Gallagher Bassett Services, Inc. v. Malone


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Docket Number: 2007-CA-00585-SCT
Linked Case(s): 2007-CA-00585-SCT
Supreme Court: Opinion Link
Opinion Date: 01-07-2010
Opinion Author: Lamar, J.
Holding: Reversed and remanded
Additional Case Information: Topic: Insurance - Inconsistent jury verdicts - Multiple legal theories - M.R.C.P. 42(b)
Judge(s) Concurring: Waller, C.J., Carlson, P.J., Dickinson and Kitchens, JJ.
Non Participating Judge(s): Randolph and Pierce, JJ.
Dissenting Author : Chandler, J., with separate written opinion.
Concurs in Result Only: Graves, P.J.
Procedural History: Jury Trial
Nature of the Case: CIVIL - INSURANCE
Trial Court: Date of Trial Judgment: 11-06-2006
Appealed from: Jones County Circuit Court
Judge: Billy Joe Landrum
Disposition: The jury found Gallagher Bassett and Nabors liable for bad faith in handling Malone’s workers’ compensation claim and awarded compensatory damages to Malone in the amount of $250,000. The jury also found Gallagher Bassett liable to Nabors on the cross-claim for breach of contract and awarded compensatory damages in the amount of $1.25 million.
Case Number: 2003-230-CV12
  Party Name: Attorney Name:   Brief(s) Available:
Appellant: GALLAGHER BASSETT SERVICES, INC.




 MICHAEL A. HEILMAN, PATRICIA J. KENNEDY, CHRISTOPHER T. GRAHAM



  
  • Appellant #1 Brief
  • Appellant #1 Reply Brief
    		•
    Appellee: GARY LEE MALONE AND NABORS DRILLING USA, INC. JOSEPH A. O’CONNELL, MARK A. NELSON, RICHARD O. BURSON, DORIS T. BOBADILLA, THOMAS J. SMITH, TOMMY SMITH  
    Appellee #2:  
    Synopsis provided by:

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    Topic: Insurance - Inconsistent jury verdicts - Multiple legal theories - M.R.C.P. 42(b)
    Summary of the Facts: Gary Malone’s right leg was amputated below the knee approximately two years after he suffered a work-related injury. Subsequently, Malone instigated a bad-faith lawsuit against several defendants, including his former employer, Nabors Drilling USA, Inc. and a workers’ compensation insurance claims adjuster, Gallagher Bassett Services, Inc. Malone argued that the defendants’ bad-faith delay in paying his viable workers’ compensation claim proximately caused him to delay medical treatment, eventually resulting in the loss of his leg. Nabors cross-claimed against Gallagher Bassett for breach of contract, asserting that it was a third-party beneficiary of a contract between Nabors’s workers’ compensation insurance carrier, CNA Insurance Services, and Gallagher Bassett. Subsequently, Nabors and Malone entered into a written agreement commonly referred to as a “Mary Carter” settlement agreement, in which Nabors paid Malone $1.5 million and remained a litigant in the case. In the settlement agreement, the parties agreed that Nabors’s liability to Malone arose out of Gallagher Bassett’s bad-faith failure to timely pay Malone’s workers’ compensation claim. After a trial, the jury found Gallagher Bassett and Nabors liable for bad faith in handling Malone’s workers’ compensation claim and awarded compensatory damages to Malone in the amount of $250,000. The jury also found Gallagher Bassett liable to Nabors on the cross-claim for breach of contract and awarded compensatory damages in the amount of $1.25 million. Gallagher Bassett appeals; Malone and Nabors both cross-appeal.
    Summary of Opinion Analysis: The jury verdicts in this case reflect contradiction and inconsistency. The jury was asked to consider both the independent tort of bad-faith denial of a workers’ compensation claim and a separate claim, purely contractual in nature, between employer Nabors and adjuster Gallagher Bassett. On the one hand, the jury returned a verdict in favor of Malone and allocated fault at 42.5 percent each to Nabors and Gallagher Bassett and established Malone’s damages in the amount of $250,000. The jury’s second verdict found, on a theory of breach of contract and/or indemnity (the jury was instructed on both), that Gallagher Bassett was liable to Nabors for $1.25 million – a figure five times the amount which the jury had established as reasonable damages to Malone. The jury’s finding that Nabors was as much at fault as Gallagher Bassett clearly is in direct conflict with its finding that Nabors did nothing which contributed to Malone’s damages. There is no way these two verdicts can be reconciled, as they create an uncertainty that is fundamentally unacceptable. The appropriate remedy is to vacate both judgments and remand this case for a new trial. The case presented multiple legal theories, and the result was a completely confused jury. A trial court has broad discretion under M.R.C.P. 42(b) to consolidate or order separate trials for a cross-claim. On remand, the trial court is strongly urged to consider severing Nabors’s cross-claim for trial.


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