Harrison v. Chandler-Sampson Ins., Inc.
| Docket Number: | 2003-CA-02085-SCT Linked Case(s): 2003-CA-02085-SCT |
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| Oral Argument: | 12-08-2004 | |
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| Supreme Court: | Opinion Link Opinion Date: 01-20-2005 Opinion Author: Carlson, J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Insurance - Dismissal - F.R.C.P. 41(b) - Adjudication on the merits - Res judicata Judge(s) Concurring: Smith, C.J., Cobb, P.J., Easley, Graves, Dickinson and Randolph, JJ. Non Participating Judge(s): Waller, P.J., and Diaz, J. Procedural History: Dismissal Nature of the Case: CIVIL - INSURANCE |
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| Trial Court: |
Date of Trial Judgment: 08-29-2003 Appealed from: MADISON COUNTY CIRCUIT COURT Judge: William E. Chapman, III Disposition: a final judgment of dismissal on res judicata grounds. Case Number: CI-99-0059 |
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| Note: | Appellee's Motion to Respond to Additional Authority Provided by Appellants to this Court During Oral Argument is denied. | |
| Party Name: | Attorney Name: | |||
| Appellant: | NEIL R. HARRISON AND JULIA A. HARRISON |
JAMES W. NOBLES, JR.
W. BRADY KELLEMS |
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| Appellee: | CHANDLER-SAMPSON INSURANCE, INC. | DOUGLAS DREW MALONE RICHARD M. EDMONSON |
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| Topic: | Insurance - Dismissal - F.R.C.P. 41(b) - Adjudication on the merits - Res judicata |
| Summary of the Facts: | Neil and Julia Harrison owned and operated two separate, but interactive, businesses. Their flagship venture, incorporated under the name Service Air, operated as a heating and air conditioning business for which the Harrisons served concurrently as directors, officers and shareholders. In addition to her interest in Service Air, Julia worked in her own capacity as a homebuilder. This separate business venture was operated as a sole proprietorship under Julia’s exclusive control. The Harrisons two business ventures worked in concert with each other as Service Air provided the central air components to Julia’s building projects. In relation to this contractual relationship, the Harrisons regularly procured commercial general liability insurance coverage for Service Air. In one of their efforts, they obtained an insurance policy through Chandler-Sampson Insurance, Inc. The policy was issued by Ohio Casualty Insurance Company to Service Air. Dr. Fred McMillan bought the Harrisons’ house and shortly thereafter, the home began to deteriorate as problems ranging from structural defects to foundational flaws surfaced. Dr. McMillan sued the Harrisons for breach of contract, breach of implied warranty, negligence and fraud. The jury returned a verdict in favor of Dr. McMillan. The Harrisons then filed two suits against their insurers, one naming Chandler-Sampson, Ohio Casualty, and Great American Insurance Company as defendants and the other naming Chandler-Sampson, State Automobile Mutual Insurance Company, and State Auto Property and Casualty Insurance Company as defendants. In both, the Harrisons claimed that Chandler-Sampson was liable for the damages stemming from the McMillan judgment. The insurance carriers removed both cases to the U.S. District Court for the Southern District of Mississippi on a theory of fraudulent joinder. The federal court determined that the Harrisons asserted no cognizable claim, and that they were thus precluded from recovering against Chandler-Sampson. The court dismissed Chandler-Sampson from the suit as an improper party, retained jurisdiction, and ultimately consolidated the two claims against the remaining insurance carriers. After determining that the Harrisons’ judgment debt was not covered by the companies’ insurance contracts, the federal district court granted summary judgment in favor of the insurance carriers. In 2002, the 5th Circuit affirmed the dismissal and the grant of summary judgment. In 1999, the Harrisons filed suit in the Madison County Circuit Court against Chandler-Sampson claiming that Chandler-Sampson, as their insurance agent, was negligent in the writing of their insurance coverage due to Chandler-Sampson’s failure to assure that the relevant policies covered the McMillan claims. Chandler-Sampson filed a motion for summary judgment on the basis of res judicata. The circuit court granted summary judgment, and the Harrisons appeal. |
| Summary of Opinion Analysis: | Issue 1: Adjudication on the merits The Harrisons argue that the federal district court dismissal was not one envisioned by Fed. R. Civ. P. 41(b) and thus was not an adjudication on the merits. The United States Supreme Court has held that the exception contained within Rule 41(b) encompasses dismissals which are based on a failure to comply with a precondition requisite to a court’s deciding the case on its merits. Under Fifth Circuit precedent a district court must resolve all questions of fact and conclude all ambiguities in the controlling state law in favor of the nonremoving parties. The Fifth Circuit’s analysis ultimately requires the district court to pierce the pleadings and determine whether the non-removing party has any possible claim under applicable state law. The district judge determined that it was clear Chandler-Sampson, in its capacity as an agent, was not a party to the insurance contracts in question and that the Harrisons failed to provide the court with any authority which substantiated the proposition that an insurance agent, who is not a party to the contract, owed a duty to defend under that contract. In rendering its decision, the district court took note of the Harrisons’ failure to assert their negligence theory against Chandler-Sampson in their complaint as originally filed with the circuit court. The district court’s final analysis recognized that the Harrisons were procedurally barred from raising their only cognizable claim, that being one for negligence. Accordingly, the district court judge issued a final adjudication on the merits. Issue 2: Res judicata The Harrisons argue that the court erred in holding that their present action was barred by res judicata. They also argue that the action did not accrue until after the district court determined that there was no coverage by the Ohio Casualty and Great American policies for indemnity or defense. Res judicata precludes claims which were actually litigated in a previous action and prevents subsequent litigation of any claim that should have been litigated in a previous action. For the bar of res judicata to apply there are four identities which must be present: subject matter of the action; cause of action; parties to the cause of action; and quality or character of a person against whom the claim is made. The subject matter of the federal suit and the subject matter of the present state civil action are the same. The substance of the both lawsuits is founded on Chandler-Sampson’s relationship to this policy. The only difference between the current and prior suits is the legal bases on which they are grounded. The Harrisons seek to proceed under a theory of negligence and shoot the arrow that was left in their quiver following the dismissal of their first suit against Chandler-Sampson. The law is well settled that where one has a choice of recovery for a given wrong, they may not assert them serially in successive actions but must advance all at once on pain of the bar of res judicata. The identical parties are involved. In both suits the Harrisons named Chandler-Sampson in its capacity as the insurance agent who wrote the Harrisons’ policy. The character and status of Chandler-Sampson has remained intact. Therefore, the court properly granted summary judgment based on a finding of res judicata. |
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