Gallagher Bassett Serv., Inc. v. Jeffcoat


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Docket Number: 1998-CA-00192-SCT

Supreme Court: Opinion Date: 09-09-2004
Opinion Author: Smith, C.J.
Holding: Reversed and Rendered

Additional Case Information: Topic: Contract - Liability of insurance adjuster - Conspiracy - Negligence per se - Fraud
Judge(s) Concurring: Waller, P.J., and Dickinson, J.
Non Participating Judge(s): Diaz and Randolph, JJ.
Dissenting Author : Easley, J.
Dissenting Author : Carlson, J.
Dissent Joined By : Graves, J.
Concurs in Result Only: Cobb, P.J.
Procedural History: Jury Trial
Nature of the Case: CIVIL - TORTS-OTHER THAN PERSONAL INJURY & PROPERTY DAMAGE

Trial Court: Date of Trial Judgment: 03-09-1998
Appealed from: Hinds County Circuit Court
Judge: Robert L. Gibbs
Disposition: The case went to trial, and the jury returned a verdict against Gallagher for $3,000,000 in actual damages and $500,000 in punitive damages. The jury returned a verdict in favor of Juana Love.
Case Number: 251-941073CIV

  Party Name: Attorney Name:  
Appellant: Gallagher Bassett Services, Inc.




CHRISTOPHER THOMAS GRAHAM MICHAEL A. HEILMAN



 

Appellee: Charles H. "Bo" Jeffcoat, Jr. PHILLIP J. BROOKINS JOHN LEONARD WALKER WILLIAM WALKER  

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Topic: Contract - Liability of insurance adjuster - Conspiracy - Negligence per se - Fraud

Summary of the Facts: On October 21, 1994, after unsuccessful attempts to recover under his employer’s automotive insurance policy, Charles Jeffcoat, Jr., filed suit, naming Cleo Bogan, Gallagher Bassett Services, Inc., and Reliance Insurance Company as defendants. The complaint sought compensatory damages from Bogan, as well as compensatory and contract damages from Gallagher and Reliance Insurance Company. It also requested punitive damages. The court entered a default judgment on the issue of negligence against Bogan because she did not defend against Jeffcoat’s claims. On June 23, 1995, Jeffcoat filed suit against Bogan, several entities affiliated with Reliance, and Juana Love, the Gallagher employee who adjusted Jeffcoat’s claim. This suit alleged that Reliance, Gallagher, and Love violated their respective contractual obligations to Jeffcoat by failing to admit the amount of coverage available under the policy; investigate and determine the amount of coverage available on Jeffcoat’s claim; and offer any excuse for their delay other than their inability to determine the number of vehicles covered under the policy. The suit requested damages of $1,000,000 against Gallagher. The court granted Jeffcoat partial summary judgment in the first suit, finding that the policy produced by Reliance and Gallagher was a true and correct copy and it included a provision for UM coverage. The Reliance entities subsequently settled with Jeffcoat for $1,850,000, and Jeffcoat by settlement agreement released those entities from any further claims. The two suits were consolidated, and Jeffcoat filed an amended complaint, which removed the Reliance entities but retained Gallagher, Love, and Bogan as defendants. After a bench trial on the issue of damages caused by Bogan’s negligence, the judge awarded Jeffcoat $1,900,000. The jury returned a verdict against Gallagher for $3,000,000 in actual damages and $500,000 in punitive damages. The jury returned a verdict in favor of Juana Love. Gallagher appeals.

Summary of Opinion Analysis: Issue 1: Liability of adjuster Gallagher argues that the proof was insufficient to establish its liability for its actions in adjusting Jeffcoat’s claim. An insurance adjuster, agent or other similar entity may not be held independently liable for simple negligence in connection with its work on a claim. Such an entity may be held independently liable for its work on a claim if and only if its acts amount to any one of the following familiar types of conduct: gross negligence, malice, or reckless disregard for the rights of the insured. Gallagher’s acts in the adjustment of this claim were, at the most, negligent. Gallagher never denied or recommended denial of this claim, but it did not pay any benefits on the policy until ten months after Jeffcoat made the claim. The payments of medical and uninsured motorist benefits were both made after Jeffcoat filed suit. Gallagher failed to give its adjusters any resources or training regarding stacking in Mississippi. Although she was generally familiar with stacking, Love did not know that stacking was available in Mississippi or how it works until Jeffcoat’s lawyer informed her what it is and explained how it works. At the very most, Gallagher and Love were negligent in their handling of Jeffcoat’s claim. However, their acts do not rise to the standard for insurance adjuster liability. Issue 2: Conspiracy Jeffcoat alleged conspiracy in his amended complaint. A conspiracy requires an agreement between the co-conspirators. Where a civil conspiracy gives rise to damages, a right of recovery may arise. In this case, there is no substantial evidence supporting the conclusion that there was a combination of entities for the purpose of accomplishing an unlawful purpose. There is no evidence of any agreement, either open or tacit, between these entities such that a combination of persons was formed for an unlawful purpose. In addition, there is no substantial evidence that the conspiracy caused Jeffcoat any damages. Issue 3: Statutory violations Jeffcoat alleged that Gallagher violated sections 83-17-29 (licensing requirement for adjusters), 83-17-17 (criminal penalties for unlicenced insurance adjusters), 83-17-19 (criminal penalties for adjusting unlawful policy), and 83-17-403 (criminal penalties for unlicensed person holding herself out as insurance adjuster). To prevail in an action for negligence per se, a party must prove that he was a member of the class sought to be protected under the statute, that his injuries were of a type sought to be avoided, and that violation of the statute proximately caused his injuries. Because negligence per se is a method of establishing the elements of simple negligence for violation of a statute, such a claim is ineffective for establishing an insurance adjuster’s liability arising from its adjustment of a claim. Issue 4: Fraud Jeffcoat argues that he offered compelling evidence fraud in this case. The evidence does not support a finding of fraud. The correspondence between Gallagher and Jeffcoat indicates that Juana Love continually represented that she was obtaining a legal opinion. However, she never obtained one. There is no evidence that Love ever explicitly represented that she had obtained a legal opinion. Since there was never any representation that a legal opinion had been obtained, there is no fraud.


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