Taylor Mach. Works, Inc. v. Great American Surplus Lines Ins. Co., No. 91-CA-0687

• Court: United States State Supreme Court of Mississippi
• Writing for the Court: SULLIVAN; HAWKINS
• Citation: 635 So.2d 1357
• Decision Date: 10 February 1994
• Docket Number: No. 91-CA-0687
• Parties: TAYLOR MACHINE WORKS, INC. v. GREAT AMERICAN SURPLUS LINES INSURANCE COMPANY and Sedgwick-James of Mississippi, Inc., as Successor in Interest to Crump/Spencer Murphree, Inc.

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635 So.2d 1357 TAYLOR MACHINE WORKS, INC.
v.
GREAT AMERICAN SURPLUS LINES INSURANCE COMPANY and
Sedgwick-James of Mississippi, Inc., as Successor
in Interest to Crump/Spencer Murphree, Inc. No. 91-CA-0687. Supreme Court of Mississippi. Feb. 10, 1994.
Rehearing Denied May 19, 1994.

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Thomas Y. Page, Wes W. Peters, Upshaw Williams Biggers Page & Kruger, Jackson, for appellant.

Aubrey E. Nichols, Gholson Hicks Nichols & Ward, Columbus, Richard T. Lawrence, Watkins & Eager, Jackson, for appellee.

Before DAN M. LEE, P.J., and SULLIVAN and BANKS, JJ.

SULLIVAN, Justice, for the Court:

Taylor Machine Works, Inc., a Mississippi corporation, filed suit against Great American Surplus Lines Insurance Company and Sedgwick-James of Mississippi, Inc., on October 8, 1990. Taylor, which manufactured a fork-lift which caused the death of Vito Dacquisto, sought to pay for its liability through a 1986 insurance policy between Taylor and Great American. Sedgwick-James is a party by way of its procurement of a similar policy for 1987 on behalf of Taylor.

The trial judge granted Great American's and Sedgwick-James' motions for summary judgment, finding as a matter of law that no claim was made under the insurance policy, and denying Taylor's motion to amend its complaint and motion to compel discovery.

Taylor appeals, assigning the following four issues:

I. Whether the trial court erred in ruling that the December 8, 1986 letter as a matter of law did not constitute a claim as defined by the insurance policy;

II. Whether Sedgwick-James' motion for summary judgment was timely filed and ripe for consideration;

III. Whether the trial court erred in denying Taylor's motion to amend its complaint to include a count for punitive damages based on alleged delay tactics on the part of Great American; and

IV. Whether the trial court erred in denying Taylor's motion to compel and motion for sanctions.

FACTS

Taylor Machine Works, Inc., (Taylor), is a Mississippi Corporation which manufactures

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forklifts used throughout the United States. Taylor, recognizing the potential for products liability lawsuits against it, obtained liability insurance and also surplus insurance, to cover extra costs of claims not paid by the original insurance. The instant lawsuit, filed in the Circuit Court of Winston County, Mississippi, involves one plaintiff, Taylor Machine Works, Inc., and two defendants, Great American and Sedgwick-James. Taylor had a 1986 claim policy (# 6-CL-5-73-76) and a 1987 claim policy (# 7-CL-7-84-76) with Great American. This 1987 policy specifically excluded the Dacquisto claim from coverage, according to Taylor's appeal brief. The 1987 policy is not in the record, but the 1986 policy is.

The instant case stems from the accidental death of Vito Dacquisto, an employee of International Transportation Services, Inc. (ITS), in California. On September 28, 1986 a side-handler forklift, which had been manufactured by Taylor, backed over Dacquisto in the ITS workplace. As early as October 7, 1986, about a week after the accident, a letter indicates that Taylor had been aware of the Dacquisto accident and had begun an investigation. Dacquisto's employer, ITS, wrote a letter on December 8, 1986, to Taylor; since this letter is at the heart of this appeal, its contents are repeated below in full:

December 8, 1986

Mr. William Clark

Taylor Machine Works, Inc.

P.O. Box Hwy 15N

Louisville, MS 39339

Dear Mr. Clark:

This is to inform you of an accident which occurred September 28, 1986 involving a Taylor sidehandler (S/N S-HO-17842) which backed over a pedestrian worker, Mr. Vito Dacquisto, killing him.

While our investigation of this incident is continuing, we wish to inform yu [sic] that Taylor Machine Works, Inc. may well be held responsible for this incident and liable for damages.

Very truly yours,

INTERNATIONAL TRANSPORTATION SERVICE, INC.

[Paulsen's signature.]

Louis W. Paulsen

Safety & Loss Control Supervisor

LWP/dlm

According to the insurance policy, in order for Taylor to collect from Great American, the injured party must make a claim within the policy year to Taylor. The policy defined claim as "a notice received by the insured of an intention to hold the insured responsible for an occurrence involving the insurance provided under this policy, and shall include the service of suit or institution of arbitration proceedings against the insured." Taylor is the insured here.

In the spring of 1987, Dacquisto's beneficiaries brought a wrongful death action against Taylor in the California state court system. ITS, as Dacquisto's employer, intervened in that lawsuit to protect its lien obtained through its worker's compensation payments. Neither Dacquisto's beneficiaries nor ITS are parties to the instant case.

Since the limit of the 1987 policy had been exhausted by another claim and settlement, Taylor sought to obtain funds for the Dacquisto accident under its 1986 policy with Great American.

Mark Brak, claims manager for Great American, stated that Great American did not receive any notice of the Dacquisto claim until it received copies of the Dacquisto "suit papers" on November 23, 1987. Great American paid Taylor $500,000 for another claim, the Burns case, which exhausted the funds from the 1987 policy.

Taylor filed suit in October 1990, alleging breach of contract, negligence, and recission. Taylor sent a set of interrogatories and requests for production to Great American and Sedgwick-James and mailed them October 5, 1990. Taylor claims these were due on November

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23, 1990. On November 19, 1990, after Taylor agreed to allow the defense attorney until December 1, 1990, to answer the complaint, Taylor's attorney advised Great American's counsel that they needed to get things "rolling," in the case, because of the pending wrongful death suit in California.

On January 25, 1991, Taylor filed a motion for summary judgment. In February 1991, Taylor again told Great American of its desire to not waste time in the litigation.

Great American responded by mail to Taylor's request for documents on February 28, 1991; these responses were filed on March 5, 1991. Great American objected to most of the requests. This response occurred about five months after Taylor sent them. Sedgwick-James' response to Taylor's request for documents is dated May 21, 1991, and marked filed, May 28, 1991. This is well over six months after Taylor requested them.

Great American responded to Taylor's interrogatories on March 14, 1991. This is over five months after Taylor sent them. Great American objected to most of the questions.

The Scheduling Order by Judge Sumner required discovery to be completed by August 15, 1991; all motions for amendments to pleadings by April 15, 1991; all motions, except in limine, by September 15, 1991.

Taylor filed its motion to compel discovery on April 4, 1991. Taylor, also via this motion, sought sanctions for Great American's delay and refusal to respond. This is within the time period of the scheduling order.

On June 6, 1991, Taylor mailed its motion to amend the complaint to the court; in this motion, Taylor sought to add a count for punitive damages, citing delay and denying a claim without an arguable reason to do so. The motion to amend was filed on June 18. June 17 was the date on which the judge granted summary judgment and denied Taylor's oral motions to amend the complaint and compel discovery.

Taylor requested the entire files claim on the Burns case, which is...