees in defending a complaint filed against them by Armin J. Moeller, Jr., a discharged member of the firm, for which they sought reimbursement from American Guarantee and Liability Insurance Company, their liability insurance carrier. Moeller, in turn, has appealed the denial by the chancery court of full reimbursement for attorney's fees in defending a counterclaim filed against him by the law firm, and punitive damages sought by him against the carrier for failure to defend under the policy.
We reverse and remand Fuselier, Ott and McKee's appeal for a determination of reasonable attorney's fees incurred in defense of Moeller's complaint. On Moeller's appeal we affirm the special chancellor's award as to actual damages on attorney's fees and the chancellor's refusal to award punitive damages.
American Guarantee and Liability Insurance Company (American Guarantee) is an insurance corporation with principal offices in New York City. On December 15, 1979, it issued to the professional law corporation of Fuselier, Ott, McKee and Moeller, P.A., its special multi-peril policy, extending through December 15, 1982. The members of this professional law corporation, who otherwise would have been partners, each owned corporate shares subject to a stock redemption agreement. There was also an employment agreement.
On March 31, 1982, Moeller was fired by Louis A. Fuselier, president of the corporation, who notified him that his employment would be terminated effective May 30, 1982.
On August 10, 1982, Moeller filed suit against the corporation and the other members individually in the Circuit Court of the First Judicial District of Hinds County. On October 27, 1982, the defendants filed an answer and counterclaim to the circuit court action. For reasons not relevant here, the suit was transferred to the Chancery Court of the First Judicial District of Hinds County.
Moeller charged the defendants with wrongfully discharging him, breaching the employment and stock redemption agreement, making fraudulent misrepresentations to get him to enter into and also to breach the agreement, and damaging his reputation. The counterclaim sought recovery of a sum due on a promissory note and a sum due from an advancement to Moeller and repayment of sums due under the stock redemption agreement if it were rescinded, and charged Moeller with wrongful solicitation of clients of the firm, interference with the firm's relationships with its clients, and defamation.
The action was heard before Special Chancellor Mike Carr, who rendered a judgment on January 20, 1984. In his written opinion, he found that there had been a breach of the employment and stock redemption agreement in locking Moeller out of the office and in failing to pay him sums due. The special chancellor awarded Moeller $64,913.66 damages under the employment and stock redemption agreement. He further found the defendants had tortiously interfered with Moeller's business relations. Thus the special chancellor found Moeller was entitled to $12,000 for loss of income, $20,000 for mental anguish and emotional disturbance, $51,000 in attorney's fees and $10,000 in punitive damages. In total, Moeller was awarded $157,913.66 in damages which the special chancellor assessed against the professional corporation and the other members of the firm individually.
Upon appeal, we affirmed in part and reversed in part. Fuselier, Ott and McKee, P.A. v. Moeller, 507 So.2d 63, 70 (Miss.1987). On Moeller's contract damages, we affirmed an award of $27,265.66 for two months salary, accrued vacation pay and stock purchase price, less $7,500 owed by Moeller to the firm, for a net award of $19,765.66. Id. at 66-69. We found that Moeller had not proven his tort claims, and hence no basis existed for punitive damages, mental anguish damages, or attorney's fees. Accordingly, we reversed and rendered on Moeller's tort claims. Id. at 69-70.
The above facts encompass the essential basis of the litigation between the attorneys. What was addressed by Special Chancellor Carr and this Court serves as a preface for the present litigation.
Returning to the beginning of this litigation between Moeller and Fuselier, Ott and McKee, we first note that American Guarantee's multi-peril policy, in addition to covering property loss and premises liability, also provided liability coverage and the right and duty to defend the following:
I. COVERAGE P--PERSONAL INJURY LIABILITY
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury (herein called "personal injury") sustained by any person or organization and arising out of one or more of the following offenses committed in the conduct of the named insured's business:
....
Group B--the publication or utterance of a libel or slander or of other defamatory or disparaging material, or a publication or utterance in violation of an individual's right to privacy; except publications or utterances in the course of or related to advertising, broadcasting or telecasting activities conducted by or on behalf of the named insured;
....
If such offense is committed during the policy period within the United States of America, its territories or possessions, or Canada, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such personal injury even if the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment for judgments or settlements.
This insurance does not apply:
....
(c) to personal injury sustained by any person as a result of an offense directly or indirectly related to the employment of such person by the named insured.
(Ex. 1) (emphasis added).
Moeller's complaint against the law firm contained, among other things, the following allegations for which he sought $25,000 in damages along with attorney's fees and costs under this count.
Plaintiff charges and alleges that the Defendants embarked on a course of conduct designed to misrepresent material facts to Plaintiff, to defraud him, and to damage his professional reputation and career.
(Ex. 2) (emphasis added).
The firm's, counterclaim against Moeller contained the following allegations for which the firm sought damages as well as attorney's fees, expenses and costs:
On or about April 1, 1982, the Counterdefendant began to solicit in person, by mail and with others, the legal representation of clients of the Association and began to attempt to personally injure the reputation and good will of the Association, as well as the reputations of Fuselier, Ott, and McKee.
(Ex. 16, p. 12) (emphasis added).
The only part of either Moeller's complaint or the law firm's counterclaim which were covered under American Guarantee's policy are set forth above. All the remaining allegations are outside the policy.
When they incorporated, Fuselier, Ott and McKee retained the services of Charles Brocato with Magruder, Montgomery, Brocato & Hosemann, a law firm specializing in taxation. Fuselier, Ott and McKee made demands upon American Guarantee through its agent, the Walter Michel Agency, to acknowledge coverage. Fuselier also requested that Brocato be retained by American Guarantee to defend the suit. Initially, American Guarantee denied coverage. Brocato on August 18, 1982, wrote a letter to John Weeks, branch claims manager for American Guarantee, stating that there was coverage under the policy. After further review, American Guarantee agreed to provide a defense under a reservation of rights, but selected its own counsel. Weeks on September 2, 1982, wrote Fuselier, Ott and McKee, stating:
We have received the summons and complaint in connection with the above entitled matter.
....
It appears there is or may be a question as to the position of the company for reasons of questions of coverage concerning various allegations in the suit.
....
We note, in the complaint, that Mr. Fuselier, Mr. Ott and Mr. McKee, are listed as individual defendants and you may want to hire your own counsel to defend the individual interest.. The lawsuit was our first notice of this case and it is possible further investigation may reveal other questions of coverage to be resolved at a later date.
The purpose of this letter is to advise you that we will, at this time, proceed with the investigation, handling, and defense of this case with a full reservation of all of our rights. This is done with the distinct understanding that no action taken by us on your behalf shall constitute either an admission of coverage under the policy or an acknowledgment of any responsibility to pay damages in any judgment against you. We further reserve the right to withdraw from the handling of this matter upon notification to you.... [T]he company does not waive any of the other policy...
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