Moeller v. American Guar. & Liab. Ins. Co.

• Decision Date: 04 April 2002
• Docket Number: No. 2000-CA-01678-SCT., No. 92-CA-00829-SCT
• Citation: 812 So.2d 953
• Court: Mississippi Supreme Court
• 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. Fuselier, Ott & McKee, P.A.; Louis Fuselier, Emile C. Ott, and M. Curtiss McKee, Individually v. American Guarantee and Liability Insurance Company.

812 So.2d 953

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.

Fuselier, Ott & McKee, P.A.; Louis Fuselier, Emile C. Ott, and M. Curtiss McKee, Individually v. American Guarantee and Liability Insurance Company.

Nos. 92-CA-00829-SCT, 2000-CA-01678-SCT.

Supreme Court of Mississippi.

April 4, 2002.

Dennis L. Horn, Madison, attorney for appellants.

Forrest W. Stringfellow, Jackson, William Charles Williams, attorneys for appellee.

EN BANC.

PITTMAN, C.J., for the Court.

¶ 1. This appeal concerns whether the trial court followed the mandate of this Court on remand, whether the motions to amend to include claims for prejudgment interest were properly denied, and whether punitive damages should be awarded in this case.

FACTS AND PROCEEDINGS BELOW

¶ 2. The origin of this appeal dates back to 1982 when Armin J. Moeller, Jr. ("Moeller") sued the law firm of Fuselier, Ott and McKee, P.A. and its members individually ("Fuselier") for terminating his employment. Fuselier, Ott and McKee, P.A. v. Moeller, 507 So.2d 63 (Miss.1987). At trial, the chancellor rendered a judgment in favor of Moeller, which was eventually reduced by this Court on appeal. Id.

¶ 3. While Moeller was on appeal, American Guarantee and Liability Insurance Company ("American Guarantee"), a professional liability insurer, brought an action against its insured, Fuselier, seeking a declaratory judgment on, inter alia, its duty to pay attorney's fees and expenses. Fuselier counterclaimed seeking attorney fees and expenses along with making various assertions for damages. The chancellor determined that American Guarantee was not obligated to pay for Fuselier's defense and that it had fulfilled its contractual duty. Also during the trial, Fuselier made an ore tenus motion to amend the complaint to include a request for prejudgment interest. This motion was denied.

¶ 4. On appeal this Court reversed the chancellor regarding American Guarantee's duty to pay Fuselier's attorneys' fees and remanded for a determination of reasonable attorney's fees incurred in defense of Moeller's complaint. Moeller v. American Guarantee & Liab. Ins. Co., 707 So.2d 1062 (Miss.1996). In its opinion, this Court stated Fuselier's appeal focused on "the special chancellor's refusal to award attorney's fees for defending the complaint of Moeller and pre-judgment interest." Id. at 1068. The Court reasoned that because Fuselier was "being defended under the defamation claim with a reservation of rights, American Guarantee was obligated to let them select their own attorney at American Guarantee's cost to represent them." Id. at 1071. This Court concluded:

American Guarantee, having chosen to defend all claims, was obligated to permit Fuselier, Ott, and McKee to select its own counsel for those claims outside the coverage of the policy. It follows that American Guarantee is liable for the reasonable legal expenses Fuselier, Ott and McKee incurred in the defense of the complaint, and the special chancellor's holding that American Guarantee was not liable for such expenses is reversed.

Id.

¶ 5. After remand, Fuselier filed a motion for enforcement of mandate in which they claimed they were entitled to: $95,244.26 for attorney's fees and expenses; an award of pre-judgment interest of 8% of the principal compounded monthly until June 30, 1989, totaling $51,433.24 (in accordance with § 75-17-7 Miss.Code Ann. of 1972); and an award of prejudgment interest from July 1, 1989 until the present¹ with interest due and owing calculated up to the date of judgment (in accordance with § 75-17-7 Miss.Code Ann. of 1972 (Supp.1989)). The motion also contained a request that punitive damages be levied against American Guarantee for its refusal to pay the principal amount of the claim and a request for payment for attorney's fees and expenses in litigating the action on remand, including prejudgment interest.

¶ 6. American Guarantee filed its response to the motion on September 24, 1998, denying each count and asserted that Fuselier was not entitled to prejudgment interest because the amount due was unliquidated. American Guarantee also contended that Fuselier had not requested prejudgment interest until the commencement of trial in chancery court, where a motion for prejudgment interest was denied, thereby not entitling Fuselier to such an award. Alternatively, American Guarantee advanced that any amount due Fuselier were expenses that, if not paid, would not warrant the imposition of punitive damages. Finally, American Guarantee charged that the imposition of punitive damages would constitute an imposition of excessive fines violating both the federal and state constitutions.

¶ 7. A hearing was conducted May 3, 1999, before a special chancellor regarding Fuselier's motion for enforcement of mandate on remand and their motion for leave to amend their counterclaim so as to include the issues of punitive damages, prejudgment interest and attorney's fees and expenses due to the alleged bad faith by American Guarantee. The special chancellor determined the only issue to be resolved was the amount that the insurance company was obligated to pay to the firm for their reasonable expenses in defending the suit, and that the other issues presented, including the motion to amend to include prejudgment interest, failed as a matter of law.

¶ 8. The trial on this case occurred July 24, 2000. On August 15, 2000, the special chancellor issued his letter memorandum opinion containing findings of fact and conclusions of law. The special chancellor determined that the sole issue for determination under the mandate was the issue regarding reasonable legal expenses incurred by Fuselier to be reimbursed by American Guarantee. The special chancellor concluded that American Guarantee was liable for the costs of the original claim, as well as the counterclaim because of their involvement in such, resulting in a reimbursement by American Guarantee of the full $95,244.26. In a final judgment filed September 11, 2000, the special chancellor ordered American Guarantee to pay the above sum with post judgment interest at the rate of 8% compounded until paid, along with expenses for the cost of the remand action.

¶ 9. Fuselier filed a motion for a new trial, amendment to judgment and relief from judgment order on September 20, 2000. That motion was denied by the special chancellor on October 5, 2000. This appeal was filed October 10, 2000.

ANALYSIS

I. DID THE MANDATE OF THIS COURT REVERSE AND REMAND FOR ATTORNEY'S FEES AND PREJUDGMENT INTEREST

OR ONLY FOR ATTORNEY'S FEES?

¶ 10. In reversing the chancellor regarding American Guarantee's duty to pay Fuselier's attorneys' fees and remanding for a determination of reasonable attorney's fees incurred in defense of Moeller's complaint, this Court announced that the appeal dealt with "the special chancellor's refusal to award attorney's fees for defending the complaint of Moeller and pre-judgment interest." Moeller, 707 So.2d at 1068. At the conclusion of the analysis of this issue, this Court stated: "It follows that American Guarantee is liable for the reasonable legal expenses Fuselier, Ott and McKee incurred in the defense of the complaint, and the special chancellor's holding that American Guarantee was not liable for such expenses is reversed." Id. at 1071. While the mandate at the end of the opinion did not specifically articulate that American Guarantee was liable for prejudgment interest, it is clear from the reference to prejudgment interest earlier in the opinion that it was included in this Court's reasoning in reversing the special chancellor's ruling.

II. IS FUSELIER ENTITLED TO PREJUDGMENT INTEREST?

A. PREJUDGMENT INTEREST

¶ 11. Fuselier claims to be entitled to an award of prejudgment interest because of this Court's decision in Moeller v. American Guarantee and Liability Insurance, 707 So.2d 1062, 1068 (Miss.1996). This Court has stated the following regarding the award of prejudgment interest:

Mississippi recognizes judicial authority to award prejudgment interest to a prevailing party in a breach of contract suit. Prejudgment interest may be allowed in cases where the amount due is liquidated when the claim is originally made or when the denial of a claim is frivolous or in bad faith. No award of prejudgment interest is allowed where the principal amount has not been fixed prior to judgment. Prejudgment interest is not imposed as a penalty for wrong doing; it is allowed as compensation for the detention of money overdue. For prejudgment interest to be awarded, the party must make a proper demand for the interest in the pleadings, including the date that it was allegedly due.

[T]o be entitled to prejudgment interest, they must meet several requirements. First, the claim for damages must be liquidated or the denial of the claim ... must have been frivolous or in bad faith. Second, the pleadings must reflect a request for prejudgment interest.

Preferred Risk Mut. Ins. Co. v. Johnson, 730 So.2d 574, 577 (Miss.1998) (citations omitted). "An award of prejudgment interest is reviewed for abuse of discretion." Theobald v. Nosser, 784 So.2d 142, 145 (Miss.2001)(citing Aetna Cas. & Sur. Co. v. Doleac Elec. Co., 471 So.2d 325, 331 (Miss. 1985)).

B. IF PREJUDGMENT INTEREST IS DUE, WHAT INTEREST RATE SHOULD APPLY?

¶ 12. American Guarantee claims that Fuselier's cause of action accrued prior to the enactment of Miss.Code Ann. § 75-17-7 (Supp.1989) and that Fuselier is not entitled to prejudgment interest. American Guarantee contends that the cause of action giving rise to American Guarantee's duty to pay for Fuselier's independent counsel arose in 1982 when American Guarantee chose to defend Fuselier under a reservation of rights.

¶ 13. Fuselier agrees that legal fees began to accrue in 1982. Fuselier does not respond to this assertion...