Titan Indemnity Co. v. Hood
Decision Date | 22 November 2004 |
Docket Number | No. 2001-CA-00869-SCT.,2001-CA-00869-SCT. |
Citation | 895 So.2d 138 |
Parties | TITAN INDEMNITY COMPANY, United States Fidelity and Guaranty Company and St. Paul Fire and Marine Insurance Company v. Carroll V. HOOD, Hico, Inc. and Old South Insurance Group, Inc. |
Court | Mississippi Supreme Court |
James Frederick Ahrend, James W. Craig, Luther T. Munford, Jackson, W. Wayne Drinkwater, Jr., Margaret Oertling Cupples, Vivian Conway Henley, Charles G. Copeland, Rebecca Jordan Blunden, Ridgeland, Christopher Royce Shaw, Jackson, Evan M. Tager, Christopher C. Wang, attorneys for appellants.
James D. Shannon, Elise Berry Munn, Kelley Mitchell Berry, Renee C. Harrison, Hazlehurst, Brandon Lee Ogburn, William A. Allain, C. Lee Lott, III, Jackson, Eugene M. Harlow, Christopher Brian McDaniel, Laurel, Walker (Bill) Jones, Robert M. Arentson, Jackson, attorneys for appellees.
EN BANC.
¶ 1. The jury award in this breach of contract case from Copiah County exceeded $82 Million,1 $80 Million of which was punitive damages. The contract in question contains a provision which vests the courts of Bexar County, Texas, with exclusive personal jurisdiction and venue of the issues litigated by the parties. Accordingly, we reverse and render.
¶ 2. The Mississippi Legislature partially abolished sovereign immunity in 1993. The resulting potential liability2 for Mississippi's political subdivisions,3 opened a substantial market for "public entity" liability insurance.
¶ 3. Jerald Delaney from the Hazlehurst area had sold public entity insurance for Titan4 and its predecessor, Innsbrook, beginning in the 1980's. Carroll Hood, Delaney's friend for many years, was a successful businessman with extensive political connections throughout Mississippi. Hood has engaged in various businesses for almost 40 years, including a wholesale distributorship for Philips Petroleum, commercial and residential real estate, and horse breeding. Hood has also served as chairman of the boards of a local hospital and bank, chairman of the Mississippi Oil and Gas Board, and a member of the Mississippi Parole Board and the Mississippi Employment Security Commission.
¶ 4. Believing Hood's political connections could serve to "open the doors" to many public entities and help acquire their insurance business, Delaney introduced Hood to Titan. This led to a preliminary, non-exclusive agreement5 for Hood's company, HICO, Inc., to market Titan's public entity insurance products in part of Mississippi. Delaney joined up with HICO, becoming one of its corporate officers, and its primary salesman.
¶ 5. During HICO's initial contract period with Titan, Hood and Delaney convinced the Mississippi Association of Supervisors to endorse the Titan insurance product marketed by HICO. In exchange for their endorsement, the Association of Supervisors would receive a two percent "royalty." The significance of this endorsement was explained by Hood's testimony:
¶ 6. After it obtained this coveted endorsement, and having achieved the required production quotas set out in the preliminary agreement, HICO was offered a new contract, which provided that HICO would have exclusive authority to market Titan's public entity insurance in Mississippi. This agreement was memorialized by a "Representative Agreement," which was made and entered as of January 1, 1994. It is this Representative Agreement that is at the center of the controversy.
¶ 7. Pursuant to the Representative Agreement, "Hood and HICO became the sole and exclusive marketing arm for Titan in Mississippi, and as a result, the only company for which Hood and HICO could market insurance was Titan."6 Under this new Representative Agreement, HICO marketed Titan's insurance by contacting independent insurance agents in various counties, and selling the insurance through them. In order to sell Titan's insurance, the independent agent signed a "Producer's Contract," which set forth the terms and conditions of the agreement between Titan and the independent agent. When a policy was sold under this arrangement, both the agent and HICO were entitled to receive a commission.
¶ 8. In September, 1994, Old South Insurance Group, Inc., was formed by Delaney and two partners, for the purpose of combining three insurance agencies under one umbrella, and marketing various insurance products in a three-town area. On February 1, 1995, Old South and Titan executed a Producer's Contract. Paragraph 3., of that contract addressed "Ownership of Expirations." It specifically provided, inter alia:
A. In the event of termination of this Agreement, provided the Producer has promptly accounted for and paid over premiums for which the Producer may be liable to Titan, the Producer's records, use and control of expirations shall remain the property of the Producer and be left in his undisputed possession, otherwise the records, use, and control of expiration shall be vested in Titan.
¶ 9. The parties do not seem to agree on the meaning of this provision. Old South says it generally means that, should Old South place a Titan policy with a public entity, Old South would be entitled to renew the policy, even if the Producer's Contract was terminated. Hood appears to believe it entitles the producer to future commissions on the account, but not to sell the renewals.
¶ 10. For several years, HICO marketed Titan's insurance under this arrangement through independent agents, including Old South. Then, in 1997, Titan was purchased by the United States Fidelity and Guaranty Company ("USF & G") which, soon thereafter, was purchased by St. Paul Fire and Marine Company ("St. Paul").7
¶ 11. In 1998, without Hood's knowledge, Delaney (acting on behalf of Old South) entered negotiations with Titan's competitor, Zurich Insurance Company, to market the Zurich public entity insurance policy. On June 29, 1998, while Hood was out of town, Delaney left a note resigning from HICO. Old South had signed an agreement with Zurich, effective August 14, 1998. When St. Paul learned that Delaney had resigned from HICO, it notified the Mississippi Insurance Commission on July 14, 1998, that Old South's authority to serve as a St. Paul agent was terminated. St. Paul did not, however, notify Old South of the termination until November 18, 1998. Miss.Code Ann. § 83-17-5 provides in pertinent part: "The insurance company ... must notify the agent within thirty (30) days if the authority is non-renewed or cancelled."
¶ 12. After acquiring its new contract, Old South began to develop public entity insurance business for Zurich, including three new accounts procured in October, 1998. Nevertheless, Old South claims it lost business during the second half of 1998, because St. Paul's exclusive marketing agent, HICO, visited the various accounts and represented that Old South no longer had authority to sell the insurance for St. Paul. Specifically, Old South states:
[E]ven though Old South had the contractually mandated "expirations" (also known as "rights of renewal") on eight (8) public entity accounts ... St. Paul's exclusive marketing representative [HICO] began approaching Old South accounts, in direct contravention of the producer's contract and asking that the accounts be moved from Old South.
¶ 13. Thus, in late 1998, Delaney and Old South wanted to sell public entity insurance for Zurich, and they wanted St. Paul to recognize their right to approach St. Paul (Titan) policyholders and either renew Titan policies or move the customers to Zurich. HICO and Hood, on the other hand, took the position that, since Delaney had resigned, and since HICO had an exclusive marketing agreement with Titan, then neither Old South nor Delaney could continue to call on HICO customers who were up for renewals of their Titan policies. A volume of correspondence aimed at reaching a solution was exchanged among Old South, HICO and St. Paul. These efforts were not successful and the hot water began to boil.
¶ 14. On October 4, 1999, the first of several permutations of this lawsuit was filed. HICO and Hood filed suit against Titan, USF & G, St. Paul, Delaney, Old South and BancorpSouth Bank.8
¶ 15. HICO's complaint charged St. Paul with breaching its contract by not paying certain commissions; by raising premiums so high that it cost HICO business; by trying to give the George County account to Delaney and Old South;9 and by taking other unspecified steps to damage HICO. These actions, according to plaintiffs, resulted in causes of action for breach of contract, tortious breach of contract, breach of the duty of good faith and fair dealing, tortious interference with business relations, negligence, and gross negligence.
¶ 16. Hood and HICO claimed that Delaney left his employ with HICO and began to solicit business for Zurich in an unethical manner. The complaint further charged that, even though Delaney was fully aware of the exclusive nature of the HICO/Titan contract, he nevertheless "convinced St. Paul to allow Delaney/Old South to act as the agent of record for St. Paul when bidding to write public entity insurance for George County, Mississippi."
¶ 17. Additionally, the complaint alleged that Delaney and Old South had a fiduciary duty to act on behalf of HICO, "as St....
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