Court Opinion

ID: 67333
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:20:27+00
Date Added: 2024-06-11T17:20:54.295150
License: Public Domain

[DO NOT PUBLISH]

          IN THE UNITED STATES COURT OF APPEALS

                 FOR THE ELEVENTH CIRCUIT
                   ________________________                  FILED
                                                    U.S. COURT OF APPEALS
                          No. 09-10014                ELEVENTH CIRCUIT
                                                          MAY 13, 2009
                      Non-Argument Calendar
                                                       THOMAS K. KAHN
                    ________________________
                                                            CLERK

               D. C. Docket No. 07-01909-CV-JEO-S

GREAT AMERICAN INSURANCE COMPANY,

                                                                 Plaintiff-
                                                        Counter-Defendant-
                                                                 Appellee,

                               versus

BADDLEY AND MAURO, LLC,
THOMAS E. BADDLEY, JR.,
JEFFREY P. MAURO,

                                                              Defendants-
                                                        Counter-Claimants-
                                                               Appellants.

                    ________________________

             Appeal from the United States District Court
                for the Northern District of Alabama
                   _________________________

                           (May 13, 2009)
Before CARNES, WILSON and PRYOR, Circuit Judges.

PER CURIAM:

      Thomas Baddley and Jeffrey Mauro appeal the summary judgment in favor

of Great American Insurance Company. The district court concluded that Great

American Insurance did not have a duty to defend Baddley and Mauro. We affirm.

                                  I. BACKGROUND

      Great American Insurance issued to attorneys Baddley and Mauro a

professional liability insurance policy that covered “all Damages and Claim

Expenses arising out of a Claim.” The policy defined a claim as “any demand

received by [Baddley and Mauro] for money or services . . . arising out of [their]

acts, errors or omissions in providing Professional Services.” Professional services

were defined as “services [Baddley & Mauro, L.L.C.] perform[ed] for a client in

[its] capacity as a lawyer; . . . or as an administrator, conservator, executor,

guardian, trustee, receiver, or in any similar fiduciary capacity, provided that such

services are connected with and incidental to [its] profession as a lawyer.”

      Baddley and Mauro represented Serra Chevrolet in an action against General

Motors. Early in the litigation, Baddley and Mauro and Serra executed a

contingency fee arrangement in which each party agreed to recover its expenses

and then divide the remaining proceeds according to a prearranged ratio. Serra and

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General Motors reached a settlement agreement in which General Motors agreed to

pay Serra 3.5 million dollars in two equal installments in 2007 and 2009.

      Baddley and Mauro mailed Serra a letter that accounted for its expenses, but

Serra disagreed with the accounting. General Motors mailed the first installment

payment to Baddley and Mauro. The check was made payable to Baddley and

Mauro, L.L.C., and was deposited into the trust account of the law firm pending

resolution of the fee dispute.

      The parties failed to resolve their differences and Baddley and Mauro issued

checks to the law firm of $1,277,500 and to Serra of $472,500. Baddley and

Mauro filed in a state court a complaint for a declaratory judgment that they had

paid the amount owed to Serra. The next day, Baddley and Mauro notified Great

American Insurance of the action.

      Serra sued Baddley and Mauro and alleged that they committed mail and

wire fraud when, without notice to or approval by Serra, the attorneys instructed

General Motors to send them the first installment payment. Serra also alleged that,

when Baddley and Mauro were paid from the trust account, they committed

racketeering and embezzlement, breached their civil duties as officers of the

federal court, breached their fiduciary duties to Serra, converted property of Serra,

intentionally interfered with contractual and business relations between Serra and

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General Motors, and committed malpractice.

      Baddley and Mauro notified Great American Insurance of the complaint by

Serra and requested a defense of the action. Baddley and Mauro requested

approval to retain a specific attorney to represent them against Serra, which Great

American Insurance approved pending its decision regarding coverage. Baddley

and Mauro later repeated their request for coverage.

      Great American Insurance denied Baddley and Mauro coverage. The

company determined that the “essence of the dispute” was “a demand for return of

legal fees, costs and expenses of litigation taken from Serra’s alleged portion of the

first installment settlement check from a former adversary in litigation, i.e., GM.”

Great American Insurance refused to defend or indemnify Baddley and Mauro.

      Great American Insurance filed a complaint for a declaratory judgment that

it was not obligated to defend or indemnify Baddley and Mauro for their alleged

misconduct against their client, Serra Chevrolet. Both parties moved for summary

judgment. The district court granted in part and denied in part summary judgment

to both parties. The district court granted summary judgment to Baddley and

Mauro on the ground that whether Great American Insurance had a duty to

indemnify the attorneys was not ripe for review. The district court granted

summary judgment to Great American Insurance on the ground that it had no duty

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to defend Baddley and Mauro. The district court concluded that the action brought

by Serra “[did] not arise out of the representation the defendants provided Serra

Chevrolet as its lawyers as defined by the relevant insurance policy, but ar[o]se out

of the dispute over what the ultimate fee arrangement was between them.”

                           II. STANDARD OF REVIEW

      We review a summary judgment de novo and view the evidence in the light

most favorable to the party that opposes the motion. Twin City Fire Ins. Co. v.

Ohio Cas. Ins. Co., 480 F.3d 1254, 1258 (11th Cir. 2007). Summary judgment

should be entered when there is no genuine issue of material fact and the moving

party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).

                                  III. DISCUSSION

      Baddley and Mauro challenge the judgment in favor of Great American

Insurance on two grounds. First, Baddley and Mauro argue that the action filed by

Serra is a claim covered under the policy issued by Great American Insurance.

Second, Baddley and Mauro argue that the district court erred by considering

evidence beyond the allegations in Serra’s complaint. These arguments fail.

      Great American Insurance did not have a duty to defend Baddley and

Mauro. Great American Insurance issued to Baddley and Mauro a policy with

coverage for incidents related to their “Professional Services,” that is, the actions

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“perform[ed] for a client in [their] capacity as . . . lawyer[s]” or in a “fiduciary

capacity[.]” Serra alleged that Baddley and Mauro diverted without authority a

settlement payment owed to Serra to satisfy its outstanding legal fees. These

alleged actions by Baddley and Mauro were self-serving and were not made on

behalf of or to protect the interest of its client, Serra. The misconduct allegedly

committed by Baddley and Mauro was not a claim covered by the policy issued by

Great American Insurance.

      The district court also did not err by examining the facts underlying the

complaint filed by Serra. Under Alabama law, the court can determine “‘[w]hether

an insurance company owes its insured a duty to provide a defense in proceedings

instituted against the insured . . . by the allegations contained in the complaint.’”

Hartford Cas. Ins. Co. v. Merchs. & Farmers Bank, 928 So. 2d 1006, 1009 (Ala.

2005) (quoting Acceptance Ins. Co. v. Brown, 832 So. 2d 1, 14 (Ala. 2001)).

When any “uncertainty” exists about whether the occurrence is covered under the

policy, “the court is not limited to the bare allegations of the complaint in the

action against the insured but may look to facts which may be proved by

admissible evidence[.]” Id. at 1010 (quoting Acceptance Ins. (internal quotation

marks omitted)). The complaint filed by Serra charges Baddley and Mauro with

misconduct related to their fee dispute, which is made plain by the opening

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sentence: “This action results from [a] fraudulent scheme by which [Baddley and

Mauro] unilaterally changed the terms of their ‘fee agreement’ with [Serra]

regarding prior litigation in which [Baddley and Mauro] represented [Serra].” The

district court did not err when it considered both the allegations of the complaint

and the parties’ submissions in support of their cross-motions for summary

judgment because neither supported coverage for the underlying fee dispute.

                                IV. CONCLUSION

      The summary judgment in favor of Great American Insurance is

AFFIRMED.

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