Opinion ID: 1671933
Heading Depth: 1
Heading Rank: 3

Heading: the beginning

Text: Returning to the beginning of this litigation between Moeller and Fuselier, Ott and McKee, we first note that American Guarantee's multi-peril policy, in addition to covering property loss and premises liability, also provided liability coverage and the right and duty to defend the following: I. COVERAGE P  PERSONAL INJURY LIABILITY The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury (herein called personal injury) sustained by any person or organization and arising out of one or more of the following offenses committed in the conduct of the named insured's business: .... Group B  the publication or utterance of a libel or slander or of other defamatory or disparaging material, or a publication or utterance in violation of an individual's right to privacy; except publications or utterances in the course of or related to advertising, broadcasting or telecasting activities conducted by or on behalf of the named insured; .... If such offense is committed during the policy period within the United States of America, its territories or possessions, or Canada, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such personal injury even if the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment for judgments or settlements. Exclusions This insurance does not apply: .... (c) to personal injury sustained by any person as a result of an offense directly or indirectly related to the employment of such person by the named insured. (Ex. 1) (emphasis added). Moeller's complaint against the law firm contained, among other things, the following allegations for which he sought $25,000 in damages along with attorney's fees and costs under this count. Plaintiff charges and alleges that the Defendants embarked on a course of conduct designed to misrepresent material facts to Plaintiff, to defraud him, and to damage his professional reputation and career. (Ex. 2) (emphasis added). The firm's, counterclaim against Moeller contained the following allegations for which the firm sought damages as well as attorney's fees, expenses and costs: On or about April 1, 1982, the Counterdefendant began to solicit in person, by mail and with others, the legal representation of clients of the Association and began to attempt to personally injure the reputation and good will of the Association, as well as the reputations of Fuselier, Ott, and McKee. (Ex. 16, p. 12) (emphasis added). The only part of either Moeller's complaint or the law firm's counterclaim which were covered under American Guarantee's policy are set forth above. All the remaining allegations are outside the policy. When they incorporated, Fuselier, Ott and McKee retained the services of Charles Brocato with Magruder, Montgomery, Brocato & Hosemann, a law firm specializing in taxation. Fuselier, Ott and McKee made demands upon American Guarantee through its agent, the Walter Michel Agency, to acknowledge coverage. Fuselier also requested that Brocato be retained by American Guarantee to defend the suit. Initially, American Guarantee denied coverage. Brocato on August 18, 1982, wrote a letter to John Weeks, branch claims manager for American Guarantee, stating that there was coverage under the policy. After further review, American Guarantee agreed to provide a defense under a reservation of rights, but selected its own counsel. Weeks on September 2, 1982, wrote Fuselier, Ott and McKee, stating: We have received the summons and complaint in connection with the above entitled matter. .... It appears there is or may be a question as to the position of the company for reasons of questions of coverage concerning various allegations in the suit. .... We note, in the complaint, that Mr. Fuselier, Mr. Ott and Mr. McKee, are listed as individual defendants and you may want to hire your own counsel to defend the individual interest.. The lawsuit was our first notice of this case and it is possible further investigation may reveal other questions of coverage to be resolved at a later date. The purpose of this letter is to advise you that we will, at this time, proceed with the investigation, handling, and defense of this case with a full reservation of all of our rights. This is done with the distinct understanding that no action taken by us on your behalf shall constitute either an admission of coverage under the policy or an acknowledgment of any responsibility to pay damages in any judgment against you. We further reserve the right to withdraw from the handling of this matter upon notification to you. ... [T]he company does not waive any of the other policy provisions. Because the amount demanded in the suit papers exceeds the limits of your policy, we wish also to afford you the opportunity to notify any excess insurance carrier you may have, or to employ, at your own expense, your personal attorney to represent you in connection with this case. Do not misunderstand us; we are not advising you to take any particular action, but we are simply giving you the opportunity of joining your own counsel if you so desire. It is also possible that some allegations of the lawsuit complaint may be covered under some other insurance carried by you or your firm with other companies and we suggest you also refer the matter to any professional liability insurance carrier you may have and ask them to discuss the lawsuit with our company so we can agree in any pro-ration that may be applicable. We have referred this lawsuit to Heidelberg, Woodliff & Franks, Attorneys at Law, Suite 1030, Capital Towers, Jackson, Mississippi 39201, and should you decide to join your own attorney in this matter, we are sure that if they will contact the above firm, the latter will cooperate to the fullest extent. (emphasis added). Weeks testified that once American Guarantee decided to defend the suit, the carrier defended all claims whether or not they were covered. American Guarantee thus undertook the entire defense of the litigation on behalf of Fuselier, Ott and McKee, with the law firm of Heidelberg, Woodliff, and Franks employed and paid by American Guarantee. Robert T. Gordon, Jr. and David Dogan, attorneys at that firm, performed the legal services. The record shows that Brocato, counsel for Fuselier, Ott and McKee, and Gordon and Dogan, not only cooperated and jointly defended Moeller's complaint, but together actively pursued the counterclaim. Brocato continued to represent Fuselier, Ott and McKee as the firm's own attorney, and at the expense of the law firm. While American Guarantee was aware that its policy covered Moeller, it did not notify him of this coverage. Moeller never made any demand on the carrier to furnish him a defense and was represented throughout trial and on appeal by counsel employed and paid by him. While American Guarantee did not inform Moeller that he too might be covered under the policy, there is nothing in the record suggesting that American Guarantee attempted to conceal coverage from him or that it was aware that Moeller himself might not be aware he, too, was covered.