Opinion ID: 1837384
Heading Depth: 1
Heading Rank: 3

Heading: Muirhead v. Great River

Text: ¶ 13. Following the Maddox v. Muirhead verdict, rendered on June 6, 1997, Muirhead and his counsel began to reconsider their prior decision to refrain from seeking assistance from Empire and its insurer. On July 21, 1997, six weeks after the jury rendered its verdict, Muirhead's counsel, Moss, sent a letter to Great River, inquiring into the possibility of [Great River's] participation in payment of [Muirhead's] attorney'[s] fees and meager judgment which was rendered against him. In attempting to explain why he and Muirhead delayed reporting the claim for a year and nine months, Moss stated: At the onset of this litigation I had discussed with Jack [Muirhead] Empire's participation in this defense and any judgment which might be rendered against him. For various reasons at those early stages we chose not to call upon Empire in that regard. ¶ 14. On October 28, 1997, Muirhead sent a letter to Great River requesting reimbursement for his attorney fees and the judgment. Great River referred the letter to Baker Donelson senior attorney William N. Reed, [6] who assigned the matter to attorney Karen Spencer for review and investigation. Muirhead hired attorney Michael Corey to represent him in his bad faith claim against Great River. ¶ 15. Spencer began her investigation which included a review of the policy provisions, the transcript of the depositions taken in the Maddox v. Muirhead case (including Muirhead's deposition), and other related documents, [7] as well as interviews with the attorneys involved. A summary of the facts available and known to Spencer during the time of Baker Donelson's first involvement in this matter included at least the following: 1. When Muirhead was served with process in Maddox's lawsuit, he employed an attorney. After consultation with his attorney, Muirhead instructed him not to put his employer, Empire, or its insurance carrier, on notice of the suit. 2. Prior to the trial, the trial judge dismissed, as a matter of law, Maddox's claim of negligence against Salter, and his claim of respondeat superior liability (and all other liability) against Empire. Neither Muirhead nor Maddox appealed these findings. 3. During the trial, Muirhead's counsel represented to the trial judge: Whereas I'm under the impression that Ramada is covered by a carrier, the defendant, Jack Muirhead is not covered by any policy of insurance. And we feel that it's prejudicial to him to have the jury infer that he is furnished with  that he has the funds through insurance means with which to satisfy any judgment rendered against him in this matter. 4. Muirhead's counsel requested the trial judge to instruct the jury that Muirhead did not have insurance coverage. 5. The only theory of recovery against Muirhead presented to the jury was assault and battery. ¶ 16. Upon conclusion of her investigation, Spencer informed Muirhead's attorney in a January 19, 1998 letter that there was no coverage afforded to Mr. Muirhead for the claims of Gary Maddox. In the letter, Spencer explained her reasoning. ¶ 17. First, she quoted policy language which limited coverage for injuries to those caused by an accident. She then stated she did not believe Maddox's bodily injuries were caused by an accident. ¶ 18. Next, she quoted policy language which provided that employees were insured under the policy only for acts within the scope of their employment or while performing duties related to the conduct of [Empire's] business. She then stated that she did not believe the facts supported Muirhead's position that he was covered under this policy provision. ¶ 19. Finally, Spencer stated that, even assuming arguendo that Mr. Muirhead was an insured for the purpose of Gary Maddox's claim, we do not believe that there is coverage for the incident that caused Gary Maddox's bodily injury, as intentional acts are excluded by the Policy. To support this position, she pointed out that Maddox's claim against Muirhead was one for bodily injury which was expected and/or intended from the stand-point of the insured, and as such, is excluded from coverage by the Policy. ¶ 20. As a result of Great River's denial of his claim, Muirhead filed a bad faith lawsuit which Great River employed Baker Donelson to defend. The matter was assigned by Reed to litigation attorney Sheryl Bey who, after investigating the allegations of the complaint and background information, provided an opinion letter to Michelle Malta, an attorney employed in-house by Great River. In her letter, Bey stated, inter alia: The underlying court's determination that Empire was not at fault because its employees were not acting in the course and scope of their employment should preclude Muirhead from asserting that he was even arguably entitled to a defense as an additional insured. The court's determination that the Amended Complaint failed to state a negligence claim against Salter and Muirhead should preclude Muirhead from arguing that his actions were accidental and fell within the scope of coverage thereby entitling him to a defense. The jury instructions given in the underlying litigation regarding Muirhead addressed only whether he committed assault and battery on Maddox, both intentional acts. Therefore, Muirhead should also be judicially estopped from challenging whether he acted intentionally  again outside the parameters of coverage afforded by Great River to Empire's employees who accidentally caused injury. ¶ 21. During the course of the bad faith litigation, both parties filed motions for summary judgment. On April 17, 2000, Hinds County Circuit Judge Swan Yerger issued a Memorandum Opinion and Order in which he stated: Maddox's Amended Complaint specifically alleged that at the time of the altercation, Muirhead was an employee of Empire Truck Sales and was at a business function. These allegations combined with the subject policy's broad language, in the opinion of the Court, were sufficient to trigger the defendant's duty to defend. Judge Yerger granted partial summary judgment to Muirhead and denied Great River's motion for summary judgment. Judge Yerger also stated the denial was in bad faith, and he indicated he might allow the jury to consider awarding punitive damages. ¶ 22. On May 23, 2000, soon after Judge Yerger entered his order, Great River's in-house counsel, Michelle VanHook, [8] sent a letter to Bey at Baker Donelson, documenting Great River's decision to obtain an opinion from another law firm regarding whether, in light of Judge Yerger's ruling, Baker Donelson had a conflict of interest in continuing to represent Great River in the bad faith litigation. VanHook's letter stated, in part: [a]fter discussing with my supervisor the issue of your law firm's potential conflict of defending Great River ... we have determined that it would be in the best interest of everyone to seek a separate opinion on this issue. We have retained the law firm of Copeland, Cook, Taylor and Bush [Copeland Cook] to research this issue.... One month later, VanHook followed up by informing Bey that Copeland Cook would be taking over Great River's defense. ¶ 23. Copeland Cook assigned Robert P. Thompson to review and evaluate the bad faith case. On April 27, 2001, in correspondence to VanHook, Thompson stated: On June 20, 1996, the attorney [9] retained by Great River to protect the interests of Empire Truck Sales, writes an eleven page letter to Great River summarizing the facts of the case which included the depositions of Gary Maddox, Calvin Burwell, Patricia Nan Sullivan and Jack Muirhead. He also summarized the statements of Paul Horn, a 1001 bartender, Gary Hamilton, a 1001 bartender, and Jeff Whittington, the Day Detective on duty at the time of the incident. In addition, Empire's attorney interviewed current or former Empire employees, Bob Huston, Travis Enlow, and David Woods and spoke with all counsel in the case. An overview of all statements/depositions was given. In his letter, Empire's attorney states that after his review of all of the above, there is no information contained in the file which would indicate that the defendants were acting in the course and scope of their employment.  (emphasis added). ¶ 24. During settlement negotiations which followed, Muirhead demanded one and a half million dollars from Great River. Greatly concerned by Judge Yerger's ruling, Great River agreed to pay Muirhead $500,000, and to assign him a 75% interest in its potential legal malpractice claim against Baker Donelson.