Gen. Am. Life Ins. Co. v. McCraw
| Docket Number: | 2004-CA-01417-SCT Linked Case(s): 2004-CA-01417-SCT |
|
| Supreme Court: |
Opinion Date: 06-07-2007 Opinion Author: Diaz, P.J. Holding: On Direct Appeal: Reversed and Remanded in Part and Reversed and Rendered in Part. |
|
| Additional Case Information: |
Topic: Insurance - Duty to indemnify - Restatement (Third) of Agency, § 8.14 - Damages - Attorney’s fees Judge(s) Concurring: Smith, C.J., Waller, P.J., Carlson, Graves, Dickinson, Randolph and Lamar, JJ. Non Participating Judge(s): Easley, J. |
|
| Trial Court: |
Date of Trial Judgment: 10-12-2004 Appealed from: Jasper County Circuit Court Judge: Robert G. Evans Case Number: 10-0115 |
|
| Note: | Link Inactive | |
| Party Name: | Attorney Name: | |||
| Appellant: | General American Life Insurance Company |
|||
| Appellee: | Stephen McCraw |
|
||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
|
| Topic: | Insurance - Duty to indemnify - Restatement (Third) of Agency, § 8.14 - Damages - Attorney’s fees |
| Summary of the Facts: | Steve McCraw, acting as an insurance agent for General American Life Insurance Company, sold a life insurance policy to Harlena Jones. Jones later filed suit in against McCraw and General American for a variety of reasons, including fraud, for selling her what is known as a “vanishing premium” policy. McCraw requested that General American defend him in the suit. The company declined, and McCraw filed a crossclaim against his principal for failure to indemnify and for emotional distress. General American settled with Jones, who had obtained a judgment against the company and in her favor. The jury trial resulted in separate verdicts of $150,000 in compensatory damages and one million dollars in punitive damages in favor of McCraw in his action against the company. General American filed a motion for judgment notwithstanding the verdict. The trial court granted the JNOV in part, vacating the punitive damage award, but declined to overturn the award of compensatory damages. General American appeals, and McCraw cross-appeals. |
| Summary of Opinion Analysis: | Issue 1: Duty to indemnify In determining whether there is a duty to indemnify between a principal and an agent, the approach of the Restatement (Third) of Agency, § 8.14, is hereby adopted. Under the Restatement Third, there are four ways an agent may obtain indemnity from a principal. The applicable section to the evidence in this case is part 2(b) which provides that a principal has a duty to indemnify an agent when the agent suffers a loss that fairly should be borne by the principal in light of their relationship. A principal does not have a duty to indemnify an agent against losses caused by unauthorized action taken by the agent that did not benefit the principal or losses caused solely by wrongful acts committed by the agent. Whether an agent was acting under the scope of authority is a question for the jury. Thus, the case is reversed and remanded for a jury to determine whether McCraw suffered a loss which, in light of the relationship between McCraw and General American, should fairly be borne by the company. Issue 2: Damages General American argues that one may not recover more than the expenses and fees associated with obtaining indemnity, and that damages for emotional distress are improper. McCraw seeks reinstatement of the punitive damages award previously vacated by the trial court. A basic principle of indemnity is that the right exists when there is a legal obligation on the indemnitee to pay or a sum is paid by him for which the indemnitor should make reimbursement. Indemnification is for reimbursement of the costs related to defending the action and pursuing indemnification. Accordingly, punitive damages for refusing to immediately indemnify an agent are not recoverable. The trial court was therefore correct in granting General American’s motion for JNOV on the issues of punitive damages. A portion of the damages assessed against General American were for McCraw’s alleged emotional distress. Emotional distress damages are not a component of reimbursement and therefore cannot be awarded in an action for indemnification. Expenses and losses allowed under the Restatement include attorney fees and expenses incurred by the indemnitee in defending the initial action and in vindicating its right to indemnity in a third-party action brought against the indemnitor. Previously, McCraw’s attorneys’ fees and expenses were bundled with the other damages. The case is remanded for a jury trial to determine what expenses were actually incurred by McCraw. |
Home | Terms of Use | About the JDP | Feedback | Using JDP | MC Law Library | Mississippi Supreme Court
