Hartman v. St. Paul Fire & Marine Insurance

40 F. Supp. 2d 837, 1998 U.S. Dist. LEXIS 14291, 1998 WL 1032112
CourtDistrict Court, N.D. Texas
DecidedSeptember 8, 1998
DocketNo. 3:97-CV-0438-P
StatusPublished
Cited by1 cases

This text of 40 F. Supp. 2d 837 (Hartman v. St. Paul Fire & Marine Insurance) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hartman v. St. Paul Fire & Marine Insurance, 40 F. Supp. 2d 837, 1998 U.S. Dist. LEXIS 14291, 1998 WL 1032112 (N.D. Tex. 1998).

Opinion

MEMORANDUM OPINION AND ORDER

SOLIS, District Judge.

This matter is before the court on the parties’ cross motions for summary judgment on the Defendant’s duty to defend Plaintiff. Plaintiff argues that he is entitled to judgment based on collateral estop-pel or law of the case by virtue of the Fifth’s Circuit’s rulings in a previous case between the parties. Defendant argues that the instant suit is barred by res judi-cata by virtue of the same. For reasons stated below, Plaintiffs motion is DENIED; and Defendant’s motion is GRANTED IN PART and DENIED IN PART.

BACKGROUND

The Wilcox Suit and St. Paul I

In 1990, Doyle Hartman sued an ex-employee for breach of the severance agreement between them (“Wilcox Suit”). Wilcox counterclaimed for defamation, invasion of privacy, misrepresentation, fraud and intentional infliction of emotional distress.1 On March 24, 1992, Hartman notified St. Paul of the Wilcox suit and requested a defense under certain general and excess liability policies issued to him by St. Paul. Prior to trial of the Wilcox Suit, Hartman brought an action in this court to enforce his contract with St. Paul (“St. Paul I Suit”).2 The Wilcox Suit was tried before a jury in January of 1994 and resulted in a partial verdict. Thereafter, the judge ordered the entire case be retried and set the matter for November 14, 1994. In the meantime, the St. Paul I suit progressed. Prior to trial, the court ruled as a matter of law that St. Paul owed Hartman a duty to provide coverage under two policies for four of Wilcox’s counterclaims, subject to a jury finding that Hartman provided prompt written notice of those claims.

In the First Amended Pretrial Order entered in the St. Paul I suit, Hartman stated: “Damages claimed ... are $2.3 million in reasonable and necessary attorneys fees and litigation costs from March 1992 through February 1994 defending the Wilcox claims, and $10-15 million from business disruption to Hartman’s oil and gas business from being forced by St. Paul’s actions to deal with the Wilcox claims himself.” (emphasis added) In the same document, under his “Contested Issues of Fact,” Hartman included: “The amount of reasonable and necessary attorneys’ fees and expenses incurred in defending the Wilcox suit from March 1992 to March 1993 unpaid by St. Paul” and “[t]he amount of reasonable and necessary attorney’s fees and expenses for defending the Wilcox suit from April 1993 through trial of this matter to March, 1994 unpaid by St. Paul. [Note: As a matter of law Hartman is entitled to the actual amounts paid by him from March 1993 through April 1994 and St. Paul cannot contest the ‘reasonableness’ of those amounts, due to breach of its ‘duty to defend’ from March ’93 to April ’94].” (emphasis added) Finally, Hartman included as a contested issue of law “[w]hether St. Paul is precluded as a matter of law from challenging the reasonableness of the defense costs paid and incurred by Hartman in the Wilcox suit from April 1993 through trial of this case in April 1994.” (emphasis added)

The jury found as follows:

[839]*8391) St. Paul was not negligent in failing to settle Wilcox’s claims against Hartman;
2) Hartman was negligent in failing to settle Wilcox’s claims against him and such negligence proximately caused injury or damage;
3) Reasonable and necessary attorneys’ fees and expenses for the period of March 1993 through February 1994 were $333,000;
4) Hartman failed to give St. Paul prompt written notice and St. Paul was prejudiced thereby;
5) St. Paul complied with its duty of good faith and fair dealing to Hartman;
6) St. Paul engaged in no unfair or deceptive insurance act or practice; and
7) There was no reasonable basis to believe St. Paul engaged in willful, wanton or malicious conduct toward Hartman.

Based on the foregoing, the court entered a take nothing judgment against Hartman. On appeal, the Fifth Circuit affirmed in part and reversed in part, holding that St. Paul had a duty to defend Wilcox’s Second through Fifth Counterclaims, but not his First. The Fifth Circuit determined that Hartman had promptly notified St. Paul in 1992 of the Wilcox’s First Counterclaim and that “the trial court erred in deciding that Hartman forfeited coverage under his 1992 CGL policy for Wilcox’s Second, Third, Fourth and Fifth Supplemental Counterclaims because he did not give prompt notice of the February 6th letter or the filing of Wilcox’s suit in December 1990.” Based on the jury’s finding that reasonable attorneys’ fees incurred by Hartman to defend the second through fifth counterclaims for the period March 1993 to February 1994 were $333,000, the court ruled that “Hartman is entitled to judgment for at least that sum.” The court then remanded the action “for further proceedings consistent herewith.”

On rehearing, the Fifth Circuit stated: “On remand, the district court is instructed to enter judgment for Hartman in the sum of $333,000 and the court may consider the parties’ arguments concerning whether Hartman is entitled to additional attorneys’ fees for prosecuting this action.” Finally, the court entered an order on recall of mandate stating: “The district court should on remand award prejudgment and post-judgment interest based on applicable law when it enters judgment.”

On March 13, 1997, this Court entered an order allowing Plaintiff to withdraw the $364,000 which Defendant had deposited into the registry of the court [representing the $333,000 found by the jury plus interest]. This withdrawal was without waiver of or prejudice to Plaintiffs rights to seek additional amounts he may be entitled to receive and/or recover in this action or in other litigation existing between Plaintiff and Defendant. Finally, the Court ordered that the amount withdrawn will be credited to the amount the Court determines Defendant owes in the Final Judgment eventually entered in this case. On April 1, 1998, this Court determined that Hartman was not entitled to recover attorney fees incurred in prosecuting the St. Paul I suit, an entered an order accordingly. , On September 4, 1998, final judgment was entered in St. Paul I.

St. Paul II

Hartman filed the instant suit (“St. Paul II”) alleging breach of contract; breach of the duty of good faith and fair dealing; and violation of Texas Insurance Code Articles 21.21 and 21.55, seeking as actual damages recovery of attorneys’ fees and expenses incurred in the Wilcox litigation post February 1994 and the “value” of the settlement Hartman reached with Wilcox in August of 1994, along with statutory penalties for St. Paul’s alleged failure timely to pay Hartman the $333,000 directed by the Fifth Circuit’s mandate, attorneys’ fees for prosecuting St. Paul II and punitive damages for St. Paul’s alleged gross negligence. St. Paul answered, asserting twenty one affirmative defenses, including res judicata.

Hartman moves for partial summary judgment, seeking a judicial determination [840]*840that St. Paul is collaterally estopped, by virtue of the Fifth Circuit’s opinion in St. Paul I, from denying it had a duty to defend Hartman for the time periods for which damages are sought in St. Paul II. St. Paul seeks a summary judgment that Hartman is precluded, by virtue of St.

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40 F. Supp. 2d 837, 1998 U.S. Dist. LEXIS 14291, 1998 WL 1032112, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hartman-v-st-paul-fire-marine-insurance-txnd-1998.