Opinion ID: 865317
Heading Depth: 2
Heading Rank: 1

Heading: w hether hri and travelers tortiously

Text: INT ER FER ED W ITH TH E SETTLEM ENT BY INITIALLY ASSERTING CONTRACTUAL SUBROGATION. ¶16. Courtney alleges that HRI and Travelers tortiously interfered with her settlement with Farm Bureau by means of gross negligence and intentional misrepresentation that contractual subrogation existed as a basis for its claim, when such did not in fact exist in the policy. Furthermore, Courtney claims she is entitled to punitive damages pursuant to Valley Forge v. Strickland, 620 So. 2d 535 (Miss. 1993). The chancellor disagreed and defined tortious interference as: “Tortious interference” is any intentional invasion of, or interference with, economic, property or contractual rights, causing injury without just cause or excuse. See 45 Am.Jur.2d, Interference, § 1. ¶17. This Court has established the following elements of intentional or fraudulent misrepresentation: “(1) a representation, (2) its falsity, (3) its materiality, (4) the speaker’s knowledge of its falsity or ignorance of its truth, (5) his intent that it should be acted on by the hearer and in the manner reasonably contemplated, (6) the hearer’s ignorance of its falsity, (7) his reliance on its truth, (8) his right to rely thereon, and (9) his consequent and proximate injury.” Franklin v. Lovitt Equip. Co., Inc., 420 So. 2d 1370, 1373 (Miss. 1982) (citing Hamilton v. McGill, 352 So. 2d 825 (Miss. 1977); McMahon v. McMahon, 247 Miss. 822, 157 So. 2d 494 (1963); Anderson Dunham, Inc. v. Aiken, 241 Miss. 756, 133 So. 2d 527 (Miss. 1961)). (Emphasis added). Likewise, these elements must be proved by clear and convincing evidence. Franklin, 420 So. 2d at 1373 (citing Parker v. Howarth, 340 So. 12 2d 434 (Miss. 1976); Crawford v. Smith Bros. Lumber Co., Inc., 274 So. 2d 675 (Miss. 1973)). ¶18. Chancellor Mask found that Courtney’s claim of misrepresentation during the settlement negotiations did not meet the Franklin elements by clear and convincing evidence; thus, Travelers and HRI were not liable for tortious interference. En route to this finding, Chancellor Mask stated, inter alia: Of particular concern to the Court is that during the negotiation of a settlement by counsel for Courtney with [Farm Bureau], a representative of HRI faxed to counsel for Courtney an excerpt from a different policy which contained an express subrogation provision. It is obvious that HRI should have done its homework before sending bogus information to Courtney’s attorney. As described above, HRI later retracted this representation and maintained its position that it held a claim by way of equitable subrogation. .... It is undeniable that HRI should have known that the contractual subrogation information that was being provided to Courtney’s attorney was false. The Court is disturbed that HRI’s usual procedures did not call for verification on the part of its representatives that the Plan contained express subrogation language prior to its claiming that means of recovery. The notion suggested by [Courtney] is that HRI carelessly assumed the risk of any fallout from this misrepresentation because, in part, it did not think a Mississippi attorney would have detected the false claim and, further, it was unconcerned about Courtney’s care and well-being. This Court is likewise concerned that an outof-state entity would engage in such behavior to the possible detriment to the citizens of this State. The Court is further concerned that HRI insisted on its name being placed on the settlement check prior to an adjudication of its entitlement. Despite the foregoing, the Court is bound by an oath to faithfully and impartially apply the law to the facts of this case. While HRI’s actions were inappropriate, the Court is unable to discern any damages which were suffered because of this misrepresentation. Similar to the findings of Judge Pickering 13 in McArthur v. Time Ins. Co.,5 889 F. Supp. 938 (S.D. Miss. 1995), which dealt with a somewhat analogous situation to the present dispute,[] the Court finds that erroneous information was submitted, but finds no damages which are attributable to the false information. From a review of the evidence, it is undisputed that Courtney’s decision to settle the case was not prompted by the actions or false information of the Respondents, as described above. Likewise, there was no evidence that the Respondents’ actions had any impact on the amount of the settlement. Further, the communication was with Courtney’s attorney and the right of the attorney to rely on this information, while having access to the Plan, is less than it would have been where the communications had been with an unrepresented person. The Court finds that HRI’s erroneous assertion of contractual subrogation was corrected and withdrawn by HRI during the negotiation process between Ashmore and Farm Bureau, and some five (5) months prior to the filing of the first petition. HRI’s letter clarifying the nature of their claim was received by [Courtney’s] counsel in December 1996, and the doubtful claim hearing was held in May 1997. Separately from the assertion of contractual subrogation, HRI has consistently asserted a claim for rights of recovery under whatever form available. Additionally, Farm Bureau recognized a potential claim of HRI, arising not solely from HRI’s erroneous communication, but from the Supreme Court’s holding in Cooper Tire. 5 In McArthur, it was first represented by the insurer and its agents that the health insurance policy contained an express subrogation provision, when such provision was nonexistent, and subsequently it was asserted that the insurer held a claim of equitable subrogation. Judge Pickering, in addressing the initial false information and the insured’s allegations relating thereto, explained that “[n]ot every unpleasant or irritating thing that occurs to one in life is the basis for a lawsuit and punitive damages. The fact that two parties disagree over their respective legal rights does not in every instance automatically give cause for a bad faith lawsuit. The fact that one who contracts with another takes a position that cannot legally be maintained by and of itself does not give reason to file suit. Plaintiff has been out no money and suffered little if any injury. His testimony demonstrates that he was not personally involved in the subrogation dispute to any great extent. Most of the correspondence occurred between Defendant Time and the carrier for the third party tortfeasor or with Plaintiff’s attorney.” McArthur, 889 F. Supp. at 945. He further found that “[r]egardless as to what happened, however, Plaintiff has not demonstrated that Defendant. . .caused Plaintiff any injury.” Id. (This footnote is a verbatim quote of Chancellor Mask’s footnote 11 appearing at the bottom of pages 19-20 of her Opinion and Judgment). 14 Accordingly, the Court finds that [Courtney’s] claim on this ground should be DENIED. However, as explained above, a different result would likely have been reached under a different set of facts. ¶19. In her opinion, Chancellor Mask relied heavily on this Court’s decision in Valley Forge Ins. Co. v. Strickland, 620 So. 2d 535 (Miss. 1993). We discuss here the relevant facts of Valley Forge. Darlene Strickland, a resident of Louisiana, applied with Valley Forge Insurance Company for an automobile liability policy, and a temporary binder was issued to provide coverage while Strickland’s application underwent further review concerning permanent coverage. The binder provided, inter alia, $50,000 in uninsured motorist coverage, and $5,000 in medical payments coverage. While the binder was in effect, a tragic automobile accident occurred in which Strickland’s twelve-year-old daughter was severely injured. The accident occurred in Jackson County, Mississippi, and the driver of the car in which Strickland’s daughter was a passenger was a relative who was a Mississippi resident. This relative/driver had a $25,000 liability policy with Nationwide Insurance Company. Valley Forge eventually paid Strickland the policy limits of $55,000, and Nationwide thereafter offered to settle by payment of its policy limits of $25,000, but only if Valley Forge would waive any subrogation rights based on Valley Forge’s payment to Strickland. However, Valley Forge refused to waive its subrogation rights. Id. at 537-38. Valley Forge eventually filed a declaratory judgment action in Jackson County Chancery Court to determine the issue of the validity of its subrogation claim. Strickland counterclaimed, alleging, inter alia, that Valley Forge was guilty of tortious interference and bad faith. In due course, the chancellor denied Valley Forge’s subrogation claim, thus finding that Strickland was entitled to the $25,000 payment under the Nationwide policy. The chancellor 15 additionally found, inter alia, that Strickland was entitled to $1,000,000 in punitive damages from Valley Forge on the tortious interference/bad faith claim. Id. at 538. ¶20. On appeal, this Court affirmed. Id. at 543.6 In the case sub judice, Chancellor Mask’s opinion detailed the facts in Valley Forge, and then distinguished today’s case from Valley Forge by stating, inter alia: The chancellor found, with regard to the declaratory action, that under Louisiana law and the provisions of the policy, Valley Forge was not entitled to subrogation or offset, and with regard to the counterclaim, found that (1) the Stricklands were entitled to the $25,000.00 benefit under Aull’s policy with Nationwide; (2) Valley Forge must tender another payment of $55,000.00 to the Stricklands as a result of its failure to obtain prior court approval for the previous payment; and (3) awarded $1,000,000.00 to the Stricklands, and an additional $1,000,000.00 “payable only if Valley Forge failed to satisfy certain corrective and preventive measures described in the judgment. . . .” The chancellor found that “Valley Forge has engaged in a bad faith effort to assert in Mississippi a contention Valley Forge knows it cannot successfully assert in Louisiana, the state where the contract was made.” (Emphasis added by Justice Lee.) Id. at 539. Valley Forge breached its duty by asserting a “meritless subrogation claim.” However, it is critical to identify what made the subrogation claim “meritless.” Valley Forge attempted to obtain the advantage of Mississippi statutory offset rights set forth in Section 83-11-107, though the insurance policy was executed in Louisiana, and “[t]he claim that a Mississippi court would apply Mississippi statutory law is patently untenable.” Id. at 540. Further, “Valley Forge knew. . .that the subrogation agreement signed. . .by the Stricklands [in connection with their receipt of the payment from Nationwide] was void. . . .Valley Forge knew Louisiana law did not permit subrogation or offset until after the insured is made whole. Id. at 539. Accordingly, the facts supported the finding that Valley Forge acted with “gross negligence in filing and maintaining a groundless lawsuit,” to the detriment of the minor child. Id. at 540.[] 6 In actuality, in Valley Forge, this Court affirmed in part, and reversed and rendered in part, the chancellor’s final judgment. However, concerning the chancellor’s rulings as discussed in this opinion, this Court affirmed. It was only with regard to the chancellor’s ruling on an issue not relevant to the disposition of today’s case that this Court reversed and rendered. 16 Unlike the case at hand, Valley Forge initiated legal action to promote a claim that was clearly groundless from the outset and did not retreat from its position. ¶21. We agree with the chancellor that Travelers and HRI did not tortiously interfere with the settlement through gross negligence or intentional misrepresentation, because Courtney suffered no damages from the incorrect assertion of contractual subrogation. Furthermore, we find that the chancellor correctly distinguished this Court’s holding in Valley Forge from today’s case – Travelers and HRI retreated from their incorrect assertion, whereas Valley Forge did not. Thus, this issue is without merit.